Gaurav's Blog

Selling Airplanes in India

My daughter's treatment in India afforded me a lot of time to talk to people here and this is what I have learnt talking and dialing some old contacts just to see what's going on.  

 

Just like China, there are nouveau rich (as the economy opened up) who have made their money with real estate, extractive industries etc. and Just like China they are "party" ( in politics) people. That much is known to everyone. What is not known that well, is that this money- is far more invisible in the hinterlands of India than in the cities. So a small town such as Sagar in Madhya Pradesh which is in the middle of the mining belt of India, are sitting on piles of money because it is easier to hide there. You befriend the taxman because he/she went to school with you. A town like Kolhapur has one of the highest concentration of Mercedes and BMW's.  

 

So why would they want to know about Aviation or Airline? 

 

Consider Tatas- before they become a respectable business house, Tata, the founder made his first millions in selling opium to the British forces who were fighting in Burma and Calcutta. Ofcourse, he had then the vision to get into textiles and steel etc. to become a formidable business group. 

 

The thing is that if I have made my money in coal or running trucks or some such business, I may not know anything about Airlines, but the 'sexiness' of an Airline business suddenly makes me respectable, it adds profile & legitimacy to my name. I have the mullah, what I want is to gain acceptance into the big boy business club of India. That explains why there is a long queue of people asking for Airline licenses. 

 

When Capt. Gopi made a pitch to ATR's, he didn't have 1 single slide on his business plan. He sold the "India growth story" to them. While the India growth story, is all but muddled for the moment, the ball is more in the court of Aircraft makers, as ambitious sales targets were already set based on explosive growth in the last 5 years and investments made. 

 

Therefore, if I were an Airplane salesman selling (largely) turbo-props, I would stop thinking about the air shows with bimbettes in row to welcome some VIP's. I would rather put on my riding boots to visit the badlands of India- the so called Tier-2 cities and visit the man with the biggest house with a simple presentation titled: How to launch an Airline. None of the fancy slides on the fuel burns and payload range. 

 

Arguably, this is a risky strategy, as by its very design it is meant to attract players that may be non-serious actors on the stage. 8/10 of such ventures may fail (not unlike elsewhere) leaving the very dirty and very tricky part of retrieving aircraft assets from these failed companies. But this is a stage that an OEM necessarily has to go through until the market matures.