How sustainable is the current fare war?
The fare wars that are going on are not healthy for the business. You are seeing the rates that have been advertised. I do understand that a few seats are sold at that price. Nonetheless, we need to make sure that this is a profitable industry. The industry has grown for a long time without any serious profits. We think this quarter has been good so far. Some discipline in the market in terms of fares; some activity in terms of rationalisation of fuel tax and some good infrastructure in terms of airports are needed. We are bullish on the industry. We know that in 20 years, it is going to take 1,600 plus airplanes worth about $215 billion.
You cannot sustain losses forever. No business in the world can do that. Nobody has unlimited money. In a situation like this, they believe that they have to be more attractive so that people will come to them. It is a classic marketing one-o-one. If you charge the same fare as Jet, why would anybody want to come to you? This is not a healthy practice and needs to be controlled. Even in the US, some capacity is sold at lower fares. But here this is something they are doing that will hurt them later.
What are you telling the airlines?
We don’t talk to them about their strategy. But we keep telling them exactly what I have told you that you cannot continue doing this. If you are starting a new route, everybody understands cutting down (prices); if you are having a problem with seasonality like in the Goa route, where you have to give discount during off season to draw the customers, it is still understandable. But to offer discounts on all the routes all the time is not right at all.
If this continues, will Boeing take a relook at its business here?
I don't think they will continue for long. Nobody has that kind of money in India to sustain unlimited losses. The capitalisation of these airlines is weak. They cannot do this for long.