Flying high on the government’s regional airport connectivity programme in his comeback journey as an entrepreneur, GR Gopinath, founder of Air Deccan, spoke to Manisha Singhal on his plans and issues in the sector. Excerpts:
What is your assessment of the regional flights initiative?
The PMO’s vision is truly transformative. Today, aviation demand is not reflecting the true aviation growth potential. Actually, 110 million tickets sold just means that only 30 million fliers are flying, which is less than 3% of India’s population. And of this 3%, at least 80% of flying is between Delhi and Mumbai. So essentially, more than 90% of the population and 90% of the country still remains unconnected. Many of the tier II cities are crucial for the growth of this country. But unfortunately, stakeholders are not aligned to the government’s policy.
What do you mean by saying stakeholders are not aligned?
The bigger metro airports (Mumbai, Delhi, Bangalore, Hyderabad) now are private sector airports. We are facing issues at the Mumbai airport. Private airports are driven by profit motive and there is more money in allowing bigger aircraft to fly into these airports, as revenues are earned from various taxes and airport charges and also in airport retail (smaller aircraft like the one Air Deccan operates are exempted from paying airport fees). They are not giving operators under UDAN slots to expand.
Have you spoken to Mumbai Airport on this?
We have, but Mumbai is digging its heels. They are happy to give Dubai more connectivity but we do not get parking for our aircraft, they have given us slot for our Kolhapur flights at 12 am midnight! How does that work? If a person coming to Mumbai needs to connect to smaller cities near Mumbai how will he travel? We need 16 slots for our flights in Mumbai under the contract but we have been given only six for eight cities. We need to operate daily return flights for passengers to offer any meaningful connectivity to these cities. Mumbai can’t be developed as an island and only by connecting international flights.
So what does this spell for players offering regional connectivity?
The model is sustainable only when we build more capacity or create capacity. We do not have any other option but to fly to Mumbai and other metro airports as alternate airports practically do not exist for us to land like they are to regional operators internationally. Every major city abroad will have at least one main airport and two to three secondary airports. Which is not the case here. Till capacity is added, the government needs to intervene.
What kind of intervention can the government make?
The government needs to take a Cabinet decision to reserve 25% of the entire capacity at the metro airports for the regional connectivity scheme, if the current imbalance in the growth in aviation is to be addressed. Alternatively, the government needs to compensate these airports for the loss of revenue for allowing operators of smaller aircraft who offer regional flights till more airports come up.
How do smaller players face up to IndiGo and SpiceJet in the segment?
Competition is good considering that 97% of all Indians never fly. IndiGo has done well to fill in the vacuum created by folding up of Kingfisher Airlines and Air Deccan. The market hasn’t grown. As there is potential for demand, there is room for growth for everybody.