Interlysis with Shyson Thomas – Air Pegasus, Unplugged.
Airline registered 08-Oct-2007, Applied for Initial NOC in 2011, renewed NOC twice.
Shareholding: Decor Aviation 25%, Shyson 30%, wife 20-23%, balance with son and daughter.
Airline applied for AOP on 28-Jan-2014, expects AOP Award in September ’14.
Airline secures two ATR72-500 aircraft, both ex-Kingfisher/Deccan. Aircraft expected between 11th-18th Aug 2014.
Airline hopes to launch towards end September.
Will connect six to eight destinations initially.
Third aircraft expected before/at December 2014. Will connect 13 destinations with aircraft #3.
Fleet expansion plans: 4 acft within 1st year of operations. 2 acft per year thereafter.
Fleet size cap of 10 aircraft.
No intention of buying aircraft.
Firm on regional coverage only. Destinations are within 1.5hrs flight (ATR72)/ 350NM of Bangalore.
Long term plans: Pegasus East, Pegasus West, Pegasus North.
Target break even: 13 months.
Has sufficient flight crew (flightdeck + cabin) for two aircraft. Cabin crew are all female.
Airline has 6 engineers. Outsourcing engineering to Airworks Hosur.
Air Pegasus has completed most formalities required to lease two ATR aircraft. The aircraft are expected in the second half of August-around the 20th, and if all goes as per plan, then the airline expects to receive its AOP towards end September. Commercial operations are expected towards end September, though The Flying Engineer pegs early-mid October as a more realistic time frame when the airline may start commercial flight operations.
Shyson Thomas, MD and CEO of Air Pegasus, smiles little, works more. His birthday is on January 21st, making him a cusp as far as the astrological signs are concerned, but he firmly believes he’s Aquarius. Aquarius is an intellectual air sign, and those born under this influence are interested in concepts and ideas, detached from personal emotions, carry great spirits- sometimes erratic and sometimes brilliant, and emphasise the intellect over anything else. They can over-react, and bear a know-it-all attitude that can put others off, but their strength is in their ability to come to a decision or draw inspiration from a wide range of sources.
The astrological sign sums up Shyson very well. He is extremely allergic and sensitive to nonsense, and very wary of others, finding it hard to trust anyone other than himself. That makes him micro-manage the airline – something that may work against the airline sooner or later. But his logic and reasoning are at times solid – so solid that you’re left with no choice but to agree.
Although Mr. Shyson’s wife and son are also on the board of the airline, he’s the man in absolute control. With a single person calling the shots, captaining and micro-managing the airline, the airline’s performance and culture will largely be reflective of the person that Shyson is. Understanding him is understanding the airline. Read below as The Flying Engineer interviews and analyses in this Interlysis (Interview-Analysis)- while editing only where necessary for language, without changing the meaning or context of replies. 102 questions. And answers.
About the Airline
1. About Air Pegasus?
We got the license about two years ago. After that, you know, we have been hunting for aircraft. Because of the Kingfisher debacle, nobody wants to place their aircraft in India. You know the reason. So I think I got the license in a bad time. Wherever we’ve gone, they’re worried about the India jurisdiction. So only two aspects (because of which) they did not want to place their aircraft in India. One is India jurisdiction, which doesn’t support a repossession of aircraft in the event of default. That is one thing. Second is the start-up status. Start-up status we can anyway justify that all these established airlines today were start-up airlines. Once upon a time. I didn’t give up on the airline, and today I have three ATR 72-500 aircraft.
TFE: Usually, lessors collect three months lease as advance. With the paramount and Kingfisher debacle, the advance for Indian operators has reportedly shot up to an unbelievable 36 months. The start-up logic is sound: even AirAsia was once a start-up no one had faith in.
2. But as per records, you registered this company on 08 October, 2007. And late 2011 is when you got your initial NOC.
This idea (starting an airline) came in 2007. By the time we registered and we wanted to apply for NOC- at that time-in 2008, that Bangalore airport shifted from HAL airport to Devanahalli. During the same period, the Hyderabad airport shifted from Begumpet to Shamshabad. After the shifting of the two major airports in India, the South India, the domestic travel in the region met a depression. So people didn’t want to travel that far to Devanahalli and fly out to Chennai. So I found a dip in the domestic passengers (numbers). People resorted to trains and cars. But after two years, people got used to it (the distance to the new Bangalore airport from the city centre) and started flying. that is when we thought, in 2011, that we can really think of starting this airline. Since then we’re active.
