Ronojoy Dutta, CEO and Whole Time Director, IndiGo, remains optimistic about aviation’s future if the liquidity crisis can be overcome

How have you managed the airline in these troubled times?

In times of crisis such as this, you have to manage an airline not for profitability or growth but for liquidity. 

This means minimizing cash burn and managing the cash balance. Fortunately, IndiGo has a healthy balance sheet and we should be able to weather this storm reasonably well.

What more can the industry do to improve resilience?

We need to strengthen our balance sheets. In good times, airline managements have tended to ignore bond holders and pay disproportionate attention to shareholders. Too much cash has gone into share buybacks and not enough cash has gone into reducing debt. Successive waves of crisis have not changed this behavior, and this is why history seems to repeat itself.

Will the industry see further consolidation?

More consolidation is inevitable. The airline industry is one of the most fragmented industries in the world with far too many players scrambling to outdo each other for growth and market share.

9/11 led to a round of consolidation in the United States with the top six merged into three. The United States is fairly consolidated at this point and there is probably not a lot of scope for more. A few of the smaller airlines such as Jet Blue, Hawaiian, Alaska could still consolidate but it is unlikely that the big three will be allowed to get bigger. 

Europe too had a round of consolidation with British Airways, Air France and Lufthansa, but there are still a number of smaller carriers which could consolidate. Asia has not seen any consolidation at all, and it is in Asia that we will probably see a lot of merger activity. The biggest obstacle to consolidation is government objection to foreign ownership.
Do you think the public attitude to flying will change?

The challenge is to convince customers that it is safe to travel. The biggest accomplishment for the airline industry has been to convince people that it is safe to go 30,000 feet in the air in an aluminum tube and feel perfectly safe.

When terrorism struck, fear of flying came back, but the industry and governments worked together to build reassurance back into the system and flying grew faster than ever.

Now we have another bout of fear in the system. But I am confident that we will work through this setback as well. The fact is that people love to travel and air connectivity is also critical to economic growth. Therefore, I am an optimist on this issue.

Will Indian aviation resume its growth curve?

I am very bullish on the future of Indian aviation. All the underlying elements of rapid growth are there, and I think we have barely scratched the surface in terms of what is possible for the future. There are undoubtedly infrastructure problems, but we are making steady progress.