India is rising. and as rising nations are wont to do, it is launching airlines on global routes in pursuit of money and international glamour. The Indian entrants in this brutal market are led by Jet Airways, which begins to fly from major North American cities to Europe, Africa, China, the Middle East and to its home bases in India on Aug. 5. Chairman Naresh Goyal, who started his career as a ticket agent, founded Jet in 1993, when India began opening up its air market. Jet was India's first private domestic carrier, and is now the country's largest private airline. Goyal, one of India's 10 richest people, spoke to NEWSWEEK's Vibhuti Patel in New York about Jet's $3.7 billion expansion and the global airline business. Excerpts:
PATEL: Why are you entering the international market now, just as airlines are struggling with high fuel costs?
GOYAL: Very few airlines make money. Indian carriers' share is only 20 percent of our captive market; 80 percent of the traffic into and out of India goes to foreign airlines because of their reputation. Nearly 30 million Indians live overseas, all doing very well. If Indians can run other businesses, why not airlines? It's not rocket science, it's a hospitality business. Indians are raised to treat the guest as god; that's our culture. Our cost in India is lower than elsewhere, our productivity is higher than most, so if we provide leadership, Indians shine. Jet Airways has made money continuously since its inception.
It's been said that you overpaid for domestic carrier Sahara to wipe out the competition.
We did not overpay—there can be no deal if it's not fair to both parties. When we bought Sahara in 2006, we looked at how TWA sold to American, Pan Am to United; we studied what assets were transferred. We were expecting that policy to come from our government and hoped to get everything—infrastructure, hangars, airport facilities—but the government did not do that. We had put $500 million in escrow. When we did not get the conditions we were expecting, we went to court and then into arbitration. Last year India's domestic airlines lost $500 million—a lot of money for a small aviation sector—so the valuation of Sahara fell by 40 percent. We could afford that. It was a win-win situation for both companies.
Will you take that approach abroad?
I can't say that I won't. Indian companies are becoming global: Tata has bought Corus, Lakshmi Mittal is buying steel all over the world, our companies are investing more in the U.K. than U.K. companies are investing in India. So, if there is an opportunity and ownership laws are favorable, if it makes sense for our shareholders, of course we'll keep an open mind.
Are you building an aviation empire? Is this an ego trip for you and for India?
Mittal and Mukesh Ambani make India proud. Infosys and Wipro are great role models. I cannot say that I will be as great as them, but today India is producing more entrepreneurs than any other country. We're no longer just carpenters and masons. As chairman of Jet Airways, I definitely would like to see India able to create a world-class airline. We should not be inferior to Singapore and Cathay Pacific in terms of reliability and standard of service. We will hire the best brains, the best talent. We aim to be second to none.
Why do Eastern carriers succeed when Western airlines struggle?
Everybody pays the same price for fuel but our costs are lower. We don't have union problems. Western companies have to provide health care, pension funds, big benefits. Asian airlines operate by building company loyalty—if we don't treat our staff like family, they leave.
Do you think you can beat Emirates, Singapore and Cathay Pacific in their markets?
We want to operate wherever our markets are. We know Indians—whether they're Indian-Americans, or British Indians, or the 4 million Indians in the gulf—no matter what their passport, we know their culture, their habits, what movies they want to see, what food they want to eat, how we can personalize our services for them. Air India [India's government-run international airline] has only 20 percent of that market; 80 percent goes to other airlines. We will capture the Indian market from Newark, JFK, San Francisco, Toronto, Chicago. In the gulf, only 25 percent of Indians fly home on Air India. I'm certain we will become the first choice of Indians in that market. Emirates is a great airline; we have an excellent relationship with it and with Etihad. We're working closely with these carriers. We're not going to fight them. We'll complement them. We want to increase India's market share from 25 to 50 percent, and they understand that it's our birthright to get our market share.
Will the new luxury cabins you're introducing be your selling point?
Not just the cabins, the entire product will be our selling point—it's like an orchestra, it's the total package. How your call center functions, how you take your reservations, how you check in passengers; it's baggage handling on departure and arrival, service onboard—all that adds up.