3. But there were media reports in 2011 of you starting operations in 2012, and another media report in the January of 2014 about you starting operations in the March of 2014. But those very evidently haven’t happened.
That also-what happened was we got the aircraft amidst all these troubles (lessor issues). We identified two aircraft from Israel. We were planning of importing these aircraft by March 2014. We were planning to start operations in March-April. Since the aircraft were registered in Israel, there was a problem: it could not fly over Arab countries. If I wanted to bring it, I had to fly it through Kazakhstan, Pakistan, and fly all over the world and bring to India. So, to fly from Tel Aviv to Bangalore, the only way is Palestine, Saudi Arabia, UAE, Oman, and so on. So with an Israeli flagship it is not possible. We then decided to send an Indian DGCA man there, deregister the aircraft, and do a temporary registration, and with an Indian flag, we can come. That was the idea. We did everything, but the DGCA official could not make it to Israel on time, due to political clearances. By then, my pilots and engineers were in Israel and camping there. This official’s travel was delayed. So I called everybody back. There’s no point in staying in a five star hotel and paying a per diem of US$150 per day. I told my men, ‘when this man goes, all of you go’. So they returned. But when the DGCA official was ready to go, that was when the Israel embassy closed all over the world. I was unable to process their visa. Their visa was already consumed-a single entry visa. Since then we’ve been struggling, and the war has broken out. So, we abandoned the deal.
That cost us about four months. And you know, once a deal is aborted, and a new one aircraft has to be scouted for, and another deal closed-it takes a sizable amount of time. After abandoning the Israeli aircraft, we started discussing with others, and now we’ve secured three aircraft.
TFE: The Israeli aircraft were signed and paid for. Certain manuals were also made with those aircraft in mind. Four expat pilots were to have joined, but the Israeli chaos made two of those expats look elsewhere for employment.
4. What would be your source of funding? I see you have other companies as well: Chartered Air freights India Pvt Ltd, Andhra ISPAT Ltd, Decor Aviation, Rukmani Industries, and Sudarshan Merchantile.
No, mainly Decor Aviation Pvt. Ltd. is our parental company; and we have Chartered Air Freights India Pvt-these two are our own companies. All other companies I have resigned from- I was only a nominee director.
5. So your source of funding for this airline would be?
Yeah…my parental company Decor Aviation, and my personal…families
6. You’ll be operating a regional scheduled operator. The requirement is a paid up capital of 12 Crores for a Regional Scheduled Operator Permit, for the first three aircraft less than 40,000kg-which the ATR are. Today, how much is the paid up capital of the airline?
Today the company has total of more than 12 crores.
7. You will also need a paid up capital increment of 4 Crores per aircraft thereafter, up to a cap of 20 Crores. To cater to your expansion plans, you’ll be able to pump in the required capital?
8. What is your business model?
You know, we’re a regional airline. That’s our model. It will be a low cost airline, but we won’t call it that-we’ll call it a right cost airline. We don’t want to undercut it.
9. You said you’ll be flying to 13 destinations. Which are these?
We won’t fly to all 13 initially. We’ll go in stages. We’ll fly to Bangalore, Hyderabad, Chennai, Cochin, Trivandrum, Tuticorin, Hubli, Mangalore, Coimbatore, Rajmundry, either to Vijayawada or Vishakapatnam, Madurai, Tirchi and Calicut.
TFE: All destinations are within the 1.5 hours flight time (350NM, no winds) that Air Pegasus wishes to fly to, on its ATR 72-500 aircraft. The airline’s incomplete website also lists Goa, Belgaum, and Tirupati.
10. With an R-SOP, you can fly out of the region and fly back. For example, you can comfortably fly Hyderabad-Pune and back. Do you have any plans?
No, not immediately. After attaining a consistency level only, will we go for that.
