The advertisement campaign brought us some unexpected results. People called up at any time of the day or night. Could we fly them, right away, to Jabalpur or Gwalior or Nashik or Nainital? They called us because no airline flew there. We quoted our price: two lakh rupees. When the caller heard the figure, there was the sound of a gasp on the other side, followed by long silence, a sigh, and the plonk of the receiver being placed in its cradle. I attended to some of these calls and recognized that the callers were middle-class people, one a bank official, another a teacher, and the third a government official. They had seen our advertisement which fired their imagination; they felt inspired to use our service. We were inundated with these inquiries, in the form of telephone calls and emails.
These were calls from people who were waking up to a new possibility. They were beginning to look at themselves differently. It was simply another matter that the helicopter pricing dynamics did not allow us to fly them, but they exuded a confidence towards things that once seemed the preserve of people belonging to well-to-do countries of the world. They represented the change that I had not thus far taken cognizance of both because I was preoccupied with work, but also because I failed to see it. I was like a father who suddenly realizes one day that his daughter has grown-up. My daughter does that to me sometimes. She turns to me and says: ‘Papa, you forget I’m nineteen!’
These calls served as an eye-opener. I began to note the signs of change. I sensed the hope, optimism, energy of the newly emerging India. I saw on my road travels computer schools run within shacks and garages. I went into one such school in a remote taluq town which was run by a young man who had done some computer course or other and had decided to become an entrepreneur. It was a rickety, run-down building but the eyes of the young entrepreneur were bright and full of hope. I saw change in my own village. I saw a young woman farm worker, earning no more than Rs 40–50 a day, returning from a weekly village bazaar with a tube of Fair & Lovely face cream. The village people I had known used castor oil on their head and green gram paste as a skin-cleanser for the face. This new disposition—to buy what the TV advertised—was taking hold of rural India. Wanting to look lovely was good enough but fair as well seemed to me a reflection of our colonial mindset!
Village boys had now cast aside neem sticks for toothbrush and toothpaste. Friends who lived in district towns had refrigerators placed at the centre of the drawing room as an object of display. More people rode motorbikes in rural India. There were TVs everywhere. The well-to-do had at least a second-hand Maruti car. A newspaper article said that for companies such as Colgate, Unilever, and Hero Honda, villages were the new growth zones.
Jayanth and I were in the habit of arguing over the destiny of India. Jayanth would in exasperation sometimes say that there was something wrong with us Indians: we are an inferior race. He said we can’t build a good road or produce electricity or clean water, and we can’t keep our streets clean because we are inferior. I was tempted to agree, but then wondered if it was true that we are an inferior people. If we are, how was it that we built the Taj Mahal and the Madurai Meenakshi Temple, among others? How do we explain the musical genius of Bhimsen Joshi, Zakir Hussain, and M.S. Subbulakshmi?
I saw change on the ground through the worm’s viewfinder. I saw it from air, from the bird’s-eye view. I was curious about objects that glinted briefly and disappeared, the slimmest of slivers. They were however no chimera. Once flying from Goa to Bengaluru, I asked the pilot to fly lower over some gorgeously scenic hillside that hid a cluster of mud houses. From lower altitude, I discovered what the glistening objects were: they were large dish antennae for television. I counted one antenna to five or six villages. They represented the new landscape of the country.
India was once seen as a country with a billion hungry people to feed. The textbooks said: ‘India is a poor country because it is overpopulated.’ It was the staple image that politicians and economists alike manipulated for their plans and agenda. The image was of unappeasable hunger, of a bottomless gorge: no matter how much food the country produced or factories it set up, the majority would always be poor, unemployed, and backward.
This image of a population explosion allowed political parties to create maudlin poll campaigns. It allowed the government to launch family planning drives; to offer subsidies, dispense doles and charity.
I saw this image aslant, and with new eyes. India to me seemed not the beneficiary of a billion doles but a growing repository of a billion consumers. Notwithstanding the complexity of caste and community and the regional, ethnic, and religious pulls on the electorate, the forces of a new society were active. These were the forces of a new unifying caste, that of the consumer. When two billion hands produce and there are a billion mouths to consume, liability becomes the greatest asset!
