One of the centres for aircraft leasing, companies from Ireland made up a bulk of lessors to India’s oldest private airline Jet Airways, which temporarily suspended operations last month. However, DAVID FLOOD, director of India and South Asia for Enterprise Ireland — a government organisation responsible for the development and growth of Irish enterprises in world markets — said in an interview with PRANAV MUKUL and SANDEEP SINGH that the Jet Airways episode is being seen as a short blip in a market otherwise poised to grow. He also spoke about the changing stance of nations towards protectionist trade policies and the challenges Irish companies face while doing business in India. Edited excerpts:
A number of Irish aircraft leasing companies are present in India…
Of the top 15 aircraft leasing companies in the world, 14 have some presence in Ireland — either headquarter or branch office. Over 50-60 per cent of all aircraft leased around the world are coming from offices based in Ireland.
Has there been an impact in sentiment for aircraft lessors due to the Jet Airways episode?
I think the aircraft leasing companies look at this as a long-term play. When they are looking at the Indian market, they are looking at it as something that is growing at 10 per cent a year in terms of aviation. At the moment the fleet of Indian airlines is around 700 aircraft and the projections are huge — over 2,000 aircraft within 5-10 years.
So, yes, Jet Airways is a short-term shock, but it was seen as coming and companies made preparations and already aircraft are being re-leased to other companies. The slack has already been taken off the Indian market. Overall the sentiment is that India is a very positive story. It is very sad that Jet has collapsed but in the longer term, the prospects are very positive. Airline industry is notoriously cyclical. We have seen with our own national carrier Aer Lingus has gone through highs and lows and every business goes through this. But if you look at the trajectory over 20 years, the number of aircraft is going up, the number of passengers is going up. So if you can get your business model correct, then you have a good product to sell.
How do you see growing protectionism across the world?
Clearly there has been a shift in the attitude in many countries around free trade and the advantages of free trade.
There has been a move towards protectionist stance in certain countries and that is a concern for us and we will continue to fight at EU level and World Trade Organization to maintain open borders and open trade and as part of the EU we have access to a market of 500 million, which is a fantastic position to be in. In India, (the free trade negotiations) are a bit slow. Negotiations have been going on for 8-9 years and we are yet to see a breakthrough because there are certain areas where there are sensitivities.
Do you see an India-EU free trade agreement becoming a reality?
I don’t see why not. There is certain move on protectionist anti-globalisation points of view at the moment. Ten years ago, I would have said that this would have never happened. Eventually, the trend to me seems to be towards more free trade. Every time we have seen protectionism rise, like in the 1930s, it has been disastrous. In the longer term, people realise that free trade actually brings more wealth to people.
What are the challenges in India that Irish companies have to face while doing business here?
India offers lots of opportunities and challenges for Irish companies. When I talk to my clients about India, the opportunities I see is the size of the market; the language English, we have a common language; we also have a common background in terms of a British-based legal system, so there’s familiarity in all of that.
Where the challenges arise are really around understanding the rules and regulations. So, bureaucracy in India — understanding how to set up a new legal entity here requires expertise. So, how we get around that is to work with local providers to understand those regulations and we connect them to our client base.
That’s the number one challenge. The second thing, I suppose, is building of the local network. In Ireland, you can do business pretty quickly, you can make an agreement after one meeting. In India, people need to look at you, talk to you, trust you and agree that yes, we are going to take this forward.
A lot of companies who camp here think we can do a quick deal and then we can go home and everything is going to be fine. No, they need to be present on the ground, need to work the relationship over a long period of time and that is where you get your reward in the long-term game. The third thing is price — a lot of Irish companies think we have a great product, we can come to India and sell at whatever price we like.
It’s only when they come to India, they understand that they really have to find the right price point. Sometimes it means that they simply have to walk away because they cannot reach the right price point.
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