He tells Shobha John that though this happened because of too-fast growth, it's a passing phase as aviation is at take-off stage with a growing middle-class demand and great potential in tier 2 and 3 cities.
Airport charges in Delhi have been hiked greatly. What's the use of privatization if passengers are going to be burdened further?
These charges go up over a five-year period. For the last three years, they didn't . So the airport is trying to recover them now and there will be a steep rise. Meanwhile, in less than two years, user development fees will be non-existent.
Air India has been given a Rs 30,000 crore equity infusion. Will it give the much-needed impetus for a turnaround ?
AI's equity and interest rate ratio was skewed. Its interest burden should go down by Rs 1,000 crore a year with this infusion. But don't forget, this is a service industry and the customer is king. AI has to change its culture. It had an excellent reputation but we have to infuse fresh spirit. Of course, the merger of AI and IA created problems. But there will be parity in pay scales between both after implementation of the Dharmadhikari report. And no one will be laid off.
What are your plans for AI's turnaround ?
We have set stringent milestones. We cannot keep pouring public money into AI. With Rs 43,000 crore debt, no one will buy this airline. Its ontime performance has to go up from the present 72% to 90% in two years, passenger load factor should be 73% by 2015 and teams will be appointed for speedy monetization of its assets, be it property or paintings. They will decide whether to lease or sell them.
We hope to generate Rs 5,000 crore in 10 years this way. As regards fleet utilization and yield, by 2013-14 , the difference between AI and the market leader should not be less than 3% and 5% respectively. And while its employee/ plane ratio is considered high, it's similar to airlines in France and the UK.
Also, don't forget the services AI offers --ground handling and engineering MRO (maintenance, repair and overhaul) facilities. With both expected to be hived off, AI can service other airlines too.
But there are calls for AI to be shut down.
We cannot shut it down. If we did, what would happen to connectivity to the north-east ? Who would do the uneconomical routes? People don't realize the consequences of shutting down AI. This is not a free-market enterprise.
Will FDI in aviation take off or flounder like in retail?
I am hopeful. We want other airlines to invest here. The commerce ministry hasn't got any objections in this regard . FDI in retail is different as it affects far more lives than aviation does.
Detractors say FDI is being brought in to favour Kingfisher.
People said the same thing when we allowed import of ATF ( aviation turbine fuel). But which was the first airline to do so? SpiceJet. Policies aren't meant for one airline alone. Already, there is 100% FDI in cargo and 74% in non-scheduled operations. Routes will also be vetted by the home ministry, so where's the problem? We've also given licenses to eight regional airlines.
You said Kingfisher can't be closed down just because it's making losses . But shouldn't tougher action be taken if passengers suffer?
Yes, Kingfisher didn't stick to its promises twice but when the government said it won't bail it out, the airline came around. It needs capital infusion but it's for the owner to decide.
But the real reason for floundering airlines is high ATF prices and sales tax on it. If Chhattisgarh and Kerala can reduce sales tax from 32% to 4%, why can't others?
We have appealed to states but haven't got much response. We will keep at it. States should realize that reduced sales tax will increase business and tourism.
Some foreign carriers want to increase flights to India after exhausting their bilateral rights. Will India ask for similar rights?
We have given the okay for 250 new flights to countries such as Kazakhstan and in a few months, this will go up to 400. Until India exhausts its bilateral rights, we won't give more to foreign airlines. India should have become a major aviation hub by now.