Chennai: For a domestic airline going international is not a matter of just having a bigger aircraft, booking the passengers, taking off from an Indian airport and landing abroad. The operational and market dynamics are quite varied.
Says Jet Airways (India) Limited's chief operating officer Peter Luethi, "The contrast between domestic and international operations is manifold. It starts with the requirements of the government negotiated traffic rights to serve any given route."
International aviation is a very demanding and complex business. It is manpower and capital intensive and is always exposed to regional and global events - far different in nature than those in a domestic environment.
For instance, the airline not only has to comply with the regulatory requirements of the country the airline flies to but also that of the nations its aircraft overfly en route. The airline should also comply with the requirement of licences for international services for pilots, inflight crews, technical and engineering staff.
The type of aircraft used differs between domestic and international routes. The domestic turned international airline has to induct new aircraft, mainly wide-bodied ones for the international routes.
"Once these elements are in place, the concerned airlines should meet the stringent regulations laid down by the Indian as well as the government of the chosen destination before an AOC (Air Operator's Certificate) is obtained," Luethi adds.
For a domestic airline that is going international, new training concepts must be developed. It should have qualified engineering and maintenance organisations not only in India but also in the country of destination.
"New representative offices under the prevailing laws of the countries to be served must be established. While commercial staff had to be hired and trained, the IT systems and its connectivities have to be arranged. Last but not least one has to position the airline and its product in both markets. These efforts are quite complex compared to opening a new destination within India." Luethi explains.
However, the experience of operating in the domestic routes is quite useful in meeting some of the operational challenges.
Luethi, 61, is a journalist's delight. He answers the questions posed to him however exhaustive and tedious they may be. And he also sticks to deadlines.
With over 35 years experience in the aviation industry Luethi joined Jet Airways in May 2003 to chart its expansion and growth, managing new aircraft induction, operational procedures and IT support systems. His was earlier with the Swissair Group in Switzerland as COO and executive vice president.
Here he talks about the issues and challenges in transforming the country's premier domestic airline Jet Airways, into a fledgling international carrier. "Our plan is to touch a revenue of $3 billion by 2010." Excerpts:
What made Jet Airways go international?
It was a logical decision for Jet Airways to leverage a very extensive domestic network with a new and rapidly expanding international network. Jet Airways worked itself to a very high level of worldwide recognition for a customer-centric approach, reliability and consistency.
Further, there is no reason why the Indian aviation industry should not also strongly participate in the massive growth of international services from and to its own country. In the past, Indian carriers participated with only 30 per cent share of its own international market.
From a domestic airliner Jet Airways is now an international carrier. Do you have a role model?
There is really no role model that can be sighted having gone the same route as Jet Airways except may be the examples in the United States. There the strong domestic airlines eventually turned into stronger international carriers, leveraging their relative domestic hubbing strength combined with their frequent flyer programmes to gain dominant market position.
Was there an initial reluctance to venture into unknown skies?
The reluctance was more on the side of the regulatory bodies in the manner in which private carriers could start to participate in this growing market and represent the spirit of a new India. On our side there was no reluctance, since our commitment to domestic market growth is complementing a growing international network.
Having said this, the task was tough as the availability of a trained labour force - cockpit / cabin crews, technicians, engineers, field managers and others - were scarce. However, this situation also offers growth opportunities for thousands of Indians to develop themselves to join the fascinating aviation industry.
On the differences in strategies to manage domestic and international airlines…
Jet Airways will continue to play a leading role in the domestic market. However with the introduction of international routes, we will build better connectivities from and to international destinations combining our strong domestic network. We will focus marketing and sales on domestic and international routes according to the prevailing market condition, while providing a seamless customer-care and hassle-free service to our travelers. Thus the airline is being developed as one airline system and is not split according to domestic or international needs. This way we will be able to optimise and create the best synergies.
On the internal and external challenges in transforming a domestic airlines into an international carrier…
The route selection is first based on traffic rights and designation by the Indian government. The government has been able to open markets in the US, the UK, France, Belgium, Netherlands, South-east Asia, China and other countries. Based on this and hopefully further opportunities, we have gone through extensive studies with all possible data that is available.
We then finalised the fleet selection, configuration, staff requirements and the ground equipment. We are in process of addressing the required infrastructure for our engineering and maintenance division, training centres for cockpit and cabin crew, technical training processes. We work with Indian partners as well as with companies outside India. The financial plans, the longer term business plan, the induction plan of these aircraft are all finalised and the organisation works in line with these guidelines towards a smooth and manageable growth path.
