Why can’t Indians be appointed as CEOs in large Indian carriers, asks industry

Management circles in the world’s third-largest domestic aviation market are abuzz with the hiring of expat chief executive officers (CEOs) by two of India’s leading carriers. Within days of Air India announcing the appointment of Campbell Wilson as the national flag carrier’s CEO & MD, the country’s largest airline IndiGo left everyone surprised by nominating Pieter Elbers as its next CEO.

Both have impressive credentials. Wilson has over two decades of experience in both full-service and low-cost models. He was last with Singapore Airlines’ low-cost subsidiary Scoot. Elbers, who has served for 30 plus years at the world’s oldest operating carrier KLM Royal Dutch Airlines, succeeds Ronojoy Dutta. He is expected to take charge by October 1.

The appointments are subject to regulatory clearances by Indian authorities.

Meanwhile, the two big-ticket appointments have led several within the industry to ask whether there is a dearth of local talent for the role?

“The general perception is that limited talent is available in India. Even Jet Airways in its earlier avatar always hired expat CEOs or COOs as they didn’t have many options available locally. So, this is basically a function of choice. In the US and other markets, the available talent pool is quite broad,” director at global executive search firm, EMA Partners, K Sudarshan told Business Today.

In the early 1990s, the entry of multiple private airlines following the repeal of the Air Corporation Act, 1953, and the government’s Open Skies Policy did lead to a shortage of senior-level airline executives.

“The mindset here was that an expat is better as he can get network advantage from the world over as well as manage support from global bodies like International Civil Aviation Organisation (ICAO) or International Air Transport Association (IATA) as and when required,” explained former head of human resources at Jet Airways, Dr. Narayan Hariharan.

Hiring Indians for C-suite roles

But 30 years on, are Indian carriers trying to send out a message that the country has been unable to create a sufficiently large talent pool of highly skilled managers to take over as the next line of C-suite executives, asked many within India’s hyper-competitive airline industry.

They alleged that the new appointments by two of the country’s largest carriers proved there was something fundamentally wrong with succession planning within the industry.

“It is said that expats bring their connections to the airline. What additional connections do they bring to Indian carriers when all the major original equipment makers (OEMs), passenger service systems (PSSs) and lessors are common for everyone within the industry,” asked CEO of soon-to-be-launched regional airline IndiaOne Air, Arun Kumar Singh. “Business is done based on not just interpersonal relationships but also a strong business acumen.”

But that brings to mind a basic question. What about people of Indian origin climbing to CEO level positions at companies such as Alphabet, FedEx, IBM, Microsoft and Adobe? Shouldn’t India as one of the world’s fastest-growing economies also become a magnet for the best talent from all over?

Aviation industry insiders countered this argument by asserting that not a single CEO at any of the US corporations cited above was ever picked up from their living rooms in India. They had to undergo the rites of passage in terms of applying for an H1B visa, green card and finally citizenship as they climbed up the value chain within their organisations.

“They were appointed CEOs only when the organisations felt they were ripe and ready. However, Indian companies often offer foreign nationals leadership roles upfront, without having to go through a government-regulated visa programme as is often the norm in other major global economies. Even countries of the Middle East that were for long dependent on expat managers, now have a succession plan ready for their businesses,” declared IndiaOne Air’s Singh.

Develop internal talent

Following the boom in domestic aviation in the 1990s, the country produced extremely competent engineering and operational heads, but always lacked individuals in core cutting cross-functional areas like leasing, network planning and commercial to negotiate terms with manufacturers and lessors. However, over time, the nature of the competencies required to fill up leadership positions has undergone significant and dramatic changes.

“Yes, talent is available in India and can be nurtured to meet competitive levels in a cutthroat industry like aviation. Managers of the future need to have inter-functional experiences at board levels and also the networking skills of the highest standards,” opined Dr. Hariharan. “We certainly have Indian expats in foreign carriers in CXO positions. However, the capabilities for aatmanirbharta (self-reliance) are yet to be internalised. The situation may change in the next few years.”

The example of former IndiGo president and whole-time director Aditya Ghosh is often cited by the industry in this regard. Ghosh is often credited with having played a major role in making the low-cost carrier (LCC) one of the most successful airlines globally. Ghosh has now partnered with stock market bull Rakesh Jhunjhunwala to launch LCC Akasa Air.

“It is time that Indian carriers start developing talent internally. With the entry of Tatas and in general more private sector participation in aviation, this process may get a kickstart. In the next five to seven years, you will get to see a lot more Indian CEOs in the space,” emphasised EMA Partners’ Sudarshan.

Indian aviation firms should, thus, develop leadership by rapidly exposing existing personnel to all aviation functions. A practice that some of the world’s biggest airlines like Singapore Airlines (SIA) and Cathay Pacific have been following for years. Incidentally, it was the benchmarks established by Air India in areas like employee training and customer services that had deeply influenced SIA and Cathay founders.