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<span style="font-size: 16px;"><strong><img align="left" alt="visiting" border="5" height="188" src="http://newbusinessage.com/ckfinder/userfiles/Images/2ndvisit.jpg" width="150" /><br />
</strong></span></p>
<p>
<span style="font-size:16px;"><strong>R Dayal <br />
</strong></span></p>
<p>
<strong>What brings you to Nepal this time?</strong></p>
<p>
Nepal is one of the most important stations for our network. There is a lot of movement of people from Nepal to different parts of the world. That is the reason why I wanted to visit the station and have a look so that we can plan for the future. How important is Nepal as a destination for Air India? It is one of the first few stations for our airlines. There is a lot of potential over here and it is an important part for us. Moreover, having such a long relationship even politically and commercially, we feel Nepal is also a part of us from many perspectives.</p>
<p>
<strong>How is the competition with other private Indian airlines as well as other airlines fl ying to Nepal?</strong> </p>
<p>
There is competition even from within India since Indigo, SpiceJet and others have also come to this place. Now, political boundaries no more exist. If you have Gulf Airlines coming directly to this place, there is definitely stiff competition. We, from Air India side, have always been benefitted from having more competition because we look forward for better efficiencies, performance and innovative strategies. Competition is always good and gives good health to the company.</p>
<p>
<strong>What is the market share of Air India fl ying from Nepal to India?</strong></p>
<p>
It is 14 per cent. Our capacity utilisation is 70 per cent which is quite good by industry standard. The current capacity is sufficient enough for the demand. Looking at the growth which may come in the future, we will definitely add a few more flights.</p>
<p>
<strong>Air India is having a fi nancial problem for some time now. What is the company doing to overcome this problem?</strong></p>
<p>
We did have a financial crunch. When any expansion takes place, it is always financed partly from the internal resources and partly from outside capital, normally from shareholders through issue capital and others. In case of Air India, we had gone for a fairly expensive programme as there was no addition of capacity for many years. The total expansion plan in the last threefour years was around Rs 400 billion Indian currency investment. That investment has to be financed. Most aircrafts are imported from France or USA which is also financed by bank or other means. So, what happened was, we approached the government for adding capital. The government is in the process of doing it. Maybe in a few months to go, everything will be cleared. But inbetween the cal,l there was a delay in the infusion of capital. All our cash generation which has taken place has to be used for repaying the foreign sovereign loans which we have committed. As a result, there was a cash flow problem. But, the government has now already approved a turnaround plan which includes the restructuring of loans along with infusion of capitals. Loans may be converted into preferential shares or may be into long term loan with lower rate of interest. Once this restructuring is completed, with our profitability we expect to pay about Rs 10 billion per annum alone as interest cost and the repayment will be much more comfortable. So, the present problem of the liquidity should be taken care of. I am expecting it to happen in may be two months time.</p>
<p>
<strong>While private airlines make profi ts, state owned enterprises including airlines seem to be making losses. What are the reasons for this?</strong> </p>
<p>
It’s not true that private airlines are making profit. In fact, the entire aviation industry of India is suffering mainly because the fuel cost has increased tremendously. For airlines, 40 per cent of the cost goes towards fuel itself. Another reason that plagues the aviation industry is stiff competition not only within the country but also outside of it which has resulted in the yield coming down. In India, there is no proper support from the government to the airlines industry and even today, taxes are very high. Compared to other places, airlines are considered to be a travel option for elites in India. So, the government has its own priority that it is heavily taxed. As a result, all airlines are in difficulty except IndiGo as they are a new airline and have all LCC models so they are able to manage it. All other legacy airlines are having problems and Air India is no exception. Because of the interest cost, such a heavy expense – where the capital has not been infused – has been a setback for us. But in the month of October-November, we made operating profit.</p>
<p>
<strong>How is Air India planning to move ahead to make itself a fi nancially strong company?</strong></p>
<p>
We have drafted a turnaround plan which has been approved by the government. The turnaround plan, besides the financial restructuring, will take care of our financial issues. We also intend to rationalise our routes. Some of the routes we have operated have to be revisited along with the economic turnaround. That exercise will give us a lot of strength. With the blessings of the government of India, Air India being the national carrier will have the first right for operating to any destinations. So, we have a lot of market available with which we expect a good growth.</p>
<p>
<strong>Nepal’s national carrier is also having serious problems. Government intervention and mismanagement are said to be the major reasons. What is the case with Air India?</strong></p>
<p>
It happens with all national carriers who cannot function purely from a commercial perspective. They have to have certain national commitments. In case of Air India, as a national carrier, we call it a second line of defence. Whenever there is a crisis like we have in Ethiopia or Egypt, the government has to solve it. Even within the country, there are places which are very loss making to us. We have an obligation to connect the place so as a national carrier; there are always obligations for the general well being of the people even at the cost of commercial principle. As regards to the government interference, though we are an autonomous body, this is a government organisation. The government has its say in giving the direction in which the airlines has to move. By and large, day to day interference is not there and we operate on commercial principle. </p>
<p>
<strong>How do you compare Air India with Nepal Airlines?</strong></p>
<p>
I do not have much insight on the way Nepal Airlines works. I believe that by the sheer size of the company, Air India is much bigger and particularly after the merger of Indian Airlines and Air India, it has become a big giant. The bigger an airline is, the better it is able to perform. Secondly, India itself is a big market, domestically as well as abroad whereas Nepal may not have that kind of a market. As far as the management of Nepal Airlines is concerned, I cannot comment about that. </p>
<p>
<strong>There are budget airlines operating in India. Is Air India also planning to come up with a similar strategy to compete?</strong></p>
<p>
In Air India, we have a legacy carrier which is a full service carrier and we are now getting into the idea of a low cost carrier. After the success of low cost carriers in Europe, it is catching up now in India as well. IndiGo is one of the low cost carriers and in Air India, we have Air India Express which is a low cost carrier. We are planning to move ahead with our low cost carrier. And we have already shifted to low cost carrier in some of the routes. Maybe in the time to come, we may have to shift to low cost carrier if there is a demand. Once the low cost module is adopted, the cost and the price come down. Today, we have market for both low cost and full legacy carrier. Depending on how the market demands, we will have to adopt the model. </p>',
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'description' => 'R Dayal is Executive Director (East)
of Air India Limited and based
in Kolkata. A graduate from IIM
Ahmadabad, he joined Indian Airlines
as a management trainee in 1977.
Since then he has worked in various
positions in financial and internal
audit in different regions of Indian
Airlines. He had also served for
Yemen Airways from 1999 to 2004
as its advisor. After the merger of Air
India and Indian Airlines in 2007, he
headed Internal Audit Department
of the company. Dayal is serving in
his current position since 2010. He
was recently in Nepal during his
official visit. In an interview with New
Business Age, Dayal shared his ideas
on Air India’s financial problems and
growth prospects.',
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<span style="font-size: 16px;"><strong><img align="left" alt="visiting" border="5" height="188" src="http://newbusinessage.com/ckfinder/userfiles/Images/2ndvisit.jpg" width="150" /><br />
</strong></span></p>
<p>
<span style="font-size:16px;"><strong>R Dayal <br />
</strong></span></p>
<p>
<strong>What brings you to Nepal this time?</strong></p>
<p>
Nepal is one of the most important stations for our network. There is a lot of movement of people from Nepal to different parts of the world. That is the reason why I wanted to visit the station and have a look so that we can plan for the future. How important is Nepal as a destination for Air India? It is one of the first few stations for our airlines. There is a lot of potential over here and it is an important part for us. Moreover, having such a long relationship even politically and commercially, we feel Nepal is also a part of us from many perspectives.</p>
<p>
<strong>How is the competition with other private Indian airlines as well as other airlines fl ying to Nepal?</strong> </p>
<p>
There is competition even from within India since Indigo, SpiceJet and others have also come to this place. Now, political boundaries no more exist. If you have Gulf Airlines coming directly to this place, there is definitely stiff competition. We, from Air India side, have always been benefitted from having more competition because we look forward for better efficiencies, performance and innovative strategies. Competition is always good and gives good health to the company.</p>
<p>
<strong>What is the market share of Air India fl ying from Nepal to India?</strong></p>
<p>
It is 14 per cent. Our capacity utilisation is 70 per cent which is quite good by industry standard. The current capacity is sufficient enough for the demand. Looking at the growth which may come in the future, we will definitely add a few more flights.</p>
<p>
<strong>Air India is having a fi nancial problem for some time now. What is the company doing to overcome this problem?</strong></p>
<p>
We did have a financial crunch. When any expansion takes place, it is always financed partly from the internal resources and partly from outside capital, normally from shareholders through issue capital and others. In case of Air India, we had gone for a fairly expensive programme as there was no addition of capacity for many years. The total expansion plan in the last threefour years was around Rs 400 billion Indian currency investment. That investment has to be financed. Most aircrafts are imported from France or USA which is also financed by bank or other means. So, what happened was, we approached the government for adding capital. The government is in the process of doing it. Maybe in a few months to go, everything will be cleared. But inbetween the cal,l there was a delay in the infusion of capital. All our cash generation which has taken place has to be used for repaying the foreign sovereign loans which we have committed. As a result, there was a cash flow problem. But, the government has now already approved a turnaround plan which includes the restructuring of loans along with infusion of capitals. Loans may be converted into preferential shares or may be into long term loan with lower rate of interest. Once this restructuring is completed, with our profitability we expect to pay about Rs 10 billion per annum alone as interest cost and the repayment will be much more comfortable. So, the present problem of the liquidity should be taken care of. I am expecting it to happen in may be two months time.</p>
<p>
<strong>While private airlines make profi ts, state owned enterprises including airlines seem to be making losses. What are the reasons for this?</strong> </p>
<p>
It’s not true that private airlines are making profit. In fact, the entire aviation industry of India is suffering mainly because the fuel cost has increased tremendously. For airlines, 40 per cent of the cost goes towards fuel itself. Another reason that plagues the aviation industry is stiff competition not only within the country but also outside of it which has resulted in the yield coming down. In India, there is no proper support from the government to the airlines industry and even today, taxes are very high. Compared to other places, airlines are considered to be a travel option for elites in India. So, the government has its own priority that it is heavily taxed. As a result, all airlines are in difficulty except IndiGo as they are a new airline and have all LCC models so they are able to manage it. All other legacy airlines are having problems and Air India is no exception. Because of the interest cost, such a heavy expense – where the capital has not been infused – has been a setback for us. But in the month of October-November, we made operating profit.</p>
<p>
<strong>How is Air India planning to move ahead to make itself a fi nancially strong company?</strong></p>
<p>
We have drafted a turnaround plan which has been approved by the government. The turnaround plan, besides the financial restructuring, will take care of our financial issues. We also intend to rationalise our routes. Some of the routes we have operated have to be revisited along with the economic turnaround. That exercise will give us a lot of strength. With the blessings of the government of India, Air India being the national carrier will have the first right for operating to any destinations. So, we have a lot of market available with which we expect a good growth.</p>
<p>
<strong>Nepal’s national carrier is also having serious problems. Government intervention and mismanagement are said to be the major reasons. What is the case with Air India?</strong></p>
<p>
It happens with all national carriers who cannot function purely from a commercial perspective. They have to have certain national commitments. In case of Air India, as a national carrier, we call it a second line of defence. Whenever there is a crisis like we have in Ethiopia or Egypt, the government has to solve it. Even within the country, there are places which are very loss making to us. We have an obligation to connect the place so as a national carrier; there are always obligations for the general well being of the people even at the cost of commercial principle. As regards to the government interference, though we are an autonomous body, this is a government organisation. The government has its say in giving the direction in which the airlines has to move. By and large, day to day interference is not there and we operate on commercial principle. </p>
<p>
<strong>How do you compare Air India with Nepal Airlines?</strong></p>
<p>
I do not have much insight on the way Nepal Airlines works. I believe that by the sheer size of the company, Air India is much bigger and particularly after the merger of Indian Airlines and Air India, it has become a big giant. The bigger an airline is, the better it is able to perform. Secondly, India itself is a big market, domestically as well as abroad whereas Nepal may not have that kind of a market. As far as the management of Nepal Airlines is concerned, I cannot comment about that. </p>
<p>
<strong>There are budget airlines operating in India. Is Air India also planning to come up with a similar strategy to compete?</strong></p>
<p>
In Air India, we have a legacy carrier which is a full service carrier and we are now getting into the idea of a low cost carrier. After the success of low cost carriers in Europe, it is catching up now in India as well. IndiGo is one of the low cost carriers and in Air India, we have Air India Express which is a low cost carrier. We are planning to move ahead with our low cost carrier. And we have already shifted to low cost carrier in some of the routes. Maybe in the time to come, we may have to shift to low cost carrier if there is a demand. Once the low cost module is adopted, the cost and the price come down. Today, we have market for both low cost and full legacy carrier. Depending on how the market demands, we will have to adopt the model. </p>',
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'description' => 'R Dayal is Executive Director (East)
of Air India Limited and based
in Kolkata. A graduate from IIM
Ahmadabad, he joined Indian Airlines
as a management trainee in 1977.
