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New airlines like Vistara, AirAsia trying to influence aviation policy, says GoAir's Jeh Wadia

"I would only go international if I have certainty that I can recover the variable costs, because, if I can, I will reduce my cost, thereby increasing my margin."

Updated: Jun 04, 2015, 03.24 PM IST
"I would only go international if I have certainty that I can recover the variable costs, because, if I can, I will reduce my cost, thereby increasing my margin."  
"I would only go international if I have certainty that I can recover the variable costs, because, if I can, I will reduce my cost, thereby increasing my margin."  
Jeh Wadia, managing director of budget carrier GoAir, is a man of contradictions. He calls his airline both a tiger and a tortoise in the span of an hour — tiger because his airline is lean and nimble, and a tortoise because he’s not in a haste to expand. He crusades against new rules for flying international although he says he isn’t affected by it. He’s not in favour of the foreign direct investment rules in aviation, but says he doesn’t require investment from strategic investors. While he comes across as very aggressive, Wadia’s airline has been the most cautious to expand. In an interview to ET, he shared his thoughts on the industry, his airline and his reputation as a tough boss. Wadia spoke to ET days before announcing Go Air's new CEO Wolfgang Prock-Schauer. Edited excerpts:

Q: The industry is undergoing changes—new carriers Vistara and AirAsia coming in, rules being changed…and the incumbents don’t seem to be too happy. What’s your take?

They are trying to influence Indian aviation policy, which is, in my perspective, ridiculous. It doesn’t warrant a foreigner dictating policy to us. This has implications on the people of India and is no different from telecom or mining issues. For us —IndiGo, Jet Airways, SpiceJet and Go Air—the cost of flying international has been threefold compared to that of new players under the proposed new rules. Count our absolute cost, the connectivity given to the people of India, sales tax paid to the Indian government on ATF. And, how much are new airlines contributing? How much connectivity will they provide? How much sales tax will they pay? Subtract the second from the first and you see the impact.

The FDI policy change was for existing airlines…. First you misuse a policy to allow foreign airlines into India, then you are trying to change 5/20 policy to advocate everything that we have been against.

You have heard of anti-dumping, right? Why should surplus capacity from foreign airlines be dumped in India and that dumped capacity be allowed to pick up our customers and take them to international destinations?

Q: The Federation of Indian Airlines (FIA) has been trying to tell the government all this. That hasn’t really helped. Do you think it should be stronger for its voice to be heard?

Is the new rule in place yet? No, right? Our objective and our focus was to make representations. Last time I checked, the ministry was here to support the industry. You have to consider what the industry is saying. You have the FIA representations. How many times can we keep saying things? FIA has always been united. We have periodical meetings. We have a secretariat. We take up all sorts of issues. Where is the question of no unity? FIA can’t send anything unless we all agree, or file the court cases that it has filed.

Q: What about Go Air flying international?

International is more glamour than anything else. Our intention is not to be glamorous; it is to be profitable. I would only go international if I have certainty that I can recover the variable costs, because, if I can, I will reduce my cost, thereby increasing my margin. I don’t have any other incentive and I am not in a hurry at the moment.

Q: Are you looking at getting a foreign investor on board through FDI?

People have always approached the company. The company is extremely efficient, it’s a tiger. We always get proposals, but we haven’t approached anyone. At the moment we are not in any hurry. We are self sufficient. We are fully funded.

Q: You are profitable at the net level, but are you comfortable with your cash position? Vendors and companies have been talking of delayed payments…

This year over last, my revenue has grown 22% and the profit a hell of a lot more. Next year, I will be more profitable than I am this year. Who wants size? I am not here to flex my muscles. I always said I am a tortoise. The tortoise is still moving, still standing, still smiling. We are well funded. We will be taking delivery of 15 planes in a year (till 2020). Contracts are all closed. Initial payments are made. Funding is all tied up.

Q: Can you comment on the sudden management changes in the airline? Your CEO Georgio De Roni left and now your chief commercial officer Tim Jordan is away…

Jordan is on sick leave because he fell ill because of pollution and this that. Whether he comes back is up to his medical condition.

Q: De Roni too fell sick...

Just happens to be a coincidence, that’s all. The problem with foreigners is, as you already know, either they love India or hate India. Then comes the wife. Then come the kids. They are not sometimes accustomed to our ways of life. They go home and see cockroaches and they go ‘woahh’.

Q: And still Go Air has always appointed expats…

Because there are certain areas of business and industry in which we Indians haven’t had experience. There are some Indians abroad. But there are more Germans, more Englishmen and Americans who have worked in low cost carriers as CEOs ,COOs, CFOs and CIOs. So you have to depend on certain kinds of expertise, which is today not available in the country unfortunately. We have no ambition today to hire people from out of the country. We only do so because the industry is not mature enough to have created a marketplace for that skillset.

Q: Are you saying India doesn’t have enough professionals to head airlines? Go Air and Jet seem to be the only domestic carriers (you consider Vistara a foreign airline) depending so much on expats...

Is that so? SpiceJet is localised, is it? What is Sanjiv (Kapoor’s) passport? What’s his nationality? Why airlines? Vinod Khosla is Indian, right? He never lived in India. He’s been living in San Francisco. Who else? Let’s take another famous Indian. Let’s take the CEO of Microsoft. He’s Indian right? Really? Indira Nooyi is Indian right? She has been brought up in India till education. After that where was she? So, if I bring Indians who left India when they were 18 and I bring them back at 50 years old, for 30 years they haven’t been in India, and that’s ok, right? They are not classified as foreigners.

Q: Who’s running the day to day operations at GoAir now?

I am. And I have announcements, don’t worry. I have a new leadership team. We will be making some impressive announcements soon. We are going from two aircraft a year for 10 years to 15 per year in four years. Don’t you think there will be some management changes and improvements and restructuring? Do we have things to improve? Yes we do. Do we have restructuring to do for taking 15 aircraft a year after taking two aircraft a year for ten years? Of course we do. It requires some structural change. Can you get it right every time? No. There are going to be some casualties. There are going to be issues which are going to be beyond the company’s control.

Also Read

GoAir to expand network with 12 additional flights

GoAir CFO Sanjay Gupta resigns

DGCA probes GoAir incident at Bengaluru airport; summons pilots

GoAir plans to add one aircraft a month: Jeh Wadia

GoAir says has no plans to fly to Bhutan

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