hi before we begin the episode we have a tiny request most of you have been listening to Daybreak for a while now but turns out you have not rated us yet so could you please spare a moment to drop us a rating or a review on whatever streaming platform you prefer Spotify or apple it really helps us and now on to the episode and thank you NWS sir so I have a big question to start with I want to know if hypothetically today you had to launch a national airline what would it look like and
what would you do differently yeah I mean uh obviously um the circumstances today the time today is different from what it was yeah um it it was a huge success then uh because U we were the first loost Airline and nobody believed it's possible that was Captain grr gopin not you may know about him or maybe you don't in case you don't let me just put it this way every time you take a domestic flight in India and you don't have to break an FD to buy a ticket you have him to thank okay let
me explain Captain gopinath introduced India to the concept of budget flying back in the early 2000s 2003 to be specific he launched air deeken now this was India's first lowcost carrier or LC CC before that only the rich and Powerful could afford to fly so planes basically look like manyi fstar hotels you'd be waited on hand and foot you'd have access to these really luxurious lounges you'd get served gourmet food you know the works it was an allout experience and of course it came with an outrageous price tag to match until One Fine Day a
young serial entrepreneur from Karnataka who was retired from the Indian Army came along and decided you know what enough of this everybody should be able to fly and it was this simple yet powerful idea of his that completely revolutionized flying in India so I had to fight with the government to get them to believe in my dream because the question was how can they be a low cost airine because aircraft cost the same the fuel cost the same the salary cost the same and the pilots uh cost the same so how can you have have
low cost so I just give them a few Concepts I said it's like a hotel people come in D stand and eat and go so similarly you know not exactly same kind of analogy the aircraft as lands and immediately takes off unloads and takes off unlike the conventional Airlines where the aircraft lands but weights for passengers from other airlines Ed Ain wrote the budget flying playbook in India and it did some really really crazy things like selling thousands of flight tickets for the price of a mango by toffee one rupee tickets were their thing I
mean snika could you even imagine something like that today it's crazy but that big bowl pitch is exactly what put a in on the map and eventually made it the third largest carrier in the country just 3 years after it was launched but here's the thing success is a double-edged sword because some suddenly everybody wanted to come in and copy paste the dec and Playbook up until then this was an industry dominated by a handful of players now there were a bunch of newbies all emboldened by Dean success go a spice Jet jetl and of
course Indigo so Less Than 3 years after its launch airin was no longer the only Airline offering Dirt Cheap Tickets yeah very tough because we had a huge lack of resources they our space yeah we didn't have Pilots we didn't have engineers and about five to six Airlines came suddenly but um but eventually you know um it's you know one of survival of the fittest yeah unfortunately the air Deon story ended less than 5 years after it started over the years many of its competitors also had the same fate but if you cut to 2024
budget flying looks drastically different from what it was back then there's a very interesting scenario playing out right now India is home to the third largest domestic Aviation Market by volume domestic passenger numbers have more than doubled in the last decade more airports are being built across the country than ever before on the surface things are looking better than ever but in many ways we are back to square one one single Airline dominates six 60% of the market share here in India and no prices for guessing which one it is I'm sure you know we're
talking about indigo the remaining 40% is split between everyone else but we all know what happens when one company starts monopolizing an industry the customer tends to suffer and in this case too we are seeing that play out in different ways delays cancellations and just a generally uncomfortable experience overall and there's the fact that flying might I mention isn't even that cheap anymore budget flying seems to be drifting further and further away from the original norrils model the Udupi restaurant model so to speak but if everything is going right behind the scenes airlines are expanding
their fleets like never before a record number of people are traveling then why is the flying experience getting so bad or is it hello and welcome welcome to yet another special episode of Daybreak I'm snigdha and I'm rahil and every week snig and I come together to talk about something in business and Tech that interest the both of us and it won't just be us depending on what we're talking about we will be joined by some really interesting people on the podcast in this episode we speak to Captain gopinath about how budget flying works and
what today's airlines are getting wrong and this episode is special for another reason we spoke to some of our Daybreak list listeners who also happen to be frequent flyers we wanted to know what matters more to them service or Price the answers are pretty interesting so stay tuned [Music] [Music] rahill and I had a very eventful Tuesday afternoon this week we went to the jaur aerodrome here in Bangalore along with our sound engineer Raji so this is a place which is basically like a mini airport about 20 km away from the main Kora International Airport
these days it's mainly used for Flight Training and it is also where a lot of companies keep their Cho plan one of those companies is deeken CHS okay so picture this the three of us pull up to the aerodrome it's an unusually warm day we're lugging all of this heavy equipment with us mics stands the works and there isn't a plane in sight there's just a lot of barren land and some slightly overgrown patches of grass there are a couple hangers here and there and then tucked away in a corner is the Deen Charter's office