Since then he has worked in various
positions in financial and internal
audit in different regions of Indian
Airlines. He had also served for
Yemen Airways from 1999 to 2004
as its advisor. After the merger of Air
India and Indian Airlines in 2007, he
headed Internal Audit Department
of the company. Dayal is serving in
his current position since 2010. He
was recently in Nepal during his
official visit. In an interview with New
Business Age, Dayal shared his ideas
on Air India’s financial problems and
growth prospects.',
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</strong></span></p>
<p>
<span style="font-size:16px;"><strong>R Dayal <br />
</strong></span></p>
<p>
<strong>What brings you to Nepal this time?</strong></p>
<p>
Nepal is one of the most important stations for our network. There is a lot of movement of people from Nepal to different parts of the world. That is the reason why I wanted to visit the station and have a look so that we can plan for the future. How important is Nepal as a destination for Air India? It is one of the first few stations for our airlines. There is a lot of potential over here and it is an important part for us. Moreover, having such a long relationship even politically and commercially, we feel Nepal is also a part of us from many perspectives.</p>
<p>
<strong>How is the competition with other private Indian airlines as well as other airlines fl ying to Nepal?</strong> </p>
<p>
There is competition even from within India since Indigo, SpiceJet and others have also come to this place. Now, political boundaries no more exist. If you have Gulf Airlines coming directly to this place, there is definitely stiff competition. We, from Air India side, have always been benefitted from having more competition because we look forward for better efficiencies, performance and innovative strategies. Competition is always good and gives good health to the company.</p>
<p>
<strong>What is the market share of Air India fl ying from Nepal to India?</strong></p>
<p>
It is 14 per cent. Our capacity utilisation is 70 per cent which is quite good by industry standard. The current capacity is sufficient enough for the demand. Looking at the growth which may come in the future, we will definitely add a few more flights.</p>
<p>
<strong>Air India is having a fi nancial problem for some time now. What is the company doing to overcome this problem?</strong></p>
<p>
We did have a financial crunch. When any expansion takes place, it is always financed partly from the internal resources and partly from outside capital, normally from shareholders through issue capital and others. In case of Air India, we had gone for a fairly expensive programme as there was no addition of capacity for many years. The total expansion plan in the last threefour years was around Rs 400 billion Indian currency investment. That investment has to be financed. Most aircrafts are imported from France or USA which is also financed by bank or other means. So, what happened was, we approached the government for adding capital. The government is in the process of doing it. Maybe in a few months to go, everything will be cleared. But inbetween the cal,l there was a delay in the infusion of capital. All our cash generation which has taken place has to be used for repaying the foreign sovereign loans which we have committed. As a result, there was a cash flow problem. But, the government has now already approved a turnaround plan which includes the restructuring of loans along with infusion of capitals. Loans may be converted into preferential shares or may be into long term loan with lower rate of interest. Once this restructuring is completed, with our profitability we expect to pay about Rs 10 billion per annum alone as interest cost and the repayment will be much more comfortable. So, the present problem of the liquidity should be taken care of. I am expecting it to happen in may be two months time.</p>
<p>
<strong>While private airlines make profi ts, state owned enterprises including airlines seem to be making losses. What are the reasons for this?</strong> </p>
<p>
It’s not true that private airlines are making profit. In fact, the entire aviation industry of India is suffering mainly because the fuel cost has increased tremendously. For airlines, 40 per cent of the cost goes towards fuel itself. Another reason that plagues the aviation industry is stiff competition not only within the country but also outside of it which has resulted in the yield coming down. In India, there is no proper support from the government to the airlines industry and even today, taxes are very high. Compared to other places, airlines are considered to be a travel option for elites in India. So, the government has its own priority that it is heavily taxed. As a result, all airlines are in difficulty except IndiGo as they are a new airline and have all LCC models so they are able to manage it. All other legacy airlines are having problems and Air India is no exception. Because of the interest cost, such a heavy expense – where the capital has not been infused – has been a setback for us. But in the month of October-November, we made operating profit.</p>
<p>
<strong>How is Air India planning to move ahead to make itself a fi nancially strong company?</strong></p>
<p>
We have drafted a turnaround plan which has been approved by the government. The turnaround plan, besides the financial restructuring, will take care of our financial issues. We also intend to rationalise our routes. Some of the routes we have operated have to be revisited along with the economic turnaround. That exercise will give us a lot of strength. With the blessings of the government of India, Air India being the national carrier will have the first right for operating to any destinations. So, we have a lot of market available with which we expect a good growth.</p>
<p>
<strong>Nepal’s national carrier is also having serious problems. Government intervention and mismanagement are said to be the major reasons. What is the case with Air India?</strong></p>
<p>
It happens with all national carriers who cannot function purely from a commercial perspective. They have to have certain national commitments. In case of Air India, as a national carrier, we call it a second line of defence. Whenever there is a crisis like we have in Ethiopia or Egypt, the government has to solve it. Even within the country, there are places which are very loss making to us. We have an obligation to connect the place so as a national carrier; there are always obligations for the general well being of the people even at the cost of commercial principle. As regards to the government interference, though we are an autonomous body, this is a government organisation. The government has its say in giving the direction in which the airlines has to move. By and large, day to day interference is not there and we operate on commercial principle. </p>
<p>
<strong>How do you compare Air India with Nepal Airlines?</strong></p>
<p>
I do not have much insight on the way Nepal Airlines works. I believe that by the sheer size of the company, Air India is much bigger and particularly after the merger of Indian Airlines and Air India, it has become a big giant. The bigger an airline is, the better it is able to perform. Secondly, India itself is a big market, domestically as well as abroad whereas Nepal may not have that kind of a market. As far as the management of Nepal Airlines is concerned, I cannot comment about that. </p>
<p>
<strong>There are budget airlines operating in India. Is Air India also planning to come up with a similar strategy to compete?</strong></p>
<p>
In Air India, we have a legacy carrier which is a full service carrier and we are now getting into the idea of a low cost carrier. After the success of low cost carriers in Europe, it is catching up now in India as well. IndiGo is one of the low cost carriers and in Air India, we have Air India Express which is a low cost carrier. We are planning to move ahead with our low cost carrier. And we have already shifted to low cost carrier in some of the routes. Maybe in the time to come, we may have to shift to low cost carrier if there is a demand. Once the low cost module is adopted, the cost and the price come down. Today, we have market for both low cost and full legacy carrier. Depending on how the market demands, we will have to adopt the model. </p>',
'published' => true,
'created' => '2012-02-23',
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'description' => 'R Dayal is Executive Director (East)
of Air India Limited and based
in Kolkata. A graduate from IIM
Ahmadabad, he joined Indian Airlines
as a management trainee in 1977.
Since then he has worked in various
positions in financial and internal
audit in different regions of Indian
Airlines. He had also served for
Yemen Airways from 1999 to 2004
as its advisor. After the merger of Air
India and Indian Airlines in 2007, he
headed Internal Audit Department
of the company. Dayal is serving in
his current position since 2010. He
was recently in Nepal during his
official visit. In an interview with New
Business Age, Dayal shared his ideas
on Air India’s financial problems and
growth prospects.',
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'content' => '<p>
<span style="font-size: 16px;"><strong><img align="left" alt="visiting" border="5" height="188" src="http://newbusinessage.com/ckfinder/userfiles/Images/2ndvisit.jpg" width="150" /><br />
</strong></span></p>
<p>
<span style="font-size:16px;"><strong>R Dayal <br />
</strong></span></p>
<p>
<strong>What brings you to Nepal this time?</strong></p>
<p>
Nepal is one of the most important stations for our network. There is a lot of movement of people from Nepal to different parts of the world. That is the reason why I wanted to visit the station and have a look so that we can plan for the future. How important is Nepal as a destination for Air India? It is one of the first few stations for our airlines. There is a lot of potential over here and it is an important part for us. Moreover, having such a long relationship even politically and commercially, we feel Nepal is also a part of us from many perspectives.</p>
<p>
<strong>How is the competition with other private Indian airlines as well as other airlines fl ying to Nepal?</strong> </p>
<p>
There is competition even from within India since Indigo, SpiceJet and others have also come to this place. Now, political boundaries no more exist. If you have Gulf Airlines coming directly to this place, there is definitely stiff competition. We, from Air India side, have always been benefitted from having more competition because we look forward for better efficiencies, performance and innovative strategies. Competition is always good and gives good health to the company.</p>
<p>
<strong>What is the market share of Air India fl ying from Nepal to India?</strong></p>
<p>
It is 14 per cent. Our capacity utilisation is 70 per cent which is quite good by industry standard. The current capacity is sufficient enough for the demand. Looking at the growth which may come in the future, we will definitely add a few more flights.</p>
<p>
<strong>Air India is having a fi nancial problem for some time now. What is the company doing to overcome this problem?</strong></p>
<p>
We did have a financial crunch. When any expansion takes place, it is always financed partly from the internal resources and partly from outside capital, normally from shareholders through issue capital and others. In case of Air India, we had gone for a fairly expensive programme as there was no addition of capacity for many years. The total expansion plan in the last threefour years was around Rs 400 billion Indian currency investment. That investment has to be financed. Most aircrafts are imported from France or USA which is also financed by bank or other means. So, what happened was, we approached the government for adding capital. The government is in the process of doing it. Maybe in a few months to go, everything will be cleared. But inbetween the cal,l there was a delay in the infusion of capital. All our cash generation which has taken place has to be used for repaying the foreign sovereign loans which we have committed. As a result, there was a cash flow problem. But, the government has now already approved a turnaround plan which includes the restructuring of loans along with infusion of capitals. Loans may be converted into preferential shares or may be into long term loan with lower rate of interest. Once this restructuring is completed, with our profitability we expect to pay about Rs 10 billion per annum alone as interest cost and the repayment will be much more comfortable. So, the present problem of the liquidity should be taken care of. I am expecting it to happen in may be two months time.</p>
<p>
<strong>While private airlines make profi ts, state owned enterprises including airlines seem to be making losses. What are the reasons for this?</strong> </p>
<p>
It’s not true that private airlines are making profit. In fact, the entire aviation industry of India is suffering mainly because the fuel cost has increased tremendously. For airlines, 40 per cent of the cost goes towards fuel itself. Another reason that plagues the aviation industry is stiff competition not only within the country but also outside of it which has resulted in the yield coming down. In India, there is no proper support from the government to the airlines industry and even today, taxes are very high. Compared to other places, airlines are considered to be a travel option for elites in India. So, the government has its own priority that it is heavily taxed. As a result, all airlines are in difficulty except IndiGo as they are a new airline and have all LCC models so they are able to manage it. All other legacy airlines are having problems and Air India is no exception. Because of the interest cost, such a heavy expense – where the capital has not been infused – has been a setback for us. But in the month of October-November, we made operating profit.</p>
<p>
<strong>How is Air India planning to move ahead to make itself a fi nancially strong company?</strong></p>
<p>
We have drafted a turnaround plan which has been approved by the government. The turnaround plan, besides the financial restructuring, will take care of our financial issues. We also intend to rationalise our routes. Some of the routes we have operated have to be revisited along with the economic turnaround. That exercise will give us a lot of strength. With the blessings of the government of India, Air India being the national carrier will have the first right for operating to any destinations. So, we have a lot of market available with which we expect a good growth.</p>
<p>
<strong>Nepal’s national carrier is also having serious problems. Government intervention and mismanagement are said to be the major reasons. What is the case with Air India?</strong></p>
<p>
It happens with all national carriers who cannot function purely from a commercial perspective. They have to have certain national commitments. In case of Air India, as a national carrier, we call it a second line of defence. Whenever there is a crisis like we have in Ethiopia or Egypt, the government has to solve it. Even within the country, there are places which are very loss making to us. We have an obligation to connect the place so as a national carrier; there are always obligations for the general well being of the people even at the cost of commercial principle. As regards to the government interference, though we are an autonomous body, this is a government organisation. The government has its say in giving the direction in which the airlines has to move. By and large, day to day interference is not there and we operate on commercial principle. </p>
<p>
<strong>How do you compare Air India with Nepal Airlines?</strong></p>
<p>
I do not have much insight on the way Nepal Airlines works. I believe that by the sheer size of the company, Air India is much bigger and particularly after the merger of Indian Airlines and Air India, it has become a big giant. The bigger an airline is, the better it is able to perform. Secondly, India itself is a big market, domestically as well as abroad whereas Nepal may not have that kind of a market. As far as the management of Nepal Airlines is concerned, I cannot comment about that. </p>
<p>
<strong>There are budget airlines operating in India. Is Air India also planning to come up with a similar strategy to compete?</strong></p>
<p>
In Air India, we have a legacy carrier which is a full service carrier and we are now getting into the idea of a low cost carrier. After the success of low cost carriers in Europe, it is catching up now in India as well. IndiGo is one of the low cost carriers and in Air India, we have Air India Express which is a low cost carrier. We are planning to move ahead with our low cost carrier. And we have already shifted to low cost carrier in some of the routes. Maybe in the time to come, we may have to shift to low cost carrier if there is a demand. Once the low cost module is adopted, the cost and the price come down. Today, we have market for both low cost and full legacy carrier. Depending on how the market demands, we will have to adopt the model. </p>',
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'description' => 'R Dayal is Executive Director (East)
of Air India Limited and based
in Kolkata. A graduate from IIM
Ahmadabad, he joined Indian Airlines
as a management trainee in 1977.
