The Hindu : Business : Growth will be profit-oriented, says AI chief

Online edition of India's National Newspaper
Saturday, Apr 10, 2004

Business

Business

Growth will be profit-oriented, says AI chief

By T.S. Shankar

V. Thulasidas

CHENNAI, APRIL 9. "Air India's growth has to be wherever there is demand, wherever there is market. It has to grow in all directions be it long haul or medium haul destinations. Growth is imperative because of the environment and because of the fact that the airline has not grown adequately for quite sometime," its Chairman and Managing Director, V. Thulasidas, said here today.

At the same time, "growth cannot be at any cost. Growth has to lead to profits for the company. Otherwise the growth cannot sustain. So, profitability will be the criterion in deciding this growth. In a sense, both have to go together. We need to bring about greater productivity, greater revenues, greater cost management so that we are able to grow in a sustained fashion."

"Air India (AI) is in for a lot of competition. AI has always been in a competitive environment because it is an international airline and has always had to compete. But what is happening now will be somewhat different," Mr. Thulasidas said in a brief interaction.

On his maiden official visit to Chennai to assess the market potential and study the ground situation here, he felt that there would be far greater competition along with a lot of growth because travel and tourism to and from India had grown substantially.

"In fact, travel from India has been more than to travel to India — perhaps for the first time. We need to be qualitatively superior. That is the priority one has to set for oneself. That we need to grow, we need to be qualitatively better," he said.

Dealing with specifics, Mr. Thulasidas acknowledged that growth was not possible without capacity. "Unfortunately for AI, for the last few years, especially the decade that has gone by, it has seen very little growth. Something like an average two per cent annual growth. Actually, the capacity needs to be more than the traffic growth rate. So we have missed the entire decade."

Addition of capacity — either through outright purchase or dry lease — was imperative for growth.

"We have now 14 aircraft on lease. We are talking of larger aircraft 747s or Airbus-310s. We are taking two more 747s on lease. We have not yet finalised the number. But we will continue to lease aircraft because even after acquiring the aircraft we intend to, the capacity will still be short. The acquisition has been delayed because of the elections. But, even after they join our fleet, we will still need more capacity," he said.

Though the AI board had approved the acquisition of 28 jets, even that would not be adequate.

"Leasing is an interim option which means we will have to think of further acquisitions too in the immediate future."

Mr. Thulasidas said there was more scope for synergy between IA and AI. But synergy is something that is required not just between AI and IA, but with the entire civil aviation sector in the country. "Even a limited open sky policy of the Government, extended up to April, has brought in lot of capacity out of and into India, there has been very good response. So that gives us in AI greater confidence that our strategy of growth is what is actually called for today."

On the travel trade's demand for a direct West bound connection from Chennai, he said: "I have come to see for myself, understand what exactly is the potential. We will put a flight where there is a demand. It has to be profitable. So, West bound from Chennai appears to be a potential area. We will work on that."

Printer friendly page
Send this article to Friends by E-Mail

Business