Hong Kong-based Cathay Pacific Airways has been operating in India since the 1950s, but has not been able to expand in the country due to restrictions on the number of flights it can operate. The airline could be forced to stop operating from Delhi as new charges make operations more expensive. Tom Wright, general manager – India, Middle East, Africa and Pakistan, shares his views on topics ranging from airport charges to Cathay?s hiring plans in India, in an interview with Debabrata Das. Excerpts:

How important is India for you?

Very important as a market due to its economic position and growth. However, we are limited in the number of frequencies we are allowed to operate into India. We believe India is underserved in terms of number of flights in and out of the market. At present, in real terms, India contributes around 3% of our passenger revenue. We believe this isn?t a true reflection of its potential. What does reflect its true potential is that it is key to our overall cargo network. We have been deploying freighters to India, adding new routes. We added Chennai and Bangalore last year and are looking at more destinations. The Indian cargo market is one where there are equal exports and imports, making it so attractive.

In terms of tourist arrivals, where does India stand compared to other countries in the region? What are your seat factors on Indian routes?

In 2011, the number of international tourists visiting China was 55.67 million, and Hong Kong 42 million, of which 28 million came from China. But India had a mere 6.29 million. This is a staggering difference given the size and potential of India as a place to visit, with all that it has to offer. There is much more potential in this market. But we are limited by the number of traffic rights, and are allowed to operate only 35 frequencies a week. We are fully utilising those.

Our seat factors are very high on Indian routes, averaging about 80%. We understand that our competitors are also enjoying high seat factors. For example, we are operating Mumbai-Hong Kong at 85%. In airline terms, we are spilling revenue and refusing new business.

Since you can?t expand on Indian routes, how else is Cathay Pacific engaging more with India?

As a company, we are expanding. We already have Indian crew, but we will recruit more Indian crew based in Hong Kong, both cabin crew and pilots. On the pilots? side, there is no fixed number, it depends on the potential of the talent we get here. In cabin crew, we are looking to add another 200 people from India. The advertisements have gone out and we have received a good response. We already have some Indian pilots, but this is the first time we have gone out to specifically recruit India pilots.

Recently, the Delhi International Airport decided to levy extra charges making it more expensive for airlines to operate. What are your views?

Delhi airport has international standards, but the decision to introduce new charges will make it the most expensive airport on the planet as per International Air Transport Association (Iata) statistics. Delhi has the same potential as Dubai, a single stop to fly anywhere in the world. But if India really wants to be a hub, it needs to be able to attract traffic.

The other view is that in a country like Japan, airports are expensive. But everything in Japan is expensive. So the yields and revenues that you can generate from there are sufficient to pay for those charges. But in India, while Delhi is charging higher than Japan, London and New York, one can?t expect the passengers to pay for that.

What will be the consequences of such a move?

A number of airlines have said that if charges are levied, they may be forced to pull out. We have already seen AirAsia and American Airlines do that. The route profitability is such that the airlines can?t afford to pay such prices.

Our routes are doing well, but they are not into Delhi. If these charges get so high that they affect route profitability to Delhi, we will have to think again whether or not to fly to Delhi.

Are charges being levied because the airport operator can?t make money?

The issue is the return on the equity investment that the government is demanding from the airport operator. My understanding is that a place like Hong Kong looks for a much longer view on return on equity investment. It looks for 5% returns spread out over a period of at least 50 years. That gives ample time for the airport to make money. In India, the government wants 16% returns, which makes it the most expensive comparable project around the world. The airport operator also has to pay 44-46% of the revenues to the Airport Authority of India.

The other issue is that most successful airports in the world put all their revenues into one single category, whether it is duty free or non-aeronautical revenues from shopping plazas. When Hong Kong shifted to this model, charges came down. The airline community and Iata feel that Delhi should look at that model.

What will be the benefits of Kingfisher Airlines joining oneworld alliance?

There?s no doubt that Kingfisher will benefit by being a part of the oneworld alliance. But to be honest, it is fairly equal for alliance partners, too, as we would be able to access the domestic network. Kingfisher?s addition to the alliance allows us the ability to connect to the tier-II and tier-III cities. As an international airline, we can?t operate routes from all cities, we need to operate from the bigger cities as that is most profitable.

Kingfisher Airlines has some issues, but I hope it gets resolved soon. The Indian aviation market is underserved and a quality airline like Kingfisher has a need and a role to play. It should be expanding as well. Other Indian carriers, too, should be expanding. The Air India issue is holding everything back. The market needs to flow freely.