Crisis at IndiGo Airlines
The crisis at IndiGo serves as a quintessential example of a multifaceted failure in the corporate sector, akin to previous crises like Kingfisher Airlines and Infrastructure Leasing and Financial Services. This situation exposes chronic weaknesses in Indian corporate governance at multiple levels, including executive management, the board, and the sector regulator.
IndiGo's Operational Background
- At its peak, IndiGo operated over 2,300 flights daily to 140 destinations.
- The airline's success was largely due to its focus on on-time performance and cost management.
Flight Duty Time Limitation (FDTL) Rules
- The Directorate General of Civil Aviation (DGCA) introduced new FDTL rules in January of the previous year.
- These rules were a significant shift for any domestic airline moving towards 2025.
- IndiGo had over a year to prepare its pilot recruitment program to align with the new rules.
Management and Board Oversight
- IndiGo's Annual Reports for 2023-24 and 2024-25 failed to mention the new FDTL rules, showcasing a lack of foresight in addressing potential operational challenges.
- The board, comprising experienced professionals, did not adequately question the management on planning for the new FDTL rules.
- A crisis management group was established by the board, but not before significant damage had occurred.
Regulatory Role of DGCA
- The DGCA monitored compliance with new FDTL rules, yet IndiGo did not highlight issues even by December 1.
- Despite over 1,200 flight cancellations in November, regulatory action was delayed, leading to a temporary exemption for IndiGo.
- This leniency has raised questions regarding regulatory objectivity and fairness, especially towards compliant airlines.
This overall scenario indicates widespread governance failures, bringing to light critical issues within India Inc's corporate governance framework.