Home / Companies / News /  Aviation sector is complicated with 5/20 rule: Tony Fernandes

Unlike his peers in the aviation industry, AirAsia Group Bhd founder and chief executive officer Tony Fernandes can be blunt and loud. A Malaysian of Indian origin who roots for the Indian cricket team, Fernandes, 52, says that the Indian civil aviation market is complicated and he is still learning it.

Days after AirAsia India managing director and chief executive officer Mittu Chandilya quit in the backdrop of the airline’s losses, Fernandes said that the airline’s other stakeholder Tata Group, with whom he had a meeting on Sunday, is happy.

Fernandes was not wearing his trademark red cap. “If I wear the cap, someone will ask for it. We are in a cost-cutting drive," Fernandes joked.

AirAsia India started operations on 12 June 2014 and so far, has managed to gain just 2% market share. It is yet to make profits. “We are like a mosquito in India. But a little bit annoying mosquito for some," Fernandes said, referring to competition.

Co-founder Arun Bhatia of Telestra last year had claimed that AirAsia India is controlled by its Malaysian parent, violating Indian laws.

But Fernandes is unperturbed. “There’s nothing more beautiful than watching a plane take off. The red ones and not the blues," Fernandes said when asked about bad times. Edited excerpts:

How tough is the Indian civil aviation market?

The sector is complicated with 5/20, there is lot of talk about regional airports, taxing the airline industry, etc. Let the market decide. If some routes need to be subsidised, subsidise. Generally, India is a huge country with a huge market, massive potential, but aviation has lagged behind rest of Asia. I am so impressed with the new government and its ambitions, but aviation has lagged a bit. The aviation policy has been due 22 months and we haven’t had it yet.

On your break even target?

We are very public about our accounts. Wait for the first quarter and then we will show you the accounts. I am a new boy and I have the entire airline industry against us. We have fantastic partners in Tata. An airline takes a bit of time when we come in here. We haven’t rushed. We have worked with our partners. We had a great meeting with Ratan Tata just now. We are very comfortable about going to the stage two now. So let’s see.

Did you underestimate the Indian market?

Did I underestimate the market? No. I didn’t come to India with what to expect. Is it a challenge? Yes. We love challenges. I am sitting with great partners who have been through much bigger challenges than we have.

There is a great opportunity in the domestic market. I think, India needs more tourists, and it’s a great opportunity for India to show the world...Tourism is a great generator of business. 5/20 has restricted that.

Then what is stopping you from scaling up in the domestic market?

We need to learn, we are not experts. We are cautious, it’s a big market and could lose a lot of money very quickly.

What are the expansion plans?

We will go to eight planes very soon and then we will push the button on that. I hope to get to 16-20 planes in the not-so distant future. Can it be in a year’s time? No, I cannot add so many planes in a year’s time.

Getting a new CEO?

The board will make the decision, if that is the case. There is nothing to announce on that. That’s one challenge in India. News comes out before I even know about it. It wouldn’t be under my control. It’s the board that decides these things. We have fantastic chairman and fantastic partners. So, let’s wait and see.

Are you denying that Mittu Chandilya has quit?

Yes. I am just saying that it’s not my call. Even if there was a call. These are things decided by board.

However, I am denying it 100%. I can’t say it in Hindi or Tamil...

December quarter was great for Indian airlines. How about yours?

Our load factor is great. This month, it’s a high 80s...I am very proud of what Mittu and the team have done. We do an internal AirAsia summary on customer satisfaction. The airline with highest rating within our group is India.

There are allegations that the Malaysian parent is micro-managing AirAsia India.

That’s an allegation, right? The Tatas have been fantastic partners. They are more and more committed towards this.

What do you expect from the government?

Make business in India easy. The potential of this country is enormous. If you unleash the entrepreneurial power in this country...It’s outstanding. Let businessmen do things easier. Cut the bureaucracy, and let the market decide.

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