I saw that people in rural India were playing an increasing role in the consumer space, to buy a range of consumer goods. What was remarkable, and this hid the seed of a future Deccan venture, was that people manifested an enthusiasm to buy everything except air tickets. This was the shock wave that hit me. India was on the march and a leap of faith was required. If India was to become a developed economy, its middle-classes should be able to travel by air between cities. I saw that there was no going back for India; it had launched itself on the high wave of consumerism and nothing would stop it from becoming an economic superpower in the next 20–30 years.
After we returned from South Africa, Sam had once suggested, ‘Gopi, why don’t we start a low-cost airline?’ I said nothing at the time but his words set off a quiet buzz somewhere deep inside my brain. Sam repeated the same thing after a trip to the US at a later date. He had flown a low-fare airline and was excited about it. He thought that perhaps we should do this too.
The buzz in my head seemed somehow to connect with my intuition that development should enable the Indian middle-classes to buy an air ticket in the future. I had discovered, and brought out of obscurity, one air-strip near Dindigal. There must be many more on the map. Why not discover them?
I asked my pilots to mark all existing, used and unused, airports in India on a large map. What I saw, when the dotted map had been finally made, overwhelmed me. There were 500 airstrips and airfields across India but with no air connectivity. Some were large enough to accommodate a Boeing, some had gone to seed from disuse and inattention, some were politicians’ gifts to their constituencies, some were Second World War airstrips, and some defence airstrips.
Not long thereafter, I attended an international helicopter convention in Florida, USA. I met a woman there who ran a helicopter tourism company at Grand Canyon. She invited me to visit her company office and I gladly accepted. Grand Canyon alone had twenty dedicated helicopters for tourists.
On the way to Grand Canyon I made a transit stop at the Phoenix airport. As I waited at the airport to be picked up by a helicopter my friend was to send, I strolled around the passenger lounge. A prominently displayed plaque there said that Phoenix airport handled 1000 flights and 1,00,000 passengers a day. I found it difficult to believe that this back-of-beyond airport, in the middle of a desert, handled more flights and passengers than all the forty airports in India put together. I rubbed my eyes in disbelief and went back to read the plaque once again!
I flew Southwest, the legendary mother of all low-cost airlines, to Phoenix. I was seated next to a carpenter, a regular American blue-collar worker. Big built, blue tattoo marks on forearm, and dressed in worker’s overalls, the man was chomping on a large hamburger. I saw written on the napkin he held, Southwest’s motto: ‘30 Years: One Mission: Low fares.’
Two ideas came together in my head and fused into one obsession: India needs an airline that goes everywhere, India needs an airline that will allow millions to fly. I didn’t need a McKenzie to tell me it would work. I simply knew it. I remembered a Kannada proverb. ‘Do you need a mirror to see an abscess on your palm?’
I saw it: you could call it a vision; I heard it: you could
call it an oracle. The US operated 40,000 commercial flights a day, India operated 420. It was the middle of 2002 when I realized that at the current growth-rates, India would, in another thirty years, be in a position to fly approximately one billion passengers a year. These were a madman’s numbers: a billion seats and 50,000 flights a day! Could it be possible? I continued the number-juggling. I said to myself that if only each of the 200 million middle-class people travels five times a year, a plausible figure, the magic figure of one billion a year seemed so palpably achievable. The gap was immense but it would still mean a hundred fold leap in the airline business at current rates.
The numbers were compelling. I wanted to get back right away so that I could direct my energies in this new direction of promise. The decision had been made as I stood there looking at the curious plaque. It was not a question of whether but how! I ended my trip to Grand Canyon on a buoyant note and headed straight back.
As soon as I landed at Bengaluru, I called up Girish Rao of the Economic Times. I did not pause to think of the pros and cons of what I would tell him. I announced with convincing finality that I was starting an airline for the common man. Girish flashed the news. It was in all the papers.
