The scene at Bengaluru's Kempegowda International Airport this week resembled a disaster zone, although no natural calamity had struck. Over 124 IndiGo flights disappeared from departure boards in a single day. Thousands of passengers, many travelling for year-end holidays or important business commitments, found themselves stranded in terminal halls that had become makeshift waiting areas. Departure screens displayed cancellation notices in red. Customer service counters were surrounded by tired, frustrated travellers seeking answers that airline staff could not provide.
The disruption was across the country. Delhi, Mumbai, Chennai, Hyderabad—every major airport saw similar scenes. Over 2,000 IndiGo flights were cancelled in a single week. Passengers who had booked affordable tickets months earlier were forced to pay two or three times more on competing airlines, if seats were available. Many abandoned their plans entirely, their faith in India's aviation sector badly damaged.
What made the crisis especially troubling was that IndiGo is not a struggling start-up or an airline facing bankruptcy. This is India's largest airline, controlling over 60% of domestic passenger traffic. It operates more than 2,300 flights daily with a fleet of over 430 aircraft. Its parent company, InterGlobe Aviation Ltd, is valued at ₹2.2 lakh crore and reported profits of ₹7,250 crore FY24-25. This is an airline that built its reputation on punctuality, efficiency and operational discipline. The airline that other carriers studied as a model had suddenly lost its way.
IndiGo’s operations unravelled in early December, with on-time performance dropping to 19.7% on 3rd December from 35% a day earlier and about 50% on Monday. The airline cancelled 1,232 flights in November. By December, it was clear IndiGo had misjudged its ability to function under the revised regulatory regime.
Delays cascaded, pushing crews beyond duty limits and leaving no reserves. Ground staff were overwhelmed, baggage went missing, customer support choked and airports saw stranded passengers. The railway ministry intervened with 89 special trains across Western, South Central, Central, and Northern Railway zones to move affected flyers—an unusual step reflecting the scale of the disruption.
The Governance Question
This operational chaos raises questions about corporate governance and leadership accountability. And here, the story goes back to 2019 and a warning that was ignored. Rakesh Gangwal was not just another co-founder or investor. He was an aviation veteran with nearly 40 years of experience in the industry.
A former chief executive officer (CEO) of US Airways who had held senior positions at United Airlines, Mr Gangwal reached the highest levels of American aviation at a relatively young age—something that only happens when someone demonstrates exceptional managerial skills and operational expertise.
When IndiGo was founded in 2006, it was Mr Gangwal who brought the operational knowledge. His partner, Rahul Bhatia of InterGlobe Enterprises (IGE), provided local business knowledge, political connections and strategic vision. Together, they built a disciplined, low-cost model that grew rapidly.
By the time IndiGo went public in 2015, it had become India's largest airline. Mr Gangwal was behind the airline's major aircraft orders—massive deals with Airbus that gave IndiGo pricing advantages and delivery schedules that competitors could not match. He designed the lean cost structure that made IndiGo a case study in efficiency. He negotiated favourable engine contracts and played a key role in network planning. His influence was visible in every aspect of the operation that made IndiGo successful.
But, in July 2019, Mr Gangwal did something unusual. He sent a detailed letter to market regulator Securities and Exchange Board of India (SEBI), publicly raising what he saw as serious governance lapses at the airline he had built. This was not a private complaint aired in boardroom disputes. This was a co-founder going public with concerns about the institutional integrity of one of India's most successful companies.
Mr Gangwal's main accusation was that the Bhatia-led IGE group was engaging in questionable related-party transactions (RPTs) and operating the airline without proper checks & balances. He pointed to deals that IndiGo had entered with enterprises such as InterGlobe Hotels, InterGlobe Real Estate Ventures, and InterGlobe Air Transport—all companies linked to Mr Bhatia's IGE group. He argued that these transactions lacked adequate independent oversight and posed conflicts of interest.
But his concerns went deeper than specific deals. Mr Gangwal's fundamental critique was about the power structure. The shareholder agreement gave Mr Bhatia's IGE group the right to appoint five of the 10 directors on the board, as well as the managing director (MD), chief executive officer (CEO) and president.
Mr Gangwal, despite being an equal partner in building the airline, could name only one director. This imbalance meant that Mr Bhatia effectively controlled all key decisions and the board lacked genuine independence to challenge management or examine related-party transactions.