and their own personal hanger where we are happy to report we actually did see some pretty nifty helicopters but we knew very little about said helicopters so we OED and ad for a little bit and then we continued on our mission to meet captain gopinath and to ask him what happened to budget flying but this is Daybreak so we were not just going to ask him the straight forward question we wanted to get the real picture so we framed the question a little bit differently so that actually brings us brings me back to that question
I started with I was really excited to hear your perspective on this but if you were launching a airline a national airline once again today what would it look like and what would you do differently one quick disclaimer before we begin this episode as we mentioned earlier was not recorded in our usual Studio settings so despite all our best efforts especially rajiv's you may notice that the audio quality is not usually what it is please do bear with us okay so now that's out of the way back to Captain Gopi not I think uh we
need to today the challenges are a little different my challenges are different I had hardly had any fund so nobody believed in my dream so I cobbled together a small amount of five cres I started the alignment then once it started suced then people you know found that it was a great idea and people then put money then I raised a lot of money as equity and gave them shares today you got a huge uh network of two Airlines so there only two airines and the third one is liing this is spice which is recovers
and falls again recovers and falls again the two Airlines Captain gopinath is talking about are indigo and Air India by the way when we say Air India we mean all the four Airlines owned by Tata so Air India Air Asia Air India Express and of course vistara in third place is spice jet which like captain gopinath mentioned is struggling to stay in the game there's also of course aasha air but it is still nowhere close to the other three and that's it India should have had at least about 20 Airlines for this country size like
in Europe right we don't have that so there's a big opportunity for another Budget Airline though for a Budget Airline there's no opportunity for Food Service yeah there's no opportunity for food service because budget has got efficiency got new aircrafts the full service also has got new aircraft the full service has got old aircrafts so why would anybody say I'll sit in the economy of India and pay more instead of just because I'm going to get some free food nobody going to sit first thing you see is what of the price yeah if the price
here 500 rupees cheaper you go go into that so right now indigo is making money there's a huge Network and also the when you start an airline those people also put a flight next to you which they also did in my time and if they got 500 2,000 flights they'll put you know you got only 10 flights they'll put 10 flights just before you so that they'll get very cheap so that you uh price your aircraft goes empty so but that's what confounds me right like again like a full service Airline is not a viable
option which I understand but as someone like an outsider of course I'm just assuming if you go in as a brand new LCC then isn't it just a race to the bottom cuz someone will always be able to undercut your price yeah not someone the establish Airlines because in America there is what is know as a predatory pricing law so similarly here now that that problem is there so that's the reason I said there's a different challenge now than the one that I had because it's difficult to get also funding now because people feel that
how are you going to succeed you're asking when then they didn't put funding because they said how is you going to succeed there's no internet you can't do low cost aine without internet and uh that model was not there in India it will not work every say it worked in America but it will not work here but an entrepreneur always comes with u an idea which beats the market right so whoo is going to come now because right now we do not have that kind of rher in India you know Ultra cost low we do
not have where they give tickets at zero cost do you think that's a viable business model in worked everywhere right because they put it at zero but not all tickets are at zero you know they he'll put about five tickets on every flight at zero fine so it's like Return of the one because it will stimulate the market yeah right and then he makes money on the other Goods that he sells then you go at you go at one rupee but come back at uh 2,000 rupes so you make average of th000 so that's how
you you you succeed okay so one thing is pretty clear LCC is the way to go Captain gopinath basically said it has to be a Budget Airline or nothing now he mentioned the poster child of budget Airlines Ryan a I'm sure you've heard of this Infamous Irish Airline it's not your average Budget Airline it's an ultra Budget Airline with a bit of a reputation thanks to its controversial CEO Michael Oli did you really want to charge to use toilets on a planes yes or no yes but not because I want the money we'll give the
money away to charity I want to get rid of three we have three toilets if I can get rid of the two toilets at the back of the planes I can add six extra seats with six extra seats I can lower everybody's airfare by another 5% all year round yep that's the guy he's also the person who once said that selling standing tickets on flights would be a good idea but the thing is controversial or not Ryan Aire has figured out the budget flying business model and it's quite simple you sell Dirt Cheap Tickets sometimes
practically for free but you also cram as many seats into the plane as possible so it is always running at full capacity and then you charge for everything else snacks extra leg room carry-on baggage the works at some point he even said he might charge for breathing on the plane when ryer came he was so successful he said um I'm not interested in giving you good service I'm not in the service business when I said it sometime when M I said we are not in the fashion business to give you fancy air hosters we not
