New Delhi: India is growing at a furious pace and the economic growth is good for the aviation sector, Ronojoy Dutta, the CEO of IndiGo, said in an exclusive interview with CNBC-TV18. He said that much like India, Indigo is impatient for growth.
“India fortunately is growing at a very furious pace. Airline revenue in general grows at twice the rate of the GDP (gross domestic product) and as long as India is growing at 6-7 per cent GDP, airline traffic will continue to grow at 14-15 per cent. So, it’s one of the fastest-growing markets in the world. So that provides a lot of headroom,” said Dutta.
“When Arun Jaitley says that India is impatient for growth, we agree. We are impatient for growth. We think that the nation needs to grow really rapidly. We are going to grow at a very rapid pace. What that does to the market share, I don’t know,” he added.
Talking about the Jet Airways, which operated its last flight in April before grounding under crushing debt, Dutta said IndiGo will look to avoid the mistakes Jet made.
“Airlines are a very unforgiving industry and there are many parts to failure and there are only a few parts to success. I think Jet Airways is a good case study in that issue. Jet was doing great I think when they were focusing on narrow bodies. When they first started, corporate India was in love with them because they had a good product, good on-time, they were making money.
“Then they took the second step of going into the Middle East and again it was a wonderful success story, very profitable. Then they made a third step and they probably made a mistake. They jumped into white bodies too early, too fast, with a fragmented fleet — some 777, some 8330. Let us go to New York with a hub in Brussels, then let us try a hub in Amsterdam, and then it was okay. Now we are going down the wrong path.
“So IndiGo needs to avoid those mistakes. Yes, we are going to expand internationally, but we are going to do it carefully, cautiously, and not make the same mistakes,” he added.
The IndiGo CEO revealed that the airline will look to take some of the international operations of Air India but at the right price.
“At Air India, there are huge risks but also huge rewards. I believe the preliminary information memorandum will come in July. Hypothetically, if someone would be taking the domestic operations, then we would be interested in the international segment at the right fleet and the right price,” said Dutta.
There have been reports of differences between IndiGo promoters Rahul Bhatia and Rakesh Gangwal. However, Dutta clarified that there is only one administrative issue and that is related to the terms of related-party transactions.
“The issue has got to do with related-party transaction so as an example InterGlobe sells services to the airline IndiGo. The headquarters we are in, so the landlord is InterGlobe so we pay a certain rent… hotels, our crews stay overnight at various places… and when they stay in, let’s say Chandigarh or Jaipur… Sheraton, Holiday Inn, Novotel all bid for that... InterGlobe has a shareholding in Novotel… These are related-party transactions and it is a matter of how you deal with them that the two promoters are talking about now,” he said.
Dutta took charge of IndiGo as its chief executive officer in January this year and the budget carrier has made rapid progress in his brief tenure.
He served as the president of Air Sahara from 2005 to 2008, president of United Airlines from 1999 till 2002 and also acted as an adviser in the restructuring of both Air Canada and US Airways.