In his letter, Mr Gangwal wrote that the company had started eroding the very core of corporate governance values. He compared the board's adherence to governance standards to a ‘paan ki dukaan’—a betel-leaf shop, an informal roadside establishment with no formal processes or accountability. It was a strong criticism from someone who understood that, in aviation, where margins for error are small and operational complexity is high, governance is not a formality but a critical safeguard.
Mr Gangwal argued that these unusual rights granting the Bhatia group unchecked control created a blind spot for risk. He wanted a more independent, stronger board that could challenge decisions, ensure accountability and prevent the airline from being treated as a personal business. His concerns were about institutional strength—about building structures that would ensure IndiGo's success beyond any individual founder's tenure.
The Managed Exit
Instead of serious reflection and structural reform, the airline's board and the Bhatia camp defended their position. Some surface-level changes were made. The board was expanded to include up to 10 members, with four independent directors and a woman director. Some related-party transactions were reviewed to Mr Gangwal's satisfaction. But the fundamental power imbalance remained unchanged, supported by the company board.
The shareholder agreement that gave Mr Bhatia disproportionate control was embedded in restrictive clauses in the articles of association (AoA). These clauses effectively locked both founders in a governance deadlock and restricted their freedom to sell shares. The dispute escalated beyond SEBI. In 2019, Mr Bhatia sued Mr Gangwal and Mr Gangwal filed a counter-suit. The matter went to the London Court of International Arbitration.
In 2021, the tribunal ruled in Mr Gangwal's favour, ordering the removal of the restrictive veto clauses that had prevented either founder from freely trading shares. This was seen as an important moment, signalling to investors that no single promoter could hold the company hostage. The structural changes to the AoA were implemented at a shareholder meeting in December 2021.
But, while Mr Gangwal won the legal battle to free himself from the shareholder agreement's constraints, he had lost the larger fight for governance reform. The board remained firmly under the Bhatia camp's control. The power structure he had warned about endured.
Mr Gangwal, who had distanced himself from day-to-day operations as the relationship with Mr Bhatia deteriorated, realised that meaningful change was not going to happen.
In February 2022, Mr Gangwal resigned from the board. His resignation letter was polite but pointed. He wrote that he had been a long-term shareholder in the company for more than 15 years and that it was natural to eventually think about diversifying one's holdings. But the underlying message was clear: the checks & balances had been removed. He requested that no unpublished, price-sensitive information be shared with him, explicitly to avoid any accusations of insider trading as he began systematically selling his stake.
Mr Gangwal's exit was not driven by financial weakness or loss of faith in the aviation sector. IndiGo was highly profitable. The Indian aviation market was growing. The airline's market dominance was secure. His departure was driven by principle. He believed that centralised control, conflicts of interest and weak board oversight posed long-term risks—not just to shareholder value but to operational strength and institutional sustainability. For him, the arbitration had settled ownership disputes, but it had not addressed the deeper cultural and governance imbalances that he saw as existential threats.
He began methodically selling his holdings. His stake dropped from 36.6% in December 2021 to under 5% by mid-2025. In May 2025, he sold shares worth ₹6,800 crore. In August, another transaction worth ₹7,020 crore at ₹5,808 per share. Total proceeds from his exit exceeded ₹45,000 crore.
Industry observers noted that Mr Gangwal was careful about choosing buyers. He did not want the shares to end up with the wrong parties. He also made it clear that he would not invest in competitors like Rakesh Jhunjhunwala-funded Akasa Airlines. His reasoning was twofold: he did not want to appear vindictive and he wanted to benefit from a potential price rise in IndiGo stock. Investing in a competitor would work against that goal.
Mr Gangwal remained a long-term thinker, betting that IndiGo's dominance in Indian aviation would continue to drive shareholder returns even as he walked away from the company.
Bhatia Takes Direct Control
As Mr Gangwal exited, Rahul Bhatia strengthened his hold over IndiGo. In early 2022, weeks after Mr Gangwal's resignation from the board, Mr Bhatia took over as MD. This was unusual. Airline promoters, typically, rely on professional managers to run operations. Taking on a managerial role signalled that Mr Bhatia was not entirely satisfied with the existing management and wanted direct oversight.
