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India needn't be embarrassed about airlines going bust: Richard Branson

Source : BUSINESS_STANDARD
Last Updated: Fri, Oct 26, 2012 19:11 hrs
Richard Branson

Thirty years ago, when he launched Virgin Atlantic, Richard Branson had no cash for advertisements and, on an industry veteran's advice, took to offbeat promotions to market his airline. On Friday, Branson lived up to that reputation by perching himself on a black-and-yellow taxi to announce the return of his airline to Mumbai. The Mumbai-London flight starts October 29. In an interaction with media persons in Mumbai, Branson spoke on a range of issues. Edited excerpts:

What has gone wrong in the Indian aviation sector?


First of all, the positive. When you switch the clock back, there was one government airline flying in India and did not result in millions of people flying. (With the launch of private airlines), you have grandmothers able to visit grandchildren, children able to visit parents. It is wonderful from a consumer’s view point. When you open up the market, there are going to be hiccups. What has happened is that there is overcapacity, which will result in one or two casualties.

People were brave enough to set up airlines and some have expanded too quickly. India is no exception to this rule. Of the 15 American airlines which have competed against the Virgin Atlantic, every single one of them has gone bankrupt and some have gone bankrupt four times. I don't think India needs to be embarrassed about the fact that some of their airlines have gone bust or might go bust. Overall, India is benefiting from the free open market and now that the government has said foreign companies can buy 49 per cent (stake in Indian airlines), I think it is a stabilising factor.

Vijay Mallya is known as the Richard Branson of India. What has gone so terribly wrong in his case?
I do not know specifically what has gone wrong but he is fighting to keep his airline flying. I hope he manages to keep it flying. The airline industry is not easy and at least he needs to have the credit for fighting; other people would have closed the airline six months ago and every member of the staff would have been on the street. He has obviously spent the last six months to see if there is a way forward and he needs credit for trying to keep the airline going.

Do you want to invest in an Indian carrier?
We will have a look. I do not promise we will. If we see an obvious opportunity, we will do so. The situation today is different from seven years ago. You have IndiGo, Jet and you have quite a few other airlines. We have a great brand and we will have a look.

Why are you so confident about the India-UK market?
Virgin Atlantic has been flying for 30 years and it is rare (if) we do not succeed on a route. We did not have the right slots at London last time. Most of the business which comes on the Mumbai route comes from the US and 50 per cent of bookings on the route for the next month is from the US.

We have the right slots and the right plane (airbus A330).

Would Virgin be joining a global airline alliance or partnering with an Indian carrier?
We have a good relation with Jet Airways and its a mixture of code share. It has worked well for us. It is quite possible Virgin Atlantic may enter into a bigger (global) alliance, and we will let you know in three-four months.

There are anti competitive alliances and competitive alliances. If some airline controls 60 per cent of the market, it becomes dominant and they tie up with someone who controls 20 per cent, they become very dominant. We successfully fought the British Airways-American Airlines alliance. If Virgin has one alliance, British Airways has 30 of them. That will not be anti-competitive. We are minnows, compared to our bigger competitor (British Airways).

How do you balance flamboyance with credibility?
When I launched Virgin Atlantic 30 years ago, I did not have advertising budget to compete with British Airways. Sir Freddie Laker, who had an airline before us and went bust, said to me: “The only weapon you have got is yourself. Go out there, make people smile. Try and get on the front page of the newspaper rather than the back page, (even) if it means dressing up in a saree or sitting on a London taxi, do it. You may end up on front pages and not on the back page. Your business might be successful. It will save you a lot of money on advertising.”

I have taken his advice. I have had a lot of fun. I think credibility comes from success that you get. We have built perhaps one of the most admired brands in the world, and we would not be admired unless the quality of products were excellent. They are excellent. One has helped the other.




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