Nevrekar
10th Nov 2008, 04:11
Airline storm will be over in six months’
Capt G R Gopinath wears many hats with aplomb, be it vicechairman, Kingfisher Airlines; chairman, Deccan Aviation or head of Deccan Express Logistics. The father of the low-cost carrier (LCC) revolution in India tells Shobha John that India’s air show will go on, but only if the LCC model survives:
Did you foresee the downslide in aviation?
I had been warning against it. I had always said that for business to grow, you need to enlarge the consumer base by bringing in a model that brings in more passengers. That’s what Air Deccan did five years back. Then too, like today, there was a monopoly. Then it was between Indian Airlines, Jet and Air Sahara. Today, it could be between Kingfisher, Jet and Air India. But monopolies never work as they stagnate growth. But my LCC model of low prices and reaching out to the other India helped change the dynamics of the market by stimulating it.
Where have airlines gone wrong today?
The first mistake they did was to get together and hike fares. Naturally, occupancy dropped. They then started cannibalising each other’s passengers. But is it better to hike fares and have less occupancy or reduce fares and have full load? Airlines have brought the present crisis on themselves. The fundamental mantra in aviation is to stretch your assets to the maximum, be it planes or pilots. If you decrease flights, costs go up. It’s a vicious cycle.
What should they do now?
Ride the storm. Expand the market and optimise revenue. Plus, find the cash whichever way you can. Don’t stand on prestige. It’s a learning curve. The storm will be over in six months.
When you sold off Air Deccan to Vijay Mallya, you said it was like sending off a daughter in marriage. Has the daughter been treated badly? Will you buy it back?
[laughs] Whatever you call it, i told Mallya that he shouldn’t kill the LCC dream. Buying back Air Deccan doesn’t arise as Mallya said he won’t exit this space, so we’re working together. If Mallya kills the Deccan model, he’ll also kill Kingfisher. It’s like an eco-system. If Rahul Bajaj wants to eat at the Oberoi or ride a Merc, he’ll have to sell scooters and motorcycles to the common man.
Are low-cost airports the answer to the crisis today?
Yes. First, we need LCC terminals inside main airports before we talk of LCC airports. The government should figure out a way to have smaller airports around big cities, like in Europe. But it isn’t seized of the matter yet. Also, private airport developers got land at subsidised rates but haven’t passed on the benefit to airlines and passengers. All over the world, ancillary activities in the airport like hotels, shops, etc, subsidise the actual cost of flying. But airports here have become a real estate business and been monopolised.
Capt G R Gopinath wears many hats with aplomb, be it vicechairman, Kingfisher Airlines; chairman, Deccan Aviation or head of Deccan Express Logistics. The father of the low-cost carrier (LCC) revolution in India tells Shobha John that India’s air show will go on, but only if the LCC model survives:
Did you foresee the downslide in aviation?
I had been warning against it. I had always said that for business to grow, you need to enlarge the consumer base by bringing in a model that brings in more passengers. That’s what Air Deccan did five years back. Then too, like today, there was a monopoly. Then it was between Indian Airlines, Jet and Air Sahara. Today, it could be between Kingfisher, Jet and Air India. But monopolies never work as they stagnate growth. But my LCC model of low prices and reaching out to the other India helped change the dynamics of the market by stimulating it.
Where have airlines gone wrong today?
The first mistake they did was to get together and hike fares. Naturally, occupancy dropped. They then started cannibalising each other’s passengers. But is it better to hike fares and have less occupancy or reduce fares and have full load? Airlines have brought the present crisis on themselves. The fundamental mantra in aviation is to stretch your assets to the maximum, be it planes or pilots. If you decrease flights, costs go up. It’s a vicious cycle.
What should they do now?
Ride the storm. Expand the market and optimise revenue. Plus, find the cash whichever way you can. Don’t stand on prestige. It’s a learning curve. The storm will be over in six months.
When you sold off Air Deccan to Vijay Mallya, you said it was like sending off a daughter in marriage. Has the daughter been treated badly? Will you buy it back?
[laughs] Whatever you call it, i told Mallya that he shouldn’t kill the LCC dream. Buying back Air Deccan doesn’t arise as Mallya said he won’t exit this space, so we’re working together. If Mallya kills the Deccan model, he’ll also kill Kingfisher. It’s like an eco-system. If Rahul Bajaj wants to eat at the Oberoi or ride a Merc, he’ll have to sell scooters and motorcycles to the common man.
Are low-cost airports the answer to the crisis today?
Yes. First, we need LCC terminals inside main airports before we talk of LCC airports. The government should figure out a way to have smaller airports around big cities, like in Europe. But it isn’t seized of the matter yet. Also, private airport developers got land at subsidised rates but haven’t passed on the benefit to airlines and passengers. All over the world, ancillary activities in the airport like hotels, shops, etc, subsidise the actual cost of flying. But airports here have become a real estate business and been monopolised.