'Aviation and tourism are inter-dependent'

Naresh Goyal, founder chairman of Jet Airways, talks about the growing domestic aviation market and the avenues that are open to an international lift. By P R Subas Chandran

Naresh Goyal Founder Chairman of Jet Airways

How have airlines played a role in making India a tourism hub?

Airlines and tourism have an inter-dependent relationship. The tourism market grows by itself with new connections, and a popular destination attracts the operation of more flights. The rapid growth of the tourism industry, both domestic and international, supported by the entry of airline operators offering low fares, has led to the rapid growth of air traffic in India. Airports in the metro cities of New Delhi, Mumbai, Chennai and Kolkata have, and are currently being upgraded to receive the largest and latest aircraft. New greenfield airports are coming up in Bangalore and Hyderabad to meet the end consumer's demand.

The industry also has significant ripple effects on other segments, particularly in the services and hospitality sectors. Non-direct generated output and employment include off-airport expenditures directly related to the use of air travel, and shipment of freight and mail, notably travel and tourism businesses (such as hotels and restaurants, travel agencies, tour operators and retailers) as well as the whole spectrum of freight business activity.

How can airlines play a vital role in taking India further?

Only the tip of the iceberg has been tapped so far when it comes to the potential of the aviation industry, particularly when one takes into account the extremely low penetration of air travel in India. While individual airlines may not have much of an impact, the airline industry as a whole can certainly play an active role in working with the authorities to develop areas such as airport infrastructure, which in turn will enable India to truly play in the arena of international travel, particularly when compared to world-class airports like Dubai and Changi.

I strongly believe that we need to make gateways such as Delhi and Mumbai transit hubs comparable with centres like Dubai, Singapore and Kuala Lumpur to attract more passengers travelling between Europe and the Far East/Australasia. Airlines and the government also need to work together to put in place regulatory requirements, because as an industry expands, if there aren't enough checks and balances, the growth will cannibalise itself. Given the symbiotic nature of the relationship between an airline and its destination, the economic success of each airline will reflect itself in the economic boom of the country and India's continued growth will, in turn, fuel the success of the aviation sector.

What would be a mature way of going about expansion by India's airline companies?

Care needs to be taken to do this systematically to maintain and grow the commercial viability of international operations. Care should be taken to avoid causing over-capacity, leading to irrational pricing and a rapid decline in yields. For sustained growth, it is imperative that the policies ensure the financial strength of the sector.

One needs to keep in mind that international rights are always exchanged on a reciprocal basis and that if more Indian carriers need to be given rights then one of two things will occur:

The existing rights will have to be spread across additional carriers. Alternatively, additional bilateral rights could be negotiated. But this would mean increased operations by the foreign carriers also or additional carriers being able to fly into the country. These together with the additional Indian carriers all becoming operational within a relatively short time, would add immense pressure on the already-inadequate infrastructure.

We believe that the current policy, where a new airline needs to complete a minimum of five years as a domestic carrier can be given international rights is wise. This enables a carrier to stabilise its operations and be in a stronger position to represent India in a global market. It also gives the government time it needs to enhance infrastructure.

What are the latest initiatives, achievements and plans for Jet's future?

Jet has now embarked on a major expansion in the international arena. In this financial year we would be inducting around 20 aircraft of which 18 would be wide body deployed on international routes. Apart from launching new international routes, we would start operations on the Gulf routes (Doha, Kuwait, Muscat, Bahrain) effective January 2008. We also propose to connect San Francisco via Shanghai towards the end of the winter schedule. Johannesburg, Nairobi and Hong Kong will also be connected by next year. As far as our international operations on the routes west of India are concerned, our most important initiative has been the establishment of Brussels as an operational hub in Europe for all our North Atlantic flights. By co-ordinating the flight schedules in both directions (particularly arrivals and departures in Brussels), we will be able to serve multiple destinations in the US and Canada from multiple originating points in India. We will be able to do this by transferring traffic at Brussels between flights whilst they are in transit at Brussels.

We aim to intensify partnerships with airlines in countries we fly to by entering into code-share agreements with the local carriers. Currently, we have code-share arrangements with Brussels Airlines, Qantas and Air Canada. We will expand further code-share arrangements with American Airlines and All Nippon as well.

Jet will also be increasing its domestic operations. We propose to induct additional B737 and ATR72-500 aircraft to deploy on domestic routes and thereby enhance connectivity. One of the key elements of our strategy would be to provide connectivity from the far-flung destinations in India to the international points we fly to like Bhopal and Newark, Agartala and Bangkok.

What could be an apt policy to help the industry grow?

An apt policy for the growth of aviation would be that which fulfils the interests of all stakeholders of the civil aviation industry. The policies should enable all players to provide safe, efficient and reliable air transport services at reasonable prices, where a well-defined regulatory framework exists catering to changing needs and circumstances, and where all players and stakeholders are assured of a level playing field. The policies and practices of the players must also ensure that the industry remains economically viable.

Revolutionised by liberalisation, the aviation sector in India has been marked by fast-paced change in the past few years. From being a service that few could afford, the sector has now graduated to being a fiercely competitive industry with the presence of a number of private and public airlines and several consumer-oriented offerings. Government policy is moving in the right direction. But infrastructure must catch up. This needs the urgent attention of the government with consistent and coherent application of policy. The following areas need to be addressed urgently: enhanced safety, cost-efficient improvement of resources both infrastructure and human, reasonable taxation, and effective use of technology (like IATA’s Simplifying the Business).