‘All We Need To Fly To South East Asia Is Permission’

Wolfgang Prock-Schauer, CEO, Jet Airways (India) Pvt Ltd in an exclusive with Anindita Chattopadhyay on the recent launch of the Kathmandu flight, spoke about the airline’s strategies for the Indian sub-continent

With price of fuel rising in the international market, a rise in ATF is imminent - which means a rise in operation cost as well. What are your plans to offset such costs?

Cost of ATF becomes higher in India compared to the international market because of the very high sales tax and it impacts operation cost heavily. We have no immediate plans to raise the fare, but we will have to look at adjustments in case the demand is pressing. Right now, to offset this kind of costs, we are targeting on increasing the load factors across the network from 64 per cent to 70 per cent. To control cost structure, personnel productivity is being raised further and aircraft utilisation is being increased. Another step is additional savings in airport and landing charges.

How do see the two international routes contributing to your revenue?

To be honest, these two routes will not have any significant effect on the revenue because they amount to only 150,000 passengers compared to our Indian domestic market of seven million passengers. Hence, a significant change in volume will come when we are allowed to fly to other international destinations.

What destinations would you like to fly to given the permission?

If we get permission, we would like to fly to South East Asian countries like Singapore, Thailand and Malaysia and later to UK and some other European destinations.

What kind of market share are you looking at on the Colombo and Kathmandu sectors and how do you plan to hold against competition?

We are looking at one-third of the market share in the Kathmandu and Colombo routes. Our strength is our big Indian network of 41 destinations behind us with a 46 per cent market share. We have a loyal customer base, especially corporate houses, which we can attract. Our product quality is superior and we have also been accorded the Superbrand status. With the Indian domestic market remaining our core business, we are confident of holding on to competition.

Are you planning fleet expansion with two new routes added to your network?

Narrow-bodied aircraft are fit for flights into SAARC and South East Asian countries and we currently have 33 such Next-generation Boeing aircraft including 12 B737-700 and 13 B737-800. With our existing fleet we can service India and the SAARC countries. Both domestic and international traffic are expected to grow by 10 per cent this year. So our aim is to increase the load factor through optimum utilisation of aircraft across the network. If allowed to fly beyond SAARC countries, then we will require more narrow-bodied aircraft in the B737 size categories. But that does not mean we will look at Boeing only. We might consider Airbus as well.

Despite your higher market share, your balance sheet is still in the red. How are you planning to bring it in the black?

It is true that we were in the red in March 2003, but we have made significant progress since then and have been able to turn round the corner in March 2004. We had of course taken a lot of initiatives to control cost. Higher personnel productivity is one such and it grew by 10 per cent. To decrease the cost on purchasing, we renegotiated aircraft leases and renewed contracts like maintenance contract etc. Compared to 2002-2003, we have been able to stabilise the cost per available seat-kilometre as good traffic growth started since October 2003. All these have helped us cross the red line mark.