give you gur give you you know you know go food we are here in transportation we'll take you from point A to point B on time with your backs rest everything is we are not focusing on except our smileing is free so we were focusing on service but um now because when the airline is successful in the low cost because there so much focusing on the bottom line to grow they they lose their uh customer focus they think that because it lowest Fair the customer will love it but another airline also gives low fair but
gives good service they switch there unfortunately not easy to give that kind of efficiency as a r Ryan has Got Away by giving bad service but he's so efficient and so simple and he has kept every people they don't care they curse but they go okay that may not make for the most comfortable flying experience but it is the only way for an airline company to turn a profit but like Captain gopinath said no one has been able to crack efficiency the way that ryana a has the only way you can afford to sell a
few hundred or even 1,000 one rupe tickets is by ensuring that the plane is running at full capacity because otherwise braking even when you're factoring in the cost of things like jet fuel and a bunch of other overheads is just impossible and then the next big challenge is figuring out the roots how many routs can your airline cover how many cities and towns can it possibly connect back in the day air dein managed to pull off something pretty revolutionary it connected small two tier and three tier towns to big cities so it would use these
70 80 seater planes usually 80 hours for regional routes and bigger air buses that could accommodate well over 100 passengers for larger cities with more demand and when we were talking about you know strategy right in the early years of decken what you did for tier 2 and tier three cities and then I know you went on to also run a regional Airline do you think you take a similar approach this time as well or would you have to rethink yeah um there are two ways one is you can start with full service Airlines then
add the ATR like what Indigo did other one you start with because you require low investment but when you start with atrs you have to go to routs uh you have to be very smart because if they put a air bus with the ATR uh and if if a bus gets 100% occupancy and the ATR gets 100% occupancy of let's say 42 passengers or 48 passengers and uh or 7 2 passes in 8 hour and a bus is let's say 190 or whatever then the air bus is cheaper and a Bangalore Chennai if you have
180 passengers and their cost per seat is cheaper so you will not be able to beat them but uh if you but it has other advantages you get into at fast you get R of it fast so you have to choose alternate routes or timing because there's so many airport which are not corrected so you have to choose those areas and then start but of course that danger is there that they'll come that's what they did to me but your costs are so low that they will withdraw usually so you have to get the key
is to get low cost in operations so that you can give low fs and innovation in all your Technology Innovation in pricing Innovation your Revenue management okay recap time here's what Captain gop's hypothetical New National Airline would look like air Deen 2.0 if I me first and foremost it would be a lowcost carrier Captain gopinath was clear about one thing budget is the only way to go then alarion a you drop ticket prices while also making sure that you are maximizing the number of passengers you can accommodate on the flight more passengers the cheaper each
seat cost is for the airline then you charge for every single add-on you connect a bunch of small towns with big cities and there you have it the perfect No Frills Budget Airline but how do passengers all of us feel about it and is this what we really want we asked you guys Daybreak listeners so stay tuned conventional wisdom around egg freezing often writes it off as yet another scammy product of the booming fertility industry but as to women in our early 30s and late 20s we know things are not that straightforward but why shouldn't
we be able to hack the system and prolong our fertility we have a hypothesis we believe that women opting to freeze their eggs are career oriented and in their 30s we also believe that most people who don't want to go through with freezing their eggs opt out of the procedure because it is just too expensive in an upcoming episode of Daybreak we want to dive into the real world complexities that drive a lot of women to opt for procedures like egg freezing we want to hear from you do you agree with our hypothesis the survey
isn't just for women who have undergone the procedure is also for those of you who have considered it at some point in your life we want to glean from all your experiences and why you make the decisions you make and of course it goes without saying that the results of the survey are completely Anonymous and confidential we will reach out to you for more details only with your explicit consent the link to the survey will be in the show notes of this episode it'll only take a couple of minutes to fill in and now back
to the episode [Music] welcome back if you are a regular Daybreak listener you may recall that we asked you our listeners about your flying experience and I'm happy to report that quite a few of you actually reached out to US 20 people wrote to us now these are people who take multiple flights every month some of these people even fly a couple times every week I mean I'm honestly just exhausted thinking about it but it would be fair to say that they are all Pro Flyers now a little while ago we spoke to Captain gopinath
and we got a sense of the ideal business model for a Budget Airline but we want to understand what people really want and by people I mean us you know people actually taking these flights what matters more to us good service or cheap tickets so we sent out a bunch of questions to everybody who responded to us on our WhatsApp number and then we got to have longer conversations with four of them a big shout out to prachi Yash shivari and Anri for giving us their time they all working professionals residing in different parts of
