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Nandini Lakshman |
June 21, 2005
On Wednesday, a fleet of five Hyundai Getz cars will make their way from a dealer in suburban Mumbai to the refurbished environs of the Rs 4,000 crore (Rs 40 billion) Nusli Wadia group's flagship company Bombay Dyeing in central Worli district.
It will be a rally with a difference. The cars will drive in single file, painted in bright turquoise blue and displaying a gigantic white logo reading "Go".
No, it will not be a cavalcade of dignitaries. The cars are for the top rung of the soon-to-be-launched upstart airline Go Air which is temporarily housed on those premises. And taking charge will be the younger Wadia scion Jeh Wadia, managing director of Go Air.
By then, he will have returned from the Paris Air Show currently underway. He will also have parked his current fleet of Ferrari, Mercedes Benz, Cadillac and Range Rover cars in the garage.
Aviation experts believe that Wadia is in Paris to network and tap investors. Whatever it is, for the moment he is obsessed with the job at hand -- Go Air, positioned as India's lowest-cost airline, is scheduled to take off in October.
At 31, Wadia may be the youngest airline chieftain, but his ambitions are nothing short of soaring. That's because the Go Air aviation project is perhaps the Wadia group's most ambitious endeavour. "It is also the first project undertaken by the third generation of Wadias," says a consultant.
Current projections are that Go Air will take off with a fleet of three 180-seater used A-320 aircraft. The strategy is to go in for a combination of leased and owned planes.
Wadia claims that they will have 20 leased planes beginning in the second year, at least some of which will include Boeing 737-800 aircraft. "The first of our new aircraft will come in from 2008," claims Wadia, who is in Paris to talk with both Boeing and Airbus.
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But, should Go Air take delivery of new aircraft some time in 2007, then the number of leased aircraft could come down to 10, he says.
At the time of going to press, with other Indian carriers making news for having placed record orders at the Paris Air Show, there's still no news from the Wadia camp on its negotiations with the manufacturers, though announcements are expected soon.
Unlike Vijay Mallya's Kingfisher Airlines which has tied up with national carrier Indian Airlines for an engineering, hangar and ground services contract for an alleged Rs 1 crore (Rs 10 million) per aircraft, Wadia says that there are no tie-ups being considered.
For a low-cost airline, maintenance accounts for 19 per cent of its expenses.
However, a ground handling agent claims that Go Air has shortlisted four partners for outsourcing for ground services and the final decision is pending.
"These are both agents as well as airlines like Jet, Sahara and Indian Airlines," he adds.
Go Air's flight schedule is believed to initially touch second-tier destinations that will include Baroda, Ahmedabad, Goa, Nagpur, Indore, Jammu, Srinagar and Hyderabad.
"There are plans to keep the aircraft for a minimum of eight to 10 hours in the air," reveals an aviation expert.
But why an airline? Is it part of the herd mentality currently embracing India Inc? "Not at all. I wrote the summary report way back in 2000. I am a prudent financial investor and the objective is to improve shareholder value," says Wadia.
Still, he is loath to divulge figures, dismissing it as competitive strategy. "We are not taking money from any of our group companies. It is the Wadia family money," he says. "We will have a no-frills airline with a focus on driving down costs and fares. We will offer quality consistency, quality assurance and a time-efficient product," he reiterates.
"The Wadias have enough affluent friends abroad they could borrow from. Also, many overseas venture capitalist are waiting to invest in Indian aviation," says the head of a new airline.
And like most of the other Indian airlines, Go Air is also wooing a foreign crew. "Where is the talent here?" asks Wadia puffing on his Marlboro. Not too many people are buying that. They claim that his core team is not yet in place.
Wadia refutes it, claiming that apart from Graham Williamson who is the chief executive officer imported from SkyServices, and general manager engineering Cheong Cheng Lock Lucky from Singapore Airlines, he has already hired a chief pilot, director of information technology, director of sales and marketing and head of flight operations, many of whom are serving their notice periods.
Wadia says his managerial crew, including pilots, would be a mix of Indians and expats.
This puts pressure on Go Air as a low-cost airline -- salaries account for 12 per cent of a low-cost airline's costs. With expats on board, costs go up further since they have to be paid in dollars, say consultants.
Airport services is another issue -- such as the turnaround time (the time taken to get people from the lounge into the plane). For Jet Airways, the turnaround time today is 45 minutes.
For Air Deccan, it is 30 minutes for a 180-seater Airbus and 15 minutes for a 48-seater ATR.
"Go Air will have to be really fast on the ground," says a competitor. Also, most low-cost carriers started with second-hand ground service equipment like coaches and push back tractors.
Coaches, which transport passengers from the terminal to the plane, account for 15 per cent of the costs as a new coach is priced between Rs 35-45 lakh (Rs 3.5-4.5 million). Knowing Wadia's background, will he opt for used equipment? "Nothing is finalised," say his people.
At the moment, Wadia shares floor space with elder brother, Bombay Dyeing's deputing managing director Ness Wadia before he moves closer to the airport in two months.
