Chennai-born Mittu Chandilya, Chief Executive Officer, AirAsia India, feels that the high level of social awareness and community feeling in his city of birth plays well with the culture of the soon-to-be launched airline.
Though the airline’s takeoff has been delayed and is now likely some time in December, Chandilya feels in India, you need to be patient and respect the processes.
Walk us through your life in and from Chennai.
I was born in Chennai. I left Chennai when I was three. We went to Kolkata for a few years and then to Nigeria. I left Africa when I was nine years old and moved to Rishi Valley, a boarding school in Andhra Pradesh, in 1989.
Since the age of nine, I have been living alone and that is a big part of who I am. I am very comfortable with people who are older than me. You have to grow up when you are living alone since a young age, especially in a boarding school, where I was initially bullied and beaten up.
At the age of 15, I left boarding school and went to Chennai, where I spent two years in high school in a sister school of Rishi Valley. I studied commerce and finance.
Then I moved to the US, initially to New York, where I spent nine months doing prep school and first year of university, and then to Pennsylvania. The reason for this was a better and smaller school. In that school, I was the first to graduate with three majors — information systems, supply chain management and strategic management, a hybrid between finance and marketing.
What do you remember of Chennai?
The people are very nice. If a kid is crying on the street, everybody wants to help. It is like a collection of small towns. There is a high level of social awareness and community feeling, which I absolutely love.
This also plays well with who we are in AirAsia and who I am as a person. AirAsia is an airline for the people. The number one thing for AirAsia is low fares.
But a passenger will have to book months in advance to get low fares.
I think you will have two things. You will have promo fares. Promo fares are for a limited time; they are sold well in advance, mainly for people who want to travel but are not particular about when.
How will you play with the margins given that you will also be selling through travel agents and will have to pay commissions?
I do think it (travel agents) will be a big part of our strategy. You will get fares on our Web site which will be good. I am honest enough to say that we are okay with razor-thin margins.
But everyone talks about this as an industry that functions on razor-thin margins.
You need to manage your portfolio. There are certain routes that will be razor-thin and others where the margins will be much better.
How does your Chennai experience translate into what a passenger can experience on-board?
It grounded me a lot. I come from a middle class background and was not exposed to flying. When I was going to Africa, I used to travel alone as a six-year-old. The only way I could get there was from Chennai to Mumbai and then shift terminals. I had to take a cab or airline bus for the other terminal… it was traumatic. All these experiences shaped me into what I want to do today. For me, an airline is not a luxury. It is a product for the people, which is why a big part of my strategy is going after virgin flyers, those who have never flown.
How do you intend doing that?
Fares. The one thing that we are consistent about in AirAsia is low fares.
How will you achieve this given that your fixed costs are pretty much the same as your competitors?
It is about discipline. First, on the cost, we do have some leverages that others do not have. The bulk costs are fuel, aircraft, rentals...those are big ones you cannot do anything about.
What about wages?
That is where we have a little bit of advantage. When it comes to pilots, we do not have much flexibility. But where we do have some advantage is management and administrative things. It is a much bigger cost than most assume. I took a 50 per cent cut. I expect that from most of my management team members.
What are the kind of costs being incurred at the moment?
We have $30 million in capital. We are burning through that, but not in an aggressive manner. Keep in mind that the biggest parts have not come in — aircraft and fuel.
The cost advantage is not coming from any one thing. It is across the board little things that are going to add to something.
How has rupee depreciation hit your India project?
The biggest cost it is hitting us on is leasing. Depending on when it comes, it is going to be a big impact.