The things you had to unlearn and learn in the process…
There is nothing to be unlearnt. Our organisation has been built to serve the domestic as well as the international clients well over the past 14 years. However, flying newly into these countries from India, we of course had to learn to offer international services starting with our frequent-flier programme, web bookings accessibility in these new markets, building an international call centre in Mumbai, menu choice, inflight entertainment, languages, serving alcohol, managing international staff on the ground as well as inflight (cockpit and cabin) and selling and operating larger cargo movements.
On the differences in the costs - hangar charges, landing charges, etc, between domestic and international routes…
Costs that will be newer for a domestic airliner that goes international are the overfly charges, international service charges and taxes. The cost of the aircraft depends on the depreciation policy, the foreign staff required in the international market as well as in India. Hangar facilities are indeed required. A full service hanger for our B-737 fleet in Mumbai will be opened during the first quarter of 2006.
Do you alternate the cabin crew between the domestic and the international flights? We have developed a detailed plan for our cabin crew to be able to participate in the growth and also to serve both the domestic and international sectors.
How do you rate your point of origin and point of destination in terms of current and future potential?
India is one of the fastest growing economies in general and aviation in particular. Our point of origin is thus a more healthy market to start from. Many foreign markets will steadily increase its traffic to India as the country expands in building the required infrastructure.
Is it not better for the airline to look at longer international routes rather than short ones?
One first looks towards the market potential, the strength of a city pair and their growth as well as the relative competitive landscape. It can therefore not be predetermined that longer routes are better. The economics of route is mainly influenced by the type and size of aircraft deployed.
Indian carriers have a very good geopolitical surrounding. First, they operate out of a market with the strongest growth potential. Second the entire region of Asia and Middle East and the Gulf is showing ideal market potential. Thus if the Indian aviation industry concentrates on the development of these positive market trends rather then be guided by a domineering attitude, then this industry will continue to strengthen its position in global aviation.
What is Jet Airways' passenger profile in its international routes - are they mainly Indians or a mix?
Many of our loyal customers from our domestic operation also use our services internationally. In the market we serve the Indian community that has known us for years for our domestic service. On the non Indian traffic we are making good progress, working closely with the international travel trade, corporate houses, joint frequent flyer programme and by positioning our own '9W staff' or our strong general sales agents (GSA) network to develop the different markets. We continue to have a strong profile in the business sector.
What is the rate of flight cancellations on international flights and the load factor.
We have not cancelled any flights to any of our international destinations since we commenced services with the exception of the 30-day disruption on the route between Delhi and Kathmandu due to the political unrest in Nepal. The load factors are in line with our plan. The premier Class to London is doing very well on these routes, after the normal introduction period we are achieving load factors in line with expectation in both classes.
How do you plan to enhance your courier revenues?
Jet Airways has been in the business of on- board courier within India for many years. We will continue to expand these services with the respective partners. Cargo on our international routes, especially with our wide-bodied aircraft operations are a significant revenue earner. We will thus build an organisation that can participate in this segment.as well.
Do you think domestic Indian airlines have the financial strength to stay on in international routes?
Making a decision to go international is not based on how long you can afford to stay in this game. It is a long-term commitment based on the strength of one's organisation, professionalism and the ability to adopt and change for the long run. Any expansion programme that introduces new players in a market place would sooner or later result in some kind of consolidation. The only question is how much damage do they cause the industry in the process.
On the prospects of low cost international airlines in India…
The prospects depend on the bilateral agreements and the way these markets will develop. True international low-cost carriers (LCC) must have the required low cost facilities and benefits. At the moment India does not offer these benefits to its own LCC industry. There is however no doubt that some international or regional LCC will serve India in the months to come.
On the plans to sell tickets via kiosks and the internet….
The year 2007 is when the aviation industry will be on e-ticketing across the world. In India Jet Airways is in the lead. We are ready for meeting the time frame also for our domestic market. During the Aerodrome 2005 in Bangalore, Jet Airways showcased the first prototype kiosk to the Indian market.
What is your fleet expansion programme?
Our current fleet size is 51 aircrafts - three A340-300E, six B737-400, two B737-900, eight ATR-72-500, 13 B737-700 and 19 B737-800
By the end of this year our fleet will increase to 53 with the induction of two B737-800s. During the second quarter of the calendar year 2006 the fleet strength will be 55 aircrafts with the addition of one B737-800 and A330-200 (leased). As per our current business plans our fleet size will go up 89 aircrafts by FY 2009-10. That would include A330s, 777s and B737s.