Since then he has worked in various
positions in financial and internal
audit in different regions of Indian
Airlines. He had also served for
Yemen Airways from 1999 to 2004
as its advisor. After the merger of Air
India and Indian Airlines in 2007, he
headed Internal Audit Department
of the company. Dayal is serving in
his current position since 2010. He
was recently in Nepal during his
official visit. In an interview with New
Business Age, Dayal shared his ideas
on Air India’s financial problems and
growth prospects.',
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<span style="font-size: 16px;"><strong><img align="left" alt="visiting" border="5" height="188" src="http://newbusinessage.com/ckfinder/userfiles/Images/2ndvisit.jpg" width="150" /><br />
</strong></span></p>
<p>
<span style="font-size:16px;"><strong>R Dayal <br />
</strong></span></p>
<p>
<strong>What brings you to Nepal this time?</strong></p>
<p>
Nepal is one of the most important stations for our network. There is a lot of movement of people from Nepal to different parts of the world. That is the reason why I wanted to visit the station and have a look so that we can plan for the future. How important is Nepal as a destination for Air India? It is one of the first few stations for our airlines. There is a lot of potential over here and it is an important part for us. Moreover, having such a long relationship even politically and commercially, we feel Nepal is also a part of us from many perspectives.</p>
<p>
<strong>How is the competition with other private Indian airlines as well as other airlines fl ying to Nepal?</strong> </p>
<p>
There is competition even from within India since Indigo, SpiceJet and others have also come to this place. Now, political boundaries no more exist. If you have Gulf Airlines coming directly to this place, there is definitely stiff competition. We, from Air India side, have always been benefitted from having more competition because we look forward for better efficiencies, performance and innovative strategies. Competition is always good and gives good health to the company.</p>
<p>
<strong>What is the market share of Air India fl ying from Nepal to India?</strong></p>
<p>
It is 14 per cent. Our capacity utilisation is 70 per cent which is quite good by industry standard. The current capacity is sufficient enough for the demand. Looking at the growth which may come in the future, we will definitely add a few more flights.</p>
<p>
<strong>Air India is having a fi nancial problem for some time now. What is the company doing to overcome this problem?</strong></p>
<p>
We did have a financial crunch. When any expansion takes place, it is always financed partly from the internal resources and partly from outside capital, normally from shareholders through issue capital and others. In case of Air India, we had gone for a fairly expensive programme as there was no addition of capacity for many years. The total expansion plan in the last threefour years was around Rs 400 billion Indian currency investment. That investment has to be financed. Most aircrafts are imported from France or USA which is also financed by bank or other means. So, what happened was, we approached the government for adding capital. The government is in the process of doing it. Maybe in a few months to go, everything will be cleared. But inbetween the cal,l there was a delay in the infusion of capital. All our cash generation which has taken place has to be used for repaying the foreign sovereign loans which we have committed. As a result, there was a cash flow problem. But, the government has now already approved a turnaround plan which includes the restructuring of loans along with infusion of capitals. Loans may be converted into preferential shares or may be into long term loan with lower rate of interest. Once this restructuring is completed, with our profitability we expect to pay about Rs 10 billion per annum alone as interest cost and the repayment will be much more comfortable. So, the present problem of the liquidity should be taken care of. I am expecting it to happen in may be two months time.</p>
<p>
<strong>While private airlines make profi ts, state owned enterprises including airlines seem to be making losses. What are the reasons for this?</strong> </p>
<p>
It’s not true that private airlines are making profit. In fact, the entire aviation industry of India is suffering mainly because the fuel cost has increased tremendously. For airlines, 40 per cent of the cost goes towards fuel itself. Another reason that plagues the aviation industry is stiff competition not only within the country but also outside of it which has resulted in the yield coming down. In India, there is no proper support from the government to the airlines industry and even today, taxes are very high. Compared to other places, airlines are considered to be a travel option for elites in India. So, the government has its own priority that it is heavily taxed. As a result, all airlines are in difficulty except IndiGo as they are a new airline and have all LCC models so they are able to manage it. All other legacy airlines are having problems and Air India is no exception. Because of the interest cost, such a heavy expense – where the capital has not been infused – has been a setback for us. But in the month of October-November, we made operating profit.</p>
<p>
<strong>How is Air India planning to move ahead to make itself a fi nancially strong company?</strong></p>
<p>
We have drafted a turnaround plan which has been approved by the government. The turnaround plan, besides the financial restructuring, will take care of our financial issues. We also intend to rationalise our routes. Some of the routes we have operated have to be revisited along with the economic turnaround. That exercise will give us a lot of strength. With the blessings of the government of India, Air India being the national carrier will have the first right for operating to any destinations. So, we have a lot of market available with which we expect a good growth.</p>
<p>
<strong>Nepal’s national carrier is also having serious problems. Government intervention and mismanagement are said to be the major reasons. What is the case with Air India?</strong></p>
<p>
It happens with all national carriers who cannot function purely from a commercial perspective. They have to have certain national commitments. In case of Air India, as a national carrier, we call it a second line of defence. Whenever there is a crisis like we have in Ethiopia or Egypt, the government has to solve it. Even within the country, there are places which are very loss making to us. We have an obligation to connect the place so as a national carrier; there are always obligations for the general well being of the people even at the cost of commercial principle. As regards to the government interference, though we are an autonomous body, this is a government organisation. The government has its say in giving the direction in which the airlines has to move. By and large, day to day interference is not there and we operate on commercial principle. </p>
<p>
<strong>How do you compare Air India with Nepal Airlines?</strong></p>
<p>
I do not have much insight on the way Nepal Airlines works. I believe that by the sheer size of the company, Air India is much bigger and particularly after the merger of Indian Airlines and Air India, it has become a big giant. The bigger an airline is, the better it is able to perform. Secondly, India itself is a big market, domestically as well as abroad whereas Nepal may not have that kind of a market. As far as the management of Nepal Airlines is concerned, I cannot comment about that. </p>
<p>
<strong>There are budget airlines operating in India. Is Air India also planning to come up with a similar strategy to compete?</strong></p>
<p>
In Air India, we have a legacy carrier which is a full service carrier and we are now getting into the idea of a low cost carrier. After the success of low cost carriers in Europe, it is catching up now in India as well. IndiGo is one of the low cost carriers and in Air India, we have Air India Express which is a low cost carrier. We are planning to move ahead with our low cost carrier. And we have already shifted to low cost carrier in some of the routes. Maybe in the time to come, we may have to shift to low cost carrier if there is a demand. Once the low cost module is adopted, the cost and the price come down. Today, we have market for both low cost and full legacy carrier. Depending on how the market demands, we will have to adopt the model. </p>',
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'description' => 'R Dayal is Executive Director (East)
of Air India Limited and based
in Kolkata. A graduate from IIM
Ahmadabad, he joined Indian Airlines
as a management trainee in 1977.
Since then he has worked in various
positions in financial and internal
audit in different regions of Indian
Airlines. He had also served for
Yemen Airways from 1999 to 2004
as its advisor. After the merger of Air
India and Indian Airlines in 2007, he
headed Internal Audit Department
of the company. Dayal is serving in
his current position since 2010. He
was recently in Nepal during his
official visit. In an interview with New
Business Age, Dayal shared his ideas
on Air India’s financial problems and
growth prospects.',
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<span style="font-size: 16px;"><strong><img align="left" alt="visiting" border="5" height="188" src="http://newbusinessage.com/ckfinder/userfiles/Images/2ndvisit.jpg" width="150" /><br />
</strong></span></p>
<p>
<span style="font-size:16px;"><strong>R Dayal <br />
</strong></span></p>
<p>
<strong>What brings you to Nepal this time?</strong></p>
<p>
Nepal is one of the most important stations for our network. There is a lot of movement of people from Nepal to different parts of the world. That is the reason why I wanted to visit the station and have a look so that we can plan for the future. How important is Nepal as a destination for Air India? It is one of the first few stations for our airlines. There is a lot of potential over here and it is an important part for us. Moreover, having such a long relationship even politically and commercially, we feel Nepal is also a part of us from many perspectives.</p>
<p>
<strong>How is the competition with other private Indian airlines as well as other airlines fl ying to Nepal?</strong> </p>
<p>
There is competition even from within India since Indigo, SpiceJet and others have also come to this place. Now, political boundaries no more exist. If you have Gulf Airlines coming directly to this place, there is definitely stiff competition. We, from Air India side, have always been benefitted from having more competition because we look forward for better efficiencies, performance and innovative strategies. Competition is always good and gives good health to the company.</p>
<p>
<strong>What is the market share of Air India fl ying from Nepal to India?</strong></p>
<p>
It is 14 per cent. Our capacity utilisation is 70 per cent which is quite good by industry standard. The current capacity is sufficient enough for the demand. Looking at the growth which may come in the future, we will definitely add a few more flights.</p>
<p>
<strong>Air India is having a fi nancial problem for some time now. What is the company doing to overcome this problem?</strong></p>
<p>
We did have a financial crunch. When any expansion takes place, it is always financed partly from the internal resources and partly from outside capital, normally from shareholders through issue capital and others. In case of Air India, we had gone for a fairly expensive programme as there was no addition of capacity for many years. The total expansion plan in the last threefour years was around Rs 400 billion Indian currency investment. That investment has to be financed. Most aircrafts are imported from France or USA which is also financed by bank or other means. So, what happened was, we approached the government for adding capital. The government is in the process of doing it. Maybe in a few months to go, everything will be cleared. But inbetween the cal,l there was a delay in the infusion of capital. All our cash generation which has taken place has to be used for repaying the foreign sovereign loans which we have committed. As a result, there was a cash flow problem. But, the government has now already approved a turnaround plan which includes the restructuring of loans along with infusion of capitals. Loans may be converted into preferential shares or may be into long term loan with lower rate of interest. Once this restructuring is completed, with our profitability we expect to pay about Rs 10 billion per annum alone as interest cost and the repayment will be much more comfortable. So, the present problem of the liquidity should be taken care of. I am expecting it to happen in may be two months time.</p>
<p>
<strong>While private airlines make profi ts, state owned enterprises including airlines seem to be making losses. What are the reasons for this?</strong> </p>
<p>
It’s not true that private airlines are making profit. In fact, the entire aviation industry of India is suffering mainly because the fuel cost has increased tremendously. For airlines, 40 per cent of the cost goes towards fuel itself. Another reason that plagues the aviation industry is stiff competition not only within the country but also outside of it which has resulted in the yield coming down. In India, there is no proper support from the government to the airlines industry and even today, taxes are very high. Compared to other places, airlines are considered to be a travel option for elites in India. So, the government has its own priority that it is heavily taxed. As a result, all airlines are in difficulty except IndiGo as they are a new airline and have all LCC models so they are able to manage it. All other legacy airlines are having problems and Air India is no exception. Because of the interest cost, such a heavy expense – where the capital has not been infused – has been a setback for us. But in the month of October-November, we made operating profit.</p>
<p>
<strong>How is Air India planning to move ahead to make itself a fi nancially strong company?</strong></p>
<p>
We have drafted a turnaround plan which has been approved by the government. The turnaround plan, besides the financial restructuring, will take care of our financial issues. We also intend to rationalise our routes. Some of the routes we have operated have to be revisited along with the economic turnaround. That exercise will give us a lot of strength. With the blessings of the government of India, Air India being the national carrier will have the first right for operating to any destinations. So, we have a lot of market available with which we expect a good growth.</p>
<p>
<strong>Nepal’s national carrier is also having serious problems. Government intervention and mismanagement are said to be the major reasons. What is the case with Air India?</strong></p>
<p>
It happens with all national carriers who cannot function purely from a commercial perspective. They have to have certain national commitments. In case of Air India, as a national carrier, we call it a second line of defence. Whenever there is a crisis like we have in Ethiopia or Egypt, the government has to solve it. Even within the country, there are places which are very loss making to us. We have an obligation to connect the place so as a national carrier; there are always obligations for the general well being of the people even at the cost of commercial principle. As regards to the government interference, though we are an autonomous body, this is a government organisation. The government has its say in giving the direction in which the airlines has to move. By and large, day to day interference is not there and we operate on commercial principle. </p>
<p>
<strong>How do you compare Air India with Nepal Airlines?</strong></p>
<p>
I do not have much insight on the way Nepal Airlines works. I believe that by the sheer size of the company, Air India is much bigger and particularly after the merger of Indian Airlines and Air India, it has become a big giant. The bigger an airline is, the better it is able to perform. Secondly, India itself is a big market, domestically as well as abroad whereas Nepal may not have that kind of a market. As far as the management of Nepal Airlines is concerned, I cannot comment about that. </p>
<p>
<strong>There are budget airlines operating in India. Is Air India also planning to come up with a similar strategy to compete?</strong></p>
<p>
In Air India, we have a legacy carrier which is a full service carrier and we are now getting into the idea of a low cost carrier. After the success of low cost carriers in Europe, it is catching up now in India as well. IndiGo is one of the low cost carriers and in Air India, we have Air India Express which is a low cost carrier. We are planning to move ahead with our low cost carrier. And we have already shifted to low cost carrier in some of the routes. Maybe in the time to come, we may have to shift to low cost carrier if there is a demand. Once the low cost module is adopted, the cost and the price come down. Today, we have market for both low cost and full legacy carrier. Depending on how the market demands, we will have to adopt the model. </p>',
'published' => true,
'created' => '2012-02-23',
'modified' => '0000-00-00',
'keywords' => '',
'description' => 'R Dayal is Executive Director (East)
of Air India Limited and based
in Kolkata. A graduate from IIM
Ahmadabad, he joined Indian Airlines
as a management trainee in 1977.
