On the
sidelines of the recently concluded 68 {+t} {+h} annual general meeting of the
International Air Transport Association in Beijing, Mr Sudheer Raghavan, Chief
Commercial Officer, Jet Airways, spoke on a host of issues with Business
Line.
Excerpts from
the interview:
Why have fares
gone up?
We have been
asking ourselves this question. Fares went up in late April, May and are
holding there.
I think there
is realisation among carriers operating full schedules that what happened in
the past is unsustainable. You saw Spice announce its results and it was not a
pretty picture. With a very small international footprint it announced a loss
which was not too far from ours.
There is a
general appetite for airlines to go down the route of profitability as opposed
to chasing market share because market share does not walk to the bank.
There is no
appetite among the banks to lend money. So at the end of the day the only route
to survival is through profitability. This realisation, though late, has dawned
on most carriers. There is an attempt that every one adopt a responsible
attitude on pricing.
Have we raised
fares since Kingfisher went down? The only way to satisfy yourself is to look
at the range of fares that were supplied to DGCA (Director General of Civil Aviation)
last year and the range supplied this year; it has not changed.
What has
changed probably is that there are less fare buckets.One airline has shrunk
capacity, so even if demand stays the same passengers have to find seats from
existing carriers at a higher bucket level.
That has
happened. And that has helped increase yields. So fares have gone up vis-à-vis
last year but not by 25-30 per cent.
Are you looking
at another hub in Europe?
As a carrier
that is growing we have to ask the Government to fly to various places. One was
Munich. We also asked for a few other places.
Does that
signal our immediate desire to shift the hub? Shifting a hub is not like
changing shirts. It is a massive enterprise. And we have to do it sensitively
as there is a lot at stake. If we want to shift a hub it has to be preceded by
a whole host of studies. Asking for traffic rights to fly to a place does not
signal a desire to change a hub.
In Brussels we
can do smooth seamless transfers. For us to move a hub we have to find some
place that allows all this. Name me a place where you can take six wide-body
aircraft at the same time and park them next to each other so that passengers
can transfer?
So it is off
the radar as of now.
Yes. We are
asking ourselves why would we want to move our hub. It will be a disruption for
the passengers who are used to it. There must be significant gains if we move a
hub.
But at the same
time we need to fly to more places in Europe because there is a strong demand
within Europe and India. Any growing airline needs to grow its network.
If we aspire to
be a strong global carrier with Indian roots, can we be satisfied by flying
just to London and Milan? We have to go to all the major financial and economic
centres of gravity of the world.
But given the
slowdown, does that make sense?
When you grow
depends on economic cycles. In the last two or three downturns the recovery has
been V-shaped.
In the last two
downturns everything plunged but picked up fast. For an airline we need to
recognise these trends and plan ahead.
What kind of
international versus domestic revenue are you looking at?
Currently it is
58 to 42. My view is that future growth is still in domestic. We will not say
let us shrink our domestic operations and put these assets in the international
market.
No doubt
despite the high growth rate in the Indian domestic market very few people are
profitable, but it is still the market with one of the highest growth
potentials in the world. Under no circumstances will we ignore our domestic
operations as that is our roots.
India feeds a
lot of global aviation. But it is not Indian carriers who do so.
I can go and
grow internationally but our distinct advantage as Indian carriers is to carry
Indian passengers from every corner of the country on to our international
footprint. The opportunity to grow internationally will always be there.
Airport costs
are also going up?
We work at
cross purposes. We have a great geographical location and in no way are we
inferior to, say, Singapore. India and Dubai have almost identical positions.
So if you have
an Inc strategy then $17 billion worth of traffic flew from west to east India
and vice versa in 2010. Guess how much Indian carriers got despite the
Government being able to negotiate for the country’s incredible wealth of
traffic rights? Less than 1 per cent.
We want to
become a global aviation hub. For that we need strong Indian carriers who are
able to use the traffic rights that the Government has secured.
We need to have
airports that take a long-term perspective and work with airline partners to
bring passengers from various parts or through hub airports and take them on. The
reason Dubai and Singapore are successful is because there is a national agenda
to make them global aviation hubs.
How will India
Inc do this?
This cannot be
done by an airline alone. There must be an India Inc agenda and it has to be
driven by the Government.
ashphadnis@thehindu.co.in
The reason Dubai and Singapore are successful is because there is a
national agenda to make them global aviation hubs. SUDHEER RAGHAVAN, CHIEF
COMMERCIAL OFFICER, JET AIRWAYS
