The power of Legal

I have come across 3 cases in my life where the power of legal has changed the game in a business and my positive perspective of it:

Case 1. 

Having worked in the financing of the airlines, I came across a very secret insight which very few people in the world know. The main cause of Indigo's success v/s its competition. 

To understand this, you need to understand one of the main reasons why the various airlines became bankrupt for the last 10-15 years in India.

In airline lingo, An AOG, or "Aircraft on Ground," is an aviation maintenance term for when a plane cannot fly due to a mechanical or technical problem. It is a critical situation for any airline, as it can be extremely costly and disruptive.

Go Air went bankrupt due to a supply shortage of engines from Pratt & Whitney, which were used in its fleet of Airbus A320 aircraft. When the airline ceased operations in 2023, it had 26 aircraft operational, while the other 28 aircraft were grounded due to engine issues with Pratt & Whitney.

Kingfisher airlines - Reasons for Collapse: The collapse was due to a combination of factors, including a huge debt burden and losses, a high number of grounded aircraft due to maintenance issues, and a prolonged financial crisis.

IndiGo currently has a number of aircraft grounded, a number that peaked in mid-2024 at over 70 but has been gradually decreasing.

Spicejet also have a number of AOG almost all the time.

While all airlines have AOG, the reason for the AOG is necessary to know.

If tight finances is a reason for payment to engine supplier to resolve AOGs, then the airline will struggle because of its finances and not necessarily because of the supplier.

If the engine supplier is not having much replacements immediately despite the airline being ready to pay, the airlines suffers for no fault of its.

The secret of Indigo's success comes from the agreement Indigo got into with Airbus and the engine supplier when it first made a huge purchase with them. Possibly knowing the industry risk of AOGs due to engine problems and its impact on the business and its first CEO being a lawyer by profession (Aditya Ghosh), they got in a clause to the effect that the engine supplier is obligated to replace the faulted engine with 24-48 hrs or else the engine supplier would pay damages per day of AOG.

I believe this clause didn't exist with the other airlines' agreements and the engine supplier agreed to this demand  of Indigo as part of the negotiation of the big order Indigo placed.

So, while Indigo had any engine trouble, the engine supplier had to prioritise to replace its engine with ready ones (mostly in Singapore being a hub for Asia) while the other airlines waited for their turn.

As the supply is usually very strained, Indigo flights went up in a day or 2 while the others only kept mailing and calling the engine supplier for replacement and lost their revenues till they went up bankrupt.

This is the power of the right legal clause.

Case 2:
In Banking, money and assets can be transferred by 2 ways: 

A. Transferring money through banking channels

B. 'Assigning' the asset/ monies through legal agreement

The common people don’t know this way of transfer of assets. This is somewhat similar to a gift deed.

Case 3:

Movie: The Firm featuring Tom Cruise

A legal firm traps its own key lawyer and blackmails him to keep the illegal things they do a secret. 

Now the hero as an individual has to fight back against a big firm and bring it down.

And how does he bring down the firm? After multiple attempts fail to bring the firm down, he finds a small misstep the firm keeps doing which he observes. The firm illegally overbills its clients and is documented in its records.

Sometimes, the key to success lies is in the details others oversee / cant think of.

Each of these stories / cases has left a lasting bright impression on me on how legal can be a solution to problems which others in the world don't consider.