A new revival plan of “Air Deccan”- An exclusive interview with Captain G.R. Gopinath

An exclusive interview with Capt G.R. Gopinath, founder of India's first low cost airline, Air Deccan for the show Bottomline, airing on Headlines Today. Below are the views:

Q. Captain Gopinath, your supporters say you are a visionary who dreams big, but is often let down by investors, while your critics say you are a failed entrepreneur who comes up with good ideas you cannot sustain. But most people would agree that you never give up. What do you say to that?

A. I think perception is important and the truth is always somewhere in between. This company for example whose hangar you are sitting in was incorporated in 1995. It took me three years to get the licence. I started here with a tent and one helicopter as a small company but today it is the largest general aviation company in India to cater to infrastructure, high net worth individuals, and corporate houses. We also maintain 60 third party aircraft. We have been here for a very long time. I am a dreamer, as you said. But as I dream, I design. It has also sometimes led me to failures. There is also a burning optimism in me.

Q. And you haven't forgiven Vijay Mallya since…

A. Yeah, I haven't forgiven him because he killed my airline and I think he killed himself. Because the writing was on the wall…the future was in low cost. The market cap of Deccan - which is normally the yardstick - before the merger with Kingfisher had reached $1.2 billion. So every investor made mountains of money, so Air Deccan was not a failure from monetary point of view, and neither was it a failure from the point of view of the model because the dream lives on.

Q.Let me quote another Jet Airways employee about you: "He is the person who killed Indian aviation, bringing to India the concept of low cost flying without the backing of infrastructure. His principle of selling well before cost sent the entire industry into the red and the industry has not recovered since".

A. I think it's too elementary to respond to. It's like saying the Maruti 800 is not the right car for this county but the only the Benz is the right car or the Ambassador is the right car. Indigo is there, Spice is there, Go Air is there…even today you can buy a ticket on a Bangalore-Delhi flight, a week in advance, for Rs 5,000 as against Rs 12,000 a decade ago when salaries were one-third and oil prices were one-third of what they are today. And Indigo is in profit. Jet, 70 per cent of the aircraft of Jet are in the low cost model. All over the world it is low cost which is (flourishing).

Q. What is it that you are going to do that could potentially destabilize the sector…?

A. My idea is not to destabilize but to create a new market. Take TV channels. Imagine if someone wants to start a new channel and the existing channels go and say to the government: 'Look there are already 400 channels, we are already losing money, don't give one more licence because he is going to destabilize TV channels.' What should the government do? Should it protect the existing channels or should it protect the consumer? I am only going to do what any sane businessman does. I made mistakes last time…my mistake was selling under pressure from my investors. I was new. I was not honed in the skills of negotiating with hawkish investors just out to make a quick buck. But it is a lesson in life I have no regrets.

Q. You have a regional airline licence with you…

A. I have a regional airline licence but my investors are saying that if I have a regional airline there will be a conflict of interest. We will have one airline in which we will have the regional as well as the one-equity structure where one will feed the other.

Q. So what you are saying is another national airline like Air Deccan, the revival of Air Deccan…

A. (Laughs) Revival of the dream. As you know every investor made money with me. I don't think they have made money with any other airline. No investor has made any money with any other airline except Air Deccan. So people are ready to invest because I took care of investors' interests. The airline was clean, transparent and it was a national, people's airline.

Q. I can almost see the tag line for the new airline: the people's airline…as opposed to the 'simply fly'.

A. You can see that the most profitable airlines of the world are low cost airlines. Look at Ryan airlines, with 290 aircrafts, 75 million passengers…with lowest fares in the world and the highest profits.

Q. How big will this be when you launch in January or February?

A. We will obviously launch small we will ensure that we are in profit. I am not an NGO…you know some crack-pot said that I am selling my tickets below cost… nobody does that. It is an art and a science to sell tickets and fill the plane… some tickets go below cost, some go above cost… that is to stimulate the market. Even yesterday I came on one of the airlines; it had only 60 per cent occupancy. Seventy seats gong empty. It's a crime to fly planes empty. I don't think my investors will allow me to take the money and burn it because I want to kill Jet Airways. No, that's not the aim. The aim is to build a robust airline for the country which this country needs. And I'm sure all of you are going to root for it. 

India Inc says 'jet set go' to fractional ownership

Air also has a decent chunk of corporates from the energy, oil and gas and textile sectors who have membership with them. The cost of such flying could be anything between Rs 60,000-Rs 3, 00,000 for an hour.

Claims of aviation companies that corporates prefer fractional ownership of aircraft can be corroborated with a recent report authored by Ketki Mahajan, research associate, aerospace and defense practice at Frost & Sullivan which states, India is one of the strongest markets for private jets with strong economic growth, expanding business interests and increasing number of billionaires.

The report further said that the private jets market in India constitutes 12% of the global market and is bigger than Asian markets in China and Japan. India has the maximum number of private jets in Asia, around 140 against China's 93 and Japan's 76; this is expected to double by 2020.

How Kingfisher can turn around its operations – An exclusive interview with Kapil Kaul, Centre of Asia Pacific Aviation

In an interview with CNBC-TV18, Kapil Kaul of CAPA presents his views on how Kingfisher could turn around its aviation business:-

Q: What is your view on the recent turn of events where the Kingfisher management has assured the employees to pay the employees three months salary and finally employees seemed to have boxed those assurances for now?

A: I don't think that the employees have any option. Getting three months salary from no salary three weeks backs; is a good beginning. If the employees don't come into the game then there will be no future at all. I believe that the employees were insisting for four months salaries, but if the management has agreed to give three months salaries then they will be in a position to present a credible plan to the DGCA at least to start with five aircrafts.

