Knowing the business, hiring experts helps to build successful airlines

Maxim One: Knowing the Business Helps

Not only was Jet considered the best among airlines in India, it also managed to gain a reputation for its reliability and high-quality service globally. Moreover, from the time it took to the skies, Jet had a clear and well-defined business model and armed with a committed body of professionals who learnt under the keen eye of Goyal, the airline was a success by any standard. Its eventual decline and fall were more a reflection of the changed times -- and the advent of the low fare airline revolution -- than its own creation, barring the big mistake of buying Sahara.

If Jet’s founder built his business from scratch, India’s largest private airline, Indigo, too had a similar trajectory. A contemporary of Goyal’s was Kapil Bhatia who was also GSA for a few airlines through his company, Delhi Express Travels. Once his son Rahul Bhatia returned after studying abroad, he consolidated the business under Interglobe Aviation. United Airlines was one of the clients and it was through this that Rahul made the connection with his co-founder and future partner Rakesh Gangwal, who at the time already had several years of experience in the airline business and had both the knowledge and the network Rahul might have lacked at the time. Another advantage that Bhatia had at the time was that his company was the main distributor for Galelio, the global reservation and distribution system for airline tickets used by most back then.

In contrast to these two entrepreneurs, the history of airlines in India is littered with examples of founders who had only the resources to set up an airline but little else. Industry experts point out that a majority of the airlines in India that failed to succeed were launched by those not familiar with the business or run by those who had little or no experience in the sector. Whether it was Sahara’s Subroto Roy, Air Deccan’s Captain Gopinath, Kingfisher Airlines Vijay Mallya or Go First’s Nusli and Jeh Wadia or smaller players like MDLR or Paramount, none of them had cut their teeth or were familiar with the airline business the way Goyal and the Bhatias were, lacking what the industry sources call the inherent advantage that only comes from diligence and learning through experience.

Maxim Two: Hiring professionals who know the business to get the job done works best

Perhaps one of the biggest and yet not fully appreciated maxims in the aviation sector is that people make the business, not the other way round.

When Goyal set out to set up his airline, he had set his sights high and was aiming for “nothing but the best”. To ensure that Jet was the best, he knew he had to bring in talent from overseas since India at the time had only Air India and Indian Airlines officials who had any experience in the business. Poaching from state-owned companies would have attracted the ire of the government and neither was he convinced of the quality of talent he would bring on board if he took that route. Therefore, Goyal hired talent from overseas and brought in expats, those with experience in the sector to work for his airline.

At first, he brought in talent from wherever he could including from Malaysia and South Africa. Once Jet acquired some standing, Goyal was able to attract better talent and managed to bring in both Wolfgang Prock Schauer and Nikos Kardassis, two airline professionals with significant international experience and standing, who did long stints with the airline. Kardassis remained a constant feature in the airline’s path, pulled in once again by Goyal at the time of the Etihad deal. Jet Airways CEOs included Gary Toomey and then following the infusion of equity from Etihad, Cramer Ball led the carrier till Goyal brought in Vinay Dube, who had done stints with both American Airlines and Delta before he returned to India.

But Goyal did a larger service to the sector by also building a formidable group of Indian professionals and managers who learnt on the job, were as adept if not better at the airline business as any of the expats and who have gone on to contribute in different ways to the industry whether in India or overseas. These included his trusted aide the late Saroj Datta, Suresh Nair, Gaurang Shetty, Raj Sivakumar, Sudheer Raghavan, and a host of others.

Taking a leaf out of Jet’s books, IndiGo too has been run by a team of professionals from within the industry right from inception. The airline’s CEO at start-up was Bruce Ashby who at the time was vice president at US Airways and was brought in to set up the initial bricks and blocks on which the airline would stand. Barring Aditya Ghosh, a former Interglobe loyalist, Rono Datta and now Pieter Elbers are experienced airline men with significant expertise and international experience. In a similar fashion to Jet, IndiGo too has helped build significant talent over time among the Indians professionals including Sanjay Kumar and Riyaz Peer Mohammed, considered among the best in their respective fields.

In recent years, AirAsia India has best demonstrated this maxim albeit in reverse. Despite having the might of the Tata group and the expertise of AirAsia Berhad behind it, the joint venture in India failed to deliver on any parametre. While there are many reasons why this happened – these are beyond the purview of this article -- aviation industry sources lay a large part of the blame on the initial choices of CEO and professionals who headed the carrier.

Tony Fernanades, the chief of AirAsia Berhad, for reasons that few in India could comprehend, brought in two CEOs for the airline who had little or no experience in the airline business and many believe this was the undoing of the carrier. People in the aviation business argue that the slow induction of new planes, the poor and haphazard choice of new routes and lack of planning were a result of a lackadaisical approach by the two CEOs who spearheaded the airline in its formative phase. By the time Tata group took charge of the airline and put Tata veteran Sunil Bhaskaran - also not someone with deep knowledge of aviation - many believe the damage done by his two predecessors was too severe to fix.

Putting the airline business in the hands of those who are unfamiliar with it hasn’t worked and the industry is replete with such instances. Sahara for instance brought in people from the chit fund and finance business and the airline didn’t get anywhere, eventually being sold for a decent sum to Jet Airways. Vijay Mallaya inducted a mix, bringing in trusted lieutenants from his liquor business and hiring whoever he could from the airline industry but failed to do it efficiently. The Marans when they took charge of SpiceJet also brought in their own people and this didn’t work either. The Wadias struggled with talent and retaining it and this is one of the primary reasons the airline went South. Lack of experience and knowledge of the sector led to a host of smaller players going bankrupt and eventually winding up. The list is long and well known.

Anjuli Bhargava writes on governance, infrastructure and the social sector. The views expressed are personal.

Stay updated with the...

See more