00:00is the business model of a private airline under siege and we've seen this over the years.
00:04Several Indian airlines have seized operations over the years due to financial distress,
00:08mergers, insolvency. Remember Jet Airways, Jet Light, formerly Sahara Airways operated from
00:14the mid-90s to 2019, shut down heavy debt, intense fare wars. Naresh Goyal was even
00:21prosecuted. Air Deccan operated from 2003 to 2008, was merged with Kingfisher Airlines
00:26which itself collapsed in 2012 under a massive debt exceeding 9,000 crores. Vijay Malia is out
00:32of the country, who was the promoter. Paramount Airways also folded due to debt. Go First earlier,
00:38known as Go Airlines, operated from 2005 to 23, also entering insolvency. Smaller airlines,
00:45MDLR, Air Pegasus, Air Costa, Zoom Air, all have shut down. Air Asia and Vistara ended operations,
00:51were merged into Air India more recently. So, it hasn't been, and we'll put out the profit numbers
00:57in a moment, but Dr. Susilan, since you have been running, experience of running private airlines,
01:02is this an unviable sector across the world? Not easy to make money on aviation, but in India,
01:08it's particularly accentuated. Rahul Bhatia and Rahul Gangwal of Indigo may have got lucky at one time,
01:13but it's not enough. So, there's a say that, you know, if you want to be a millionaire,
01:19spend billions in aviation business. That's what, because you lose money in aviation business,
01:24especially when it comes to Indian market, definitely the taxes are very high. The fuel price
01:28keep fluctuating in favor of the government, not in favor of the airmen. Definitely, it's not a
01:33profitable sector within India. That's why no investor wants to invest in commercial airmen in
01:39India, because whichever example we see, whichever case studies we see, we always see in the airlines
01:43are collapsing in India. I had operated my own airline Air Udisa in Udan route, but it takes months
01:49for me to get the subsidies from the airlines. The airports were not ready. Now, we have 162 airports,
01:55but when we started the operation, and when we had built around 74 routes under Udan scheme,
02:00we got only 10 operational airports. My aircraft was parked in the hangar for days, because there was
02:06no airports. So, now, definitely the taxes are very high. If you go for not private airport,
02:11if you land in that private airport, the taxes are huge. So, we don't want to fly in that.
02:16So, you take an example of Bombay airport. We don't want to fly to Bombay airport, because we want to
02:19go to Pune, because the airport comes under airport center for India, and taxes are less there.
02:23So, definitely, business of aviation in India is not profitable.
02:27Okay, let me bring in more voices on that. Sanjay Lazar, you know, there's so much of talk.
02:31When I asked the minister, he said, our plan is to have five competitive airlines over the next
02:35five years. That's what will bring passenger fares down, will make the industry more competitive.
02:40It's not happening. I've heard this over the years, open skies. I heard Praful Patel talk about it 20
02:44years ago. Now, I hear Mr. Raman Naidu talk about it. Is that possible or not? Is there something
02:51structurally wrong?
02:53Rajdeep, two points in this question. One is, is there space, there is room for at least one full
03:01service carrier, in my view, and one really ultra low cost or regional carrier. We have space. But
03:08like Dr. Sushilan says, we are structurally long, 50 plus percent is ATF. Then you've got the taxes,
03:17your airport taxes, Qt, UDF, all this. So, it makes it a challenging task for anyone, an entrepreneur,
03:24to start an airline and grow the way Indigo or Spice or Akasa has grown. Excuse me. But government
03:33needs to look at this very carefully. If it wants more competition, if it wants to avoid the monopoly
03:38that it sees from Indigo, then it's got to restructure the operations. It's got to reduce taxes.
03:45It's got to make it more friendly. So, people come in and they're welcomed in with less of this
03:52burden. So, that's, that's one very important thing. That's the only way we're going to see
03:56expansion of this aviation sector. Otherwise, you know, like he says, billionaires will become
04:01millionaires.
04:01Right.
04:02And it's pulled up 15, 20 airlines have shut shops since 1992. And we'll only expect...