I pitched my idea to Mohan Kumar, pointing to the 500-plus mid-sized towns and cities in India. I said we needed to look beyond Delhi and Mumbai. A town like Bellary was a bustling industrial centre and export hub. It housed 15 per cent of the jeans manufacturing industry in the country, in addition to poultry, mining and textiles industries. Also, Bellary was handy to the illustrious historical ruins of Hampi. The town had three airstrips but no air connectivity. The first and the only flight, a hopping flight, had landed in Bellary in 1932 carrying mail.
I drew attention to many other great towns and cities with a rich past which were poised to make a big leap into the future. I mentioned Dehradun, the gateway to Haridwar and entry point to the Himalayas; Kanpur, with a population of four million (almost the size of Norway), and a city that used to be a manufacturing hub during the British times and had two airfields but no air connectivity; Kolhapur and Nashik in Maharashtra. Nashik had emerged as the wine capital of India and ABB and HAL had set up manufacturing facilities there, had two airfields but no air connectivity.
I reeled off statistics. Every day sixteen million Indians travelled by train and twelve million by bus. Together they made up nearly thirty million a day. Even if 5 per cent of this number travelled by air, that would be a whopping 530 million travellers a year. Even if this number looked huge, it did not mean 530 million different people travelling but 200 million middle-class people travelling two and half times a year, which was not an unimaginable prospect over the next thirty years. This was the writing on the wall and no market research was needed to interpret it for us. Mohan Kumar heard me. He said in his characteristically laconic manner, ‘OK, let’s do it.’
I did not think money, just as I did not think money before getting to the last point in my helicopter venture. I thought about the other nitty-gritty. The business model would have to be a profoundly, dyed-in-the-wool, Indian. It would have to factor in India’s geography, culture, and heritage; incorporate the Indian genius; to be an airline for India’s common man; for the masses. I only saw the beacon of light, passed over the shadows, and plunged head-on. However, challenges and stumbling blocks there were aplenty. Some glared one in the face, others lurked around the corner.
The entrepreneurial history of Indian aviation has its milestones, and its tombstones. The Tata-Singapore Airline venture, it was rumoured, had only recently been scuttled by the Indian Airlines and Jet Airways lobby. If I took that path, I could meet with a similar fate. I had however a measure of the power of the idea and was also aware of the politically correct populist appeal of mass air travel. It would have been difficult for a politician to reject a business proposal whose objective was to link rural India with urban India, and it would have been politically embarrassing for a politician to say no to a business proposal that would make it possible for the common man to fly. Such an idea could not fall on deaf ears, and that is precisely what happened.
I realized the idea needed political support and will of a different kind. I therefore began speaking to politicians whom I had met and knew. I met Venkaiah Naidu, Chandrababu Naidu, and S.M. Krishna. They showed unaffected enthusiasm. They realized connectivity would spur economic growth and that the airline would spur investments because if Toyota or Tata wanted to scout for a place to set up shop in Orissa, the first thing they would look for was air connectivity.
I was confident that if an airline model could work in the US and in Indonesia, economies at the two extreme ends of the spectrum, it should work in India, positioned somewhere in the middle. The most important thing for me now was to find the people who had intimate knowledge of low-cost airline management: the real people!
Planning an Airline
I did research and made enquiries with contacts about someone who had worked hands on in a low-cost carrier (LCC). I zeroed in on Connor McCarthy. Connor had been associated with Ryan Air for over a decade and worked directly under the legendary Michael O’Leary, CEO of Ryan Air. After leaving Ryan Air, Connor had helped set up Air Asia, a low-cost carrier in Malaysia. Connor’s association with Ryan Air was crucial. Ryan was the most successful low-cost airline in Europe and had created aviation history by offering seats for one euro.
Ryan Air had achieved the apparently unachievable. It had the lowest revenue per passenger, the lowest operating cost, and the highest margin of profitability for an airline. It was the most ruthless cost-cutter of all times. Connor McCarthy had been deputy chief operating officer for Ryan for over a decade. He was the man I wanted to talk to. Few knew the nuts and bolts as he did.