11. Air Costa flies outside the region. Why are you restricting it to the south region?
It is not right of me to criticise another carrier, but I do not agree with the kind of aircraft that has been chosen by Air Costa. If you’re thinking of a regional airline, you should look at the cost. For regional operations of one to one-and-a-half hour distances, the best available is the ATR, because of its low fuel consumption. But the disadvantage of the ATR is that it can cruise only up to 14,000-15,000 feet. Whereas, the ERJ (E-Jets), it’s a beautiful aircraft, I agree, but it’s a jet aircraft. But that cruises up to 24,000ft. To cruise up to that level, it will take considerably a lot of time and fuel. If you’re going to Chennai, immediately after cruising you’ll have to descend. Doing that, you’ll be consuming about 2,100kg of ATF per hour. So that’s a huge difference in fuel consumption.
What they have to do is- that aircraft, if you want to go from Bangalore to Bangkok-it’s possible. It’s a three-and-a-half-hours flight. That’s the reason they’re flying from Bangalore to…where do they go? (TFE: Ahmedabad, Jaipur….). So it’s not a regional you know, to have some economy it (the Embraer Ejets) have to fly 350NM and above. I don’t have that kind of a flying distance and I don’t believe in that. I only wanted to cater to nearby places with a low maintenance cost and low cost of fuel.
Since he has gone for a, I will not say a bad aircraft, but incorrect aircraft, so that will not serve the purpose for regional airlines.
TFE: The fuel figures on an EJet aren’t as bad as stated. Plus, a jet need not take longer to fly higher: it’s average rate of climb is higher than the ATR’s. The ATR caters best to short and thin sectors, and the Embraer EJets to short and long sectors. While Pegasus will cater to Tier II and III cities in the region, Air Costa will cater to Tier II and III cities across the nation. But Air Costa’s present fleet deployment on short sectors, as Shyson rightly puts, is not the best thing to do.
12. But now they’re converting their R-SOP to a pan India SOP. So now, for them to operate all across India, the aircraft supports the range.
But again that business model you have to think. Because now, predominantly, everybody are national level players. And I don’t want to compete with the national level players. Because now, national coverage is given by IndiGo, SpiceJet, GoAir, Jet Airways…everybody is a national guy. Everybody is competing for long haul flights like Delhi, Mumbai, Kolkata…everybody is competing. So there should be some difference. I don’t want to compete where everybody is competing.
I don’t think it’s a wise idea because Air Costa is an infant as of now. Just born last year. Jet Airways was born about 15 years ago. It’s not a small brother competing with a big brother. Because Jet Airways, if he wishes, can just crush him. He doesn’t have much experience as well, in the airline business- I’m not criticizing, but I’m just giving my opinion.
I’ve gone to Naresh Goyal and taken his blessings. He should not kill me also. I can only tell him that I can give him a feeder service, When you fly an international flight into Bangalore from Muscat, I’ll take your passengers and drop them at Madurai, or bring people from Madurai and give it to you-that way we have to work.
13. That means your plan right now is very firm on being regional? You won’t be looking at other aircraft to cater to a possible expansion?
No, no, no. All India regional I don’t want. There are enough players.
14. So this is your space and you’re very clear about it?
Very clear about it. I will have three phases. After the southern phase is established, we’ll go to Pegasus East, based at Kolkata. I will cater to all North Eastern cities. There also, I’ll place some six to eight aircraft.
15. And Phase III?
Phase three will be Pegasus West. That will be based at Ahmedabad, catering to Bhavnagar, Bhuj, Mumbai.
16. Any plans of going to the Northern region?
The last phase-the fourth phase-is the northern region. Pegasus North. That will be based somewhere in Jalandar or another city, catering to Delhi, Jammu and other places.
17. So if you need to go there, your regional scheduled operator permit will have to be upgraded to a pan India permit.
Nothing. We can have separate AOPs.
18. You have been speaking about Air Pegasus for long. An example of another airline being oft spoken of, but which never took off, is AkashGanga airlines. The honest question is: Will you really start, and if you start, what will be a realistic estimate?
100% we’re starting. I haven’t given up. We couldn’t start as the situations then were adverse. Now. we’ve overcome hurdles, and the dark days are over. We’re a hundred percent sure of starting between September 15th and September 30th. That is for sure.
19. But you have to get your aircraft, and you have to go through your AOP process.
The AOP is already in process. We’ve submitted all the manuals. What’s left is the import of aircraft, proving flight, organise a preparedness meeting, inspection of the stores by the DGCA. We’re expecting AOP by the end of this month (August).
20. End of August?
End of August. Or first week of September.
