 "Those who succeed forget they were children of reforms: Captain G R Gopinath")
What do you think of AirAsia’s plans to enter India with the Tata Group?
AirAsia’s entry is pretty good for customers, especially the emerging middle class. This would break the cozy cartel and offer cheaper fares. Low-cost carriers stimulate the market and expand the consumer base. For the first time in the country, the number of passengers flown year-on-year has shrunk. This is unimaginable in an exploding economy like India. IndiGo, a well-run airline, grew by cannibalising passengers from other airlines, especially Kingfisher, Air India and Jet; it didn’t grow by creating a new market. That is not sustainable in the long run. AirAsia’s entry is good for the aviation sector directly — it would provide employment to thousands of jobless pilots (estimated at 5,000), engineers, technicians, air hostesses, ground-handling agents and ancillary industries such as maintenance, repair and overhaul units. It is also good for the economy, especially in pushing investments to interiors. New airlines, especially low-cost carriers, would open up new, unconnected cities and new city-pairs. It would also boost tourism and generate jobs in the unorganised sector, with a ripple effect.
To what extent can AirAsia be a low-cost model in India?
It won’t be easy. Aviation is tough anywhere in the world. But it is probably the toughest in India. Whatever India may not have, or whatever the odds, if a product or service is designed to cater to the emerging, price-sensitive middle class and priced within their reach, India has an inexhaustible market. But it needs innovation, ruthless efficiency and high asset utilisation. Given the antiquated rules and regulations, dating back to 1937, the fact that the government lacks a long-term strategic vision for aviation, arbitrariness and discretionary decision making on policy issues, allocation of infrastructure in monopoly airports and the inherently flawed public-private airport policy, it is extremely tough to run an airline, especially for low-cost carriers. But it is an entrepreneur’s job to work with the government without a personal agenda and cynicism, and help bring reforms that result in a robust and vibrant aviation sector.
With Indigo, SpiceJet and GoAir on a strong platform, how can AirAsia make a mark?
Anyone in business or planning to enter a new world must be ready for competition. It brings out the best in people and organisations. And, in its final outcome, it is 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. They lobby to prevent new entrants, as was the case when the Tatas wanted to enter the fray. Entrepreneurs break the status quo. The government must create an ecosystem conducive to competition and equitable growth. Privatisation? Yes. Cartelisation? No.
While there is immense potential for air traffic, the problems Kingfisher is facing must be a concern. Lessors are saying they wouldn’t lease aircraft to Indian operators easily.
After the collapse of Kingfisher Airlines, the inability of lessors to repossess their aircraft from the Airports Authority of India has cast a shadow on Indian aviation. The ministry, being a stakeholder in all airports, including private ones, must intervene. Can one vendor or service provider seize the goods of another for default by a borrower common to both? Can unpaid employees take possession of aircraft and demand salaries from the lessor? Based on this logic, can statutory authorities take possession of the assets of a supplier because the buyer hasn’t paid taxes? This is an unwise and illegal move by airports. In the long run, this would affect airports, as their action would impede growth in aviation. This is because lessors would be reluctant to lease to India or make leasing 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.