India’s economic policies must be such that inspire growth and reward efficiency. Not just in aviation, but across sectors. We have one of the youngest population in the world that is highly productive. Inclusive growth must be encouraged. The need of the hour is to create more job opportunities; include more women in our workforce; spread development to smaller cities; and innovate to bring costs down and improve service delivery and products. Government policies should, financially and otherwise, recognize and reward private enterprises that further this cause. Enterprises that encourage equal opportunities must be recognized and rewarded as they are creating a talent pool that is very much needed in the industry today. All of these would reduce the burden on the government and encourage inclusive growth in every part of the country.
The key growth driver for Indian aviation has been, and will be in the future, the need for high-quality, low-fare travel. The economy and aviation industry have a symbiotic relationship, so if India has to grow by 8-10%, then the aviation market has to grow at just double that rate. Also, reaching out to people who have not had the opportunity to fly so far—that is a huge section of the population in India. The key challenges are to keep the cost low and continue to offer lower and affordable fares. Our aviation turbine fuel is among the costliest, thereby putting an additional burden to the overall cost. To make the matter worse, the rupee has depreciated almost 20% against the dollar during the last few quarters, combined with high airport charges. So one key focus area will be to monitor costs carefully and offer affordable fares regularly.
Reduction in taxes and airport charges are more than welcome as more and more people have to fly and, hence, the fares need to be more affordable. Airport charges and other related operating costs are an ongoing concern. Airlines also need not get greedy, but whenever they can, they must bring down fares. At the same time, the government must also not push the airlines to sell fares at a cost that would make the airlines suffer losses. The overall cost structure of losses should be brought down so that the costs come down and hence the advantage can be passed on to the passengers.
The government must also make it easier for airlines to import fuel without the risk of further taxes as that fuel moves from one part of the country to another.
India is one of the least penetrated markets in terms of aircraft density. For increased air travel and lower fares, there must be increased competition and aircraft capacity. Induction of aircraft capacity should be encouraged across all types of aircraft so that the mismatch between little supply and increasing demand may be corrected. This would mean lower fares and growth in air passengers.
Maintenance, repair and operations (MROs) in India are laden with unfriendly customs duties and other tax structures, making it cheaper for airlines to repair their aircraft overseas than in India. The duty structure should be revamped to allow MROs to grow.
It is so ironic that despite having a population of 1.25 billion, the percentage of skilled manpower is very low. Manpower skills are required across fields in our business—pilots, aircraft engineers, flight attendants as well as human resources, finance and legal professionals who understand aviation. High-quality training institutes and methodology are the need of the hour. It is also important to encourage and financially reward those airlines, airports, cargo operators and MROs that create new job opportunities.
The year 2012 has been a good one for IndiGo from the growth and expansion standpoint. From a fleet size of 48 aircraft in December 2011, 31 destinations and 289 daily flights, the firm today operates 61 brand new Airbus A320 aircraft, 373 daily flights, 33 destinations across India and abroad, and has carried over 50 million passengers till date. From IndiGo’s inception, its aim has been to demonstrate repeatedly that low cost does not mean low quality and that people should come to accept and see that this is the airline that will provide consistently low fares. IndiGo will continue to expand its network to meet the requirements of both business and leisure travellers wherever they demand it, both in India and abroad.
I think there is only one lesson to learn from the recent slowdown in growth—to keep costs lower than revenue and meet the customer’s demands with a high-quality product or service with consistency. We have been blessed with many years of double-digit growth and, once in a while, there is a slow year, but India is a highly under-penetrated aircraft market with a burgeoning and productive population that needs to fly at affordable fares. Therefore, there is a long runway ahead of all of us.
Aditya Ghosh, president, IndiGo