21. But you need the aircraft for the proving flights. When are they expected?
Two aircraft are coming between 11th August and 18th August.
22. What about the time for the registration and other DGCA formalities?
Another one week.
23. You’re saying the proving flights will happen by the end of August, and your AOP should be awarded by early September. After the AOP award, you’ll have to open for sales. When will that happen?
Maybe first September?
24. After you open for sales, you may want to give a gap between open for sales and operations, during which sufficient tickets are sold.
Comfortably, we need a one month advance bookings to start. But if it is 15-20 days in advance also it is okay.
25. So based on what you’ve told me, it is somewhere close to end of September or early October when you should start operations?
No no, we’ll not go to October.
26. What’s the guarantee?
(With the voice raised) Hundred percent! See, in India, everybody is a rumour monger. How much I’m struggling, how much I’m not sleeping and how much money I’ve invested, only I know. They’ve already made their own version-it’s not going to fly. Okay, let them say whatever they want. But my cards are open, I’m working towards the end game, and wherever I’m falling into an air pocket, only I know. These people do not know-especially the pilot community, sitting somewhere and criticizing.
TFE: While Mr. Shyson is very keen on seeing it happen in September, here are the TFE estimates: The aircraft is expected before 20th August. The airline still needs to get approvals for manuals that have already been submitted. Further inspection formalities need to be completed, and only thereafter can the proving flights take place. The DGCA’s efficiency is another variable. With these, the proving flights may happen towards mid-September, latest, and following that is a two week estimate for the AOP to be awarded. End September is when the AOP may arrive, and open for sales. October is a safe bet for the airline to start operations, though we do hope Mr. Shyson’s targets are met.
27. On the board of directors are Mrs. Shyna, and Mr. Ashvin, whom I believe are family?
28. Does Decor Aviation have a 100% share holding in Air Pegasus?
Not 100%. they have some 25% holding, and I have some 30%. My wife has got around 20-23%. The remaining are with my son and daughter.
29. So it’s a total family business? There’s not external investor?
No no, I don’t want to drive it sitting in the driving seat.
TFE: While maybe not in the open, it appears that Mr. Shyson has an exit strategy, and is believed to have potential investors who are waiting for the airline to start operations. Once started, the money may flow in from outside.
30. What is your expected breakeven load factor, on average?
31. Don’t you think 65% is very low?
It is low, but I have to be very conservative. But you know, I will have 100% occupancy. (With a broad smile). I believe in that. Because my aircraft will go chock-a-block. I’m sure. By all calculations I’ll take 65%. Or take it 70%. It’s all hypothetical.
TFE: With increasing competition, the airline will be pressed to offer competitive fares. As you take the fares lower, you will have to fill more seats to break even. Average yields and revenue management practices will ultimately determine the BELF.
32. When’s the third aircraft expected?
33. So you’ll start operations with two airplanes?
34. Both will be online at the same time?
35. What are the condition of these aircraft?
These are the Kingfisher aircraft that were sent back, when Kingfisher wasn’t in as bad a shape. Because of lease (payment) defaults, these aircraft were sent back. In 2011 or early 2012. They’re in a good condition, and were not cannibalised.
TFE: The two aircraft in question were returned in the February and April of 2012. Since then, the airplanes have been in storage, and haven’t found another operator in another country.
36. What are your route expansion plans and fleet expansion plans?
We plan to have four aircraft in a year (of starting operations), and thereafter two aircraft every year. In September (2014) I’ll have two aircraft, in December three aircraft, and by March-April the fourth aircraft.
TFE: It is believed that the airline already has five other aircraft in its lease pipeline. In short, the airline has almost secured eight aircraft; however, the first two are the only ones that have all formalities completed.
37. What is your target fleet size? There must be a cap for your fleet strength?
10 aircraft. After which we will move to the other phase.
38. Right now you’ll be leasing. Leasing has benefits. So does buying. Do you plan to buy aircraft?
Nobody wants to own the aircraft. Everyone wants to operate the aircraft. If you want to have a cup of tea, you will not think of starting a restaurant. Worldwide that is the scenario. Everybody wants to operate the aircraft. Nobody wants to own the aircraft.
TFE: As many are aware, buying dos have benefits, but leasing is the way to go for a startup.
39. And your route expansion plans?
We will be starting with some six to eight destinations now. When we have the second aircraft, we’ll stretch up to ten.
