I'll run business for benefit of AirAsia India, not anyone else: Amar Abrol

Interview with CEO, AirAsia India

Amar Abrol, CEO of AirAsia India, a company which has been through much turbulence, tells Arindam Majumder in an interview that operations are stable at the airline now and that with support from promoters, it is looking to fly international by middle of next year. Edited excerpts: 

AirAsia has been able to get eight planes in around three years. It is only now that you have decided to bring in a number of planes together. Any reason?
 

The reason is simple — we have decided to expand. India is an important market for us. It is one of the fastest growing aviation markets in the world, growing at more than 20 per cent. The company sees opportunity in this market and is here for the long run and provide consumers a product which is low in fare but ensures class. At the end of this year, we will be at least 14 aircraft, if not more.

There have been two years of low fuel price during which the airline did not expand much. Do you think that was a missed opportunity with the crude price inching upwards now?
 

It’s not a lost opportunity. The low price environment allowed us to offer low fares and enter new markets.

How soon will you be able to fly international?

We want to get to 20 as soon as possible. Most likely we should reach there by June 2018. Obviously if we can have it our way, we will like to push further and have 20 aircraft before that, but practically speaking,  we will get there by middle of next year

What are the routes you will be looking at as part of your international foray?

We have a single aircraft type- A320--which has a flight time of around five and a half hours. Basically, we will be looking at every city that falls within that radius, we will evaluate. It’s natural for us to plug into our own overseas network- such as Malaysia or Thailand. That doesn’t mean that other places are not in radar.

There were controversies that the airline gives preference to AirAsia Malaysia for products like leasing planes at higher than market price resulting in loss for the airline. Your comments?

That’s why we have given a global RFP (request for proposal) for leasing the new planes. My mandate is to run the business for the best benefit of AirAsia India and not for any other party. Whoever can give us planes or any other services according to our specifications at best possible price- we will go with them. We have tied up for insurance with Reliance and not with Tune or Tata group. We run it like a business. 

Ex-AirAsia India executives say that they have had little say over running the airline. How is it for you?

We are a board run company. The board consists of several people. I report to the board and the board gives me the authority to run the business in India. I don’t see any conflict of interest there. Our day to day operations are run from here. We have more than quarterly board meetings. The budget is approved by the board here, funding is provided by both the shareholders. I have not faced any issue in running any of the operations I am supposed to. 

Your audit report of last fiscal mentions lack of financial control measures. Have you been able to address those?

Every company has its own set of challenges. But rest assured, those issues are being worked on. We are becoming stronger, better and certainly control and compliance are at the heart of everything. We operate according to Indian law. 

The churn rate among the senior executives of the company has been high. Your CFO too resigned recently. What are you doing to stop the loss of talent?

Part of it is everybody’s personal choice. If an individual wants to move out for a personal reason, they are entitled to. Churn is part of any company. I really can’t comment on what happened in the past, but we have a fairly stable operation now. We continue to attract talent. When I came in we had some 600-700 people. Today the number has grown to 1,050.

What is your strategy to compete with an airline like IndiGo having 126 aircraft, launching three to four flights in the same route and playing in the same category?

There is room for growth for all airlines. As I said the market is growing at 20+ percent. Of 300 million Indian who can fly, currently only 70 million fly. So there is a huge scope for growth. Obviously, IndiGo is quite a formidable competitor. They practically fly everywhere. But we have got our own niche, our own market, own segment. Our load factor is in the range of 85-90 per cent. So obviously, we are flying our planes full. I don’t think it’s a question of excess capacity now. Nearly all of our routes are doing well. As the new routes mature they will also start performing well. 

Within India, where else will AirAsia look to fly?

Our philosophy is we are going to destinations where there is a new India, largely not in the metros. If we look at the metros, it’s connecting them to the smaller cities. We are looking to open our third bay in Kolkata. We already have our bay in Bengaluru and Delhi. We will be looking to connect a few cities from Kolkata. We have already opened sales for Delhi-Srinagar and Delhi- Bagdogra. We are looking at cities which houses the young India- the KPOs, BPOs. These would be cities like Hyderabad, Goa, Bengaluru, Pune.

What stops you from entering the Mumbai market?

Right now Mumbai is slot constrained. Very honestly, there is no place to land or take off. We will get to Mumbai as and when the infrastructure allows. Entry into a market is driven by a couple of factors- it should make economic sense for us as when we enter a market; we do it with a long term plan. We will definitely come to Mumbai. It’s a just a question of when and not if.

After three years, the airline is still in red. When do you intend to make money?

Everyone wants to become profitable. The shareholders have invested money to get adequate return. The team is working towards that. Having said that,  2017 is also an investment year for us. Cost of getting a serious number of planes, opening new routes, marketing will be high. In December 2016, when we did a Rs 100 crore sales, we broke even at an EBIT level.

What are your funding plans for expansion?

Right now we are adequately funded for our expansion plans. Both shareholders have participated in the capital infusion to take the company to the next level.

You come from a non-airline background. How long did it take you to understand aviation?

I am still learning. I work with the right people in finance, marketing, and operations. My job is to ensure adequate funding and get the right talent on board and do all these in a compliant way….