Aviation: Q & A with bigwig
The potential is huge as disposable income levels of the expanding middle class are rising steadily, says Naresh Goyal.india Updated: Mar 30, 2008 22:42 IST
Naresh Goyal is the Chairman, Jet Airways
Q. Where is the Indian aviation sector headed?
A. The potential is huge as disposable income levels of the expanding middle class are rising steadily. But the 40 per cent growth in passenger traffic can't be sustained going forward. This has been proved in China and India is no exception. In 2006, China recorded passenger traffic of 160 million and the number grew by 15 per cent to 185 million in 2007. But this year the figure could be maximum 210 million, a growth of 10 per cent.
The passenger traffic in India suddenly went up because of the entry of several new players and the cheap fares they offered. I don't think airlines would be able to continue offering very cheap fares for very long. The cost of running an airline is so high that it does not make sense for anybody to operate a 'low cost, no margin' business. Jet Airways is in this business to make money and I don't have any other business to bank on. It is not in the interest of our shareholders to run a loss-making airline by offering tickets at prices below the cost.
Q2. Where in the value chain is India now?
A. Basic infrastructure to support the aviation industry's growth is not yet in place. The government is making efforts. But our pilot training institutes and training schools for engineers and technicians are not equipped to handle the pressure, prompting many to go abroad to gain the skills. We are also hiring hundreds of expatriate pilots, engineers and management personnel including CEOs to run our airlines. And though the number of aircraft and flight movements grew suddenly, our airports were not upgraded to handle the traffic load.
Q3. Where can it go from here?
A. This is a great sector and we have to grow it steadily by making prudent business decisions. India has a great opportunity and we should not miss it. In 1993 when I started the airline, people thought I was crazy, but I proved my critics wrong.
Indians are hospitable by nature and our service standards will help us to emerge as preferred carriers for passengers around the world. Sustaining low fares for a long time will not be possible. Fares will go up, and some financially sound players till survive. There is huge opportunity in cargo as well.
Q4. How acute is the skill shortage?
A. My main challenge today is not the competition from rival domestic and international carriers, but to get the best talent and management teams from around the world to achieve our dream of becoming one of the top five airlines in the world by 2012. I want people who understand the business and run it effectively.
Today, there is acute shortage of trained manpower in every segment, be it pilots, engineers and cabin crew. Since we are the oldest airline in the private sector, other Indian carriers constantly look at us to hire trained manpower and I am happy to say that Jet Airways has contributed substantially to the overall growth of the aviation industry.