The Go Air terminal is sizzling with activity. Until a few months ago, he was only the deputy managing director of the Rs 146 crore (Rs 1.46 billion) Bombay Burmah, a group company.
Now, juggling his responsibility with Go Air, a couple of months ago Wadia traded his plush office on another floor for a spartan space amongst his employees. His glass-encased see-through cabin, although large, is more like a mini-conference room.
"I want to be with my people as I hate the hierarchy approach," he says fiddling with his laptop. So, facing him in the adjoining cabin is the silver-haired Williamson.
Wadia claims that his current aviation dreams grew out of the angst of being born with a silver spoon. Yes, he lived every boy's dream of chasing anything "with speed and adventure" even as existential questions plagued him.
All trappings of wealth were more than welcome, but every indulgence was awash with guilt. Every time he spoke to his parents about it, they said he was "truly fortunate".
"Yes, it was a contradiction and I couldn't live with it myself. That's when I realised I had to do something about it," says Wadia.
Compounding the anguish was the Rashtriya Swayamsevak Sangh stalwart Nanaji Deshmukh, who has been a close Wadia family friend for decades.
Deshmukh, a champion of the self-reliance movement for the underprivileged residing in Chitrakoot in Madhya Pradesh, where he runs the Deendayal Research Institute, has been a great influence on the Wadia boys.
According to family friends, Deshmukh visits the Wadia household almost every month and is believed to have told Nusli Wadia: "You have two sons, so why don't you give me one of them for Chitrakoot?"
"At 26, I realised that while I was seeking responses to my questions, the answer was always in front of me. That's when I joined Nanaji and got involved in social work at Chitrakoot," says Wadia.
That was five years ago. With no domestic air connectivity, going to Chitrakoot meant flying from Mumbai to Delhi and Allahabad, and then taking a car.
Initially, like all rich boys, Wadia's Chitrakoot visits involved hiring a private jet "which cost me a bomb". The entire journey by train was anything from 16-26 hours. So he decided to travel, at least part of the journey, like the common man.
"Even an air-conditioned seat didn't guarantee the basic facilities. The conditions were pathetic. That's when I decided that I'd make a difference to their lives by having a low-cost airline, offering train fares for flying," claims Wadia, tracing the genesis that marked the conception of Go Air.
Wadia's career had begun with the late nineties dot-com boom, when he was put in charge of the group's IT initiatives. It involved developing businesses in IT education, building bandwidth, content and cross border venture deals, all fuelling his social conscience.
All of that was way ahead of its time. But with the dot-com bloodbath in early 2000, Nusli Wadia advised his son to pull out. That's when Go Air happened.
The aviation industry dismisses Wadia as a novice. "Aviation is a serious business and not a rich boy's dream to own a plane finally coming true," says a well-placed Indian Airlines pilot. Already, many low-cost airlines have been launched.
And Kingfisher Airline, which had also made noises about being low-cost, is now being touted as a full-service carrier.
Wadia claims he is not worried. "We will be the lowest-fare airline in India," he says. That's why he is going all out to ensure that his take-off is well on schedule.
|The 'good' life |
Is Jeh Wadia a bad boy turned good? At one time, like most rich industrialists' sons, he was a familiar face on page 3. Wadia says that he was a heavy drinker and partied like crazy. A severe bout of jaundice a few years ago saw him give up liquor completely.
Ex-Bombay Dyeing managers say that Wadia at that time was so impatient that many of the workers on the shopfloor were at the receiving end of his brusqueness.
The Wadia boys were initiated into the business through the Bombay Dyeing shopfloor. But his loyalists -- and there are plenty of them -- defend him.
"You lie to him and there is nobody worse than Jeh," says a manager. By Wadia's own admission, he is very short tempered and, like all young boys, "had his wild days."
Sent to England to study at Richmond College, a pocket money of £600 was 'not sufficient for partying.' So Wadia took up a summer job at a car dealership.
"I changed cars every day when I went to college, impressing everyone around me," he says. Dropping out of college in the third year, the facade continued till he came back to India.
Born with the gift of the gab, Wadia displayed a business streak that the family hadn't unearthed. "Coming into contact with so many people, the dealership gave me a different outlook on life. I understood different values from the money perspective. It was the turning point in my life," he says.
Back in India, he set up a car dealer agency -- PNS Motors -- and imported cars. While the money from this fuelled his wild passions, he was made a management trainee in Bombay Dyeing with a Rs 2,000 monthly salary to "learn the ropes from ground zero".
Despite the education, operations was not his forte. "I had cotton coming out of my ears and I hated it," he says. Now he wants to replace that with turbine fuel.
|The low-cost airline cost structure |
Having a low-cost airline may be the flavour of the season, but the cost structure is completely different compared to a full-service airline.
- A. Fuel
- B. Maintenance
- C. Airport charge
- D. Capital cost
- E. Salaries
- F. Marketing and distribution
- G. Interest
- H. Insurance