Since then he has worked in various
positions in financial and internal
audit in different regions of Indian
Airlines. He had also served for
Yemen Airways from 1999 to 2004
as its advisor. After the merger of Air
India and Indian Airlines in 2007, he
headed Internal Audit Department
of the company. Dayal is serving in
his current position since 2010. He
was recently in Nepal during his
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Business Age, Dayal shared his ideas
on Air India’s financial problems and
growth prospects.',
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National Carriers Cannot Function Purely On Commercial Perspective
7 min 7 sec to read
R Dayal
What brings you to Nepal this time?
Nepal is one of the most important stations for our network. There is a lot of movement of people from Nepal to different parts of the world. That is the reason why I wanted to visit the station and have a look so that we can plan for the future. How important is Nepal as a destination for Air India? It is one of the first few stations for our airlines. There is a lot of potential over here and it is an important part for us. Moreover, having such a long relationship even politically and commercially, we feel Nepal is also a part of us from many perspectives.
How is the competition with other private Indian airlines as well as other airlines fl ying to Nepal?
There is competition even from within India since Indigo, SpiceJet and others have also come to this place. Now, political boundaries no more exist. If you have Gulf Airlines coming directly to this place, there is definitely stiff competition. We, from Air India side, have always been benefitted from having more competition because we look forward for better efficiencies, performance and innovative strategies. Competition is always good and gives good health to the company.
What is the market share of Air India fl ying from Nepal to India?
It is 14 per cent. Our capacity utilisation is 70 per cent which is quite good by industry standard. The current capacity is sufficient enough for the demand. Looking at the growth which may come in the future, we will definitely add a few more flights.
Air India is having a fi nancial problem for some time now. What is the company doing to overcome this problem?
We did have a financial crunch. When any expansion takes place, it is always financed partly from the internal resources and partly from outside capital, normally from shareholders through issue capital and others. In case of Air India, we had gone for a fairly expensive programme as there was no addition of capacity for many years. The total expansion plan in the last threefour years was around Rs 400 billion Indian currency investment. That investment has to be financed. Most aircrafts are imported from France or USA which is also financed by bank or other means. So, what happened was, we approached the government for adding capital. The government is in the process of doing it. Maybe in a few months to go, everything will be cleared. But inbetween the cal,l there was a delay in the infusion of capital. All our cash generation which has taken place has to be used for repaying the foreign sovereign loans which we have committed. As a result, there was a cash flow problem. But, the government has now already approved a turnaround plan which includes the restructuring of loans along with infusion of capitals. Loans may be converted into preferential shares or may be into long term loan with lower rate of interest. Once this restructuring is completed, with our profitability we expect to pay about Rs 10 billion per annum alone as interest cost and the repayment will be much more comfortable. So, the present problem of the liquidity should be taken care of. I am expecting it to happen in may be two months time.
While private airlines make profi ts, state owned enterprises including airlines seem to be making losses. What are the reasons for this?
It’s not true that private airlines are making profit. In fact, the entire aviation industry of India is suffering mainly because the fuel cost has increased tremendously. For airlines, 40 per cent of the cost goes towards fuel itself. Another reason that plagues the aviation industry is stiff competition not only within the country but also outside of it which has resulted in the yield coming down. In India, there is no proper support from the government to the airlines industry and even today, taxes are very high. Compared to other places, airlines are considered to be a travel option for elites in India. So, the government has its own priority that it is heavily taxed. As a result, all airlines are in difficulty except IndiGo as they are a new airline and have all LCC models so they are able to manage it. All other legacy airlines are having problems and Air India is no exception. Because of the interest cost, such a heavy expense – where the capital has not been infused – has been a setback for us. But in the month of October-November, we made operating profit.
How is Air India planning to move ahead to make itself a fi nancially strong company?
We have drafted a turnaround plan which has been approved by the government. The turnaround plan, besides the financial restructuring, will take care of our financial issues. We also intend to rationalise our routes. Some of the routes we have operated have to be revisited along with the economic turnaround. That exercise will give us a lot of strength. With the blessings of the government of India, Air India being the national carrier will have the first right for operating to any destinations. So, we have a lot of market available with which we expect a good growth.
Nepal’s national carrier is also having serious problems. Government intervention and mismanagement are said to be the major reasons. What is the case with Air India?
It happens with all national carriers who cannot function purely from a commercial perspective. They have to have certain national commitments. In case of Air India, as a national carrier, we call it a second line of defence. Whenever there is a crisis like we have in Ethiopia or Egypt, the government has to solve it. Even within the country, there are places which are very loss making to us. We have an obligation to connect the place so as a national carrier; there are always obligations for the general well being of the people even at the cost of commercial principle. As regards to the government interference, though we are an autonomous body, this is a government organisation. The government has its say in giving the direction in which the airlines has to move. By and large, day to day interference is not there and we operate on commercial principle.
How do you compare Air India with Nepal Airlines?
I do not have much insight on the way Nepal Airlines works. I believe that by the sheer size of the company, Air India is much bigger and particularly after the merger of Indian Airlines and Air India, it has become a big giant. The bigger an airline is, the better it is able to perform. Secondly, India itself is a big market, domestically as well as abroad whereas Nepal may not have that kind of a market. As far as the management of Nepal Airlines is concerned, I cannot comment about that.
There are budget airlines operating in India. Is Air India also planning to come up with a similar strategy to compete?
In Air India, we have a legacy carrier which is a full service carrier and we are now getting into the idea of a low cost carrier. After the success of low cost carriers in Europe, it is catching up now in India as well. IndiGo is one of the low cost carriers and in Air India, we have Air India Express which is a low cost carrier. We are planning to move ahead with our low cost carrier. And we have already shifted to low cost carrier in some of the routes. Maybe in the time to come, we may have to shift to low cost carrier if there is a demand. Once the low cost module is adopted, the cost and the price come down. Today, we have market for both low cost and full legacy carrier. Depending on how the market demands, we will have to adopt the model.
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<p>
<span style="font-size:16px;"><strong>R Dayal <br />
</strong></span></p>
<p>
<strong>What brings you to Nepal this time?</strong></p>
<p>
Nepal is one of the most important stations for our network. There is a lot of movement of people from Nepal to different parts of the world. That is the reason why I wanted to visit the station and have a look so that we can plan for the future. How important is Nepal as a destination for Air India? It is one of the first few stations for our airlines. There is a lot of potential over here and it is an important part for us. Moreover, having such a long relationship even politically and commercially, we feel Nepal is also a part of us from many perspectives.</p>
<p>
<strong>How is the competition with other private Indian airlines as well as other airlines fl ying to Nepal?</strong> </p>
<p>
There is competition even from within India since Indigo, SpiceJet and others have also come to this place. Now, political boundaries no more exist. If you have Gulf Airlines coming directly to this place, there is definitely stiff competition. We, from Air India side, have always been benefitted from having more competition because we look forward for better efficiencies, performance and innovative strategies. Competition is always good and gives good health to the company.</p>
<p>
<strong>What is the market share of Air India fl ying from Nepal to India?</strong></p>
<p>
It is 14 per cent. Our capacity utilisation is 70 per cent which is quite good by industry standard. The current capacity is sufficient enough for the demand. Looking at the growth which may come in the future, we will definitely add a few more flights.</p>
<p>
<strong>Air India is having a fi nancial problem for some time now. What is the company doing to overcome this problem?</strong></p>
<p>
We did have a financial crunch. When any expansion takes place, it is always financed partly from the internal resources and partly from outside capital, normally from shareholders through issue capital and others. In case of Air India, we had gone for a fairly expensive programme as there was no addition of capacity for many years. The total expansion plan in the last threefour years was around Rs 400 billion Indian currency investment. That investment has to be financed. Most aircrafts are imported from France or USA which is also financed by bank or other means. So, what happened was, we approached the government for adding capital. The government is in the process of doing it. Maybe in a few months to go, everything will be cleared. But inbetween the cal,l there was a delay in the infusion of capital. All our cash generation which has taken place has to be used for repaying the foreign sovereign loans which we have committed. As a result, there was a cash flow problem. But, the government has now already approved a turnaround plan which includes the restructuring of loans along with infusion of capitals. Loans may be converted into preferential shares or may be into long term loan with lower rate of interest. Once this restructuring is completed, with our profitability we expect to pay about Rs 10 billion per annum alone as interest cost and the repayment will be much more comfortable. So, the present problem of the liquidity should be taken care of. I am expecting it to happen in may be two months time.</p>
<p>
<strong>While private airlines make profi ts, state owned enterprises including airlines seem to be making losses. What are the reasons for this?</strong> </p>
<p>
It’s not true that private airlines are making profit. In fact, the entire aviation industry of India is suffering mainly because the fuel cost has increased tremendously. For airlines, 40 per cent of the cost goes towards fuel itself. Another reason that plagues the aviation industry is stiff competition not only within the country but also outside of it which has resulted in the yield coming down. In India, there is no proper support from the government to the airlines industry and even today, taxes are very high. Compared to other places, airlines are considered to be a travel option for elites in India. So, the government has its own priority that it is heavily taxed. As a result, all airlines are in difficulty except IndiGo as they are a new airline and have all LCC models so they are able to manage it. All other legacy airlines are having problems and Air India is no exception. Because of the interest cost, such a heavy expense – where the capital has not been infused – has been a setback for us. But in the month of October-November, we made operating profit.</p>
<p>
<strong>How is Air India planning to move ahead to make itself a fi nancially strong company?</strong></p>
<p>
We have drafted a turnaround plan which has been approved by the government. The turnaround plan, besides the financial restructuring, will take care of our financial issues. We also intend to rationalise our routes. Some of the routes we have operated have to be revisited along with the economic turnaround. That exercise will give us a lot of strength. With the blessings of the government of India, Air India being the national carrier will have the first right for operating to any destinations. So, we have a lot of market available with which we expect a good growth.</p>
<p>
<strong>Nepal’s national carrier is also having serious problems. Government intervention and mismanagement are said to be the major reasons. What is the case with Air India?</strong></p>
<p>
It happens with all national carriers who cannot function purely from a commercial perspective. They have to have certain national commitments. In case of Air India, as a national carrier, we call it a second line of defence. Whenever there is a crisis like we have in Ethiopia or Egypt, the government has to solve it. Even within the country, there are places which are very loss making to us. We have an obligation to connect the place so as a national carrier; there are always obligations for the general well being of the people even at the cost of commercial principle. As regards to the government interference, though we are an autonomous body, this is a government organisation. The government has its say in giving the direction in which the airlines has to move. By and large, day to day interference is not there and we operate on commercial principle. </p>
<p>
<strong>How do you compare Air India with Nepal Airlines?</strong></p>
<p>
I do not have much insight on the way Nepal Airlines works. I believe that by the sheer size of the company, Air India is much bigger and particularly after the merger of Indian Airlines and Air India, it has become a big giant. The bigger an airline is, the better it is able to perform. Secondly, India itself is a big market, domestically as well as abroad whereas Nepal may not have that kind of a market. As far as the management of Nepal Airlines is concerned, I cannot comment about that. </p>
<p>
<strong>There are budget airlines operating in India. Is Air India also planning to come up with a similar strategy to compete?</strong></p>
<p>
In Air India, we have a legacy carrier which is a full service carrier and we are now getting into the idea of a low cost carrier. After the success of low cost carriers in Europe, it is catching up now in India as well. IndiGo is one of the low cost carriers and in Air India, we have Air India Express which is a low cost carrier. We are planning to move ahead with our low cost carrier. And we have already shifted to low cost carrier in some of the routes. Maybe in the time to come, we may have to shift to low cost carrier if there is a demand. Once the low cost module is adopted, the cost and the price come down. Today, we have market for both low cost and full legacy carrier. Depending on how the market demands, we will have to adopt the model. </p>',
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'description' => 'R Dayal is Executive Director (East)
of Air India Limited and based
in Kolkata. A graduate from IIM
Ahmadabad, he joined Indian Airlines
as a management trainee in 1977.
