Thursday, August 11, 2022

Air India, Indigo Appoint Foreigners As CEOs, Maintain Past Trend

By Jitender Bhargava

Jitender Bhargava, former Executive Director, Air India & Author

Four months after Tata regained control of Air India, an announcement was made for the appointment of New Zealander Campbell Wilson, as the airline’s CEO. Campbell is currently CEO of Scoot, the low cost subsidiary of Singapore Airlines. The airlines board has approved Mr. Wilson’s appointment subject to regulatory review since he is not an Indian citizen. Mr Wilson is due to leave the airline  in June, and will be tasked by Air India’s new owners with moving the loss-making carrier towards profitability. This was after Ilker Ayci, the former Turkish Airlines boss, backed out for multiple, but unexplained, reasons.

Considering that Tata won the bid for Air India in the disinvestment process on 8 October 2021, one is tempted to ask; why did the appointment of a CEO take so much time? Did the Tata Group, India’s largest business conglomerate not have anyone within their huge industrial empire to head the airline? Is it a coincidence that the Tata’s, like most other private carriers, also opted for an expat to lead Air India. 

A question often doing the rounds is ‘is there a dearth of capable leaders within the country in the aviation industry?’ Yes, there indeed is.  If one peruses the long list of CEOs of Indian carriers ever since they were allowed to enter into the business of flying starting early 1990s, most CEOs of Indian private carriers have been of foreign origin. The ones who have been or are of Indian origin are those who have acquired experience working with international airlines abroad. 

Mr Wilson’s broad range of experience across both full service and low cost business models within the same group makes him well suited to the Air India role. Air India has an LCC subsidiary (Air India Express), while the Tata Group, Air India’s new owner, also controls LCC AirAsia India and is part owner of the full service carrier Vistara. One of the main challenges he faces will be aligning all of these airlines, which could lead to consolidation. Mr Wilson’s experience on the subject has played a major role in aligning Scoot and SIA and the merger of Scoot and Tiger Airways when the latter was fully taken over by the SIA Group.

Considering the relationship and link between SIA and Air India. SIA and the Tata Group who are joint owners of Vistara, they will have to decide how Vistara fits with Air India, as they are both full service carriers. Wilson’s pedigree makes him a good fit to hit the road running. 

Foreigners Have An Edge

Jet Airways appointed a series of expats in leadership roles since inception. Wolfgang Prock-Schauer, currently the President/Chief Operating Officer of InterGlobe Aviation, which runs Indigo, headed the airline from 2003 to 2009. Nikos Kardassis was another CEO of foreign origin to head Jet Airways. Vinay Dube, who was CEO of Jet Airways when the airline shut operations in 2019, had earlier been with American Airlines, the world’s largest airline by fleet size. An aviation industry veteran, Dube has also been a former chief executive officer of Go Air (previously known as Go First). Currently, Dube is the CEO and co-founder of upcoming airline Akasa Air, which is backed by billionaire Rakesh Jhunjhunwala

Wolfgang Prock-Schauer also helmed Go Air as CEO and Cornelis Vrieswijk, another Chief Executive Officer of foreign origin, headed Go Air airlines at a point of time. 

Rahul Bhatia and Rakesh Gangwal, who was President and CEO of US Airways Group from 1998 until his resignation in 2001, promoted Indigo, India’s largest domestic airline jointly. Ronojoy Dutta, the CEO of Indigo since January 2019, had earlier served United Airlines in various capacities before being promoted as President. 

Aditya Ghosh, who worked with InterGlobe Enterprises since 2004 became President and a full time director of Indigo in 2008. It is difficult to think of another Indian, without having worked with a global airline, to successfully head an Indian airline for a decade.

Air Asia India and Vistara have quite naturally had expat CEOs since their inception because of foreign equity holding by international airlines.

IndiGo recently named current KLM head Pieter Elbers as its new CEO. Elbers is due to take over the top job at IndiGo replacing the current IndiGo CEO Ronojoy Dutta who is set to retire later in the year. The IndiGo board has selected Mr Elbers, but his appointment is still subject to regulatory approval. 

Mr Elbers has served as CEO of KLM since 2014 and has held several senior roles in a 30-year career with the airline. The selection of Mr Elbers fits well with IndiGo’s aspirations to be a much larger player in the international market. 

The list of foreigners or Indians with global airline experience providing leadership to Indian carriers is long, prompting one to ask why Indian carriers have failed to produce leaders, and if they had the potential why did they miss the opportunity. 

Lack Of Opportunity

Air India and Indian Airlines were two airlines operational since 1953. It is not difficult to explain why the two airlines failed to provide senior executives as CEO because they were steeped in the ‘Sarkari’ culture and the two airlines’ lacklustre performance in recent decades did not enthuse promoters of private carriers to look at its managerial talent for the top post. Mere experience of a few decades was not deemed good enough, and rightly so. It must, however, be stated that many private Indian airlines have employed former Air India/Indian Airlines personnel to head Engineering and Operations departments. 

Lack of leadership talent was also evident when the merged Air India-Indian Airlines entity began looking for an experienced COO to steer the airline out of the mess created by the government through its many reckless decisions. It had to zero in on Capt. Gustav Baldauf, who was working as executive vice-president (flight operations) in Austrian Airlines and had previously worked as vice-president (operations) in Jet Airways and Air Canada. He was the first expatriate in the management team of the then country’s flag carrier. The fact that he did not last long in the position and quit in disgust due consistent governmental interference is another story.

What cannot, however, be explained is that almost three decades after Jet Airways had come up and was run successfully till its collapse, none from Jet Airways management team have been considered worthy of the leadership role by airlines that were established subsequently. Why? A question needs serious introspection if Indian carriers have to groom individuals for CEOs/COOs roles in the future and having a background with a foreign airline is not a mandatory requirement. Considering that Indian aviation is no longer a nascent industry but growing at a phenomenal pace, must we keep relying on foreigners or expat Indians who have spent most of their life abroad to lead Indian carriers?

Incidentally, even the newly appointed CEO of Jet Airways 2.0. Sanjeev Kapoor had served NorthWest Airline in his initial career years. He had later worked with SpiceJet and Vistara. 

Airline Experience Not Essential

Global experience shows that airline background is not vital or an essential requirement. One of the most successful CEOs of British Airways, Lord King was a businessperson with no airline experience when British Prime Minister Margaret Thatcher had picked him for the coveted position. He is credited with leading British Airways from an inefficient, nationalised company to one of the most successful airlines of recent times.

Likewise, Colin Marshall, who was hired by Lord King in 1983 as CEO of British Airways, was instrumental in the reform of the company prior to its successful privatisation in 1987 had no airline experience.

Likewise, when Japan Airlines was facing an existential crisis in 2011, Kazua Isamori, the founder of Kyocera Corporation, Japan, was appointed the CEO. Even though he had no airline experience, he successfully transformed the airline.

To the outside observer it may seem notable that expatriates will be leading India’s two largest airlines. However, such a development is commonplace throughout the airline industry. Talent is more important than nationality, particularly in an industry as globally interconnected as the airline sector.

Jitender Bhargava, former Executive Director, Air India and author of ‘The Descent of Air India.’

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