India’s aviation industry is often a graveyard of broken ambitions. Kingfisher went bust. Jet Airways stalled on the runway. Air India had to be rescued. And yet, amidst all the turbulence, one airline not only survived but soared. And that airline is IndiGo.
With over 2,200 daily flights and more than 430 aircraft, it holds a market share of over 60%. Its parent company, InterGlobe Aviation, is valued at ₹2.2 lakh crore and clocked over ₹7,250 crore in profits in FY25, while its competition bleeds cash. If there was ever a golden goose in Indian aviation, this was it.
But here’s the thing. One of its co-founders, Rakesh Gangwal, recently exited the company by selling the majority of his stake. Once holding over 35% of IndiGo, Gangwal has steadily sold down since 2022. In May 2025, he offloaded a ₹6,800 crore block. And then in August, another 3.1% for around ₹7,020 crore, bringing his total shareholding down to just under 5%. So if you look at it, his exit had been a methodical unwinding.
Which begs the question: Why is Gangwal walking away?
At first glance, you might think founders often cash out after a long run. But dig deeper, and you’ll find something more complicated. That at the heart of this problem lies a bitter moment between the two founders. And to understand that, let’s take it from the top.
IndiGo’s success story began in 2006 with Gangwal and Rahul Bhatia at the helm. Gangwal, a former United Airlines executive with deep operational experience, handled the back end. Bhatia, who ran InterGlobe Enterprises, focused on strategy and finance. Together, they ran a tight ship: low costs, high discipline, no frills. And by the time IndiGo went public in 2015, it was already India’s largest airline.
But despite their shared success, tensions began to build.
Gangwal accused Bhatia of breaching corporate governance norms. He claimed that Bhatia, through his group company InterGlobe Enterprises, exercised disproportionate control over IndiGo’s affairs. He raised red flags about related-party transactions, which are business dealings between IndiGo and Bhatia-linked firms that were not subject to sufficient board scrutiny, according to Gangwal.
In 2019, Gangwal raised these concerns. He also criticized the lack of independence in board appointments, suggesting that Bhatia could push through decisions without meaningful checks. This included major moves like leasing, vendor contracts, and operational tie-ups, areas where Bhatia’s influence allegedly went unchallenged. According to Gangwal, this was a risk to shareholder value.
Soon, he raised these concerns with SEBI over shareholder rights, making the dispute public. And the allegations centered on financial opacity and concentrated decision-making, which he believed endangered the company’s long-term health.
Unable to reconcile their differences internally, the founders eventually took their battle to the London Court of International Arbitration (LCIA) in 2019. Interestingly, the arbitration was first initiated by Bhatia’s InterGlobe Enterprises, but Gangwal’s group countersued for remedies of its own. And after nearly two years of back-and-forth, the tribunal delivered its final award in September 2021, and this time, Gangwal had reason to feel vindicated.
The tribunal ordered that specific (RoFR) clauses in IndiGo’s Articles of Association (AOA), ones that essentially gave each promoter veto power over the other’s share sale, be removed. These provisions, born from their earlier shareholders’ agreement, had effectively locked both founders into a stalemate, preventing either from diluting or monetizing holdings without the other’s consent. The arbitrators ruled that these restrictions be scrapped, paving the way for a more open and market-aligned structure.
Following the order, IndiGo convened an Extraordinary General Meeting in December 2021, at which shareholders voted to amend the AOA and formally remove those veto clauses.
And with this change, both founders’ shares became freely tradable.
It was a landmark reform, not just because it allowed Gangwal to sell his shares freely, but because it sent a strong message to investors: no single promoter could ever again hold the company hostage over ownership rights. Yet, even after this structural fix, Gangwal believed that deeper governance issues still lingered, from concentrated control to conflicts of interest. And that’s when he decided to step away.
By February 2022, Gangwal had resigned from the board and announced his intention to gradually exit the company over the next five years.
Since then, his exit has unfolded in stages. Each sale is carefully timed, often through block deals, and mostly routed through the Chinkerpoo Family Trust. The latest sale in August 2025 was executed at ₹5,808 per share (about 4% lower than the market price).
But for Gangwal, it seems the decision wasn’t driven by price. It was principle.
Even with IndiGo flying high, he remained unconvinced that the company’s governance structures were sufficiently reformed. For him, the core issues remained unresolved:
- Centralized control,
- Conflicts of interest, and
- Weak oversight.
In his view, while the arbitration settled ownership disputes, it didn’t fully address the cultural and operational imbalances he had long warned about. The board was larger and more independent, yes, but true independence, he felt, was still lacking.
And when you no longer believe in the pilot, it doesn’t matter how well the plane is flying.
That’s what makes this exit so significant. From holding 36.6% in December 2021, he now has a little less than 5% by mid-2025.
And this wasn’t triggered by poor financials or weak market positioning. It stemmed from a breakdown of trust and alignment at the top. And that’s a lesson that extends far beyond aviation.
Great companies aren’t just built by profits or market share. They’re built by partnerships. And those partnerships are held together not just by equity, but by governance, transparency, and mutual respect.
Gangwal’s exit may seem quiet. But it’s a reminder of how loud silence can be when it comes from the cofounder of India’s most successful airline.
So, here’s the question: If building a great company requires trust, what’s left when even the founders stop believing in each other?