the country in different lines of work rahil can you walk us through the questions that we asked them and what was the objective of all this so the objective was to understand what frequent flyers want from their flying experience of course we wanted to know how often they fly we also wanted to get a sense of which airline they generally opt for and then we went in and asked what matters more to them when it comes to air travel you know price or Comfort straight off the bat the general consensus is that the flying experience
just isn't that much fun anymore for a variety of reasons I appreciate the flying experience that comes with vistara or Air India if it's Indigo it's mostly bad hardly ever ugly but never good as well if you ask me about the flight experience I would have to say that it has been somewhat disappointing due to the excessive crowds at the entry and security areas of the airport flying domestically has been a true pain of late I been outside the country for about 4 months now so I can't speak to the extremely recent times but right
before I left I took several flights to tend to work and personal commitments and most of them were delayed uh for example uh recently I went to prag and I paid a 400 rupee for a pre-booked local wge meal and I was expecting a small meal but uh uh in Flight I received two small wapow wbed in a plastic which which was cold and unappetizing basically so yes all four listeners had similar concerns things just seemed to be a lot more chaotic these days Indigo Air India vistara were the most popular choices for all four
of them and that did not come as a surprise but here is where things get interesting when it comes to the price or com Fort question we got some surprising answers we were expecting people to straight up say price but multiple people said it depends on the duration of the flight for longer domestic flights they do prefer more comfortable carriers and three out of the four listeners we spoke to said they enjoyed the overall flying experience with stara had to offer but they were also aware of the fact that their days traveling on board visara
flights were numbered right the airline is in the middle of a merger with air India so it will technically Cease to Exist by sometime next month and with that a duop will be solidified we will have Indigo with its Mammoth you know over 60% market share and then we will have Air India which has swallowed up a bunch of the other competitors and return to relevance right now I know Captain gopinath is not a big believer in the full service airline model and I do see his point but clearly there is a demand for it
right and I'm not saying this based on the conversations that we've had with our listeners I mean even Indigo has announced recently that it will be launching uh business class on select routs right and you do have a point there snika because this isn't just happening in India globally we are seeing a bunch of budget Airlines starting to offer certain premium upsells it's sort of like economy plus okay so Spirit Southwest which are some of the biggest airlines in the west are all going down that route they'll offer somewhat of a tear third model so
you can opt for No Frills or you can cough up some extra cash and get a few luxuries like food and priority boarding in some senses it does make sense to premiumize right especially because per capita income and people's discretionary spending has been increasing considerably over the years it's pretty well documented with that there's also of course been a considerable increase in air travel too right there are far more people traveling by planes the idea of course here is to squeeze as much money out of you as possible so it's basically a really Far Cry
from the one rupee ticket days right which is also why you know the likes of Air India and indigo they're betting big on future growth and they willing to take risks like premiumization because they believe it will pay off in the long run they also adding up to their fleets like never before Indigo has ordered 500 new planes Air India under its new tataa management has ordered about 470 even relatively new Airlines like aasa have close to 60 planes on order and they've also been expanding their Roots even Beyond India okay but the thing is
there's a reason most full service Airlines crash and burn metaphorically speaking of course thank God it comes back to the fact that this is a business that's built on high volumes and low margins right Captain gopad spoke about that a little while ago too basically Airlines seek to gain a lot more from doing things like ryion Aire cramming in as many seats as possible to bring down the cost per seat right because there are just so many variables Airlines have to consider things like jet fuel costs Manpower costs geopolitical tensions anything could send them over
the edge right I mean air dein is the ultimate example of how things can suddenly go south so I almost succeeded it was not that easy and uh but when the oil prices went up by four times and when pilot salaries which we started at 1 lakh went to six lakhs and the engineer salary started at 25,000 went to something like 3 lakhs four lakhs and every price went up we were not able to give that kind of ticket at that time and so therefore there's a glut of Airlines combined know combination of this in
that and so my calculations uh did not prove right because I was bit ahead of time so it is fair to say now that we kind of making our way into the second chapter of budget flying in India and this time around it does not seem to fit perfectly into the Udupi restaurant mold nor does it fit into the fstar mold it seems to be somewhere in the middle and airlines in India at least for now will have to tread the fine line between both but one part of the story that has stood the test
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trial this episode was scripted and produced by rahil philippos and edited by Rajiv Cen do tell us what you thought of it send us a text on our WhatsApp number it is 8971 8379 also don't forget to rate US [Music] [Music] [Applause] [Music]
