Institutional Investor Advisory Services (IiAS), a proxy advisory firm, has said IndiGo must review its board structure after its failure to meet new government rules led to the cancellation of thousands of flights this month.
The firm, which criticised the IndiGo board’s “deafening silence” on the crisis a few days ago, put out another note raising concerns around disproportionate board representation of promoters and lack of transparency around the promoter group’s influence over the board. It also highlighted the overlap between the responsibilities of the promoter-managing director Rahul Bhatia and IndiGo CEO Pieter Elbers
IndiGo, India’s biggest airline with a market share of nearly two-thirds, has cancelled nearly 5,000 flights since early December and left thousands of passengers stranded after new rules that increased pilot’s rest period and reduced their night-time flying came into effect. The cancellations prompted the civil aviation ministry to summon CEO Pieter Elbers seeking an explanation. The Directorate General of Civil Aviation (DGCA) also summoned him and other senior executives, and the DGCA recently sacked four flight operations inspectors who were to oversee the airline's resource management.
The advisory issued the note after the IndiGo Chairman Vikram Singh Mehta addressed stakeholders, acknowledging the need to improve operations.
Apart from co-founder Bhatia and Mehta, IndiGo's board includes well-known personalities such as Pallavi Shardul Shroff, managing partner of law firm Shardul Amarchand Mangaldas; retired Indian Air Force Air Chief Marshal BS Dhanoa; former SEBI chief M Damodaran; and retired bureaucrat Amitabh Kant. Other directors on its board are Michael Gordon Whitaker, Gregg Albert Saretsky and Anil Parashar, according to IndiGo's website.
Under its Articles of Association, IndiGo's board was set up to have 10 directors: five non-executive, non-independent directors nominated by the Rahul Bhatia-led IGE Group (which includes the promoter entity InterGlobe Enterprises Ltd), one director nominated by the Rakesh Gangwal-led RG Group, and four independent directors. The IGE Group also has the right to appoint the managing director, CEO and the president of the company.
On the disproportionate board representation of promoters, the IiAS pointed out that the IGE group will have considerable sway over the board composition even if its shareholding falls below 5% from the current 35.7%. It can continue to nominate 50% of the board and appoint key personnel.
“While board representation rights for promoters or large shareholders are not unusual, such rights should be proportionate to shareholding and with a cap. These rights should lapse once ownership falls below a threshold. This ensures no shareholder exercises board control disproportionate to their stake,” it said.
It noted that the RG Group, whose shareholding has declined from 37% to 5.85% as of 30 September 2025, still retains the right under the AoA to nominate one director. The group currently doesn't have any representation on the nine-member board.
The advisory also said that while the number of independent directors on the board may be in line with the law, it is not in alignment with global best practices. IndiGo’s AoA currently envisions only 40% independent directors.
“Indian boards are compliant with regulations if one-third of its members, including the chair, are independent. However, we believe at least half of the board [should] be independent to balance control and strengthen oversight – especially where controlling shareholders or promoters have board nomination rights,” the IiAS said.
Also, as the note added, it is not clear how many of the non-independent directors have been appointed by the IGE Group. This makes it difficult to assess “the true extent of IGE's influence”.
On the overlap of Bhatia’s and Elbers’ roles, the note added that it is not clear how the responsibilities have been divided between the two. This is particularly relevant given the heat Elbers is facing, having been summoned by the civil aviation ministry to explain the fiasco.