Q: KFA is sitting on mountain of debt; lenders are waiting for the company to clear their dues, only seven aircrafts are airworthy. What kind of credible plan do you present in this context?

A: Credible plan means to have five aircraft operational which is required to keep his licence intact. Credible plan for a turnaround is all together a different ball game. The company requires a minimum USD 600 million immediately to start a revival plan and the balance USD 400 million needs to come in the near term.

Q: Do you believe that DGCA will agree to sign up to lift the suspension given the fact that they are only going to do enough to keep that licence condition afloat. Do you believe given the fact they have already seen their licence being suspended the DGCA is going to go easy?

A: If the airline has five airworthy aircrafts, sufficient cash to maintain those aircraft, have employees on board then the suspension can be revoked. Earlier, the question was that the employees were not coming on board, so the operations were suspended. Turnaround of Kingfisher is a different ball game altogether because unless and until the promoted capitalizes to the tune of USD 400 million there isn't any game.

Civil Aviation minister to propose ATF under declared good category

In an exclusive interview with IANS, Civil Aviation Minister, Ajit Singh said:  “High price of aviation turbine fuel is the biggest issue. We need to rationalise it. I have already written to the petroleum minister and I will also meet him in a couple of weeks," said Singh, referring to a proposal to notify this fuel as a declared good.

Once a product is listed as a declared good, a uniform sales tax is payable on it. In the case of aviation, airlines will have to pay a four percent sales tax across all states, as opposed to a wide fluctuation of 3?34 percent. Oil regulator will also be in a position to keep a check on prices.

At present, aviation fuel in India is nearly 50-60 percent dearer than in countries such as Thailand, Singapore or the UAE, due to the additional 3-34 percent sales tax imposed by states. This pushes the cost of operations by close to 30 percent.

Commercial aviation in stake, regional connectivity on a boom

Despite the current turbulence in India's commercial aviation space, the government sees robust growth ahead if airlines reduce tariff, induct small aircraft and connect cities beyond metros for which a policy will be announced soon.

In an exclusive interview with IANS, Civil Aviation Minister- Ajit Singh showed interest in expanding connectivity to regional cities:-

·        We need more connectivity to smaller cities. There is also the need to build low cost airports at these places. This will surely encourage a growth in passenger traffic.

·        Tier II and Tier III cities are the ones that are showing rapid economic growth. These are the places where the aviation service must improve.

·        According to the minister, even though India's overall economic growth slumped to around seven percent in the past few years, the domestic commercial aviation business continued to log a robust growth of over 15 percent, notwithstanding a dip in the past eight months.

·        As a result of this growth, India's metros are now well connected. The need now is to promote this kind of growth in smaller cities, and that will be our main focus.

·        For this, we will soon announce a major policy for regional airlines. We have already hired a consultant for this.

·        Airlines must induct small aircraft that can land on short runways, as only 90 runways in the country can handle jet operations. In fact, many out of those 90 runways are non-operational. This leaves a gap-how to connect places which have shorter runways. Airlines are in touch with the manufacturers of small aircraft that can land there.

Spain (Europe) to set up its base in the upcoming aerospace park at Bangalore

The European nation is keen on a presence in Bangalore as it views the city as a research and development hub in aerospace technology in India

One of the biggies in the aerospace industry, Spain, is looking at setting up a base in the IT city. It is eyeing the upcoming aerospace park next to Bengaluru International Airport (BIA) at Devanahalli.

The state-of-the-art 985-acre facility is being developed by the state industries and commerce department. It also has a 252-acre Special Economic Zone in its premises.

The aerospace park has already got investors and project proposals from HAL, Jupiter Aviation, Dynamic Technologies, Centum Electronics, AMADA, BEML, Wipro, Tyco and Aero Electronics Private Limited.

 Surbhi Sharma, honorary consul of Spain, told Bangalore Mirror, “With Bangalore being the centre of R&D in aerospace, Spanish companies’ priority would be to set up a base here. Spain is in the forefront in aerospace industry and its first choice of investment in aerospace sector would be Bangalore.’’

 Bangalore Aerospace Park is targeting investments up to $5 billion dollars spread over the next nine years. The Karnataka government is banking big-time on this mega-project as the aerospace industry is the highest employment multiplier. “Spain is an important part of Airbus manufacturing process and also a strong EADS player”.

Air India cancels 18 more flights to Mideast even as minister assures normalcy

Barely a day after Civil Aviation Minister Ajith Singh promised to restore the cancelled Air India and Air India Express flights from Kerala, Air India announced cancellation of 18 flights to Middle East from Trivandrum International Airport.

The airline has cancelled nine flights from Trivandrum to Dubai, six to Sharjah and three to Muscat till October 12, according to Air India Trivandrum station manager SSG Jacob.

He said that the passengers who booked tickets in these flights were being informed through phone.

The official said that the airline had also made alternate arrangements to carry the passengers to their respective destinations.

Majority of the passengers will be accommodated in the flights on the next day.

Jacob said the cancelled flights will be restored after the completion of the first phase of Haj operations.  The airline is preparing a new schedule in this regard.

It will be operating flights from October 12 according to the new schedule.The cancellations are due to diversion of flights for Haj operations. Jacob said two flights operated from Trivandrum to Gulf destinations were diverted to Lucknow for carrying the Haj pilgrims. Ajith Singh had promised to restore the cancelled flights and not to cancel any further flights in the Kerala-Gulf sector following huge protests from various quarters over the abrupt cancellation of the Trivandrum-Sharjah flight on Saturday.

He had given an assurance in this regard to member of parliament from Trivandrum Shashi Tharoor, who had pointed out that the frequent cancellation of flights were causing hardships to hundreds of passengers.

Thousands of passengers were left in the lurch as the airline cancelled as many as 168 flights from the three airports in the state to various countries in the Gulf in the last one month.