IATA predicts India’s airlines will lose $400 million in 2010

DG IATA has made very precise comments on why Indian Aviation industry, specially, the private domestic airlines are losing money and have accumulated losses. Mr. Giovanni Bisignani as CEO of the world airline association cannot speak more words or beyond as to what exact improvements are needed to be addressed by the operators, regulatory authorities and those public-private entities now in control of the management of major airports in India.

I as pretty senior retired top management executive have captured those phrases in inverted commas said by DG-IATA, and would like to elaborate the points and bring them to the attention of the chairmen/managing directors/owners/chief promoters of the private airlines to improve upon their bottom lines as no consultant and/or today’s hired personnel (MBAs) from un-related industry will be able to provide such suggestions on how really we can lead the industry by united effort in bringing down high competition and turn-around the operations towards profitability over a specific period of time.

1) “Coordinated policy approach among government ministries” – great disparity in investment policies announced by the government vis-à-vis developments of airport infrastructure and its management & investment in private domestic airlines by foreign airlines. Indian government must ratify this disparity without any excuse of national security reasons.
2) “Improve competitiveness” – every domestic airline would like to grab the piece of cake by operating the core metro city-pairs with in-numerable frequencies, leading to air traffic congestion, low flight level paths whereby consuming more fuel and increasing market competition by lowering the fare structure and losing on such high density routes. (Incredible policy administration by top lead executives of the airline). Instead, why doesn’t regulator who allots the slots for landing/take-offs should induce a bidding program by airlines for acquiring to operate such high density routes in limitation with air traveller population and/or estimated growth. I am not wrong to state this, because in mobile telephony, there is already a bidding process by operators and it has led the TRAI (Telephone Regulatory Authority of India) to fill their coffers full of funds and yet the mobile operators are able to make money despite lowering tariff. Unless, the aviation ministry itself is avert to the idea due to supportive favours by few influential airline operators.
3) “Comprehensive approach with common vision” – Today’s top executive (from un-related industry, i.e. not from aviation industry) of private airline does not believe in domestic-interline-relationship. At the airport each of these airlines treat other airline passenger like an enemy and when any question asked just for directions by a passenger, first he is queried which airline he is flying with. And then, if he is not their passenger, there isn’t right answer coming just for giving directions. Why, note this instance, a passenger standing in front of an another airline ck-in counter, the security GUYS (tough ones/body builders) of that airline, shoo away the passenger stating that they should not be seen loitering in front of their ck-in counters as they are not the passengers of that airline. Is there such a rule framed by the regulator, Bureau of Civil Aviation Security or the airport authorities? No, it is way airline personnel are taught by their seniors not to keep any relationship with other airlines. Abroad, airlines share several of the market and statistical information among themselves although it is not a statutory requirement but it is the interline-relationship and so are staff that are cordial to ANY passenger. Where is the association of private domestic airlines ? How many times, it was formed and it died its own death, as their thought-process and compatibility in their strategy do not match. With domestic interline-relationship, they can induce a system of accepting each other’s revenue documents of the passengers in the event of delays to each other’s flight schedules or cancellations, instead of making the passengers go and buy fresh tickets. The mentalities will never improve as today’s management is not airline savvy, because they come from different field of operation/administration.

4) “How to tap the potentials of growth in air travel (as spending power of Indians to triple in next TWO years)” – in the first place :

a) No domestic airline today knows its customer – why? He buys the ticket on NET, he comes to the airport for ck-in (we use to call this as first contact of the passenger with the airline) but he is either checked-in by airport handling company or an outsourced agency by the airline itself. Any of passenger’s comments/complaints are heard by handling company and/or outsourced agency but never reaches the management of the airline. How would you service a client, when you do not know your customer ?
b) All airlines have done away with agent commissions – why would an agent provide support to the airline and let the airline know who is the customer that he is booking on a particular airline. Because, an agent knows that there are NET bookings and there are direct corporate deals given by airlines, so no one makes a visit to his agency from the principle airline, whether it is high yielding passenger or tourist class. This is one reason why loads are dwindling because airlines think that they can build network, but it is not true and not realistic either. For any networking of sales efforts, distribution network must be established and with this concept the agents were appointed by airline’s own governing global association, i.e. IATA. It is wrong to state that airlines are saving on their expenditure by curtailing the commissions. Instead, you advertise or place larger number of field sales personnel, yet you cannot achieve the results which a travel agent can bring to your airline. He can fill in your empty seats but you airlines are drifting away yourself from agents in search of cutting your costs. The comprehensive approach by airlines to cut costs is to approach the regulator to formalize two stages of terminal and navigational charges, one for international airlines and one a lower tariff for domestic airlines. Do not take sacrifices from passenger to forgo his meals, drinking water supplies, no water or tissue paper roll in toilets on-board the airplane or no meals on ground in the event of flight delays beyond certain time frames. Are you airlines really making profits out of these savings ? No, gentlemen operators. You are only drifting away your product from the customer and may be one day he chooses to switch his travel plans to another mode of transport. In that case, you operators are responsible for not participating in the growth of air travel population. You need to pamper them a little bit (not too much) directly as well as in-directly (through travel agent – commissions to be re-introduced and some PLB incentives) and this initiative by all airline will definitely lead them to increase the air travel population (not switching the numbers from one airline to another). Ultimate direct gains are for all – airline operators, regulators and public-private airport handlers, and indirectly to all auxiliary service providers.

It may please be noted that these are my express opinions coming out of my long drawn hands-on experience from all aviation departments and no one should take any offence on my comments which are in general nature through observations and experiences.

Copies sent to:- DG-IATA, Minister of CA-India, DG-DGCA-India.

Hi Iqbal,
Very well written and precise. It is about 4-5months since this. Did any of the officials to whom this was addressed reverted or commented on this? I would be surprised if they have. No one accepts constructive inputs.