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Nimish
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Joined: 16 Dec 2006
Posts: 9757
Location: Bangalore, India
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 Posted: Wed Apr 18, 2007 10:31 am Post subject: Economic Times: Great Interview With DN And IT |
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At: http://economictimes.indiatimes.com/quickies/1919180.cms
Some quotes:
| Quote: | Capt: I always knew him because he?s larger than life? Sometime ago, I think before he started the airline, we met once in his house.
ET: That's when he offered to buy you out...
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Mallya: I’d even go one step further and say that if Gopi is going to get the guy from the village to fly, great. Once he flies and once he prospers, he’ll come to me, in any case.
ET: If the opportunities are so good, why is it that both of your airlines are losing money
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Mallya: The government has to listen. How long will the government not listen? Ultimately they must realise there is a lot of public money at stake. Lot of small investor money as well. In so many other sectors the government has provided much needed relief, they have become far more practical in formulation of policies. So why not civil aviation? Gone are the days when government can think that civil aviation is the prerogative of the rich, and to quote one example, impose an additional tax on first and business class passengers’ travel overseas.
Government has to understand that growth of civil aviation, connectivity and travel is necessary to maintain the GAP growth of this country. They are not doing anybody a favour here. It’s all very well to have a luxury tax on say automobiles. You can say why is the guy driving an expensive automobile when he can drive a cheaper one and, therefore, we’ll give a tax concession to address the difference in economic status. But when it comes to civil aviation it is not a question of economic status, it is a necessity. People have to travel. So it is not right to penalise air travellers, which they are doing now. Maybe it will take a couple of years to convince them but they will get convinced.
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Capt: Four years ago when I started the airline, the Bangalore-Delhi fare was Rs 12,300. There was a cosy, comfortable, tacit cartelization, between the three airlines, then - Indian Airlines, Jet and Sahara. Rs 12,300, when oil prices were one third, salaries were half. Today if Vijay gets a fare of Rs 7000 to 8000 he is in profit and if I get Rs 4,900 at 80% occupancy, I am in profit. The problem is that I’m not getting Rs 4,900, I’m getting about Rs 4,600. I’m getting about 300 or 400 or 500 rupees less than what I’m supposed to get. So I don’t need to charge about Rs 3000 more or Rs 4000 more. I just need to get about Rs 400 more. The money is there. It is a function of the irrational behaviour of all the airlines put together. I think it is good because that’s why there is a free market economy. It’s our inability to understand the dynamic pricing model, how to get that Rs 400 more.
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Capt:Coming to the question of consolidation, in any emerging economy it’s like a gold rush. There’ll be too much of sudden growth. There will be acquisitions and mergers. I think it is a sign of a healthy economy that when companies go sick or bankrupt, it can also create monopolies. There is money available today. So when companies form the mergers and acquisitions banks are ready to fund them.
ET: So would you like to acquire another airline?
Capt: Yes, definitely
ET: Mr Mallya, is it possible to make money on the Air Deccan kind of fares?
Mallya: Gopi admits he is short of three four hundred rupees and I respect him for it. I know .. he has 80% load factor today, but he is short of yield. If he increases his yield, his load will go down. So at the end of the day, the whole industry has to become more sensible.
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Mallya: At the end of the day we have this great situation where the full service carriers are blaming all the low cost carriers, and low cost carriers are blaming all the full service carriers. Water has to find its own level, and those who have the financial resources to stick it out, will stick it out.
I’m saying it in front of him. He cannot continue selling fares at his cost today forever. It’s impossible.
Capt: Yeah, somebody called me an evangelist. I said no, I have evangelical zeal. It’s not an NGO, it’s a business. Except that my business model aligns itself with the nation’s screw-ups. But having said that, business has to be in profit, it’s a very sacred word. I mean all your roads are built by all the taxes companies pay... your hospitals, all your salaries for government employees. But having said that, we have a low fare and our fares were always above our cost, when we started. It changed only later when the excess capacities came and there were full service carriers, basically Jet and Indian and Sahara, who were trying to stop us. You can try to stop competition by using both fair and foul means. One is in the normal competitive spirit. The other is by using your clout to see that the new competitor doesn’t come in. I’ll just give you an example. Today we are the second largest airline in the country. Our January market share is 20.8 and Indian airlines is 16.3. I have 42 aircraft. What it took them 53 years, we did it in less than three and a half years.
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A great read and a no-holds barred type of interview. |
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karatecatman
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| Posted: Wed Apr 18, 2007 12:07 pm Post subject: |
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Surprising the two men are talking.
There was a time when they were constantly at each other throats in the media.
Is this the next airline merger? Deccan as Kingfisher's LCC? |
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the_380
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| Posted: Wed Apr 18, 2007 2:11 pm Post subject: |
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| Quote: | | Is this the next airline merger? Deccan as Kingfisher's LCC? |
There's still some time before that 
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lambuhere1
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| Posted: Wed Apr 18, 2007 2:39 pm Post subject: |
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Or is it the other way around ?
Deccan buying our KF and renaming it as Deccan Tiger  |
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Nimish
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Joined: 16 Dec 2006
Posts: 9757
Location: Bangalore, India
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| Posted: Wed Apr 18, 2007 5:25 pm Post subject: |
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| karatecatman wrote: | Surprising the two men are talking.
There was a time when they were constantly at each other throats in the media.
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I'm guessing they're friends but have differences in opinion. And that comes out clearly even during the interview - with Mallya and Gopi disagreeing on points. |
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VABBy
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Posts: 823
Location: DEL
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| Posted: Wed Apr 18, 2007 7:23 pm Post subject: |
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I read the whole article in the hard copy of ET today at wrk and i must say that its indeed an eye opener.
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stealthpilot
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| Posted: Fri Apr 20, 2007 12:23 am Post subject: |
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Thanks for bringing it to our attention Nimish,
Yup nice interview, but it didn’t really tell us a whole lot that we didn’t already know.
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HAWK21M
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Posts: 8132
Location: Mumbai, INDIA
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| Posted: Fri Apr 20, 2007 6:16 pm Post subject: |
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Two Men with different ideas & the same goal.
Thanks for sharing.
regds
MEL
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COUGAR
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Posts: 986
Location: Bangalore
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| Posted: Fri Apr 20, 2007 7:47 pm Post subject: |
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No Mel! Their goals are very diff and it is stated in the interview.
One wants the common man to start flying. And the other wants to be cruise liner in the sky. VERY different.
The only Common thing between them is the choice of aircraft: A320 and ATR!
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