40. Did you mean the third aircraft?
With the third aircraft, we’ll have 13 destinations. Six, eight and thirteen.
41. But you said you’ll be deploying the first two simultaneously. How can we have three sets of destinations?
We will confine to these six airports. We don’t want to keep going to new airports as it is a capital investment. So we can repeat (increase frequency). Number of flights will be more to and fro a destination.
Both the aircraft will operate eight destinations initially.
42. When would you look at going to Phase II, the North East?
After three years.
43. And Phase III?
That depends on the consistency we achieve. Because if we’re achieving a consistency here (South), second year onwards we will think of starting from there.
44. Would you be looking at typing up with a mainline carrier?
We will evaluate the kind of proposal they give. Otherwise our plan is to integrate everything ourselves. We’ll have Pegasus South, Pegasus East, Pegasus West, Pegasus North. And we’ll have a central hub at Nagpur or Bhopal. We’ll bring passengers from Coimbatore to Nagpur, and from Nagpur I’ll connect him to Guwahati.
45. But Nagpur to Guwahati is very far for an ATR.
We’ll have a hub and spoke model and deploy and Airbus.
TFE: This is where the airline’s long term planning comes under question. While integration is one issue, will the airline have multiple AOPs? A single pan India license may work in the airline’s favour in the long run, unless there is a strong need to make each unit of Pegasus a separate profit centre.
46. So then you’ll be expanding into a jet, eventually?
Yes. We’ll collect passengers to Nagpur and deploy two Airbuses to connect.
47. You had previously mentioned Kochi as your engineering base?
No, Kochi we deleted. Kochi is not professional and friendly. It is not a professional airport.
48. Will you be reaping the new benefits that BIAL offers to airlines based at Bangalore?
We are also trying to start from HAL Airport. That possibility is coming up. We need to take it up with the regulators.
49. But if that doesn’t happen?
50. Is it a predominantly point to point network model?
51. So your hub in the West?
52. And the North?
Somewhere in Punjab. Chandigarh or other.
53. So you’re keeping away from Tier I cities?
Mumbai is crowded. We won’t get space. Instead of Mumbai. I’ll base at Ahmedabad. Instead of Delhi, I’ll go to someplace like Chandigarh. And again Kolkatta I don’t want. Instead of Kolkatta I may go to Aizwal or somewhere. The main idea is to avoid crowded airports. But I will connect to these cities.
54. According to you, which are the most viable routes in the south?
It’s very difficult to say, now. Too much of competition. Kochi was a good route, but AirAsia has come into that and they’re trying to spoil; Trivandrum is good. Chennai is no longer lucrative-everybody is going to Chennai. Hyderabad-Bangalore was good, but now there’s too much competition. I think we’ll have to find a market where others are not concentrating on.
55. But there will be some overlaps.
Yeah, but then we’ll have to change the timings. I had a plan to go to Kochi early morning. 06:30 was when my flight was planned, AirAsia’s flight is scheduled at 8:30. It kills. People want an Airbus because of the passenger appeal. They will say, ‘okay, it is 6:30, let me wait for another two hours, and I’m going to get a cheaper ticket, 900 rupee’. They’re not going to sustain, but that’s a different thing.
56. What would be your target break even period?
57. That’s a very interesting number.
It can happen in nine or eight months. Doing business on an excel sheet and doing it practically are very different. I had projected a nine month break even to the banks. But they said that I was too optimistic. and that it is not going to happen. Then I had to ask him the same question, ‘when do you want me to break even?’ They said a minimum two years. So I said, ‘okay!’. I’ll change my excel sheet.
58. So what kind of bank support do you have?
I only have working capital support from the bank. And guarantees. Bank guarantees.
59. Sourcing pilots has not been a problem?
We now have 20 pilots. Nine are captains. We have 20 cabin crew, and six engineers. We’re going to outsource the engineering to Airworks. We’ve already signed an agreement with them.
TFE: There are 19 pilots: 8 captains, of which two are expats + 11 first officers, of which two were recently were type rated. The second batch comprises of 6 captains and 9 first officers, of which 3 are not rated and not experienced. Chief Pilot training (and TRE) is Demetrios Sipsas from Greece, and was formerly with Air Deccan. retired Jet Airways ATR captain Murali Sundaram is the deputy Chief Operating Officer at the airline.
