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thank you very much for coming here mr.
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Patel it's really an honor to have you
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here and speak to us about the aviation
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sector in India globally under your
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leadership india's aviation sector has
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of course experienced tremendous growth
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as well as some ups and downs of course
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in recent times due to some external
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factors how do you see the aviation
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market shaping up both in India and
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abroad but especially do you see that
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India will buck the trend recover faster
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and really help the global aviation
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market to recover more quickly as well
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well you're right India is a major
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aviation market now it wasn't so just a
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few years ago in fact it's almost now
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the ninth largest aviation market in the
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world and it went through a couple of
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years of very high growth two thousand
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five six and seven especially we saw
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growth in the high 20s and 30s and in
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2008 the oil price rise and then
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subsequently the world recession have
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impacted aviation worldwide and in India
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too and I feel that the last quarter
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especially has been very encouraging in
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India we've seen about twenty-five
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percent growth but I don't look at it at
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that high numbers for the whole year
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maybe even a fifteen percent growth will
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be quite good and that would be in a way
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leading aviation back on the path of
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recovery undoubtedly given the
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population the economic growth that's
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projected we do expect growth and so
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this may have been a small bump with
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these various external factors you've
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obviously worked on the policy side
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quite a bit you know in terms of
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aviation infrastructure I believe that
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India's headed on a good path to really
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modernize airports air traffic control
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and so forth how do you view though
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bilateral rights for instance this has
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been one of those discussion points have
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Indian carriers benefited or been
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disadvantaged obviously competition is
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good for the consumer we all know that
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we do you strike the balance because
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that must have been one of these aspects
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which you've had to deal with very
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a critically over time you're right in
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fact one of the key areas what we work
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is on the regulatory side especially
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more than the technical regulation but
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as far as the overall sector I think it
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is only grown because we have inner way
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sought to free it off for government
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control and it has helped the Indian
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consumer usually it's helped the country
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self the economy it's helped tourism and
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that is the reason I think today you
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find that India's being recognized as an
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aviation power but that notwithstanding
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I think it's very important that we
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balance the growth in a methodical way
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we've have now very liberal aviation
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agreements with many countries so we see
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more flights of other countries coming
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to and from India we also have an Open
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Skies agreement with the United States
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first of its kind and I think that has
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also shown that we have a lot more
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connectivity now between India and the
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u.s. but of course much more will happen
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in the future but it's it's a question
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of you know balancing the needs of a
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country the local Airlines the domestic
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airlines also must have a equal level
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playing field so on one side while we've
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opened up the international skies on the
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homefront we still have a lot of I would
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say a regulation in terms of we don't
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allow foreign airlines yet to operate
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within India but I think over a period
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of time it's a calibrated approach the
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as and when we go along the road we will
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also be you know balancing and opening
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up progressively is the balance between
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low-cost carriers and the full service
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carriers the appropriate one right now
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well I think it's not a question of
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choice I think it's a compulsion all
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airlines as we've been talking earlier
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as the cost of operations the pressure
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on the eels and the shrinking customer
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base in case you increase fares so I
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think a combination of this has forced
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all airlines worldwide to look at
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cutting costs and especially the
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full service and the legacy carriers
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have not been able to reduce costs as
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you know efficiently as they would have
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liked to you know you can't suddenly
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dismantle the high costs and the old
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structures whereas in the case of the
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lower cost carriers they came in a fresh
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they didn't have to go through the
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learning curve or the pressures of you
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know having a larger organization and
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that's why they have been able to wean
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away a lot of customers even in India
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almost more than fifty five percent of
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air travel now is with the lower cost
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segment so it's happening all over the
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world is happening in Europe it's
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happening in America it's happening in
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Asia and it's happening in India so as a
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result of which I think we will have to
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see a transition in a larger percentage
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to migrating from the full service or
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legacy carriers to the low cost model
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makes sense especially given the
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distribution of our populations income
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right no and in India you see the issues
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are of travel between one side you the
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other is not more than maximum travel is
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two hours so in that kind of a situation
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domestically it makes absolute sense to
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have a lower cost model also in the near
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region like Middle East where a large
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Indian expat population is their
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distances are not more than three or
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four us so or Southeast Asia with a lot
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of travel is involved between India and
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those countries so as a result of which
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see the lower cost model in the domestic
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or the near region would be definitely
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making a lot more sense in future on the
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cost side one of the important factors
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is like you mentioned oil and fuel now
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indian carriers are disadvantaged by the
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fact that the taxes are so high on the
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aviation fuel now I know you've been
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trying to advocate for lowering this and
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this is in the state's hands to a large
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extent how do you think that can be can
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be tackled because we are operating at a
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cost disadvantage compressively others
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and that's not translating into a
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competitive advantage but a competitive
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disadvantage at this stage now I do