Connor McCarthy dismissed the idea of a low-cost airline in India. India had made a mark in technology and software but its aviation was of medieval vintage and nobody took India seriously. Connor said a few conditions needed to be fulfilled for an LCC to exist: liberal rules and regulations and a conducive policy environment; high level of internet and credit card penetration, and a network of principle and alternative airports.
India did not fulfil these conditions: Indian aviation was tightly controlled by the government; Internet and credit card penetration was less than two per cent, and the number of serviceable airports was very small. I was not, however, prepared to listen to anyone who said LCC would not work in India. I was in love with the idea! I reminded myself of the saying: ‘the heart has its reasons of which the head knows nothing.’ I went ahead and called Connor McCarthy, saying that I wanted to come over along with my CFO and get his insights about LCC. Connor was abrasive. and said roughly, ‘Well, I don’t have time. And if I did, you couldn’t afford me. I’m expensive.’
I was stupefied, but not put off, by his reaction. I decided to pursue him. I asked him, ‘How costly are you? Connor said he charged 400 euros an hour. I said I would not haggle over the price. ‘I’ll fly in on Wednesday night. I want you to meet us on Thursday and Friday. I want you for eight hours each, those two days. Your fee would be 6400 euros. I shall pay you that. Friday night we’ll go out for dinner. I’ll pay for the dinner but not for what you say at the table.’ Connor agreed.
I received a two-page contract the following day. He had billed us for 13,400 euros instead of 6400 and sent me an email explaining the reason for the inflation. He would have to prepare for two days to talk to us for two days. I called him up and said, ‘Connor, you are trying to be smart by two and half measures. I am looking to establish a relationship on an ongoing basis. I’m not coming to you because you’re a college professor but because you are a hands-on guy. I just want you to talk to me about what you did at Ryan Air. You worked with O’Leary for ten years. Tell me what you did there. I don’t need a power-point presentation. In fact, if you need to prepare to talk to me, then I don’t want you at all.’
Connor eventually agreed to my terms and we were soon in Dublin, the city of
George Bernard Shaw, James Joyce, and the Kennedy clan. I wanted to see that beautiful city which is as famous for its legendary pubs as it is for its literary giants.
I booked twenty hours of Connor’s time, sixteen hours of formally agreed talk and four hours over dinner. I got to see Dublin free of cost in the bargain. Meanwhile, I thought of making a radical departure from the cardinal principles of LCC. LCCs are advised to deploy a single aircraft family because that saves them money on training, spare parts, and maintenance. Now, however, I understood India from an aviation perspective and its ground realities were different. The 500 airstrips we had plotted on our map in small towns and cities could handle only small aircraft such as the ATR. The forty or so operational airports across India could handle both the larger Boeing and Airbus and the smaller aircraft. But Boeing and Airbus would restrict us to the metros and it made no sense to cannibalize the existing air traffic. Deccan’s LCC would only make profit if it enlarged the pie and generated new passenger traffic. My idea was: tap the ‘other’ India.
For the LCC to succeed, I would have to bring in consumers from Dehradun and Dharmashala to fill the Delhi–Mumbai flight. We could fly the large aircraft between metros and feed these trips with passengers flying on our smaller ATRs from the small towns and cities. By marrying the two, I thought, we would be creating air traffic to and from India’s tier II and III regions and the conditions for an implosion of air connectivity. I reckoned Indian aviation would benefit as more cities got air-linked.
I saw a parallel between this and the American experience with the railway, or railroad, as they call it. The American railroad was laid 150 years ago. It helped open up the vast American country and its economy. It linked up the coastal cities with the Midwest and the deep interiors. In the case of the American railroad, the pioneers had to contend with attacks by Red Indians. In my case, I believed I would have to contend with the proverbial red tape. Fortunately the idea of a common man’s flight, not in fancy but in reality, so inspired the imagination of the bureaucrats that each of them laid out a red carpet for me along the corridors of bureaucratic maze! My idea of using two kinds of aircraft would also be in alignment with the policy of encouraging enterprises that helped rural India to progress. I thought the ‘rural India progress’ line might be a good pitch, coupled with the fact that all the government needed to do was simply spruce up and fill the potholes in existing airports and runways.
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