60. Any of these are TREs and TRIs?
No, nobody. Just line captains.
61. What synergy can you expect between Decor aviation and Air Pegasus?
It’s a backward and forward integration. Pegasus can give business to Decor, so my business is not going outside. So I give the ground handling work to Decor, so Decor will get more business.
62. Will that help you reduce costs?
63. Would that pass on to the passengers?
We have a fixed structure.
64. With AirAsia seen as ‘crashing’ the market, where would your price point be?
As I told you, we will be a right cost airline. These (low fares) are gimmicks, I do not believe in that. I don’t know what they’re up to and what are their plans and actions.
65. Let’s put AirAsia aside. Compared to other airlines, where would your price point be?
Definitely lesser than them. Because my overheads are less, because we have this Decor support-ground handling equipment are already available with Decor. Staff are also available with Decor-ground handling staff.
66. When can we expect to see Airport counters? Because if you plan to fly in September, we expect the counters to be up and running now.
We’ve started applying. We’ve already taken an engineering space. The airline industry is not like any other industry. You need it only when you really need it, rather than draining resources too early. I’ve not applied for and taken the technical counter because the rental starts. At many airports today you have plug-and-play check in counters and ticketing counters. So, if I’m starting from September 15th, I need the office only by 1st of September.
67. So you’re confident of no delays due to these?
No, we’ve applied and kept, else the overheads increase. I’m paying the rent for the engineering office, without using it.
68. Rumours are that you are cutting the salaries of your pilots because you haven’t yet started operations. Is that true?
There’s no cutting of salaries- they’re not entitled to salaries, because they’re not working. These are not rumours-I am still paying them a stipend. This month is the last.
69. When did you apply for an AOP?
28th January 2014.
70. How many NOC renewals have you had?
Two renewals. The first renewal is valid for one-and-a-half-years, thereafter six months each. This will be the last renewal.
71. One of the many reasons for IndiGo’s success and Kingfisher’s failure is the engine maintenance contract: IndiGo had a very good engine contract. In your case it would be with Pratt and Whitney. How good is your contract?
It’s not the maintenance contract. That does not matter. It all depends on how you run your airline. An airline requires close monitoring. Decision making has to be very fast. If today I get a message from so-and-so that my aircraft is grounded, what is to be done? This decision has to be taken immediately. Swap the aircraft. Cancel Madurai. Give the affected full refunds. This decision has to be taken. For this, the COO and the owner have to be on full alert. Kingfisher was a total mismanagement.
Honestly speaking, Dr. Mallya is a good businessman. Unfortunately he could not make money. But that doesn’t mean that people (in the management) in his airline haven’t made money. People in the aviation industry are like that-everybody will the join the airline, and they will work with you, till you become bankrupt, and they will bankrupt you because of their actions, and they will get away. They have nothing to lose.
TFE: Maintenance contracts can make or break an airline. IndiGo today stays afloat and keeps its airplanes up in the air for longer (less susceptible to maintenance issues) due to the nature of its contracts. When IndiGo and Kingfisher airplanes were affected by issues with the IAE engine that power their Airbuses, IndiGo kept smiling while Kingfisher had to ground some airplanes – simply because of the contracts signed.
72. How confident are you of your management team?
We have a very good lead management team now. They’re handpicked. And mostly I’ll be heading it. I’m going to have a strict finance control. By profession I’m a chartered accountant. Cheque books are with me. Very strict financial control. Every purchase will come through me only. I will re-negotiate. If I have a doubt that my people are doing (malpractice), then immediately I will take action.
TFE: While Mr. Shyson has done his homework, most of the work being done today at the airline are by those who haven’t done such a thing before. While it isn’t impossible for them to execute their tasks, there will be certain inevitable gaps, shortfalls, or inefficiencies and errors associated with the inexperienced. IndiGo didn’t have to deal with this: they had appropriately experienced professionals on board since day one. Ofcourse, professionals come costly, but then it’s a choice between long term stability and short term gains.
73. One issue plaguing some airlines is that they are ‘family and friends’ airline, as evident in another startup airline. Will you be forming your airline based on merit, or will it be another family and friends airline?
No! This is not a rehabilitation centre. It is on merit basis and we have proven people. The airline industry has a disadvantage. Whoever comes will bring their own people in.
