A visionary who has relentlessly pursued and fulfilled his dream of building a premier product development company to cater to global aviation, V K Mathews, Founder and Executive Chairman, IBS SOftware has been a leader in his own right. Apart from being a specialist in the aviation business, he has revolutionised IT business in India with IBS Software and put Kerala on the IT map of the world. In this candid interview, he offers his invaluable insights on the status of the Civil Aviation Industry post-COVID, Air India’s disinvestment process and how technology will be a tipping point for driving business in the coming future.
The coronavirus crisis has necessitated the need for digital transformation and reliance on technology like never before. How does IBS plan to keep up with the subsequent demand and expectations of the people?
Post COVID, there will be new opportunities in every sector, mostly travel, and companies should be agile enough to grab those opportunities. The companies that can survive the economic downturn will grow faster than what they were in the last ten years. For all the profit areas of the aviation industry and mostly cargo, we provide best-in-class Next Gen technology platforms. Many of the airlines continue using legacy technology; while some of them use in-house technology; some still depend upon very old technology. IBS has the latest, next generation technology platforms, be it cargo, passenger, operations, loyalty, hospitality etc. We have five technology platforms and one of the things that we can witness happening is that airlines will rush to replace their legacy systems with modern technology. We will see significant demand for newer platforms, newer tech systems and our expectation is that, we will be able to play a very contributive role.
For cargo, our platform iCargo is the leading tech platform for the world which takes care of the entire supply chain and looks into operations, warehouse management, airport handling etc.
Be it American airlines or Japanese or Korean Airways, it caters to a global clientele. So the need for us to provide this latest generation platforms for airlines is going to increase.
Similarly on the passenger side, there will be significant changes. Customer loyalty will be the single biggest value for airlines going forward and we have probably the best customer loyalty management, customer relationship management platform and we can see its adoption accelerating in the coming days.
You started off on your endeavour to redefine business with just 55 employees. How did you foresee or envision the path ahead when you started off?
I started IBS 20 years back and at that point in time, the aviation and travel industry (which was my background) was using very old and inadequate technology that were built or developed over the last 40 years. In the 90s, the technology revolution took place. Newer technologies, newer capabilities emerged but the aviation industry could not take advantage of it because it was using very old technology and replacement was difficult and not an option either. So because of my understanding of the aviation industry and the technology deployment there, I thought it will be a great opportunity and a need for the industry to have Next Generation platforms and that meant a future built using newer technologies. That was the vision and we maintained it and clearly we were able to plug the gap. That’s how we started.
Now we have reached another stage, which is IBS 2.0 post-COVID19. The vision is to redefine the future of travel through technology innovation & revolution.
A customer should be able to come directly to the airlines and get his/her services from the airline directly, for example, ability to book freight, monitor its movement, get the best deals, and the airlines should be able to ensure that whatever service level the customer is looking for, it can be made available.
In pre-Covid days, 55% of cargo capacity wouldgo to waste every day; and vacant space is a lost opportunity for iCargo. So there is a lot of opportunity for one to improve through technology utilisation of space. So going forward, the role of IBS is to redefine the future of travel transportation through tech innovation.
Recently, you had announced a partnership with Webcargo that empowers air carriers to become fully digital. Can we see more such projects and partnerships in digital evolution in the near future?
We will definitely look at other partners for opportunities to collaborate, whereby the technology capability for the industry is more.
We will look at several others with the objective of helping airlines and stakeholders of the industry to improve their revenue and market share, reduce their cost of operations and improve their capacity utilisation.
The disinvestment process of Air India has taken many turns and now it looks more uncertain given the current scheme of things. As an aviation expert and as somebody who has been associated with the Civil Aviation industry for so long, what are your thoughts on the same?
The privatisation of Air India is absolutely essential and they should have done it long time back. The reason being- it is not the government’s business to be in business. They will never be able to compete or be commercially flexible as they don’t have operational agility, so it cannot do.
Air India has amassed around 50-70,000 crores of debt and ongoing, so it should be privatised. Of course, COVID has made it difficult and the last attempt failed because the government put forth very strong conditions. So, in order to make Air India privatisation successful, they have to make the conditions flexible for the buyer/acquirer.
If you look at Indian civil aviation, post Liberalisation, in phase one (1990-2005), every airlines that started off, perished. And in the second phase (2005-2020), some of them have been successful but if you really look at the cumulative profit margin of the airlines, it is below zero. They don’t make any money, they lose money. Even today, every year, the total profit of the airlines is below zero.
It is thus, a high-potential but a very cost-sensitive market. Government should make the terms such that the buyer has a chance of success. The biggest problem is the culture of the airlines.
Air India has too many employees, and it is the problem of the system. Unless they make the terms easy, the only choice they will have is to liquidate it. Or else the complete loss will be borne by the taxpayers.
This is an abridged version of the interview. For the full interview, click here.