Economic and technical transparencies are key to success

 

Birendra Bahadur Basnet
MD, Buddha Air

Birendra Bahadur Basnet is a first generation businessman with his reputation increasing year after year. He entered into the airline business without any prior experience but today he heads a very successful airline company. When he registered his airline, Buddha Air, and started operations in 1996, he had only one aircraft that was purchased with a loan. His journey had begun with a US-made Beechcraft 1900D. Now, Buddha Air has a fleet of nine aircraft - three Beechcraft 1900, three ATR 42-320 and three ATR 72-500. Basnet spoke to Janardan Baral of The Corporate about his company’s strategies and country’s aviation sector. Excerpt:

What are main reasons behind massive success of Buddha Air which, as of today, holds 56 percent market share of domestic airlines?

Buddha Air is a common platform for its 700 employees.  We continuously motivate employees to achieve success. We believe that all employees should have feeling of ownership on the company. Buddha Air gives high value to its employees for the growth of company and shares both profit and loss with its employees. I can say that collective work of employees is the main reason for the progress of Buddha Air so far.

How do you motivate your employees?

All financial transaction should be transparent. Transparency creates environment of trust between employees and company management. Salary increment based on the inflation rate and performance based reward system are some ways to motivate employees in a positive manner. We provide incentives to employees. The company should hike air fare every year to meet administrative cost including salary of employees. Yet, we are committed to provide services at reasonable cost. We have started providing services from big aircraft reducing number of small aircraft. On top of all, the most important thing is economic and technical transparency. Besides, long term vision, strategies, best products and investment are equally important to make a company successful.

Buddha Air could not achieve success in international flights such as Paro, Lucknow and Banaras. What’s your say?

First, we have not give importance to those destinations compared to domestic destinations. Our team should have put more effort to be successful in internal market. Second, Paro of Bhutan and Lucknow of India could not be the best flight destinations for us. We failed to do good business in these destinations. The reason we decided to stop our Lucknow flight was obvious. People can get there in three hours from Nepalgunj. Passengers opt to fly to Nepalgunj and then go to Lucknow. However, Banaras has been one of the lucrative flight routes to us. We will be continuing our service to Banaras.

Indian airline companies are doing good business from Banaras flight. Can we say Buddha Air could not compete with them?

We have not reached at the level where we can compete with Indian airline companies. Simiarly, we cannot surpass the market of Indian Airline which has been operating service in that route since decades. Yet, we did not incur loss from the Banaras flights. But, Banaras is seasonal destination due to religious reason. Keeping this fact in mind, we have decided to operate service on this routefor six months only.

It is said that Buddha Air has given less priority to the destinations of the neighbouring countries because it will start its service to other lucrative international destinations. Is it true?

I do not decline it completely. But we will not take decision in haste. First we should have strong presence in the areas where we have been operating our services at present. We have to be very competitive to start international flights. It seems that airline companies that have been operating service in Nepal are profit oriented than service. In such situation, the possibility of profit is high in this sector. But, Buddha Air has not reached a level where it can compete with renowned international brands such as Thai, Qatar, Etihad and others. So, we will not go to the international market for next four to five years.

There is neck to neck competition in the domestic airline market. What will be your strategies to maintain your market share?

We have established our brand image as a company which regularly pays tax, which is employees friendly and which serves a million passenger in a year.  We will not be adding number of aircraft for the coming few years. Similarly, we have plan to sell a Beechcraft. Currently, we have nine aircraft. We will sell a 18-seater and reduced the number of aircraft to eight. Similarly, we have been trying to enhance our capacity. We have to make profit to keep our employees satisfied. So our goal is to make profit by ethical business practices.

Audit report of ICAO has showed Nepal as a high-risk zone. Private airline companies blame Nepal’s regulator CAAN of trying to introduce an impractical rule based on the audit report. Do you agree?

We should let regulator work independently. It has right to monitor and regulate the entire sector. But, it is not fair to disregard the flight captains in the name of new regulation. Another issue is that the regulator has made it mandatory to keep a deposit of Rs 50 million.  This provision is not acceptable. First, regulatory body should not be politicized. It should not blame ICAO to cover its own incompetency.

So don’t you abide by the provisions of Air Operator Certificate Requirements which the regulator has recently introduced?

We cannot afford same deposit amount as the international airlines are required to offer. We have already expressed our dissatisfaction over such provision. We will stop all international flights if the government tries to implement it forcefully. We cannot continue our Banaras flight by depositing Rs 50 million. The regulation which is formulated for jet planes should not be forced for small aircraft too.

Nepal’s airline safety situation seems deteriorating every consecutive year. Cannot we say that this is due to airline operators who are not abiding the regulator?

Nepali sky is obviously more risky compared to European sky. Nepal’s geography is dangerous compared to many other countries in the world. But we have failed to avoid many accidents that could have been easily avoided, such as those were caused by minor human error. Many accidents had taken place due to negligence on the part of airline companies and human resource involved in the operation. Regulator does not have sufficient manpower to monitor effectively. I do not blame this on weak legal provisions. We all should leave our habit of breaching the law. All should be abide by the regulation.

Poor operation technology is also blamed for the frequent air accident in Nepal. Do you feel so?

Both Instrumental Flight Rule (IFR) and Visual Flight Rule (VFR) have their own procedures and rules. Crew members should follow all the process including maintaining height and distance in all flights. Similarly, some airports have some specific rules. Crew members should follow those rules too. New technology can only facilitate the process. The main question is whether we follow all due processes strictly. I think all should follow international standards while operating airlines services. Buddha Air is very much conscious about this.

In Nepal, there is no stability in the number of airline companies. How to address this problem?

Yes it is fact. Sustainability of airline companies is a crucial question in Nepal. There were so many good airline companies when Buddha Air started its operation. Most of them have already closed down. Owners should be serious to the problems that may occur in this business for the sustainability of the company. Companies should be updated time and again. Concerned company should give special attention for the capacity building of employees.

Buddha Air is criticized as being focused on profit oriented destinations only. It has not started operation in rural areas so far though it had pledged to do so. What do you say?

We want to start our operation in remote areas. But we don’t have appropriate aircraft to do so. We have planned to start service in the remote areas after getting hold in the international flights. Buddha Air had tried to buy an aircraft to start service in the remote destinations but the price of aircraft skyrocketed and we could not afford that. It is bitter reality that we cannot operate service in loss. 

So what are major preconditions to start service in remote parts?

The first condition is infrastructure. The government should invest in infrastructure. There should be road connectivity. Then, locals will have options whether to travel by air or by road. The government should be clear also regarding subsidy and other schemes to operate services in the remote parts.

We often hear about syndicate among airline companies to fix air fare? What is the reality?

The government has fixed the maximum ceiling on the fare. For instance, upper limit of the air fare to Biratnagar is Rs 6,700. Airline companies have been following the ceiling set by the government. I do not think there is similarity in air fare among all airline companies.