Since then he has worked in various
positions in financial and internal
audit in different regions of Indian
Airlines. He had also served for
Yemen Airways from 1999 to 2004
as its advisor. After the merger of Air
India and Indian Airlines in 2007, he
headed Internal Audit Department
of the company. Dayal is serving in
his current position since 2010. He
was recently in Nepal during his
official visit. In an interview with New
Business Age, Dayal shared his ideas
on Air India’s financial problems and
growth prospects.',
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<span style="font-size: 16px;"><strong><img align="left" alt="visiting" border="5" height="188" src="http://newbusinessage.com/ckfinder/userfiles/Images/2ndvisit.jpg" width="150" /><br />
</strong></span></p>
<p>
<span style="font-size:16px;"><strong>R Dayal <br />
</strong></span></p>
<p>
<strong>What brings you to Nepal this time?</strong></p>
<p>
Nepal is one of the most important stations for our network. There is a lot of movement of people from Nepal to different parts of the world. That is the reason why I wanted to visit the station and have a look so that we can plan for the future. How important is Nepal as a destination for Air India? It is one of the first few stations for our airlines. There is a lot of potential over here and it is an important part for us. Moreover, having such a long relationship even politically and commercially, we feel Nepal is also a part of us from many perspectives.</p>
<p>
<strong>How is the competition with other private Indian airlines as well as other airlines fl ying to Nepal?</strong> </p>
<p>
There is competition even from within India since Indigo, SpiceJet and others have also come to this place. Now, political boundaries no more exist. If you have Gulf Airlines coming directly to this place, there is definitely stiff competition. We, from Air India side, have always been benefitted from having more competition because we look forward for better efficiencies, performance and innovative strategies. Competition is always good and gives good health to the company.</p>
<p>
<strong>What is the market share of Air India fl ying from Nepal to India?</strong></p>
<p>
It is 14 per cent. Our capacity utilisation is 70 per cent which is quite good by industry standard. The current capacity is sufficient enough for the demand. Looking at the growth which may come in the future, we will definitely add a few more flights.</p>
<p>
<strong>Air India is having a fi nancial problem for some time now. What is the company doing to overcome this problem?</strong></p>
<p>
We did have a financial crunch. When any expansion takes place, it is always financed partly from the internal resources and partly from outside capital, normally from shareholders through issue capital and others. In case of Air India, we had gone for a fairly expensive programme as there was no addition of capacity for many years. The total expansion plan in the last threefour years was around Rs 400 billion Indian currency investment. That investment has to be financed. Most aircrafts are imported from France or USA which is also financed by bank or other means. So, what happened was, we approached the government for adding capital. The government is in the process of doing it. Maybe in a few months to go, everything will be cleared. But inbetween the cal,l there was a delay in the infusion of capital. All our cash generation which has taken place has to be used for repaying the foreign sovereign loans which we have committed. As a result, there was a cash flow problem. But, the government has now already approved a turnaround plan which includes the restructuring of loans along with infusion of capitals. Loans may be converted into preferential shares or may be into long term loan with lower rate of interest. Once this restructuring is completed, with our profitability we expect to pay about Rs 10 billion per annum alone as interest cost and the repayment will be much more comfortable. So, the present problem of the liquidity should be taken care of. I am expecting it to happen in may be two months time.</p>
<p>
<strong>While private airlines make profi ts, state owned enterprises including airlines seem to be making losses. What are the reasons for this?</strong> </p>
<p>
It’s not true that private airlines are making profit. In fact, the entire aviation industry of India is suffering mainly because the fuel cost has increased tremendously. For airlines, 40 per cent of the cost goes towards fuel itself. Another reason that plagues the aviation industry is stiff competition not only within the country but also outside of it which has resulted in the yield coming down. In India, there is no proper support from the government to the airlines industry and even today, taxes are very high. Compared to other places, airlines are considered to be a travel option for elites in India. So, the government has its own priority that it is heavily taxed. As a result, all airlines are in difficulty except IndiGo as they are a new airline and have all LCC models so they are able to manage it. All other legacy airlines are having problems and Air India is no exception. Because of the interest cost, such a heavy expense – where the capital has not been infused – has been a setback for us. But in the month of October-November, we made operating profit.</p>
<p>
<strong>How is Air India planning to move ahead to make itself a fi nancially strong company?</strong></p>
<p>
We have drafted a turnaround plan which has been approved by the government. The turnaround plan, besides the financial restructuring, will take care of our financial issues. We also intend to rationalise our routes. Some of the routes we have operated have to be revisited along with the economic turnaround. That exercise will give us a lot of strength. With the blessings of the government of India, Air India being the national carrier will have the first right for operating to any destinations. So, we have a lot of market available with which we expect a good growth.</p>
<p>
<strong>Nepal’s national carrier is also having serious problems. Government intervention and mismanagement are said to be the major reasons. What is the case with Air India?</strong></p>
<p>
It happens with all national carriers who cannot function purely from a commercial perspective. They have to have certain national commitments. In case of Air India, as a national carrier, we call it a second line of defence. Whenever there is a crisis like we have in Ethiopia or Egypt, the government has to solve it. Even within the country, there are places which are very loss making to us. We have an obligation to connect the place so as a national carrier; there are always obligations for the general well being of the people even at the cost of commercial principle. As regards to the government interference, though we are an autonomous body, this is a government organisation. The government has its say in giving the direction in which the airlines has to move. By and large, day to day interference is not there and we operate on commercial principle. </p>
<p>
<strong>How do you compare Air India with Nepal Airlines?</strong></p>
<p>
I do not have much insight on the way Nepal Airlines works. I believe that by the sheer size of the company, Air India is much bigger and particularly after the merger of Indian Airlines and Air India, it has become a big giant. The bigger an airline is, the better it is able to perform. Secondly, India itself is a big market, domestically as well as abroad whereas Nepal may not have that kind of a market. As far as the management of Nepal Airlines is concerned, I cannot comment about that. </p>
<p>
<strong>There are budget airlines operating in India. Is Air India also planning to come up with a similar strategy to compete?</strong></p>
<p>
In Air India, we have a legacy carrier which is a full service carrier and we are now getting into the idea of a low cost carrier. After the success of low cost carriers in Europe, it is catching up now in India as well. IndiGo is one of the low cost carriers and in Air India, we have Air India Express which is a low cost carrier. We are planning to move ahead with our low cost carrier. And we have already shifted to low cost carrier in some of the routes. Maybe in the time to come, we may have to shift to low cost carrier if there is a demand. Once the low cost module is adopted, the cost and the price come down. Today, we have market for both low cost and full legacy carrier. Depending on how the market demands, we will have to adopt the model. </p>',
'published' => true,
'created' => '2012-02-23',
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'description' => 'R Dayal is Executive Director (East)
of Air India Limited and based
in Kolkata. A graduate from IIM
Ahmadabad, he joined Indian Airlines
as a management trainee in 1977.
Since then he has worked in various
positions in financial and internal
audit in different regions of Indian
Airlines. He had also served for
Yemen Airways from 1999 to 2004
as its advisor. After the merger of Air
India and Indian Airlines in 2007, he
headed Internal Audit Department
of the company. Dayal is serving in
his current position since 2010. He
was recently in Nepal during his
official visit. In an interview with New
Business Age, Dayal shared his ideas
on Air India’s financial problems and
growth prospects.',
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'content' => '<p>
<span style="font-size: 16px;"><strong><img align="left" alt="visiting" border="5" height="188" src="http://newbusinessage.com/ckfinder/userfiles/Images/2ndvisit.jpg" width="150" /><br />
</strong></span></p>
<p>
<span style="font-size:16px;"><strong>R Dayal <br />
</strong></span></p>
<p>
<strong>What brings you to Nepal this time?</strong></p>
<p>
Nepal is one of the most important stations for our network. There is a lot of movement of people from Nepal to different parts of the world. That is the reason why I wanted to visit the station and have a look so that we can plan for the future. How important is Nepal as a destination for Air India? It is one of the first few stations for our airlines. There is a lot of potential over here and it is an important part for us. Moreover, having such a long relationship even politically and commercially, we feel Nepal is also a part of us from many perspectives.</p>
<p>
<strong>How is the competition with other private Indian airlines as well as other airlines fl ying to Nepal?</strong> </p>
<p>
There is competition even from within India since Indigo, SpiceJet and others have also come to this place. Now, political boundaries no more exist. If you have Gulf Airlines coming directly to this place, there is definitely stiff competition. We, from Air India side, have always been benefitted from having more competition because we look forward for better efficiencies, performance and innovative strategies. Competition is always good and gives good health to the company.</p>
<p>
<strong>What is the market share of Air India fl ying from Nepal to India?</strong></p>
<p>
It is 14 per cent. Our capacity utilisation is 70 per cent which is quite good by industry standard. The current capacity is sufficient enough for the demand. Looking at the growth which may come in the future, we will definitely add a few more flights.</p>
<p>
<strong>Air India is having a fi nancial problem for some time now. What is the company doing to overcome this problem?</strong></p>
<p>
We did have a financial crunch. When any expansion takes place, it is always financed partly from the internal resources and partly from outside capital, normally from shareholders through issue capital and others. In case of Air India, we had gone for a fairly expensive programme as there was no addition of capacity for many years. The total expansion plan in the last threefour years was around Rs 400 billion Indian currency investment. That investment has to be financed. Most aircrafts are imported from France or USA which is also financed by bank or other means. So, what happened was, we approached the government for adding capital. The government is in the process of doing it. Maybe in a few months to go, everything will be cleared. But inbetween the cal,l there was a delay in the infusion of capital. All our cash generation which has taken place has to be used for repaying the foreign sovereign loans which we have committed. As a result, there was a cash flow problem. But, the government has now already approved a turnaround plan which includes the restructuring of loans along with infusion of capitals. Loans may be converted into preferential shares or may be into long term loan with lower rate of interest. Once this restructuring is completed, with our profitability we expect to pay about Rs 10 billion per annum alone as interest cost and the repayment will be much more comfortable. So, the present problem of the liquidity should be taken care of. I am expecting it to happen in may be two months time.</p>
<p>
<strong>While private airlines make profi ts, state owned enterprises including airlines seem to be making losses. What are the reasons for this?</strong> </p>
<p>
It’s not true that private airlines are making profit. In fact, the entire aviation industry of India is suffering mainly because the fuel cost has increased tremendously. For airlines, 40 per cent of the cost goes towards fuel itself. Another reason that plagues the aviation industry is stiff competition not only within the country but also outside of it which has resulted in the yield coming down. In India, there is no proper support from the government to the airlines industry and even today, taxes are very high. Compared to other places, airlines are considered to be a travel option for elites in India. So, the government has its own priority that it is heavily taxed. As a result, all airlines are in difficulty except IndiGo as they are a new airline and have all LCC models so they are able to manage it. All other legacy airlines are having problems and Air India is no exception. Because of the interest cost, such a heavy expense – where the capital has not been infused – has been a setback for us. But in the month of October-November, we made operating profit.</p>
<p>
<strong>How is Air India planning to move ahead to make itself a fi nancially strong company?</strong></p>
<p>
We have drafted a turnaround plan which has been approved by the government. The turnaround plan, besides the financial restructuring, will take care of our financial issues. We also intend to rationalise our routes. Some of the routes we have operated have to be revisited along with the economic turnaround. That exercise will give us a lot of strength. With the blessings of the government of India, Air India being the national carrier will have the first right for operating to any destinations. So, we have a lot of market available with which we expect a good growth.</p>
<p>
<strong>Nepal’s national carrier is also having serious problems. Government intervention and mismanagement are said to be the major reasons. What is the case with Air India?</strong></p>
<p>
It happens with all national carriers who cannot function purely from a commercial perspective. They have to have certain national commitments. In case of Air India, as a national carrier, we call it a second line of defence. Whenever there is a crisis like we have in Ethiopia or Egypt, the government has to solve it. Even within the country, there are places which are very loss making to us. We have an obligation to connect the place so as a national carrier; there are always obligations for the general well being of the people even at the cost of commercial principle. As regards to the government interference, though we are an autonomous body, this is a government organisation. The government has its say in giving the direction in which the airlines has to move. By and large, day to day interference is not there and we operate on commercial principle. </p>
<p>
<strong>How do you compare Air India with Nepal Airlines?</strong></p>
<p>
I do not have much insight on the way Nepal Airlines works. I believe that by the sheer size of the company, Air India is much bigger and particularly after the merger of Indian Airlines and Air India, it has become a big giant. The bigger an airline is, the better it is able to perform. Secondly, India itself is a big market, domestically as well as abroad whereas Nepal may not have that kind of a market. As far as the management of Nepal Airlines is concerned, I cannot comment about that. </p>
<p>
<strong>There are budget airlines operating in India. Is Air India also planning to come up with a similar strategy to compete?</strong></p>
<p>
In Air India, we have a legacy carrier which is a full service carrier and we are now getting into the idea of a low cost carrier. After the success of low cost carriers in Europe, it is catching up now in India as well. IndiGo is one of the low cost carriers and in Air India, we have Air India Express which is a low cost carrier. We are planning to move ahead with our low cost carrier. And we have already shifted to low cost carrier in some of the routes. Maybe in the time to come, we may have to shift to low cost carrier if there is a demand. Once the low cost module is adopted, the cost and the price come down. Today, we have market for both low cost and full legacy carrier. Depending on how the market demands, we will have to adopt the model. </p>',
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'description' => 'R Dayal is Executive Director (East)
of Air India Limited and based
in Kolkata. A graduate from IIM
Ahmadabad, he joined Indian Airlines
as a management trainee in 1977.
