Domestic aviation in for good times

Indunil HEWAGE

Deccan Aviation Lanka, a premier airline that operates helicopters and fixed wing aircraft in Sri Lanka sees tremendous opportunities in the local aviation industry fuelled by the prevailing peaceful environment in the country.

Deccan Aviation Lanka has managed to capture its customers through trust and is capable of providing the ultimate experience for business and leisure travellers with a premium service, safety and comfort.

Daily News Business features Deccan Aviation Lanka CEO and Director Denham Schokman for this week's Tea with CEO column.

Here are the excerpts of the interview

Q: How has the 2011 year been so far for the Deccan Aviation?

A: Year 2011 has been a phenomenal year for Deccan so far.

We expanded our fleet with a new aircraft, which we believe will completely transform air travel in Sri Lanka.

This year so far upto August we have seen a 68% increase in the top line compared to the same period last year.

We also see an increase in business flyers, mainly fuelled by the large scale investment projects taking place in the north and east. If you look at our guest composition, currently about 40% are corporate flyers, in the past this used to be around 20% so we see more business flyers and investors chartering our aircraft.

Q: How do you see the Sri Lankan market, is it growing?

A: Yes, absolutely. When transport systems are efficient, they provide economic and social opportunities and benefits that result in positive multiplier effects such as better accessibility to markets, employment and additional investments.

In the past, despite trying economic conditions imposed on the country by the conflict, domestic airlines continued to deploy additional capital and provide job opportunities, all with the hope that the end of hostilities would usher in a renaissance for our industry. Domestic aviation is definitely a growth sector in the peace dawned Sri Lanka. We welcome the policy of the government, encouraging aviation to be a future pillar of our economy by positioning the country as an aviation hub in the region. Investor confidence and boost in tourist arrivals has a clear correlation to domestic air travel. This is evident in the sharp increase in domestic passenger numbers after the dawn of peace.

Q: What areas is Deccan Aviation concentrating in Sri Lanka?

A: In Sri Lanka, we are focused to develop our charter business - both helicopter and fixed wing divisions by adding more capacity to take advantage of the growth in tourism and corporate travel. The company also has plans to extend its reach by providing operational and maintenance support to other domestic airlines and private operators in the country.

We have done this in the past to start airlines and currently maintain aircraft belonging to other operators. We have the infrastructure in place to do this - qualified staff, technology and expertise.

Q: How do you support future growth aspirations of the company?

A: Our strength has always been our people. We have the most experienced team of aviation professionals working for us. Continuously training and enhancing competence levels of our staff is an important element in our growth strategy.

Also aircraft selection is another important decision, identifying the right type of aircraft that suites our local condition is critical. Keeping abreast with new technology and continuous innovation is a key component of our growth strategy.

Q: How do you see the local aviation industry?

A: Sri Lanka's private domestic aviation sector is not developed or advanced in comparison to other neighbouring countries in the region such as Maldives, India and Nepal. We are many years behind most nations - measured by number of aircraft, range of services, ease of travel, infrastructure and competition law.

Q: What are the challenges and opportunities you see in local aviation industry?

A: We see a lot of opportunity especially with the second international airport in Hambantota scheduled to open end 2012. This will attract new investment to the country and we as a long-standing domestic carrier would be interested to explore possibilities on how best we can leverage on these opportunities.

Touching on challenges, I think infrastructure is a critical challenge; lack of proper facilities for passengers at our domestic airports is a concern. We have 13 airfields in the country including BIA and Ratmalana and Deccan operates to all these airports. There are government initiated projects under way to modernise domestic airports and I think these need to kick off soon if the industry is to stand tall.

Domestic aviation industry is largely hit by the brain drain. Scarcity of skilled human resources such as pilots and engineers, specially in the helicopter segment is a challenge. Most talent has left the country seeking better opportunities overseas.

Lack of policy to regulate the industry and create a level playing field is another challenge the industry is facing. Our main competitors in both the helicopter and fixed wing segment are entities backed by the State and does not pay the same levies and taxes and have the same cost structure that a private operator such as ourselves have.

Q: How does Deccan make a responsible commitment to the well-being of the environment since airlines are considered as one of the largest air polluters?

A: This remains to be a challenge for the entire industry. However I must say that it's not correct to say that the airline industry is one of the biggest polluters. Airlines only represent 2% of CO2 emissions.

There are several means by which the industry and airlines can jointly reduce emissions.

Technological advancements to the aircraft and engines, the way you conduct operations such as better route planning, reduced thrust take off, improvements to the infrastructure such as modernised air traffic control systems and carbon offset and trading projects.

Deccan takes every measure to ensure that our carbon footprint is kept to minimum. We will be shortly introducing a carbon offset scheme to our guests. The scheme allows travellers to calculate the per passenger emissions of their flights and buy carbon dioxide credits that would be paid to a variety of environmental projects.

Q: Does Deccan Aviation engaged in innovating airline products and services?

A: Continued innovation represents an important opportunity for travellers to get what they want while enabling airlines to differentiate themselves and build brand loyalty.

At Deccan we adopt a culture of innovation; this philosophy has helped us to meet and exceed the expectations of our guests. Guests who fly onboard an aircraft, specially in general aviation, expect lot more than flying from point A to B. The assurance of safety, inflight comfort, on time performance and flight experience, all these contribute towards creating a value proposition to a guest. We continuously strive to improve on these aspects at various touch points.

Our customers demand a high level of service and we are ready to meet and exceed their expectations. We offer a seamless service, we go beyond our core function of providing air transfers, we provide ground transportation, tour guides, excursion packages and hotel reservations to ensure our guests take back with them a memorable experience. We deploy superior technology and processes to ensure that our operations are world class and safe. We are the only domestic airline in Sri Lanka to have a GPS based tracking system onboard our aircraft, which enables us to track our aircraft real time.

We have also joined the social media band wagon, as this allows us to capture and share information and create common communities where both our existing and potential customers can interact with us more easily. We are preparing for the future by using social media and social networking to collaborate and accelerate innovation.

Q: The continuous price increase in fuel has been a major drawback for the global aviation industry. How does Deccan Aviation cope with this challenge?

A: The airline industry is one of the most challenging businesses to manage. There are many uncontrollable factors impacting an airline business.

It was predicted that in 2011 the global airline industry would make a profit of USD 8.6 billion. Half way down the year it has been readjusted to USD 4 billion. This is a 54% reduction. There are several reasons for this. Surging oil prices, political unrest in the middle east and natural disasters across the globe. Fuel was predicted to be at USD 96 a barrel in year 2011 and now it's averaging at USD 110 and fuel is estimated to comprise 40% of an airline's costs. To answer your question, on the near and mid-term, I believe there will be a drop in passenger numbers. However, on the long-term, despite these challenges, the world will continue to be more mobile.

Q: What are the latest trends you see in the global aviation industry and how will it benefit or affect the local aviation industry?

A: Tourist arrivals are an important element in our business and we saw international tourism recovering strongly and demand for leisure travel improving significantly in 2010 and the trend continuing in year 2011.

We can see this in our own country. The forecast for 2011 was to achieve 750,000 tourist arrivals and looking at the numbers I strongly believe we will go pass the 850,000 mark. Like I said, the world will continue to be more mobile.

We are in a region that has the fastest growth rate in air travel. This is partly fuelled by the burgeoning middle classes in emerging markets such as India, China and Malaysia.

Q: What sort of investment plan does your company have in mind in Sri Lanka?

A: We have definite plans to add a larger twin engine helicopter to our fleet in the next six months and many more expansion plans which we will be able to disclose later.