Kiran Rao, executive president (marketing and contract) and president (India) at Toulouse-based plane maker Airbus SAS, is candid enough to admit that his calculations went wrong when Indian low-fare carrier SpiceJet Ltd acquired his rival Boeing Co.’s planes. He is confident that Indian airline companies will stage a recovery and embark on their next phase of expansion, buying more planes. Edited excerpts:
How important is India for you?
In terms of numbers, it is small, but it is one of the best markets. It will surprise all of us. Civil aviation minister Praful Patel has said India would need at least 2,000 planes. I will go by what minister says.
The airlines are struggling to come out of losses. Why would India need more planes?
The Indian market is growing at 16% (per annum). That’s incredible. Even China is only growing at 9%. Our India projections have been 8% growth but the market is growing at 16%. Even if it can sustain 8% growth for 20 years, India would need more than 1,000 planes.
In every 15 years, passenger traffic in India has doubled and in every 20 years it has trebled. It’s enormous growth.
IndiGo surprised the industry with a 100-plane order some years back. It now plans to buy 150 more planes. So, all set for another big round of orders?
Well, we can’t take anything for granted. We are looking for more opportunities and we are in discussions with them. But one thing is confirmed: that A320 is a great success for India. It’s the best aircraft, particularly for low-fare carriers.
Meeting orders: Kiran Rao says Airbus will deliver 30 more planes to the Indian market in this calendar year. Harikrishna Katragadda/Mint
Your competitor Boeing is also scouting for new orders.
All carriers require more planes. We have a market share of 68% and I am more focused on strengthening the relationship with existing customers.
Historically, Boeing had old planes. Now old Boeing planes are being phased out. In fact, Boeing’s 777 planes are rejected by Indian customers.
The strength of the Indian market is A320, which is the airplane of choice for the domestic market, especially for low-fare carriers. And A330 is the plane for the choice for international market. We will deliver 30 more planes in this calendar year.
What do you do when you are not selling planes?
In addition to the day job, I am also the president of the International School of Toulouse. This is an English-speaking school in Toulouse and all three of my kids go there. It’s a good break from dealing with planes and it brings me down to earth.
I don’t have too much spare time but we usually go on active holidays as a family. I am a qualified scuba diver and I enjoy sailing. Scuba diving is the best way of getting away from the phone and BlackBerry. Sailing, too.
Do you switch off phones only when scuba diving?
No, I have a great family life. My time is occupied mostly because of kids. James, 18, Matthew, 16, and Emma, 11.
James is the young pilot; he was flying since 12 years old and went solo at 15. He is following in the footsteps of his mother who got her flying licence at 18.
Matthew is the go-kart racer. This go-kart racing is a prelude to our fast racing events such as Formula One. My role is to drive him to the track, prepare the kart, tyres, fuel, engine check, fix broken parts and then watch him race. He recently came first in a 10-hour endurance race in France. Once he is racing, I monitor the times and then adjust the various settings to see how to get him quicker. I am his chief mechanic.
My daughter Emma loves acting. Fortunately for me, this only requires me to sit in the audience and clap.
Have you ever thought of doing something else?
If I had not joined Airbus, I would have been a flight test engineer with the UK ministry of defence. I was selected for this very exciting role but turned it down in favour of being a sales guy. It looked like a fun job when I was 22. Very few got such an opportunity to test and certify all British defence aircraft. But no regrets, as it has been an adventure.
Your favourite deal?
Every deal I have done has a unique story. If I have to single out one, it was the (sale of) 41 aircraft to South Africa. It was my first deal and a tough one. One day I will write a book. India is full of interesting characters—all with full of energy and indepth knowledge like Vijay Mallya, Naresh Goyal, etc.
What has been your best Indian aircraft deal?
The best deal is IndiGo in (terms of) numbers. But in terms of money, it was Kingfisher Airlines.
The best time in your career?
I cherish my five years in India during 1996-2001. I was given the job to create Airbus in India. I was 32 when I was made to sell passenger planes. I had no knowledge about where to start.
Do you see the impact of economic slowdown receding?
Fortunately, I did not see many airlines cancelling their planes. In fact, some of them have advanced their schedules. For sure, we had two difficult years, where airlines had to rebuild their finance models.
But we had predicted that the airline recovery will start by the end of 2010 and that is happening now. The load factors of all airlines are up. Now they will see profitability too. Frankly, the recovery is not 100%. We have to be very cautious. But all airlines are showing positive signs of recovery.
Any mistake that you committed in your India assignment?
I think we were looking at different directions when the low-fare carrier SpiceJet took its decision to buy planes. I believe we could have won that too.
With major aircraft deals in India, you had promised a huge sum of offset to Indian companies. You had also promised an aircraft maintenance, repair and overhaul (MRO) in India. (India’s defence offset policy mandates that foreign contractors source components and systems from local vendors for at least 30% of the value of orders worth more than Rs300 crore that they get from India.)
We have already superseded our offset obligations in India. We had an offset obligation of $600 million (around Rs2,768 crore) to do in India up to 2023. We have already finished it. But it doesn’t mean that we will switch off the key of sourcing materials from India. We have done an engineering centre in India, handling high-end engineering works with 400 employees, unlike Boeing’s similar engineering facility that is managed by a handful of employees.
We are doing general procurement in India and have relationship with Indian companies such as Infosys Technologies Ltd and Satyam Computer Services Ltd.
We have also tied up with (Canadian training solution company) CAE for training pilots with two A320 simulators. We are sourcing doors of A320 aircraft from Hindustan Aeronautics Ltd.
What about MRO?
We had signed an agreement with erstwhile Indian Airlines. Since it is merged with Air India to form Nacil (National Aviation Co. of India Ltd) it is taking some time. But still we have a lot of time, considering the time that we have promised to come up with the same.