Nepali Times: Cosmic has been very aggressive in its pricing strategy. Do you think the budget airline strategy works in Nepal?
Sanjay Pradhan: The budget airline strategy is working the world over: Ryan Air, Deccan Air and Air Asia. The business concept is universal and not confined to budget carriers-competitive pricing and cost efficiencies. Budget airlines even make profits, which may surprise some people. Increased capacity and sophisticated technology make it possible to implement a multi-pricing strategy that is attractive, flexible and effective-both to the passenger and the airline. Cosmic Air now has over 50 percent domestic market share, over 40 percent share in the Delhi sector and recently Dhaka sector and over 85 percent occupancy. As the numbers show, the strategy is working and we are here to stay.
Don't you think the pricing is predatory and will put other smaller airlines out of business?
Pricing is not the only factor that determines choice. Anybody who buys a single product or service knows that a consumer will choose a superior product that is offered at a reasonable price. The need of the day was to fly larger and more sophisticated jet aircrafts in the domestic sector and to remove the bottleneck in our country by flying regional routes. We have filled a latent demand. We have grown the overall market both in the domestic and international sectors that we operate, in some sectors by more than 40 percent-many were first-time fliers. Each airline has a business model that it follows and its own target market. We have our own. We are willing to form alliances with other airlines like we do in the regional sector because no airline can fly everywhere.
But do customers really benefit?
Definitely. Let the numbers tell you the story. Customers have a choice and in some sectors more than 75 percent of customers choose Cosmic Air for many reasons. Simply put, over 50 percent of the domestic air passengers fly with Cosmic Air because they benefit from the choice.
What are Cosmic's plans for expansion on the domestic and international sectors?
Two more flights have been added to the Dhaka route making it five weekly. With the arrival of the fourth Fokker 100, we intend to fly to Kolkata, Banaras and Rangoon from July. Cosmic Air is also awaiting the approval from CAAN for Bhadrapur and Pokhara using the Fokker jet. Two more jets will be added by October and two more in February 2006. By then we will fly Paro, Bangkok, Mumbai and Bangalore after we get the allocated seats.
But you only have 1,500 seats a week allocated for the India sector, are you trying to get Necon's and Air Shangrila's unused seats?
We have Necon's 610 seats on a conditional basis. We have already approached the government to allocate the unutilised seats, which we are ready to return if the other airlines start operating. In the present circumstances when Jet and Sahara have cancelled their flights to Nepal, additional seats are required immediately. Right now, even in the Delhi sector we have been getting requests for additional seats and flights. We have reapplied for a third flight daily to Delhi but the question of quotas has to be addressed. It is ironic that the seat quota is being under-utilised and our country is suffering due to it-the hotels, the tourism industry, etc. In terms of lost opportunity and revenue to the country this amounts to millions of dollars and eventual loss to many in the tourism industry.