Amar Abrol took over as the CEO of troubled AirAsiaIndia in March this year. In an interview to BusinessLine , Abrol shares the airline’s plans to turn around and become one of the leading low-cost carriers in the country.
How has the homecoming been? Since taking over in March, what has been your top priority?
I was happy to return to my homeland. Have been away from here for a good 20 years. We have actually done a number of things.
The shareholding pattern is more or less final now. It is done and dusted. The first port of call was to get the investment for further expansion of the airline. We have got the board approval now. We made our presentations to the AirAsiaIndia board as well as Tata Sons board.
How big is the investment and what will it go into?
It is in multiple of dollars. It is around $40 million or thereabouts (₹250 crore). We have to now deliver on the promise we made to the board. The money will go into hiring people, opening more stations and getting more aircraft. We plan to induct about 20 A320s and we expect to start inducting them as early as possible, though there are no timelines as of now. We will be inducting our seventh aircraft in September.
Money will come from both the partners?
Yes, both the partners will contribute as per their equity stake. There will not be any changes in the shareholding pattern.
All the aircraft that you have inducted so far have been from AirAsia Berhad. So, will the rest come from there as well. One criticism against the airline is that the lease rental charges paid to AirAsia Berhad are more than what the partner has invested in its Indian operations.
I don’t know about the past. But, we are very clear that we are going to get the best from anywhere we can get. We will float an RFP and go for the lowest bidder. If it comes from AirAsia Berhad, then it is good, if not, it is still fine with us. We will look at the overall age of the fleet and where we are going to fly. I have to return money to the shareholders. So, there is no compromise there. Money is in the pocket. We just have to start focusing more on operational issues.
Have you moved away from being an ultra low-cost airline to a low-cost model?
We haven’t actually. It is still pay-as-you-use model. We have unbundled the pricing. You don’t have to pay for insurance, air travel. It is all up to you. It is the model we have been operating for all across Asia. There are a bit of deviations like you can’t charge for the first 15 kg of baggage. So, there is a bit of a deviation there.
What have you done internally to return to profitability?
We have tightened up our internal structure. We are adding on talent, hiring more pilots. We have about 50 of them and we will get more as we induct more aircraft.
We will introduce red carpet and bring in insurance. Our team has for the past few months been working on some of the fundamentals. We have fixed our OTP (on-time performance). Now, it is around 85 and for a few months it even went upto 90 per cent. Our load factor is 90 per cent. We have a solid product and we have improved it further.
The airline has been reducing its losses over the last few quarters. When will you turn profitable?
We are GP positive now starting April. We should turn profitable soon though I won’t tell you when. We are running a tight ship. I want to pass on the benefits to our consumers.
If one looks at some of the figures from your balance sheet, even though the airline had longer flights (an increase of 62 per cent), the average fare grew a mere 12 per cent. These are key indicators about the financial health of the airline.
India is a tough market. There are full-service carriers which offer lower fares than low-cost airlines do. Revenue side is a challenge.
But we run a tight operation. For example, without getting into specifics, the number of hours we fly, the turnaround, whether the aircraft flies on time and the fuel that gets consumed are all the parameters which we constantly monitor. Our turnaround of our aircraft is a mere 25 minutes, which is the lowest in the industry. How we do it is our trade secret.
There was talk about having an international hub from one of the southern cities. What has happened to that plan?
We can actually fly international from anywhere because our aircraft can fly non-stop for over four hours.
But right now the focus is on India. We have the cheapest cancellation fee, lowest processing cost and there are a number of elements which differentiates us from the rest.