dnata, the world’s fourth largest air services provider, started its travel services business in India recently. Gary Chapman, president, dnata reveals why they opted to focus on the corporate travel segment and their cautious optimism about the India market. By Sudipta Dev
Your perspective of the India market ? Would you agree that your entry has been a bit late?
Dnata has four key core key businesses – travel services, ground handling and cargo handling, airport and aviation catering and IT services. We entered into the travel services in India – in Delhi, Mumbai and Bengaluru, and we are focused on corporate travel. We do not think that we are too late because we wanted to come in with the right platform and the right business model. We are focused on the right platform – corporate travel. The way Indian businesses is growing there is a lot of opportunity. We want customers to know that we have the right technology because we are about services and standards. It is not about just being there, but providing the right solutions for what the customer wants and needs. We are well positioned to do that. We are working with Hogg Robinson Group (HRG).
Are you happy with the market response since you started operations in India?
It is still at a very initial stage but things are moving in the right direction. We planned the gestation period on getting travel services up and running. The investment and working capital required is quite significant. We are slightly ahead of the plan. The plan is quite modest and we are not overtly ambitious. We feel that we are in the right place and have a good team of people. We have made some good wins but need to make more. That is our intention.
When do you plan to initiate your retail and online operations?
The verticals, whether it is MICE or retail or associated products, we would enter gingerly step by step when we think we are ready.
You have never considered venturing into ground handling and airport catering in India?
While we are doing travel services, it is interesting that we have not got into ground handling in India or airport catering, although we had lots of opportunities to do so and people ask us if we are not late for this. The truth is all the foreign organisations that have gone into catering and ground handling have faced enormous challenges and I am not at all disappointed that we are not there at the moment in those businesses. We will watch and wait. Many who have been there have not made any money in ten years. It is a difficult market – legislations/regulations change from time to time, so it is not easy to set your long-term strategy. We have been very patient, we are interested in going into those other businesses at the right time, in the right way and at the right price. But we have been conservative and we will continue with that approach. Let us be honest, the Indian market is incredibly challenging and that does not mean that you can’t succeed but you have to be on top of the game. You certainly cannot ignore it and we have no intention of doing that. But the steps will be very measured.
You had recently acquired an OTA in UK. Can you tell us more about this acquisition and what are your future plans in the online space?
Yes, we have acquired a company called Travel Republic in which we have a majority interest. We did that for several reasons – one of them is that it is a good business that is doing well, not only in UK but Europe and Spain and we think it has the potential to do even better. But also, we are predominantly a Middle East based organisation, where the travel agency has been a traditional model, people are embracing the internet and it is starting to accelerate but it has been quite slow. With Travel Republic it was an easy way to acquire the technology to leapfrog us into that. The intention will be to take Travel Republic and roll that in the Middle East and later India.
What is dnata’s competitive advantage in the India market?
We have a good reputation which is important. We have corporates in India – Indian owned and based and subsidiaries or branch offices of global corporates. Global corporates tend to award their travel business-based on a global relationship. We are well positioned and our advantage is our standards and services.
That does not mean that we are the lowest cost, we have never pretended to be and we not positioend in the market to be like that. We also bring with us access to technology that allows corporates and businesses to manage their travel budgets and expense process claims. We have a large equity in Hogg Robinson, almost 23 per cent, and that gives us access to their technology.
What are your expansion plans in this market ? What would be the key growth areas?
The Indian market is enormous. We will monitor it, our home is Dubai that is just next door to India, there are very close historic ties, trading ties and from aviation perspective we are very close. We will continue to leverage on that and look at opportunities. We have never said that we want to be the biggest in these businessses; we have said that we want to be admired. We want to be an organisation that our employees are proud of and we also want a service level where the customer knows he will get reliable high standard service. We rebranded dnata abourt a year ago and got a great response from market.
What is your vision for dnata now ? Your plans for the future?
In the last six years dnata has increased in size four fold, we have well over 20,000 people working in 38 countries. We are the fourth largest air services provider in the world and now handle more passengers, aircraft and cargo outside of Dubai than inside the emirate. We are a global business that is why we had to change our approach. We are no longer Dubai centric. We don’t want to be the biggest but want to be the best. We don’t have any strong aspirations of expansion for the sake of expansion, but want to make sure that whatever we do we want to do well.