04:08You know, we've got limited time. I want to bring you in, Jitendra Bhargava. I remember you
04:13used to write about Air India, once you left Air India, about how Air India's monopoly had in a way
04:19destroyed the, ended up, or the government ended up destroying Air India because of the excessive
04:25governmental control. Today, open skies, private airlines, and we have many of the same crises
04:31coming back, crises of governance, crises of not expanding the sector fast enough. Even though the
04:37number of airports are increasing, the number of passengers are expected to grow exponentially.
04:42There seems to be somewhere something structurally wrong. What's the solution?
04:52Mr. Bhargava?
04:57Okay, let me try and...
04:58The government should stay away from the aviation sector.
05:01Yes.
05:02No, the government should simply stay away from it. They've let the private enterprise come in
05:06and run it. Yes, there are flaws in the system at the moment, as the Indigo's climbing to the
05:12market share, dominant player, 65 percent market share. But that's been entirely because they
05:17could seize the opportunity when an airline collapsed. Now, imagine if the minister says
05:21there is room for five airlines in the country. The question is, who will cede ground or market
05:27share? Indigo already has placed orders for 1,000 aircraft. Air India, 570. Both of them
05:34account for 90 percent domestic market share. And in the beginning, Rajdeep, with just one correction,
05:38you know, you made a statement on the number of pilots you had per aircraft, Indigo and Air India.
05:43Let's not forget that Air India has a large number of long-haul, large-capacity aircraft.
05:49So the requirement, when you have the rest period and all, the requirement is more in the case of Air India
05:54as compared to an airline which is operating medium-sized or small aircraft on short-haul sectors.
06:00You know, Captain Amit Singh, in a lot of the discussions so far, we haven't spoken about
06:06pilots, their concerns. You speak to them off the record. They wanted these FDATL rules. Now
06:11they've been pushed back to February. Is that a fear that pilots' concerns at the moment have lost out
06:17because of all that's happened in the last week? Their genuine concerns over their safety, stress levels?
06:24See, if you see the history of FDATL, right from 1992, 2007, FDATL was issued. It was kept under
06:36abeyance because of pressure from the airlines. Then 2011, another FDATL came. 2012, there was
06:42Mangalore crash. FDATL was more stringent rules were implemented. But again, there was a pushback from
06:49the airlines. It was kept under abeyance. And again, 2019, it was issued. 24, again, again,
06:55under abeyance. So there's always a push from the airlines. And for some reason, the rules which
07:02are meant for safety are kept under abeyance. So that is the history of FDATL.
07:06That's my fourth question. Which is exactly my question. How do you make India's skies safer
07:12and more competitive? How do you get more players and make them safer? Do you think it's possible,
07:17Captain, to do both? Make the skies safer but bring in more players?
07:23Aviation is highly regulated or rather over-regulated. Indigo itself is not a true low-cost airline.
07:28It's a hybrid airline. Because the regulatory requirements are so much that one person can do only one job.
07:35Like a security person can only do a security job. He cannot do somebody else's job. So therefore,
07:41the overheads are very high. So that is the problem, rationalization. So we have to rationalize.
07:47And then fuel is the biggest issue. Fuel, there was a proposal about two decades back that airport authority
07:56and the airlines will get their own, will import the fuel. So that will lower the taxes.
08:01Rather than coming through the state, they will get their own, they'll have their own system of fuel.
08:06So there's greed on the part of the state which wants to collect more revenue through fuel taxes.
08:15There's greed on the part of airlines which will resort to shortcuts.
08:18That question to you, Sanat Kaur, how to make India's skies safer and more competitive,
08:23is that possible? Or will we come back to this debate five years from now?
08:27No, no.
08:28So many Indian airlines have collapsed in the recent past.
08:31Yes, I think this is practical because there is an imbalance.
08:34Airports make money, airlines lose money. Now, we have an economic regulator for airports,
08:40but there is no economic regulator for airlines. I think there is a need to look into this,
08:46that why is the airports are making money, but airlines are not making money.
