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Is ego the reason for India's airline woes?

updated 11:09 PM EDT, Thu May 9, 2013
STORY HIGHLIGHTS
  • India's airlines have experienced a turbulent few years
  • Low-cost carriers have suffered and attracted a poor reputation
  • IndiGo airline pins its hopes on its strong business model
  • New law allows foreign ownership up to 49% of Indian airlines

(CNN) -- The country's economy may be surging ahead, but for the last few years, many of India's legacy airlines have struggled to keep their books in the black.

Last October, Kingfisher Airlines suspended flights until further notice, and JetAirways and SpiceJet have both been battling high operation costs and stiff competition.

Some carriers have found solace in new laws announced last September that allow foreign investors to buy stakes of up to 49% of Indian carriers. The move has attracted some aviation giants to India's fledging aviation landscape. Etihad Airways is working on a deal with JetAirways, while Air Asia is hoping to launch an India syndicate.

One local company, IndiGo, has risen to become Asia's fastest growing airline. Its president, Aditya Ghosh, had no airline experience before leading the airline, which in his view, is no bad thing.

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"That we are running an airline is incidental. What we set out to do was build a great business," he says.

It is more important to us to run a sharp business rather than try and plant flags everywhere and buy bigger planes.
Aditya Ghosh, president, IndiGo

Ghosh's business model has been deceptively simple. His aim has been to run a low-cost airline with high standards, both in terms of cleanliness and reliability.

"The airlines that we were competing against were low-cost airlines that were synonymous with dirty planes, bad schedules, high numbers of cancellations... just chaotic, disorganized. So we set out with one objective: to prove that low cost is not low quality," he says.

Key in establishing a competitive brand has been making sure fights always run on time.

"I'm Indian, so I can say it: In India, being on time is not really everybody's priority. Six or seven years ago, trains used to run six or seven hours late. For flights, if you were 15 minutes or half an hour from your schedule time, there was nothing alarming about that," says Ghosh.

"We were these mavericks who said, 'On time is our thing.' If an IndiGo plane gets delayed by ten minutes, people are looking at their watches."

IndiGo's formula doesn't sound too complex, and one wonders why some of India's fledgling carriers haven't followed suit. Ghosh says the answer boils down to ego.

"I think it is more important to us to run a sharp business rather than try and plant flags everywhere and buy bigger planes," he says.

Though IndiGo is the largest airline in the country, they only fly to 33 destinations (their competitors, by comparison, fly to as many as 75 within India).

"They fly double the number of planes than we have, but we focus on business," says Ghosh. "Staying away from ego, and being consistent, I think that's what is different about us."

Whether or not foreign investment will save India's airlines remains to be seen, he adds.

"I don't think lack of money was really the issue for a lot of carriers in India. They could have got money from large Indian business houses. Unless you keep your costs below your revenue, you will continue to bleed, and I don't know whether more cash in the answer to the problem," he says.

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