Since then he has worked in various
positions in financial and internal
audit in different regions of Indian
Airlines. He had also served for
Yemen Airways from 1999 to 2004
as its advisor. After the merger of Air
India and Indian Airlines in 2007, he
headed Internal Audit Department
of the company. Dayal is serving in
his current position since 2010. He
was recently in Nepal during his
official visit. In an interview with New
Business Age, Dayal shared his ideas
on Air India’s financial problems and
growth prospects.',
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<span style="font-size: 16px;"><strong><img align="left" alt="visiting" border="5" height="188" src="http://newbusinessage.com/ckfinder/userfiles/Images/2ndvisit.jpg" width="150" /><br />
</strong></span></p>
<p>
<span style="font-size:16px;"><strong>R Dayal <br />
</strong></span></p>
<p>
<strong>What brings you to Nepal this time?</strong></p>
<p>
Nepal is one of the most important stations for our network. There is a lot of movement of people from Nepal to different parts of the world. That is the reason why I wanted to visit the station and have a look so that we can plan for the future. How important is Nepal as a destination for Air India? It is one of the first few stations for our airlines. There is a lot of potential over here and it is an important part for us. Moreover, having such a long relationship even politically and commercially, we feel Nepal is also a part of us from many perspectives.</p>
<p>
<strong>How is the competition with other private Indian airlines as well as other airlines fl ying to Nepal?</strong> </p>
<p>
There is competition even from within India since Indigo, SpiceJet and others have also come to this place. Now, political boundaries no more exist. If you have Gulf Airlines coming directly to this place, there is definitely stiff competition. We, from Air India side, have always been benefitted from having more competition because we look forward for better efficiencies, performance and innovative strategies. Competition is always good and gives good health to the company.</p>
<p>
<strong>What is the market share of Air India fl ying from Nepal to India?</strong></p>
<p>
It is 14 per cent. Our capacity utilisation is 70 per cent which is quite good by industry standard. The current capacity is sufficient enough for the demand. Looking at the growth which may come in the future, we will definitely add a few more flights.</p>
<p>
<strong>Air India is having a fi nancial problem for some time now. What is the company doing to overcome this problem?</strong></p>
<p>
We did have a financial crunch. When any expansion takes place, it is always financed partly from the internal resources and partly from outside capital, normally from shareholders through issue capital and others. In case of Air India, we had gone for a fairly expensive programme as there was no addition of capacity for many years. The total expansion plan in the last threefour years was around Rs 400 billion Indian currency investment. That investment has to be financed. Most aircrafts are imported from France or USA which is also financed by bank or other means. So, what happened was, we approached the government for adding capital. The government is in the process of doing it. Maybe in a few months to go, everything will be cleared. But inbetween the cal,l there was a delay in the infusion of capital. All our cash generation which has taken place has to be used for repaying the foreign sovereign loans which we have committed. As a result, there was a cash flow problem. But, the government has now already approved a turnaround plan which includes the restructuring of loans along with infusion of capitals. Loans may be converted into preferential shares or may be into long term loan with lower rate of interest. Once this restructuring is completed, with our profitability we expect to pay about Rs 10 billion per annum alone as interest cost and the repayment will be much more comfortable. So, the present problem of the liquidity should be taken care of. I am expecting it to happen in may be two months time.</p>
<p>
<strong>While private airlines make profi ts, state owned enterprises including airlines seem to be making losses. What are the reasons for this?</strong> </p>
<p>
It’s not true that private airlines are making profit. In fact, the entire aviation industry of India is suffering mainly because the fuel cost has increased tremendously. For airlines, 40 per cent of the cost goes towards fuel itself. Another reason that plagues the aviation industry is stiff competition not only within the country but also outside of it which has resulted in the yield coming down. In India, there is no proper support from the government to the airlines industry and even today, taxes are very high. Compared to other places, airlines are considered to be a travel option for elites in India. So, the government has its own priority that it is heavily taxed. As a result, all airlines are in difficulty except IndiGo as they are a new airline and have all LCC models so they are able to manage it. All other legacy airlines are having problems and Air India is no exception. Because of the interest cost, such a heavy expense – where the capital has not been infused – has been a setback for us. But in the month of October-November, we made operating profit.</p>
<p>
<strong>How is Air India planning to move ahead to make itself a fi nancially strong company?</strong></p>
<p>
We have drafted a turnaround plan which has been approved by the government. The turnaround plan, besides the financial restructuring, will take care of our financial issues. We also intend to rationalise our routes. Some of the routes we have operated have to be revisited along with the economic turnaround. That exercise will give us a lot of strength. With the blessings of the government of India, Air India being the national carrier will have the first right for operating to any destinations. So, we have a lot of market available with which we expect a good growth.</p>
<p>
<strong>Nepal’s national carrier is also having serious problems. Government intervention and mismanagement are said to be the major reasons. What is the case with Air India?</strong></p>
<p>
It happens with all national carriers who cannot function purely from a commercial perspective. They have to have certain national commitments. In case of Air India, as a national carrier, we call it a second line of defence. Whenever there is a crisis like we have in Ethiopia or Egypt, the government has to solve it. Even within the country, there are places which are very loss making to us. We have an obligation to connect the place so as a national carrier; there are always obligations for the general well being of the people even at the cost of commercial principle. As regards to the government interference, though we are an autonomous body, this is a government organisation. The government has its say in giving the direction in which the airlines has to move. By and large, day to day interference is not there and we operate on commercial principle. </p>
<p>
<strong>How do you compare Air India with Nepal Airlines?</strong></p>
<p>
I do not have much insight on the way Nepal Airlines works. I believe that by the sheer size of the company, Air India is much bigger and particularly after the merger of Indian Airlines and Air India, it has become a big giant. The bigger an airline is, the better it is able to perform. Secondly, India itself is a big market, domestically as well as abroad whereas Nepal may not have that kind of a market. As far as the management of Nepal Airlines is concerned, I cannot comment about that. </p>
<p>
<strong>There are budget airlines operating in India. Is Air India also planning to come up with a similar strategy to compete?</strong></p>
<p>
In Air India, we have a legacy carrier which is a full service carrier and we are now getting into the idea of a low cost carrier. After the success of low cost carriers in Europe, it is catching up now in India as well. IndiGo is one of the low cost carriers and in Air India, we have Air India Express which is a low cost carrier. We are planning to move ahead with our low cost carrier. And we have already shifted to low cost carrier in some of the routes. Maybe in the time to come, we may have to shift to low cost carrier if there is a demand. Once the low cost module is adopted, the cost and the price come down. Today, we have market for both low cost and full legacy carrier. Depending on how the market demands, we will have to adopt the model. </p>',
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'description' => 'R Dayal is Executive Director (East)
of Air India Limited and based
in Kolkata. A graduate from IIM
Ahmadabad, he joined Indian Airlines
as a management trainee in 1977.