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agree that taxation at least on fuel is
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something
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of concern for Indian carriers and as
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the whole industry as also the ministry
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we see reason in that demand for lower
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taxes well it's not been easy so far to
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be able to convince various states
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especially because in India we have the
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states which actually collect local
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taxes and they find it as a generous way
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to make money so I don't want to comment
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on their reason but the fact is yes this
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does put a pressure and that's why one
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of the reasons why because fixed costs
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cannot be brought down or the fuel costs
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cannot be brought down there for the low
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cost model is probably being more
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successful in terms of you know trying
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to reduce costs on the other fronts and
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finally I want to turn in a little bit
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towards air india and indian airlines
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and the merger i will tell you my bias
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and that is i believe in the merger and
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I've openly done that because i believe
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the strategic compulsion is there to
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have domestic and international combined
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but obviously the challenge has been to
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integrate appropriately so i don't see
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it as a flawed decision in terms of
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doing it the question is is the
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integration too complex to ever be
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possible or can it be done in some
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structured fashion and i know you've
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been working on this their various
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committees and we see comments how can
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this be approached the implementation
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piece is successful and effective
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because i think operationally
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strategically the compulsion is just
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there i do agree that the merger as you
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rightly said is makes eminent sense it's
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not something which we decided knee-jerk
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that we need to do this I think there
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was a lot of thought process well
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intentioned well advised and what's
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actually not really gone right is that
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the two entities have slightly cultural
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differences well it's not insurmountable
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but probably a little bit of resistance
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from the people who work and what the
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organization's has led to this situation
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I don't think it is going to be
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you know impossible to solve we are
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working on it delayed though a little
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bit not as well executed as planned but
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at the end of the day I think in a year
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or two we will be able to make it a
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fully functional merger I hope so I mean
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especially with the IT platform frankly
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speaking I know that that was not
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entirely the government of India's fault
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because the provider is also were unable
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to deliver on a technical solution and
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combining and harmonizing the
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reservation systems now you've also
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launched of course this coo search a
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very public one and our understanding is
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the five shortlisted candidates are
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expats of various kinds and various
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names have been floated including people
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like voltron Maya hooba might be part of
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the mix because he's leaving lufthansa
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Singapore Airlines executives and so
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forth I don't know if you can give us a
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hint of what might be coming but I
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wanted to ask you the role of that
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person because my understanding is that
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coo will stop still operate under the
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ministry and then under Arvind Jadhav no
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at work you know no I on the first on
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the psf system I think they've sorted it
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out and by the end of this year the PSS
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integrated system will be functional so
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that is one major concern which has been
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I think addressed the other issue is
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about the CEO well see Air India is not
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directly and provide you know reporting
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to the Ministry on a day-to-day basis
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they have a board and they have been now
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given and even further impetus by giving
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an independent board of directors with
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eminent people like unen Mahendra and
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amit mitra and they will be I'm sure
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able to take decisions on their own
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government is only a shareholder and
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therefore naturally would like to know
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what's happening but on a day to day
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basis we don't want to interfere the CEO
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will bring in more professionalism while
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the CMD of course is the overall you
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know the administrator of the airline
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and
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would definitely be in the end person to
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be accountable but he needs strong
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professional hands and especially
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aviation being a complex business of
00:11:23
global business it's always nicer to
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have a professional coo and I don't know
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who's going to be eventually shortlisted
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there's a independent panel which is
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going to interview these candidates and
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hopefully a point one but I would be
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only saying this that we as government
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are very clean as shareholders also to
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be having a first-rate airline and a
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profitable airline so lets you know
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support them in whatever ways possible I
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like that attitude especially on the
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autonomy side and personally having
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travelled on the JFK to India routes I
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can see how the airline can go back to
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its glorious days because there was a
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first-rate product so especially as the
00:12:05
route rationalization is also taking
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place please think about the future
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growth of the airline in the position I
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would hate to see the airline lose the
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flag carrier or national carrier status
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which it has final question I wanted to
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ask you is on FDI in the aviation sector
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has been talked about for a while
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obviously there's a careful balance of
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the needs financially professionally but
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also protecting to some extent of giving
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equal playing fields for the local
00:12:33
carriers what is your stand on this how
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should this be done no FBI is I would
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say a fairly reasonable percentage is 49
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at the moment and I think some stage you
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know we can look at things in future but
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as of now I think 49 is a good
00:12:53
percentage of FDI and the airline side
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but in terms of aviation related like
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airport infrastructure greenfield
00:13:01
airports you can have one hundred
00:13:02
percent in mumbai delhi and the joint
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ventures of hyderabad and bangalore we
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have seventy four percent FDI so there
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are I would say many incentives for
00:13:12
cargo airlines for non scheduled
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operations we have very liberal lefty I
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regime so I think it's a calibrated
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approach and as we feel the requirement
00:13:22
would be there for more capital for
00:13:23
airlines
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we will look at it more objectively
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thank you very much I've enjoyed the
00:13:28
insights as I'm sure all the viewers
00:13:30
will also do thank you very much