74. Will you have a monitoring department?
Besides flight data monitoring, we will have an energy audit as well. I’m going to introduce a fuel audit. If the fuel consumption is beyond the tolerance level I set, the captain is answerable.
TFE: It is learnt that Air Pegasus will have a unique but logical fuel policy. The policy will be towards carrying more fuel rather than flying with ‘just right’. The justification is in the cost of carrying extra fuel versus the costs of a diversion.
75. It would be difficult for you to micro-manage?
No, I will have people at all levels. I also have two expat pilots who are examiners. Two of them are coming tomorrow (2nd August 2014).
76. But you said expat pilots are expensive. (under Aircraft)
I don’t want to have, but at the same time I need to have some TREs and TRIs. They’ll be here for a while for their AVSEC training. Then I’ll send them back, as its expensive for me. If we’re starting by 15th of September, I’ll ask them to come by 10th August.
77. But you do get them in India. At Jet Airways. So why not the Indians?
They’re already with Jet Airways. Their process will take a lot of time. DGCA rules require a six month notice period.
78. What’s your monthly outflow today?
About INR 30 lakhs per month. I’ve spent that for about five to six months now. So already two crores is down-drained out. So do you think I am mad, unless I have a definite plan?
79. I believe two aircraft were earlier with Kingfisher..
80. Their registration?
Although shared, The Flying Engineer has been requested to not reveal this information.
81. And the third aircraft?
The third one is from Europe.
82. All the aircraft are leased?
83. And the age of these aircraft?
Mine are the 2007 model. So less than seven years old.
TFE: The aircraft were produced in late December 2005, and are about 8.5 years old.
84. All are 72-500s?
85. Outside your office I see an image of a Q400. Inside your office I see an ATR.
That is a mistake. My advertisement guy has made a mistake. Someone was doing my branding. Here too he made the same mistake. I told him to change it. That’s not my mistake. The people who do not understand what is a Q400…
86. So Q400 was never being considered?
Nothing at all.
87. If I’m to ask you: both are turboprops, both have advantages and disadvantages. Why do you think an ATR 72 is stronger than the Q400?
Selection of aircraft is very important. When I compare the Q400 and ATR, the ATR has been in the Indian market since the 1990s. They’ve been here for more than 15 years. In India, more than 17 aircraft have been flying, since last year. The advantage is that ATR has studied the parts requirement. How much logistics required, out of their experience, and they’ve built up a customer service centre, and stores and all that. So, availability of parts is proven. Second advantage is if I’m running out of parts, I can always borrow from Kingfisher, Jet Airways, Alliance Air, and whenever I get parts, I can return it to them. Thirdly, because of the large number of ATR aircraft that were flying in India, a lot of trained engineers and pilots have been produced (locally). I can now hand-pick. Now everybody is unemployed. Of course, some have moved to other airlines, but still, people are available in the market. Getting trained pilots and engineers is one advantage, then logistics, spare support.
SpiceJet has made a mistake, they’ve gone in for the Q400. The aircraft are now due for their C check. There is no C check facility available within India. If you want the C Check to be done, you have to go to Istanbul, and you have to spend about half of the cost of the aircraft in doing so. My aircraft, on the other hand, can go to Airworks at Hosur and complete the C check and D check.
I’ve always wanted to go with proven aircraft, proven routes. SpiceJet was given a lucrative Q400 offer, and the airline executives went for it. Now they’re feeling sorry for it. They will have to depend upon expat pilots now. Expat pilots will dictate terms. ‘Yearly four times I have to go home. Four times you have to give me tickets. Every time I go, I’ll be on leave for one month’. They’re suffering because of that.
The Q400 is not a reliable aircraft. It has got a lot of issues. Grounding issues. SpiceJet is already facing. And if you don’t get spare parts, its grounded.
88. Three things help decide an aircraft: Lease rates, Customer Support, and Fuel Burn. the ATR’s fuel burn is undisputed. Is their customer service great?
Very great. ATR is supporting now. ATR doesn’t have a major player now. They’re celebrating a new partner in India.
89. What about lease rates? Are yours attractive?
Lease rates today aren’t that attractive due to Kingfisher issues. In the long run, we will have to get them reduced.
90. How much have you secured yours for?
Although shared, The Flying Engineer has been requested to not reveal this information.
