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The Rediff Business Interview/ Richard G Koszarek

'Budget must lower import duties on aircraft spares'

Gujarat Airways Limited was originally promoted by a corporate group headed by Non-Resident Indian J M Patel. It is the only regional airline which operates in the regional andr district routes.

Under the stewardship of chairman Richard G Koszarek, GAL is eyeing new regions for expansion, apparently encouraged by the Union government's resolve to boost civil aviation. Shobha Warrier interviewed Koszarek in Madras recently when he was at Dynamic South summit, exploring options of launching operations in south India. Among other things, he revealed his expectations from the February 27 Budget.

How do you find the business atmosphere in India?

From the investor's point of view, yes, I'll say that certain infrastructure is lacking here. As people who run an airline, we have to be content with certain things like the points that we fly to, watch hours, fuel supplies, engineering servicing, etc. To develop that infrastructure, you need funding.

If you look at India's aviation history, there was an explosion of many airlines at one time and it was followed by consolidation. Now you have only Jet Airways and the state-run Indian Airlines. But we are the only airline which runs in the regional routes. Now we are looking for expansion in the south.

Do you see south as a dynamic destination?

Absolutely. If it were not for NEPC, we would not have had nearly 170 trained pilots at our disposal. I look at this also as a part of infrastructure.

NEPC could not survive for long. Many private airlines of that period failed miserably.

It was quite unfortunate, I would say. But I gained from the fact that they developed excess pilots in the market. The failure might have been due to the overcapacity in the market that happens with any new industry. Later on, Jet Airways came into the picture with an aircraft which is of the right size. They started with four aircraft and slowly bought the next 15.

Above all they had a much competitive marketing. But what we are looking for now is inter-city operations. We operate in seven cities. We find that certain routes are profitable and certain routes are not. If we have to re-adjust the routes, one has to go to the civil aviation ministry to see that the lesser profitable routes are less and the profitable routes are more.

Have you encountered bureaucratic hurdles, which India is famous for?

You said it! India is famous for it and it is there.

What's the remedy?

Perseverance. You just stay there. They certainly are concerned about having the regional airline promoters.

What do you expect from the aviation ministry? Opening up of the sector?

I think more than us, the aviation minister himself expects that. What we expect from him is, one, the reduction in fuel taxes which actually comes from the ministry of petroleum. Then you have the travel tax, which takes 15 per cent of your ticket. For a small airline, that is a pretty big bite. Those two items could be given concessions because we have less than 50 seats in our aircraft. If we had these concessions, we would have more sustainability.

Of course, identifying the other routes, the profitable pilgrimage routes like Puttaparthi or Tirupati or… See, you have a very interesting economic relationship between the south and Saurashtra. There is a lot of travel between Coimbatore, Bangalore and Ahmedabad.

If you take the Indian airlines, because of the government policy, it is forced to serve the socio-economic routes. All these things are highly politicised. Indian Airlines is constrained by the rules, being a part of government. But Jet Airways is more commercially oriented.

How profitable is it to run air-taxis in India?

Actually my seats are priced higher than say a commercial airliner, which operates long routes. But there are certain routes like Bombay-Diu where I can afford to run multiple flights at a higher price, more than the Bombay-Baroda route. Even if I lessen the price of Bombay-Baroda, it doesn't make me any competitive with somebody like Jet Airways.

They have a much bigger marketing infrastructure than I do because I am a small regional airliner. Regional airliners should be co-chaired with the national airlines.

This was one of the points to be discussed with the civil aviation ministry. But I am here to speak to various state governments to see what interest they have and whether they have the money to afford the interests.

Are you happy with the way India is opening up its markets?

I remember the days when it took me three days to phone New York. Now you have teleconferencing. Yes, I think India has made great strides.

Do you have any specific expectations from the Budget?

I hope they will lessen the import duties on spare parts of aircraft. You have the commerce ministry that needs to effect specific rules allowing the import of new spares instead of segregating them to entail higher duties. That is what I am expecting from the Budget.

More than hundred prospective investors from the US have assembled for the Dynamic South summit. Do you think the investors do not care much about the sanctions imposed by the US government?

Investors do care about the sanctions. You take aviation for example. If you apply for any aircraft part for civil application, there is no sanction on that product. In other words, sanctions are specific to certain areas. The investors might have been cautioned before they came here.

Are you optimistic about your plans for the south?

Yes, of course. The very fact that a meeting of this sort is happening here (Madras) is very encouraging. People are being made aware that opportunities do exist here. For instance, DuPont had plans to set up their plant in Goa but finally they found a home here. Why? Because the south probably is more understanding. The presence of the US ambassador at the Summit also is encouragement.

Is south India more aggressive than other regions in marketing?

I think all the states are getting more aggressive. The states are becoming more competitive in attracting industries. I just hope I will be attracted to south too!

Photograph by Sreeram Selvaraj

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