The government should provide a level playing field and not just suit four or five tycoons, AirAsia Group CEO Tony Fernandes tells HT in an exclusive interview a day after Tata Sons increased its stake in their joint venture airline in India. “It’s time for India to stop putting self-interest above national interest,” he said. Excerpts:
What’s your take on Tata’s increasing stake in AirAsia India (AAI)?
It obviously shows Tatas are very committed to AAI. Both of us are committed to whatever capital is required to grow the airline. We are going to add two planes soon and I did like to take it to 10. We are also removing the uncertainty over shareholders and are clear on our capital plan.
Secondly, we have worked hard in getting a new management team in place. All the blocks are in place.
By when do you add two planes?
What was the need for Tata’s to buy out Arun Bhatia’s stake?
You will have to ask the Tatas that.
Have you and Tatas put in more equity?
No, we haven’t as yet.
Would it have been better that AAI was a two-way JV from the very beginning?
It’s definitely better to have one wife than four but at that time the Tata’s did not want to own more than 30% so we needed other shareholders. But I don’t regret anything. Arun Bhatia contributed. He put in a lot of effort. I wish him good luck.
But haven’t his public statements brought more problems for you?
I have no comment on that.
Will the issue of foreign control be finally settled with Tata’s increasing their stake?
I never thought there was an issue. Obviously, if Tatas thought there was an issue they won’t be extending their stake. The chairman has himself become a stakeholder so it’s very clear that no one thought it was an issue and no one will put their reputation on line. By having Tatas there as a much larger shareholder now, further confirms that they never had an issue about this foreign control.
How will the abolition of the 5/20 rule help Indian aviation?
It’s time for India to stop putting self interest above national interest. Everyone can see very clearly that India has been short of international connectivity and that hurts the economy. It is short of connectivity because it does not give enough rights to foreign airlines and the local airlines are not pushing for it either.
When people are willing to invest to improve the lives of Indians and improve the economy then why not. If Emirates or Etihad or Qatar putting in more flights for more people to come to India and invest, so be it. To have a policy to just stop international (routes) so that people are forced to do domestic (flights) makes no sense. Both domestic and international should grow at the same time.
In Malaysia domestic has grown as much as international. The same happened in Indonesia and China. These are red herrings.
Really, a lot of this has been put in place to please owners of some Indian carriers. I think India has moved beyond protecting a few businessmen. If there was a national referendum right now on whether India should have more flights and should it allow airlines to fly international, I am pretty sure where the people will vote.
How will the Tata’s increasing stake help AAI?
We have two clear shareholders who are dedicated to growing the airline. Shareholders can share the same strategy which enables to grow with a clear objective and less internal issues.
There was lot of hype surrounding AAI’s launch. Have you lived up to expectations?
No one in AAI made any promises or deadlines. This is not a two year story. People were excited because they were excited with what we had done in other countries. We haven’t been able to grow as much as we wanted to because of so many court cases, obstacles, lobbying etc.
It’s such an exciting thing because the people of India wanted to have more choice, more international flights and more connectivity. Of course, there was hype. Have we lived up to that? No. But no one expected all these issues that we have been caught with. Are we giving up? Clearly not. One of our major shareholders is putting in more capital. We see a potential of helping change Indian aviation. Competition makes people better. Imagine if there was only one mobile phone provider or one newspaper in India, it won’t have been such a vibrant media industry.
Vistara has grown at a much faster pace than AAI. Can you share your expansion plans over the next three years?
I have no idea at the moment. Vistara is only one airline I have the potential for investment in many different places - Philippines, Malaysia, Indonesia, Japan etc. Singapore Airlines has one overseas investment. Both Tata and I want to make sure we are not sinking money into a black hole. In a short period, Vistara has changed their business model. We are very experienced in this. There is no point rushing in like a bull in a china shop and losing hundreds of millions of dollars so we are slowly learning the market. We are not here to see who is bigger. Let’s see who is here in 10-15 years time.
You have applied to become an Overseas Citizen of India (OCI)...
Let me make it clear through your newspaper: I didn’t apply for OCI for anything to do with AAI. It has zero bearing whether I am an OCI or whatever. I applied because my dad would have been proud. I applied because I want to spend more time in India and as an OCI I don’t need a visa. I was told I am same as an NRI and I can buy houses, don’t need a visa etc. So that was another bonus.
It has nothing to do with AAI. I was tired of all these other airlines saying foreign, foreign, foreign (ownership and control). Actually my father’s heritage and the fact that we have the Tatas, we are probably more Indian in substance than many Indian airlines. Jet has Etihad plus Naresh (Goyal) lives in London, I am told that GoAir guys live in Turkey, IndiGo is an American airline from what I can see and if you look at the shareholders more than 60% shareholders are foreigners. So apart from Air India they all got foreign connections.
But I don’t care who is foreign and who is not. I only care what we can do for Indian people but these guys have been bringing it up non-stop. Let me make it very clear OCI has nothing to do with AAI. It will be very naïve for me to think like that.
Do Indian carriers fear you?
You have to ask them. I find it very strange. We have six planes versus IndiGo which has 100 planes and they are all worried about us. Having said that we started with two planes in Malaysia and now we are the largest Malaysian airline. I will just focus on myself. In all these years I have never thought about other airlines. I am not focused on competition. I focus on how we can do better.
I find it so strange that other airlines spend so much time trying to stop us. When an Indonesian airline came to Malaysia we welcomed them. We didn’t stop them. We didn’t force the government to stop them. We said let the best man win. There is a market for everybody. Let the people choose. Competition is good.
When will AAI break even?
I don’t know. But we are moving in the right path.
What are your views on the regulatory problems in India?
We need less regulation. Obviously government should facilitate business and not hinder business and government should provide a level playing field and not a field just to suit four or five tycoons. They should put in a regulation that helps the people of India, create jobs and create economic growth. I am a believer in free market. Since AAI has come in we stared new routes we created more traffic.
India is desperately short of international tourists and that’s a great and easy earner. It has been made clear by the India PM that tourism is a key goal. Ajay Singh (of SpiceJet) made a good point at the Hyderabad air show that the government should reduce the cost of business. We still have aviation tax fuel and very high airport charges. The government should be focussed on that as well to allow more people to fly.