Warwick Brady - Every Rupee - Every minute - COUNTS !

What made you accept Captain Gopinath’s offer to work for Air Deccan?

Gopi was very clear about things, his vision, the planes he was buying, his orders, his investors.I came down in May inspired by his vision and the challenge hit me.

About your nickname ‘Chopper’!

We closed Buzz for about a month. We reduced the work force to about 130 in that month. We had to make them understand as to why we were bent on reducing costs. I was renowned for being ruthless, but fair – yeah Chopper Brady. Ryanair was profitable within a couple of months from the operational point of view.

And what are your plans here?

The investors want a low cost best managed airline. It’s a very tough market, there’s already a fare war. Our objective is to offer lower fares, but at the same time 7be profitable, we can only do that by lowering costs. I’ve been here about three and a half months and I’ve a general plan. We’ve to put our house, our systems in order; to create efficiency.

I am rescheduling flights starting February 1, 2006. An aircraft always comes back to its base from now on. This will reduce my crews per plane to 2 shifts per day and won’t require any night stops.

We’ve to manage the infrastructure for 6 bases and 25 aircraft. We’ll have fifty planes in the future, with not a huge increase in engineering staff. The biggest cost is fuel. We’ll work with the pilots reducing on fuel consumption.

We are talking to all our handling agents to lower costs, rationalizing supply, tendering, trying to play people off each other. I want to increase our stock level, but reduce our costs. I’m going to be the lowest cost operator in India.

We have to send a message to all the staff about what we plan to do. We have to be the most on time and the safest, at the lowest fares - That’s the service we are offering. Apparently that’s what people want. So, what if you have to buy your food? Even if you spend Rs.3000/- one way to Delhi, you save 3,000. So you spend some money on food. If I can get Rs.3,500 average fares, we’d be laughing all the way to the bank.

We have to be the most on time and the safest, at the lowest fares - That’s the service we are offering.

Your thoughts on low price strategy being easy to copy but hard to implement?

It is very easy to be a low fare airline with high costs, but, if we are going to carry 8 million passengers next year and our revenue per passenger is just US$2/- below our cost, we are going to lose $16 million, that’s how close we are. I can make $1/- on ancillary sales, that’s why I’ve introduced Café Coffee Day on flights, and I can make a couple of dollars on excess baggage charges, make some money on hotel bookings, ancillary branding, If I make $3 per passenger, I make $24 million annually. Every single dollar, or Rs.45/-, that I save per customer, I am adding huge revenue.

I want the staff to buy into the dream, to understand what we are trying to do - a really low cost airline and we are going to pay our staff more. The only way I can pay more is have less but productive staff.

I’ve done a few things that are unpopular. Between commissions, crew consumption and pilferage we lost about 30%,making a loss. We took away the crew meals and paid them money instead. Bring your own or buy them in-flight. We are not in the business of serving things. That saves a lot of money.

The time taken to board the aircraft is something that I am trying to cut down. I am looking at free seating on the Airbus. We are also looking at gate control which will improve the turnaround by 2-3 minutes.

Do you get any adverse reactions and comments from the crew on this?

Still am. I went around all our bases and explained to the pilots why we are doing that. What we are trying to do is change the culture that hasn’t been a low cost culture.

We tell them - If you guys want to have very good ESOPS we can all make some really good money - to buy into our dream, you have to be low cost and make sure that we generate every single Rs.45 - 50, because that’s where we’ll make the profits. Other airlines are losing 2 - 5 dollar per passenger, they’ll be in bad shape, they’ll start losing 10-15 million dollars per month and no airline can take that for very long.

How do you get the vision across in terms of low cost?

We’ve now put on some portals for communicating with the crew and staff across all our bases. So we can get memos out there to be seen by all. On the flight I help the cabin crew tidy the cabin and saying – go down and collect the rubbish. Earlier we had eight people doing the cleaning during a turn around - that’s gone now. Our cabin crew is now doing the transit cleaning. Putting that across wasn’t very comfortable, either. We’re also trying to get the passengers involved. This has already reduced my turnaround time by 10 minutes, if I can get another couple of sectors for my planes, my productivity per plane will go up.

I’m trying to get our turnaround time down, by restructuring the way which our flights are being handled.

