AirAsia India, a joint venture between Tata Sons and AirAsia Berhad, has been initiating several measures to keep costs under control and ensure the safety of passengers, and is hopeful of renegotiating contracts with the aircraft lessors. In an interview with BusinessLine , Sunil Bhaskaran, MD & CEO, AirAsia India shares the carrier’s gameplan as the airline navigates itself during the pandemic. Edited excerpts:

 

There have been various estimates about how much time it will take the airline industry to return to pre-Covid days. But what does the current situation tell you?

We were expecting Indian domestic aviation to get back to normalcy (pre-Covid levels) by April 2021. But it increasingly looks like it will be April 2022. By Diwali, the domestic traffic is expected to reach 50 per cent levels compared to last year. The trajectory is good. But for an airline, it is not enough. The fares are at the lowest end of the bands specified by the DGCA.

 

So, what are the factors that you believe are delaying the recovery?

There are two main factors — The confidence among customers to start flying again, which is expected to come back only once a formal cure or vaccine can be made available. Second, even within the people who are willing to travel, the uncertainty of quarantine rules in different States acts as a deterrent. And, as of now, there are a lot of unidirectional routes where migrant workers from the East are returning to the cities. We will get a more accurate demand picture when the train service is resumed completely. Most migrant workers prefer travelling by trains rather than by taking a flight. So, we will get to know how many will start taking flights. But, the good news is that the number of daily fliers has improved from about 60,000 passengers per day to around 1,75,000 passengers a day (approximately 43 per centas compared to last year).

 

But we could assume more people are not travelling by flight, because there is still the fear of contracting the coronavirus…

Let me tell you that the entire flight experience, from the departure terminal of an airport to the arrival terminal of the airport is extremely safe. The safety and health protocols have been very well implemented. The Indian government should be lauded for ensuring that all stakeholders (airports, airlines, ground handlers, regulator, civil aviation authorities and health authorities) worked closely together to develop and implement the new safety protocols to ensure complete the safety of passengers. This protocol was developed very scientifically. The air quality and circulation in the cabin is so good that it is next to impossible to catch the infection inflight. Thanks to HEPA filters, nearly 99.9 per cent of the virus, which is0.06-0.14 micron in size, gets eliminated. The fresh air inflow inside the cabin is changed 20-30 times in an hour. So, fresh air gets circulated every two-three minutes.

According to data published by the IATA, the risk of a passenger contracting Covid-19 onboard is extremely low, with only 44 identified potential cases of flight-related transmission amongst 1.2 billion travellers, that is one case for every 27 million travellers. The layered approach of safety measures alongside comprehensive guidance for safe travelling has beckoned air travel as the safest mode of travel. However, it is imperative to maintain personal hand hygiene and use protective gear like masks and face shields.

 

There are reports about how AirAsia Berhad, which owns 49 per cent in the airline, might exit the joint venture with Tata Sons. How true are these reports?

This is a question to be addressed to the promoters.

 

One assumes that not flying international routes has boded well for the airline. Otherwise, the cash burn would have been higher...

International flights are expected to return to normalcy much later than normalcy returning to domestic flights. To that extent, not having international flights has turned out to be good for us.

 

How is the cost structure of the airline? Are there any areas which need to be tightened?

Our cost structure is amongst the most competitive in Indian aviation. Where we lose out on is the fuel expense. There are airlines which have already inducted the A320Neos, which gives them a direct saving of 10-13 per cent. We have just inducted our first A320Neo (CFM engine) this week. But we save on many other things and processes to have the highest productivity of our assets. These include very high utilisation of the aircraft as well as the very efficient turnaround time.

 

Do you have room to renegotiate the aircraft leases?

The huge impact on the aviation sector has obviously impacted lessors equally. Whilst the contracts are weighed heavily in favour of the lessor and airlines have minimum leeway; we expect lessors to look at the airlines which will survive this crisis differently and provide some relief to them. But what we are doing which is quite significant is that we are focussing more on digital. We have tied up with TCS for application development and maintenance contract. We are also thinking beyond the airline. We are working closely with the Bengaluru airport and its vendors to enable facial recognition based contactless right from entering the airport to boarding the aircraft.

Related Topics
comment COMMENT NOW