Since then he has worked in various
positions in financial and internal
audit in different regions of Indian
Airlines. He had also served for
Yemen Airways from 1999 to 2004
as its advisor. After the merger of Air
India and Indian Airlines in 2007, he
headed Internal Audit Department
of the company. Dayal is serving in
his current position since 2010. He
was recently in Nepal during his
official visit. In an interview with New
Business Age, Dayal shared his ideas
on Air India’s financial problems and
growth prospects.',
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<span style="font-size: 16px;"><strong><img align="left" alt="visiting" border="5" height="188" src="http://newbusinessage.com/ckfinder/userfiles/Images/2ndvisit.jpg" width="150" /><br />
</strong></span></p>
<p>
<span style="font-size:16px;"><strong>R Dayal <br />
</strong></span></p>
<p>
<strong>What brings you to Nepal this time?</strong></p>
<p>
Nepal is one of the most important stations for our network. There is a lot of movement of people from Nepal to different parts of the world. That is the reason why I wanted to visit the station and have a look so that we can plan for the future. How important is Nepal as a destination for Air India? It is one of the first few stations for our airlines. There is a lot of potential over here and it is an important part for us. Moreover, having such a long relationship even politically and commercially, we feel Nepal is also a part of us from many perspectives.</p>
<p>
<strong>How is the competition with other private Indian airlines as well as other airlines fl ying to Nepal?</strong> </p>
<p>
There is competition even from within India since Indigo, SpiceJet and others have also come to this place. Now, political boundaries no more exist. If you have Gulf Airlines coming directly to this place, there is definitely stiff competition. We, from Air India side, have always been benefitted from having more competition because we look forward for better efficiencies, performance and innovative strategies. Competition is always good and gives good health to the company.</p>
<p>
<strong>What is the market share of Air India fl ying from Nepal to India?</strong></p>
<p>
It is 14 per cent. Our capacity utilisation is 70 per cent which is quite good by industry standard. The current capacity is sufficient enough for the demand. Looking at the growth which may come in the future, we will definitely add a few more flights.</p>
<p>
<strong>Air India is having a fi nancial problem for some time now. What is the company doing to overcome this problem?</strong></p>
<p>
We did have a financial crunch. When any expansion takes place, it is always financed partly from the internal resources and partly from outside capital, normally from shareholders through issue capital and others. In case of Air India, we had gone for a fairly expensive programme as there was no addition of capacity for many years. The total expansion plan in the last threefour years was around Rs 400 billion Indian currency investment. That investment has to be financed. Most aircrafts are imported from France or USA which is also financed by bank or other means. So, what happened was, we approached the government for adding capital. The government is in the process of doing it. Maybe in a few months to go, everything will be cleared. But inbetween the cal,l there was a delay in the infusion of capital. All our cash generation which has taken place has to be used for repaying the foreign sovereign loans which we have committed. As a result, there was a cash flow problem. But, the government has now already approved a turnaround plan which includes the restructuring of loans along with infusion of capitals. Loans may be converted into preferential shares or may be into long term loan with lower rate of interest. Once this restructuring is completed, with our profitability we expect to pay about Rs 10 billion per annum alone as interest cost and the repayment will be much more comfortable. So, the present problem of the liquidity should be taken care of. I am expecting it to happen in may be two months time.</p>
<p>
<strong>While private airlines make profi ts, state owned enterprises including airlines seem to be making losses. What are the reasons for this?</strong> </p>
<p>
It’s not true that private airlines are making profit. In fact, the entire aviation industry of India is suffering mainly because the fuel cost has increased tremendously. For airlines, 40 per cent of the cost goes towards fuel itself. Another reason that plagues the aviation industry is stiff competition not only within the country but also outside of it which has resulted in the yield coming down. In India, there is no proper support from the government to the airlines industry and even today, taxes are very high. Compared to other places, airlines are considered to be a travel option for elites in India. So, the government has its own priority that it is heavily taxed. As a result, all airlines are in difficulty except IndiGo as they are a new airline and have all LCC models so they are able to manage it. All other legacy airlines are having problems and Air India is no exception. Because of the interest cost, such a heavy expense – where the capital has not been infused – has been a setback for us. But in the month of October-November, we made operating profit.</p>
<p>
<strong>How is Air India planning to move ahead to make itself a fi nancially strong company?</strong></p>
<p>
We have drafted a turnaround plan which has been approved by the government. The turnaround plan, besides the financial restructuring, will take care of our financial issues. We also intend to rationalise our routes. Some of the routes we have operated have to be revisited along with the economic turnaround. That exercise will give us a lot of strength. With the blessings of the government of India, Air India being the national carrier will have the first right for operating to any destinations. So, we have a lot of market available with which we expect a good growth.</p>
<p>
<strong>Nepal’s national carrier is also having serious problems. Government intervention and mismanagement are said to be the major reasons. What is the case with Air India?</strong></p>
<p>
It happens with all national carriers who cannot function purely from a commercial perspective. They have to have certain national commitments. In case of Air India, as a national carrier, we call it a second line of defence. Whenever there is a crisis like we have in Ethiopia or Egypt, the government has to solve it. Even within the country, there are places which are very loss making to us. We have an obligation to connect the place so as a national carrier; there are always obligations for the general well being of the people even at the cost of commercial principle. As regards to the government interference, though we are an autonomous body, this is a government organisation. The government has its say in giving the direction in which the airlines has to move. By and large, day to day interference is not there and we operate on commercial principle. </p>
<p>
<strong>How do you compare Air India with Nepal Airlines?</strong></p>
<p>
I do not have much insight on the way Nepal Airlines works. I believe that by the sheer size of the company, Air India is much bigger and particularly after the merger of Indian Airlines and Air India, it has become a big giant. The bigger an airline is, the better it is able to perform. Secondly, India itself is a big market, domestically as well as abroad whereas Nepal may not have that kind of a market. As far as the management of Nepal Airlines is concerned, I cannot comment about that. </p>
<p>
<strong>There are budget airlines operating in India. Is Air India also planning to come up with a similar strategy to compete?</strong></p>
<p>
In Air India, we have a legacy carrier which is a full service carrier and we are now getting into the idea of a low cost carrier. After the success of low cost carriers in Europe, it is catching up now in India as well. IndiGo is one of the low cost carriers and in Air India, we have Air India Express which is a low cost carrier. We are planning to move ahead with our low cost carrier. And we have already shifted to low cost carrier in some of the routes. Maybe in the time to come, we may have to shift to low cost carrier if there is a demand. Once the low cost module is adopted, the cost and the price come down. Today, we have market for both low cost and full legacy carrier. Depending on how the market demands, we will have to adopt the model. </p>',
'published' => true,
'created' => '2012-02-23',
'modified' => '0000-00-00',
'keywords' => '',
'description' => 'R Dayal is Executive Director (East)
of Air India Limited and based
in Kolkata. A graduate from IIM
Ahmadabad, he joined Indian Airlines
as a management trainee in 1977.
Since then he has worked in various
positions in financial and internal
audit in different regions of Indian
Airlines. He had also served for
Yemen Airways from 1999 to 2004
as its advisor. After the merger of Air
India and Indian Airlines in 2007, he
headed Internal Audit Department
of the company. Dayal is serving in
his current position since 2010. He
was recently in Nepal during his
official visit. In an interview with New
Business Age, Dayal shared his ideas
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growth prospects.',
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<span style="font-size: 16px;"><strong><img align="left" alt="visiting" border="5" height="188" src="http://newbusinessage.com/ckfinder/userfiles/Images/2ndvisit.jpg" width="150" /><br />
</strong></span></p>
<p>
<span style="font-size:16px;"><strong>R Dayal <br />
</strong></span></p>
<p>
<strong>What brings you to Nepal this time?</strong></p>
<p>
Nepal is one of the most important stations for our network. There is a lot of movement of people from Nepal to different parts of the world. That is the reason why I wanted to visit the station and have a look so that we can plan for the future. How important is Nepal as a destination for Air India? It is one of the first few stations for our airlines. There is a lot of potential over here and it is an important part for us. Moreover, having such a long relationship even politically and commercially, we feel Nepal is also a part of us from many perspectives.</p>
<p>
<strong>How is the competition with other private Indian airlines as well as other airlines fl ying to Nepal?</strong> </p>
<p>
There is competition even from within India since Indigo, SpiceJet and others have also come to this place. Now, political boundaries no more exist. If you have Gulf Airlines coming directly to this place, there is definitely stiff competition. We, from Air India side, have always been benefitted from having more competition because we look forward for better efficiencies, performance and innovative strategies. Competition is always good and gives good health to the company.</p>
<p>
<strong>What is the market share of Air India fl ying from Nepal to India?</strong></p>
<p>
It is 14 per cent. Our capacity utilisation is 70 per cent which is quite good by industry standard. The current capacity is sufficient enough for the demand. Looking at the growth which may come in the future, we will definitely add a few more flights.</p>
<p>
<strong>Air India is having a fi nancial problem for some time now. What is the company doing to overcome this problem?</strong></p>
<p>
We did have a financial crunch. When any expansion takes place, it is always financed partly from the internal resources and partly from outside capital, normally from shareholders through issue capital and others. In case of Air India, we had gone for a fairly expensive programme as there was no addition of capacity for many years. The total expansion plan in the last threefour years was around Rs 400 billion Indian currency investment. That investment has to be financed. Most aircrafts are imported from France or USA which is also financed by bank or other means. So, what happened was, we approached the government for adding capital. The government is in the process of doing it. Maybe in a few months to go, everything will be cleared. But inbetween the cal,l there was a delay in the infusion of capital. All our cash generation which has taken place has to be used for repaying the foreign sovereign loans which we have committed. As a result, there was a cash flow problem. But, the government has now already approved a turnaround plan which includes the restructuring of loans along with infusion of capitals. Loans may be converted into preferential shares or may be into long term loan with lower rate of interest. Once this restructuring is completed, with our profitability we expect to pay about Rs 10 billion per annum alone as interest cost and the repayment will be much more comfortable. So, the present problem of the liquidity should be taken care of. I am expecting it to happen in may be two months time.</p>
<p>
<strong>While private airlines make profi ts, state owned enterprises including airlines seem to be making losses. What are the reasons for this?</strong> </p>
<p>
It’s not true that private airlines are making profit. In fact, the entire aviation industry of India is suffering mainly because the fuel cost has increased tremendously. For airlines, 40 per cent of the cost goes towards fuel itself. Another reason that plagues the aviation industry is stiff competition not only within the country but also outside of it which has resulted in the yield coming down. In India, there is no proper support from the government to the airlines industry and even today, taxes are very high. Compared to other places, airlines are considered to be a travel option for elites in India. So, the government has its own priority that it is heavily taxed. As a result, all airlines are in difficulty except IndiGo as they are a new airline and have all LCC models so they are able to manage it. All other legacy airlines are having problems and Air India is no exception. Because of the interest cost, such a heavy expense – where the capital has not been infused – has been a setback for us. But in the month of October-November, we made operating profit.</p>
<p>
<strong>How is Air India planning to move ahead to make itself a fi nancially strong company?</strong></p>
<p>
We have drafted a turnaround plan which has been approved by the government. The turnaround plan, besides the financial restructuring, will take care of our financial issues. We also intend to rationalise our routes. Some of the routes we have operated have to be revisited along with the economic turnaround. That exercise will give us a lot of strength. With the blessings of the government of India, Air India being the national carrier will have the first right for operating to any destinations. So, we have a lot of market available with which we expect a good growth.</p>
<p>
<strong>Nepal’s national carrier is also having serious problems. Government intervention and mismanagement are said to be the major reasons. What is the case with Air India?</strong></p>
<p>
It happens with all national carriers who cannot function purely from a commercial perspective. They have to have certain national commitments. In case of Air India, as a national carrier, we call it a second line of defence. Whenever there is a crisis like we have in Ethiopia or Egypt, the government has to solve it. Even within the country, there are places which are very loss making to us. We have an obligation to connect the place so as a national carrier; there are always obligations for the general well being of the people even at the cost of commercial principle. As regards to the government interference, though we are an autonomous body, this is a government organisation. The government has its say in giving the direction in which the airlines has to move. By and large, day to day interference is not there and we operate on commercial principle. </p>
<p>
<strong>How do you compare Air India with Nepal Airlines?</strong></p>
<p>
I do not have much insight on the way Nepal Airlines works. I believe that by the sheer size of the company, Air India is much bigger and particularly after the merger of Indian Airlines and Air India, it has become a big giant. The bigger an airline is, the better it is able to perform. Secondly, India itself is a big market, domestically as well as abroad whereas Nepal may not have that kind of a market. As far as the management of Nepal Airlines is concerned, I cannot comment about that. </p>
<p>
<strong>There are budget airlines operating in India. Is Air India also planning to come up with a similar strategy to compete?</strong></p>
<p>
In Air India, we have a legacy carrier which is a full service carrier and we are now getting into the idea of a low cost carrier. After the success of low cost carriers in Europe, it is catching up now in India as well. IndiGo is one of the low cost carriers and in Air India, we have Air India Express which is a low cost carrier. We are planning to move ahead with our low cost carrier. And we have already shifted to low cost carrier in some of the routes. Maybe in the time to come, we may have to shift to low cost carrier if there is a demand. Once the low cost module is adopted, the cost and the price come down. Today, we have market for both low cost and full legacy carrier. Depending on how the market demands, we will have to adopt the model. </p>',
'published' => true,
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'description' => 'R Dayal is Executive Director (East)
of Air India Limited and based
in Kolkata. A graduate from IIM
Ahmadabad, he joined Indian Airlines
as a management trainee in 1977.