Those familiar with the situation suggested that Mr Bhatia believed IndiGo had lost some of its competitive edge and had become complacent. He was known as a sharp businessman who stepped in decisively before things went seriously wrong. But his appointment as MD also meant that the concentration of power that Mr Gangwal had warned about became even more pronounced. There was now no counter-balance, no internal voice with the standing and expertise to challenge strategic decisions or raise governance concerns.
The Connection to Current Crisis
The current operational crisis at IndiGo—coming just three years after Mr Gangwal's departure—raises uncomfortable questions about the governance structure he warned against. Would a more independent, empowered board have insisted on better planning for the FDTL rules? Would directors with genuine autonomy have challenged management's decision to maintain a hiring freeze despite a two-year implementation window? Would a board culture that valued dissent and accountability have prevented the airline from being caught so badly unprepared?
These are not theoretical questions. They go to the heart of what corporate governance is supposed to achieve. Governance is not about managing daily operations. It is about creating institutional structures that ensure long-term strength, that build safeguards against complacency, that empower independent voices to challenge management when strategic decisions carry unacceptable risks.
Mr Gangwal's warnings were precisely about this. He was not questioning IndiGo's profitability or market position. He was questioning whether the governance structure was strong enough to ensure sustainable success. He was concerned that concentrated power, weak board independence and inadequate oversight would eventually lead to institutional failures—perhaps not immediately, perhaps not in obvious ways, but inevitably.
The current crisis suggests his concerns were valid and forward-looking. IndiGo had two years to prepare for regulatory changes that were publicly announced, extensively debated in the industry, and legally mandated by court order.
Every other airline managed the transition. IndiGo—with its scale, resources and profitability—should have been best positioned to navigate these changes smoothly. Instead, it has suffered the worst operational collapse of any Indian carrier in recent memory. But it did not and for that the primary blame rests with the IndiGo board and then with the Union ministry of corporate affairs (MCA) and SEBI which has been active in imposing corporate governance norms on listed companies but is often found ignoring obvious governance failures.
Mr Gangwal's exit was a warning that went unheeded. He chose to walk away rather than lend his credibility to a structure he believed was fundamentally flawed. The fact that he was proven right so soon after his exit is a serious indictment of the governance culture that replaced his voice with silence. The board that remained, placed control over accountability and prioritised short-term outcomes over long-term resilience.
Today, with IndiGo’s operational breakdown disrupting travel nationwide and the railway ministry stepping in to assist stranded passengers, the question for Indian business is clear: Was Mr Gangwal right? And what is the cost of sidelining those who understand that strong governance is essential, not optional?
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Thanks to Mr Naidu,DGCA & it's related department.
There is proverb*Never put all eggs in a single basket*
We the inocent citizens are the the sufferers.
Jai ho BJP.
Their staff was rude to the extent of beating the passengers. Top management never responded.
This is right time for Govt to take over the company. Their accounts must be frozen before that to prevent siphoning of funds.
It's quite clear that the Indigo management had taken GOI and civil aviation ministry for granted and the public for ride given its monopoly. Govt too is in cohoots with the airline company obviously for gaining illegal gratification probably for party/personal funds.
Does this Govt have the guts and resolve to tackle the bull by its horns. Or is it waiting for the public outcry to settle down over due course. Public memory is short lived obviously.
A class action suit is need of the hour.
There are reports in print media that a parliamentary panel had cautioned to not let the airlines bypass FDTL(flight duty time limitation)... this was sounded in Aug 2025 .
This really begs the question of authority of DGCA and lobbying(if any) by airlines..seems the parliamentary committee knew well in advance the expected behaviour of airlines...
While the head of operations ,CEO and the leadership team is responsible, it also brings to fore the arrogant attitude...we will 'manage'.
I felt that after the tragic accident of AI-171 in June early this the DGCA would be far strict and the airlines in general would be more cautious to ensure flight safety...seems Indigo holding company interglobe was more focused on revenue ,profitability and share price ...erie similarity with Boeing
• This included payouts of ?1,300 crore in FY2015, which left the company with a negative net worth of ?139.4 crore at the time of IPO filing.
• The move was criticized as promoters “taking cash off the table” before inviting public investors.
can you show me the saint in this company??