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Rediff.com  » Business » Kiran Rao: Spreading his wings

Kiran Rao: Spreading his wings

February 14, 2005 13:17 IST

Kiran Rao, the senior vice-president of Airbus Industrie, is a salesman par excellence.

On a recent trip to an Airbus facility in France, a few journalists from Bangalore and Chennai were pleasantly surprised when Rao served them piping hot south Indian food he had brought from home. Needless to add, they were completely bowled over.

Thanks to Rao, the euro 20 billion European aircraft maker, Airbus, is in the process of finalising orders worth over $6 billion in India with various airlines placing orders for around 100 aircraft leaving arch rival Boeing far behind.

Thanks to the orders, the 41-year-old Bangalore-born aeronautical engineer has moved up the Airbus hierarchy. Rao, a PhD in transonic aerodynamics, who was till recently Airbus's vice president incharge of the Indian region and sub-Saharan Africa, has relocated to the Airbus headquarters at Toulouse in France as a senior vice president.

In his new role, Rao will be responsible for carrying out price negotiations for Airbus with airlines all over the world.

Rao began his career with British Aerospace (now called BAe Systems) before moving to Airbus as a marketing manager in France. Within two years, he relocated to the US as the director of marketing for Airbus.

In April 1996, he was made in-charge of India. In 2000, he was promoted as vice-president and his sphere of responsibilities was increased to the whole of Indian region and sub-Saharan Africa.

People who know Rao say that he has tremendous resilience and this is how Airbus bagged the Indian Airlines order to buy 43 aircraft from it for Rs 9,475 crore (Rs 94.75 billion).

The purchase plan of the state-run carrier had been stuck with the government for a long time and insiders say Rao played a big role in persuading the government and the airline to go ahead with the deal.

The Indian Airlines board had approved the proposal for the first time at its meeting in March 2002.

Subsequently, Airbus's arch rival Boeing, hit hard by the slump in the aviation market following September 11, offered the government a Rs 700-crore (Rs 7 billion) cut in prices as a last ditch effort to get the largest aircraft order from India in that year.

"Many thought that with the price cut, Boeing would manage to get the government to reverse its decision to award the contract to Airbus. There were pressures on the government from other quarters too," said a source who was closely associated with the negotiations with the two aircraft makers on the Indian Airlines deal.

Rao then managed to convince the government and the airline that, in the long term, Airbus aircraft run would yield better results for the PSU.

He also argued that Indian Airlines needed to complete its fleet acquisition plan quickly as it was under attack from private carriers. This clinched the deal for Rao.

Airbus is currently negotiating with Indian Airlines over the delivery schedule of the 43 aircraft and the prices. Indian Airlines has set up a price negotiation committee to deal with Airbus to reduce the prices further.

The price negotiation committee is also using the earlier Boeing offer to cut prices by Rs 700 crore to get Airbus to cut the price down further.

While the government and the carrier are hopeful of getting a better price, the aircraft maker has not made any commitment so far.

It is not just orders from Indian Airlines that Airbus and Rao have won recently. Indian low cost carrier Air Deccan is planning to buy 30 Airbus A 320 for $ 1.8 billion.

Vijay Mallya's Kingfisher Air is also buying 30 Airbus aircraft.

With Air-India fine-tuning plans to buy 50 aircraft at a cost of about $ 7 billion, grabbing this order will be Rao's next challenge. It helps, of course, that with 10 new carriers having announced their intention to start operations soon, there will probably be no shortage of orders for some time to come.

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Bipin Chandran
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