Since then he has worked in various
positions in financial and internal
audit in different regions of Indian
Airlines. He had also served for
Yemen Airways from 1999 to 2004
as its advisor. After the merger of Air
India and Indian Airlines in 2007, he
headed Internal Audit Department
of the company. Dayal is serving in
his current position since 2010. He
was recently in Nepal during his
official visit. In an interview with New
Business Age, Dayal shared his ideas
on Air India’s financial problems and
growth prospects.',
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<span style="font-size: 16px;"><strong><img align="left" alt="visiting" border="5" height="188" src="http://newbusinessage.com/ckfinder/userfiles/Images/2ndvisit.jpg" width="150" /><br />
</strong></span></p>
<p>
<span style="font-size:16px;"><strong>R Dayal <br />
</strong></span></p>
<p>
<strong>What brings you to Nepal this time?</strong></p>
<p>
Nepal is one of the most important stations for our network. There is a lot of movement of people from Nepal to different parts of the world. That is the reason why I wanted to visit the station and have a look so that we can plan for the future. How important is Nepal as a destination for Air India? It is one of the first few stations for our airlines. There is a lot of potential over here and it is an important part for us. Moreover, having such a long relationship even politically and commercially, we feel Nepal is also a part of us from many perspectives.</p>
<p>
<strong>How is the competition with other private Indian airlines as well as other airlines fl ying to Nepal?</strong> </p>
<p>
There is competition even from within India since Indigo, SpiceJet and others have also come to this place. Now, political boundaries no more exist. If you have Gulf Airlines coming directly to this place, there is definitely stiff competition. We, from Air India side, have always been benefitted from having more competition because we look forward for better efficiencies, performance and innovative strategies. Competition is always good and gives good health to the company.</p>
<p>
<strong>What is the market share of Air India fl ying from Nepal to India?</strong></p>
<p>
It is 14 per cent. Our capacity utilisation is 70 per cent which is quite good by industry standard. The current capacity is sufficient enough for the demand. Looking at the growth which may come in the future, we will definitely add a few more flights.</p>
<p>
<strong>Air India is having a fi nancial problem for some time now. What is the company doing to overcome this problem?</strong></p>
<p>
We did have a financial crunch. When any expansion takes place, it is always financed partly from the internal resources and partly from outside capital, normally from shareholders through issue capital and others. In case of Air India, we had gone for a fairly expensive programme as there was no addition of capacity for many years. The total expansion plan in the last threefour years was around Rs 400 billion Indian currency investment. That investment has to be financed. Most aircrafts are imported from France or USA which is also financed by bank or other means. So, what happened was, we approached the government for adding capital. The government is in the process of doing it. Maybe in a few months to go, everything will be cleared. But inbetween the cal,l there was a delay in the infusion of capital. All our cash generation which has taken place has to be used for repaying the foreign sovereign loans which we have committed. As a result, there was a cash flow problem. But, the government has now already approved a turnaround plan which includes the restructuring of loans along with infusion of capitals. Loans may be converted into preferential shares or may be into long term loan with lower rate of interest. Once this restructuring is completed, with our profitability we expect to pay about Rs 10 billion per annum alone as interest cost and the repayment will be much more comfortable. So, the present problem of the liquidity should be taken care of. I am expecting it to happen in may be two months time.</p>
<p>
<strong>While private airlines make profi ts, state owned enterprises including airlines seem to be making losses. What are the reasons for this?</strong> </p>
<p>
It’s not true that private airlines are making profit. In fact, the entire aviation industry of India is suffering mainly because the fuel cost has increased tremendously. For airlines, 40 per cent of the cost goes towards fuel itself. Another reason that plagues the aviation industry is stiff competition not only within the country but also outside of it which has resulted in the yield coming down. In India, there is no proper support from the government to the airlines industry and even today, taxes are very high. Compared to other places, airlines are considered to be a travel option for elites in India. So, the government has its own priority that it is heavily taxed. As a result, all airlines are in difficulty except IndiGo as they are a new airline and have all LCC models so they are able to manage it. All other legacy airlines are having problems and Air India is no exception. Because of the interest cost, such a heavy expense – where the capital has not been infused – has been a setback for us. But in the month of October-November, we made operating profit.</p>
<p>
<strong>How is Air India planning to move ahead to make itself a fi nancially strong company?</strong></p>
<p>
We have drafted a turnaround plan which has been approved by the government. The turnaround plan, besides the financial restructuring, will take care of our financial issues. We also intend to rationalise our routes. Some of the routes we have operated have to be revisited along with the economic turnaround. That exercise will give us a lot of strength. With the blessings of the government of India, Air India being the national carrier will have the first right for operating to any destinations. So, we have a lot of market available with which we expect a good growth.</p>
<p>
<strong>Nepal’s national carrier is also having serious problems. Government intervention and mismanagement are said to be the major reasons. What is the case with Air India?</strong></p>
<p>
It happens with all national carriers who cannot function purely from a commercial perspective. They have to have certain national commitments. In case of Air India, as a national carrier, we call it a second line of defence. Whenever there is a crisis like we have in Ethiopia or Egypt, the government has to solve it. Even within the country, there are places which are very loss making to us. We have an obligation to connect the place so as a national carrier; there are always obligations for the general well being of the people even at the cost of commercial principle. As regards to the government interference, though we are an autonomous body, this is a government organisation. The government has its say in giving the direction in which the airlines has to move. By and large, day to day interference is not there and we operate on commercial principle. </p>
<p>
<strong>How do you compare Air India with Nepal Airlines?</strong></p>
<p>
I do not have much insight on the way Nepal Airlines works. I believe that by the sheer size of the company, Air India is much bigger and particularly after the merger of Indian Airlines and Air India, it has become a big giant. The bigger an airline is, the better it is able to perform. Secondly, India itself is a big market, domestically as well as abroad whereas Nepal may not have that kind of a market. As far as the management of Nepal Airlines is concerned, I cannot comment about that. </p>
<p>
<strong>There are budget airlines operating in India. Is Air India also planning to come up with a similar strategy to compete?</strong></p>
<p>
In Air India, we have a legacy carrier which is a full service carrier and we are now getting into the idea of a low cost carrier. After the success of low cost carriers in Europe, it is catching up now in India as well. IndiGo is one of the low cost carriers and in Air India, we have Air India Express which is a low cost carrier. We are planning to move ahead with our low cost carrier. And we have already shifted to low cost carrier in some of the routes. Maybe in the time to come, we may have to shift to low cost carrier if there is a demand. Once the low cost module is adopted, the cost and the price come down. Today, we have market for both low cost and full legacy carrier. Depending on how the market demands, we will have to adopt the model. </p>',
'published' => true,
'created' => '2012-02-23',
'modified' => '0000-00-00',
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'description' => 'R Dayal is Executive Director (East)
of Air India Limited and based
in Kolkata. A graduate from IIM
Ahmadabad, he joined Indian Airlines
as a management trainee in 1977.
Since then he has worked in various
positions in financial and internal
audit in different regions of Indian
Airlines. He had also served for
Yemen Airways from 1999 to 2004
as its advisor. After the merger of Air
India and Indian Airlines in 2007, he
headed Internal Audit Department
of the company. Dayal is serving in
his current position since 2010. He
was recently in Nepal during his
official visit. In an interview with New
Business Age, Dayal shared his ideas
on Air India’s financial problems and
growth prospects.',
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<span style="font-size: 16px;"><strong><img align="left" alt="visiting" border="5" height="188" src="http://newbusinessage.com/ckfinder/userfiles/Images/2ndvisit.jpg" width="150" /><br />
</strong></span></p>
<p>
<span style="font-size:16px;"><strong>R Dayal <br />
</strong></span></p>
<p>
<strong>What brings you to Nepal this time?</strong></p>
<p>
Nepal is one of the most important stations for our network. There is a lot of movement of people from Nepal to different parts of the world. That is the reason why I wanted to visit the station and have a look so that we can plan for the future. How important is Nepal as a destination for Air India? It is one of the first few stations for our airlines. There is a lot of potential over here and it is an important part for us. Moreover, having such a long relationship even politically and commercially, we feel Nepal is also a part of us from many perspectives.</p>
<p>
<strong>How is the competition with other private Indian airlines as well as other airlines fl ying to Nepal?</strong> </p>
<p>
There is competition even from within India since Indigo, SpiceJet and others have also come to this place. Now, political boundaries no more exist. If you have Gulf Airlines coming directly to this place, there is definitely stiff competition. We, from Air India side, have always been benefitted from having more competition because we look forward for better efficiencies, performance and innovative strategies. Competition is always good and gives good health to the company.</p>
<p>
<strong>What is the market share of Air India fl ying from Nepal to India?</strong></p>
<p>
It is 14 per cent. Our capacity utilisation is 70 per cent which is quite good by industry standard. The current capacity is sufficient enough for the demand. Looking at the growth which may come in the future, we will definitely add a few more flights.</p>
<p>
<strong>Air India is having a fi nancial problem for some time now. What is the company doing to overcome this problem?</strong></p>
<p>
We did have a financial crunch. When any expansion takes place, it is always financed partly from the internal resources and partly from outside capital, normally from shareholders through issue capital and others. In case of Air India, we had gone for a fairly expensive programme as there was no addition of capacity for many years. The total expansion plan in the last threefour years was around Rs 400 billion Indian currency investment. That investment has to be financed. Most aircrafts are imported from France or USA which is also financed by bank or other means. So, what happened was, we approached the government for adding capital. The government is in the process of doing it. Maybe in a few months to go, everything will be cleared. But inbetween the cal,l there was a delay in the infusion of capital. All our cash generation which has taken place has to be used for repaying the foreign sovereign loans which we have committed. As a result, there was a cash flow problem. But, the government has now already approved a turnaround plan which includes the restructuring of loans along with infusion of capitals. Loans may be converted into preferential shares or may be into long term loan with lower rate of interest. Once this restructuring is completed, with our profitability we expect to pay about Rs 10 billion per annum alone as interest cost and the repayment will be much more comfortable. So, the present problem of the liquidity should be taken care of. I am expecting it to happen in may be two months time.</p>
<p>
<strong>While private airlines make profi ts, state owned enterprises including airlines seem to be making losses. What are the reasons for this?</strong> </p>
<p>
It’s not true that private airlines are making profit. In fact, the entire aviation industry of India is suffering mainly because the fuel cost has increased tremendously. For airlines, 40 per cent of the cost goes towards fuel itself. Another reason that plagues the aviation industry is stiff competition not only within the country but also outside of it which has resulted in the yield coming down. In India, there is no proper support from the government to the airlines industry and even today, taxes are very high. Compared to other places, airlines are considered to be a travel option for elites in India. So, the government has its own priority that it is heavily taxed. As a result, all airlines are in difficulty except IndiGo as they are a new airline and have all LCC models so they are able to manage it. All other legacy airlines are having problems and Air India is no exception. Because of the interest cost, such a heavy expense – where the capital has not been infused – has been a setback for us. But in the month of October-November, we made operating profit.</p>
<p>
<strong>How is Air India planning to move ahead to make itself a fi nancially strong company?</strong></p>
<p>
We have drafted a turnaround plan which has been approved by the government. The turnaround plan, besides the financial restructuring, will take care of our financial issues. We also intend to rationalise our routes. Some of the routes we have operated have to be revisited along with the economic turnaround. That exercise will give us a lot of strength. With the blessings of the government of India, Air India being the national carrier will have the first right for operating to any destinations. So, we have a lot of market available with which we expect a good growth.</p>
<p>
<strong>Nepal’s national carrier is also having serious problems. Government intervention and mismanagement are said to be the major reasons. What is the case with Air India?</strong></p>
<p>
It happens with all national carriers who cannot function purely from a commercial perspective. They have to have certain national commitments. In case of Air India, as a national carrier, we call it a second line of defence. Whenever there is a crisis like we have in Ethiopia or Egypt, the government has to solve it. Even within the country, there are places which are very loss making to us. We have an obligation to connect the place so as a national carrier; there are always obligations for the general well being of the people even at the cost of commercial principle. As regards to the government interference, though we are an autonomous body, this is a government organisation. The government has its say in giving the direction in which the airlines has to move. By and large, day to day interference is not there and we operate on commercial principle. </p>
<p>
<strong>How do you compare Air India with Nepal Airlines?</strong></p>
<p>
I do not have much insight on the way Nepal Airlines works. I believe that by the sheer size of the company, Air India is much bigger and particularly after the merger of Indian Airlines and Air India, it has become a big giant. The bigger an airline is, the better it is able to perform. Secondly, India itself is a big market, domestically as well as abroad whereas Nepal may not have that kind of a market. As far as the management of Nepal Airlines is concerned, I cannot comment about that. </p>
<p>
<strong>There are budget airlines operating in India. Is Air India also planning to come up with a similar strategy to compete?</strong></p>
<p>
In Air India, we have a legacy carrier which is a full service carrier and we are now getting into the idea of a low cost carrier. After the success of low cost carriers in Europe, it is catching up now in India as well. IndiGo is one of the low cost carriers and in Air India, we have Air India Express which is a low cost carrier. We are planning to move ahead with our low cost carrier. And we have already shifted to low cost carrier in some of the routes. Maybe in the time to come, we may have to shift to low cost carrier if there is a demand. Once the low cost module is adopted, the cost and the price come down. Today, we have market for both low cost and full legacy carrier. Depending on how the market demands, we will have to adopt the model. </p>',
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'description' => 'R Dayal is Executive Director (East)
of Air India Limited and based
in Kolkata. A graduate from IIM
Ahmadabad, he joined Indian Airlines
as a management trainee in 1977.
Since then he has worked in various
positions in financial and internal
audit in different regions of Indian
Airlines. He had also served for
Yemen Airways from 1999 to 2004
as its advisor. After the merger of Air
India and Indian Airlines in 2007, he
headed Internal Audit Department
of the company. Dayal is serving in
his current position since 2010. He
was recently in Nepal during his
official visit. In an interview with New
Business Age, Dayal shared his ideas
on Air India’s financial problems and
growth prospects.',
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