TFE: Interestingly, Air Pegasus has managed to secure these aircraft with just a nine month advance payment, as against the ridiculous 36 month advance. The aircraft are about eight-and-a-half years old, and have been in storage since early 2012. Getting aircraft was so much a priority that the airline may be paying more than what it could have bargained for.
91. Why do you think Turboprops are unpopular in India?
With turboprops, passenger appeal is less. That I have to agree you know, because it is a 72 seater aircraft, whereas A320 or Boeing is a bigger aircraft. All over the world, people prefer to travel in a bigger aircraft. But at the same time, the A320 or a Boeing cannot make money in the short sector. Because A320 operations from Bangalore to Chennai is high, and their seating capacity is 180. To have minimum 70-80% occupancy, they must sell how many seats, 120? They don’t get 120 or 180 for Bangalore-Chennai. So they have to go empty, they have to waste fuel, everything. Whereas this turboprop, if I get 50 passengers, as against my 72 seating capacity, I’m making a 80% occupancy. My weight and cost of operations will also be less, and I can pass on those benefits to the passengers. Only thing is that the Boeing may take 45 minutes; I may take 10 minutes more.
TFE: Two reasons for the low appeal, really: 1. the pronounced vibrations in the cabin 2. The ignorance of the travelling public who mistake a turboprop for an unreliable and old technology piston prop.
92. So you have a 72 seat layout?
TFE: One of the two ex-Kingfisher aircraft arriving is fitted with a 72 seat layout, and the other with a 66 seat layout. The exact ‘standard’ seating configuration is not certain.
93. How keen have you been on the ATR?
From the very beginning, I was very particular about ATR. If I don’t get an ATR, I will not start. Selection of an aircraft has got a very important role to play in an airline. You have to look at your model. If you’re regional, you cannot think of aircraft like the A320 or Boeings.
TFE: Sources differ with Mr. Shyson’s views. It is believed that he did evaluate the Airbus 320 and Q400s, and in a media interview with IBN live in 2011, had clearly mentioned, “We have Bombardier Q400 (78-seater) and ATR72-500 (70-seater) on our radar and will finalise one soon”.
94. ATR must be happy to regain their footing in the region through a new customer. They must be giving you some benefits. Have they?
ATR is supporting me, as they wanted to bring back their business.
95. How do you rate yourself as a businessman?
I am very adamant on my decisions. I am very reasonable. If anybody tried to be very smart, I’ll know how to deal with him (rephrased).
96. But are you broadminded and open-minded?
I am broadminded and open-minded. I always react very fast, but at the same time I’ll have a second thought. After taking a decision I myself evaluate whether I am right or not. I am wrong, I don’t mind calling them and apologizing. I could have been tensed the previous day and spoken in a not-so-great manner. You know how much tension I’m carrying, but I’m sorry. I have the weakness of saying ‘no’ first and ‘yes’ later. I don’t know, that’s my star sign. I also cannot keep secrets in my heart.
97. Because finally the success of the business depends on the nature of the man at the helm of affairs. What makes you Mr. Shyson?
I am very hardworking, result oriented. If I have decided on something, I will try to achieve that. I will never give up. When I used to attend classes at my CA institute, the words on a board are still on my mind. ‘There may be a failure in your attempt, but there should not be a failure to attempt’.
98. You said you’re result oriented. One major cause of failure for quite a few airlines around the world is them being result oriented but not research oriented. How much importance will you give to research?
100%. Monitoring is very important. I’ve already researched on the aircraft. I already have a plan where every day I shall connect via a conference call with all airport heads at 9 am to give a performance report. There will be afternoon and evening conference calls, and take corrective measures while analysing what went wrong. If a sector is not performing well, immediately change the destination.
99. This is very intense work. How will you manage between Decor and Air Pegasus?
For Decor, I’ll find somebody. I’ll only be involved in the decision making.
100. Why an airline?
As of now, I’m doing the entire airline job for IndiGo, SpiceJet, Jet Airways, and others. Essentially, the entire airline responsibility is on my head. I have equipment, airport staff, I have all the infrastructure-what I’m lacking today is only the aircraft. So I thought, if I can take one or two aircraft on lease, i can run my own airline.
101. Was it a business decision or an emotional decision?
It was a business decision.
102. Was it a personal (aircraft) research or did you have a team?