08:50Because of competition, yes, but there are many other reasons.
08:54The taxation, everything which is loaded onto the airlines,
08:58of course they sell their tickets after adding all these things.
09:01But there is an imbalance in my view, and the passengers suffer because they have to pay high.
09:07But I think there is a need for a full study of the aviation sector rather than piecemeal about airlines and airports separately.
09:16Right. Sherebi, do you see more players coming in, or will the Indigo experience make them even more diffident?
09:23You know, even Rahul Bhatia himself is expanding reportedly into the hotels business of Indigo.
09:29He's not necessarily only looking at the airline anymore.
09:33Do you see more airline players coming, given the fact that across the world, it's not easy to make money on airlines?
09:39I just want to put some figures. The world's largest aviation market, United States,
09:43876 million passengers, 5.2 increase from the previous year.
09:47China followed with 741 million passengers, growth rate at 18.7.
09:52UK ranked third, interestingly, to 261 million passengers, up 7.3.
09:57Spain and India comes fifth, handled 211 passengers, increasing 11.1 percent rise.
10:04So there's an increase in passengers, increase in airports.
10:07Will there be an increase in airlines making the sector more competitive and hopefully safer?
10:13Rajdeep, it's a long shot. There's a lot of structural reform necessary before that happens.
10:23But let's give credit where it's due.
10:25Indigo brought in a fair degree of innovation into the system and did a lot to cut costs.
10:30Sometimes, and now as we've learned over the years, they've lost their way, including at the cost of safety.
10:35But what we would need, and I'm going to quote Ronald Reagan here,
10:38when he said the nine most dangerous words in the English language are,
10:41I am from the government and I'm here to help.
10:43When we have the DGCA is the most successfully lobbied regulator in the country.
10:49There's a leaf they need to take out of the book of other regulators that also look into significantly heavily regulated sectors.
10:57That needs to change. Government policy needs to change.
10:59It needs to be a place where commerce happens. There is regulation on norms and safety.
11:04But there is not, we are not, if we are going to end up in this price cap mechanism, et cetera, et cetera.
11:10That's not going to inspire confidence either for markets or for new players.
11:15So long way to go.
11:16And I'm afraid you may just be sitting here five years later and asking the same question.
11:20Now you're calling for the reform of the regulator. You're saying start.
11:24I'm saying regulator and government.
11:26You've got to deregulate the regulator in a way.
11:28Or the regulator focuses on core issues rather than entering every little sector of the aviation business.
11:36Am I correct?
11:37Absolutely.
11:38Okay.
11:39I think we've got a sense from all of you of the challenges that lie within.
11:45Did it take a crisis like Indigo for us to wake up to it?
11:49That's the question that will be asked.
11:51But sometimes in India it takes a crisis for suddenly reform to take place.
11:56The aviation sector has ridden into the open skies more than two decades ago.
12:02But now in many ways, it's been a wake up call, a reality check.
12:06And that I appreciate that all my panelists, I hope, have given the government in a sense, a reality check.
12:13You're having a smile on your face, Mr. Lazar.
12:15What do you want to say?
12:16I'll give you a 30 second.
12:17What is the final words?
12:19In all this turmoil, I believe there's a ray of sunshine.
12:24And that ray of sunshine, like Sherby just pointed out, is that we can restructure our complete aviation infrastructure.
12:32Whether it's redoing the DGCA, redoing the pilots and operational structure.
12:38This is a chance to take off in a clean slate.
12:41I think, I hope, that this ministry and the PMO and everybody looks at it.
12:45Because we are the fastest growing aviation market on Earth.
12:48We are going to be number three in the next five years.
12:51And I look forward to bright aviation.
12:54You know, Indigo is a game changing airline.
12:56It's going to continue to grow.
12:58Of course we know that.
12:59We want to see others.
13:00So I hope and pray that we can make the right steps.
13:03You know, criticism is not about wanting the other guy to fail.
13:07It's about wanting them to succeed within the fine and narrow.
13:11That's what I want to say.
13:12Okay.
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