Those who succeed forget they were children of reforms: Capt Gopinath

Q&A with an aviation expert

Exactly a decade after Capt Gopinath pioneered the low cost aviation  model in India during 2003, AirAsia along with the Tata Group is planning to start their venture in India. The going may not be easy for AirAsia given the complexities an airline has to wade through in India. In such a situation, Gopinath shares his views to Raghuvir Badrinath of Business Standard on how the events may span out. Excerpts:

What do you feel about AirAsia's plans to enter India with the Tata Group?

Entry of AirAsia is pretty good for the customers especially for the emerging middle class. They will break the 'cozy cartel' and offer cheaper fares.  True low cost carriers stimulate the market and expand the consumer base. For the first time in the country year on year total passengers flown have shrunk. It is unimaginable in an exploding economy like India.

Indigo airlines a well run airline grew by cannibalising passengers from other airlines especially Kingfisher, Air India and even Jet, but not by creating a new market. That is not sustainable in the long run. And moreover, entry of AirAsia is good for aviation sector directly.

It will provide jobs to thousand of jobless pilots (estimated 5, 000 pilots), engineers, technicians, air hostesses, ground handling agents and ancillary industries like MROs. It is good for the economy as well especially in pushing investments to interiors. New airlines especially LCCs will mean they will open up new cities that are unconnected, and new city-pairs. It is particularly a big boost to tourism and will generate jobs in the unorganised sector with a ripple effect.

To what extent AirAsia can be really a low cost model in India similar to the one you pioneereed?

It won't be easy. Aviation is tough any where in the world but probably toughest in India. Whatever India may not have or whatever  be the odds, India has an inexhaustible market, if a product or service is designed to cater to the emerging, price sensitive middle class and priced within their reach. That needs innovation and ruthless efficiency and high asset utilisation.

Given the antiquated rules and regulations dating back to 1937, lack of a long term strategic vision for aviation from the government and arbitrariness and discretionary decision making on policy issues and allocation of infrastructure in  monopoly airports and inherently flawed public private airport policy, it is extremely tough running an airline—more so an LCC. But it is as much the job of an entrepreneur to work with government without personal agenda and cynicism  and help bring in reforms that results in a robust and vibrant aviation sector.  

With Indigo, Spicejet and Go Air on a strong platform, how do you think, AirAsia can differentitate?

Any one in business or planning to enter, in the 'new world' must be ready for competition. It brings out the best in people and organisations. And in the final outcome good for the people and the country.

But the tragedy is those who succeed forget they were children of reforms and  how they reached there in the first place and lobby to prevent new entrants as it happened earlier when Tatas wanted to enter the fray. Entrepreneurs break the status quo and the government must create a conducive ecosystem for competition and equitable growth. Privatisation ? Yes ! Cartelisation ? No.

While there is immense potential for air traffic, problems which Kingfisher is facing must be a issue...in the sense the aircraft lessors are saying they will not easily lease aircraft to Indian operators?

The inability of lessors to repossess their aircraft which are held by Airports Authority of India consequent to the collapse of Kingfisher Airlines has cast a shadow on Indian aviation and the ministry must intervene being a stake holder in all airports including the private ones.

Can one vendor or service provider seize the goods of another for default by a borrower common to both? Can unpaid  employees tomorrow take possession of aircraft and demand salaries from the lessor? By same logic can statutory authorities take possession of assets of a supplier because the company the buyer of goods has not paid its taxes?

This is an unwise and illegal move by airports and in the long run will affect the airports also as their action will impede the growth of aviation as lessors will be reluctant to lease to India or make it prohibitive. It may however be easier for AirAsia as they are established. But it is not AirAsia's or Tata's  credibility that is in question. It is the difficulty and unpredictability of doing business in India that may impact lease rates.