New leaders will determine post-pandemic fortunes for Air India and IndiGo

Summary:

• KLM's Pieter Elbers will become CEO of IndiGo by 1-Oct-2022, replacing Ronojoy Dutta.
• IndiGo is the largest player in the Indian domestic market, with a 53.9% passenger share.
• KLM has links to IndiGo due to a code-share agreement signed recently.
• Campbell Wilson will shift from SIA Group to take over as Air India CEO.
• Wilson headed SIA's LCC subsidiary, but also has broad experience with the parent airline.

Pieter Elbers is taking over a successful and growing airline

In the most recent development, on 18-May-2022 IndiGo named current KLM head Pieter Elbers as its new CEO.

Mr Elbers is due to take over the top job at IndiGo on or before 1-Oct-2022, replacing the current IndiGo CEO Ronojoy Dutta who is set to retire on 30-Sept-2022. 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. KLM announced in Jan-2022 that Mr Elbers would not enter a third contract term as CEO. He is due to step down from his KLM role on 1-Jul-2022.

At first glance it may seem like a big shift for the head of a large legacy full service carrier to take the reins at an LCC. However, IndiGo is not just any LCC - it is the dominant player in India's vast domestic market, accounting for a 53.9% share of passengers in the first quarter, according to India's Directorate General of Civil Aviation.

IndiGo has a fleet of about 275 aircraft and has more than 500 Airbus narrowbodies remaining on order.

IndiGo's next growth phase will concentrate more on international markets

The selection of Mr Elbers could fit well with IndiGo's aspirations to be a much larger player in the international market.

The airline had begun its drive to increase international flights before the coronavirus pandemic and has signalled that it will focus much of its growth on international markets in the post-COVID phase. Alliance partnerships are also becoming more important. Mr Elbers' experience in these areas could be very useful to IndiGo.

Mr Elbers is far from unfamiliar with the Indian airline. KLM and IndiGo signed a new codeshare agreement on 13-May-2022, linking their networks. This is part of an agreement reached between IndiGo and Air France-KLM.

KLM currently serves Mumbai and Delhi, adding Bangalore from 23-May-2020. The IndiGo deal gives it connections to a much wider range of Indian cities.

For IndiGo, the Air France-KLM deal improves its international offering, particularly in the Americas and Europe.

At the time the codeshare deal was announced, Mr Elbers praised IndiGo as "a successful airline with a modern fleet" that has won many customer satisfaction awards.

After the CEO hiring was revealed, IndiGo Managing Director Rahul Bhatia cited Mr Elbers' "deep understanding of the [airline] business, [and] his legendary leadership qualities coupled with his energy and passion".

Mr. Bhatia also applauded Mr Dutta for "effectively leading our business for almost four years with a steady hand through what has been the most turbulent period in the airline's history".

Campbell Wilson faces a more challenging assignment with Air India

IndiGo's leadership announcement occurred a week after Air India unveiled its own major leadership move, selecting Campbell Wilson as its first post-privatisation CEO.

Mr Wilson is currently CEO of the Singapore-based LCC Scoot, and is due to leave the airline on 15-Jun-2022. He will be tasked by Air India's new owners with moving the loss-making former flag carrier towards profitability.

While the Air India board has approved Mr Wilson's appointment, it is still subject to regulatory review as he is not an Indian citizen.

Mr Wilson - a New Zealander - is a veteran of the Singapore Airlines (SIA) Group, which is the parent company of Scoot. He joined SIA in 1996 and has held a wide variety of roles within the group. He was the founding CEO of Scoot between 2011 and 2016, and he was then appointed senior VP-sales and marketing for Singapore Airlines.

Mr Wilson returned as Scoot CEO in Apr-2020.

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 for the Tata Group will be aligning all of these disparate airlines, and in some cases it is likely considering consolidation.

Mr Wilson knows a lot about both of these subjects, as he has had a major role in positioning Scoot within the SIA group and was also involved in executing the merger of Scoot and Tiger Airways when the latter was fully taken over by the SIA Group.

Air India's chairman N Chandrasekaran described Mr Wilson as "an industry veteran, having worked in key global markets cutting across multiple functions …. further, Air India would benefit from his added experience of having built an airline brand in Asia".

SIA CEO Goh Choong Phong praised the contribution that Mr Wilson has made to the group over the years. He also said Mr Wilson is going to Air India "with our full blessings."

There is a significant link between SIA and Air India. SIA and the Tata Group are joint owners of Vistara, and they will have to work together to decide how Vistara fits with Air India, as they are both full service carriers. It seems that there will need to be at least some degree of cooperation between Air India and Vistara.

CEO search has previously run into political problems, but the new pick should be less controversial

Air India has had some challenges trying to secure a CEO to lead the airline into its next phase.

The airline named former Turkish Airlines chairman Ilker Ayci as the airline's next CEO and managing director on 14-Feb-2022. He was due to take the reins of the company on 1-Apr-2022, although the appointment was still subject to regulatory approval.

However, Mr Ayci decided to withdraw from the role before his tenure had officially begun. This followed concerns from some political factions in India regarding Ayci's past links to Turkish President Recep Tayyip Erdogan. The government of India has a strained relationship with Turkey.

Before Mr Ayci was selected, the high-profile airline executive Fred Reid was believed to be one of the candidates under consideration.

Jet Airways looked within India for a CEO to lead its relaunch

Elsewhere in the Indian airline industry, the resurrection of Jet Airways will also mean the return of a well-known name.

Airline industry veteran Sanjiv Kapoor took over as Jet Airways CEO on 4-Apr-2022. His last position was as president of Oberoi Hotels & Resorts, but he has also held senior airline positions in India and overseas.

Before joining Oberoi Mr Kapoor was chief strategy and commercial officer at Vistara. Before that he was COO for the Indian LCC Spicejet.

In another recent senior appointment, Jet Airways named Vipula Gunatilleka as its CFO. Mr Gunatilleka was previously CEO of SriLankan Airlines.

Mr Elbers and Mr Wilson appear to be the right leaders at the right time

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.

These two highly regarded CEOs are good choices to lead IndiGo and Air India, and in both cases their particular experience should benefit the Indian airline industry during a time of transition.