On the day Jet Airways announced its direct flight from Bengaluru to Amsterdam’s Schiphol airport, Vinay Dube, the newly appointed CEO of the company, is extremely bullish about the future of the civil aviation market in India. In an interview with Raghu Krishnan, his first after assuming the top role at Jet, he says the current pressure on fares is due to competition. Edited excerpts:
We are seeing pricing decline and pressure on airline fares. Would you attribute low fares to the macroeconomy or increasing competition?
I don't think it has anything to do with macroeconomics because macroeconomics in India is still very strong. There is GDP growth, there is consumer spending. It is all competitive dynamics.
You have expressed interest in the second round of the regional connectivity scheme. How soon will you start?
We have made our application process now. The government decides who is selected and when. We are participating with our set of routes, just like the others.
In the first quarter you saw profits earned largely through the sale of real estate...
My view is that in the medium to long term we may be able to make more cash from operations. That is our focus. There are two big elements, one is on the revenue side, where we continue with our differentiated services that Jet has historically provided. We have been recognised recently by TripAdvisor as the best airline, and we will continue to find ways of improving customer service and guest experience. This, hopefully, will translate into more demand for Jet. Then we will have to address our cost side as well.
Have you identified areas that need to be addressed?
There are plenty. I have been here for just 55 days. I recognise these are parts of the strategy we must have — attacking every element of our cost structure, inefficiencies we have, people inefficiencies, consumption rates, norms and debt structure.
What are you plans for expansion?
I can't give you specific routes. We are here to celebrate the launch of our direct flight from Bengaluru to Amsterdam. But in terms of our growth engine, I can tell you that there is growth coming at Jet Airways, and not just for a year or two but for the foreseeable future. I don't know whether we put out our capacity projections, we are getting new 737s. We have placed an order for 75 Max (Boeing) that will start being delivered next year.
There has been talk of Delta picking up a stake in Jet...
Not that I am aware of, and there have been no chats since I have taken over. We are focused on continuing to cement our partnership with Air France and KLM and with Delta to connect to the US. We are focused on when the customer connects in Schiphol that it is the best connection he gets. Those are the elements of the partnerships we are focused on. You sell a ticket here, you give access to the partner network. You transfer luggage, you try to do the transfer seamlessly. When you go to one gate, you get a reciprocating connection. These are the things consumers are looking for and that is what we are focused on currently.
There is also talk of a joint venture (JV) with AF-KLM?
Not a joint venture. JVs in India have a different meaning. For me, it is improving our partnership in all these elements I talked about and other ways to improve that partnership.
You talked about pressure on pricing due to competition. Will it continue for long?
I don't know about pricing pressure. CEOs could get into big trouble when it comes to pricing. All you have to do is look at the order books of the Indian carriers to know that there will be plenty of competition in future.
And you don’t see that as a problem?
Not at all. I am happy with competition. My view is that at the end of the day, it is not up to you and me to pick winners or losers, it is the consumer who decides who wins and who loses. You do that on the basis of what the consumer wants. Today, Jet Airways offers what I think is the best value for money and we are proud of that. We relish competition and we know how to be successful.
When you enter regional connectivity routes, will you continue to offer full services?
Absolutely, you will find that in every single flight.