If an airline goes bust in the next six months and there are suddenly 200 crew and 100 pilots in the market, salaries ain’t going to go up. We told them that if you leave us now, how do you think we’ll view you coming back? Not with great open arms! I want people to stay here, get paid well, to support the airline as one big team.

Were ESOPS a part of the conscious decision?

It was a conscious decision by the investors and Gopi to write a scheme that was the best in India. There is no other Indian company I am aware of - giving away 12% of their equity to the staff. That’s part of Gopi’s vision.

How do you compare this with other low cost airlines globally?

Ryanair and South West practically invented low cost. Southwest is American. I think the Ryanair culture was too hard, while South West’s is totally over the top. I’ll try and get something in the middle – A really energetic proud work force because we are trying to change the face of history in India. Low cost means getting rid of all these people in the office.

You spoke of improving aircraft productivity, Isn’t poor infrastructure a spanner in the works.

The airport costs are too high. The infrastructure is appalling. Basically we need our airplanes to fly between 0545 and midnight. We fly at night, we need another crew. Too many delays and I need six or seven sets of crews - a big cost. I am trying to change the schedule so that we can have a buffer in the middle of the day to catch up with delays.

What of the future here?

We are putting in a lot of money in our fleet; we are not cutting any corners as far as our new planes are concerned. We want efficient planes. I think the team will learn and contain our losses and then start making profits.

How do IT systems help you in the process of running a low cost airline?

Lots. It’s all there on the computer – we are trying to do this all over, engineers, cabin crew, security you know where they are. Even security, I am trying to move out from the government to an approved security organization so that I can get rid of head count.

How do you get people to accept cost-cutting?

Make people accountable for the costs by making it difficult for them to get what they want. It’s very easy to sign a $100,000/- project, but do I need it?We are building a structure for tomorrow. If you have got 10 employees today that want the airport to give you free parking, what will you do when there are 300? We tell them - No we don’t give you free parking.

Every single dollar, or Rs.45/-, that I save per customer, I am adding huge revenue.

What about the concept of the ‘moment of truth’ - Every touch point with the customer must be a good experience for them.

I don’t agree with it. For example - if you have 100 irate people because of a delayed flight wanting to smash up the counters and things like that, the check-in staff ain’t going to be very polite.

I am trying to give the staff a set of guidelines –If the passenger has missed the flight by five minutes, they are not going to board the flight. You could give them a reschedule after collecting the difference and the rescheduling fee. If we cancel a flight, give them a free reschedule and a free ride all within a month or you can cancel. But we are not going to give the passenger food, drinks.

Passengers are not aware of how a low cost airline works. How do you communicate to the passenger?

On the PNR, we try explaining to the customer who we are and what we do. One page - the key issues are mentioned, how it translates into a lower fare. We don’t have lots and lots of staff to deal with a bad situation. But for the passenger, if you are six hours late, it’s very difficult to digest that we aren’t going to give them anything, especially when they are used to every other airline doing that.

We try and SMS to communicate with the customers in case of delay.

Passengers don’t erupt for Jet delays because they have 55 staff to look after them, there are meal and hotel vouchers. The impact is much less. All airlines have the same amount of disruptions. Our airplanes are as new or newer. In spite of all that delay, the food and everything a Jet Airways passenger anyway ends up paying around 10-12000 Rupees one way.

What we are trying to do is to get the passenger go to the airport, get on the aircraft, reach on time and if we can do this 98-99% of the time, we’ll be the best airline in India, by far.

What’s the differential in terms of fare between Air Deccan and the competition?

Kingfisher fares are on the higher side. Indian Airlines are lowering their fares. I am trying to tell the passengers to get low fares by booking in advance, as you get closer to the flight time, it gets more expensive. But, then we’ll still be 30-40% cheaper.

The Airbus fares need to be about 2,500 to 3,500 on an average. We can’t just give away all tickets at Re.1/-. There has to be certain balance in the fares. Yes, you can give away 30% of your capacity under Rs.1,000 , but somebody is going to be paying Rs.4,500, which is still around Rs.2,000 cheaper on the last day fare.

Tarachand Wanvari looks after the South India Desk of Indian television.com. He is a consultant correspondent for businessgyan. E mail : tarachand@businessgyan.com

Issue BG58 Jan06