Here is a short transcript of the Last Thursdays with Mr. Birendra Bdr. Basnet, Director of Buddha Air which happened on 25th November, 2010 in Dwarika’s hotel. Last Thursdays is jointly organized by us (E4N) and Samriddhi.
My family background is basically in agriculture and in that respect, I am a first generation entrepreneur (outside of agriculture). The reason behind opening Buddha Air was the creation of wealth. Fourteen years ago, when we were establishing Buddha Air, we didn’t have any equity and hence we started with debt finance. Looking back, the determination that we had fourteen years ago, was the key for the establishment of Buddha Air. Being a middle class family, opening up an airline company was a joke for everybody else. Even our own family made fun of us. They mocked, “We didn’t have five thousand rupees in our pocket but we were forwarding a project worth three hundred million rupees.” There were many factors which made it possible though, especially our strategic planning and action for the company. Some major values Buddha Air represents is diligence, integrity and honesty. We have been practicing these three values very seriously.
LESSON 1: STICK TO YOUR CORE VALUE.
Another important thing we do is respecting and facilitating our staff. We have around six hundred staff and they are our major strength. If we do not facilitate our staff and respect our team members, we cannot be profitable. There is a union in Buddha Air but it is not political. Though the union is there, we are free to take actions in the matters of human resource management and we can even fire the workers in necessary conditions. The union understands that if any of the staff makes a mistake, it will hamper the entire team. Another important thing is we have a transparent account and we pay all the taxes. Let me also tell you that I don’t know anyone from the tax office and this kind of transparency is highly valued by our staff. Let me share with you a situation, during one of our lowest time. In 2001, the aviation industry wasn’t doing great. There was an extremely unhealthy competition in aviation sector and to make matter worse, we were in dire financial state. We then called all our staff together and decided to reduce thirty percent of our salaries, just so we can sustain the company. Understanding the situation, everyone was ready to cut down on their salaries. In the end, we didn’t have to reduce the salary but the incident demonstrated our ability to handle even that type of situation. In the other hand, we have been able to justify our profits as well and have provided bonus to all our staff members.
LESSON 2: BE TRANSPARENT.
Institutionally, the organization has grown immensely and right now we also have an institutional fund. However, one of my proud moments was that when the government called me to pay 10% of all my income so far in the voluntary disclosure of income source (VDIS). Due to the transparency we maintained, I was able to reply saying if they wanted 10%, they would have to return 15% of the 25% of our income we have already paid for all those years as taxes. The main importance of transparency accountancy is that we can diversify from the legal savings we have made which is also one of our greatest achievements In my view, one of our major strength is that we focused in only one business. Organizations like IFC and World Bank has told us in 2009 that there are only five airlines companies in the world that have generated net profit and one of them is Buddha Air. And the main reason behind it is core competency. It’s been fourteen years and yet we are only focused in one part of the sector. We have also always focused on the good governance that is required in any organization. There is a huge cash flow generated in the aviation industry and right now the turnover of domestic aviation industry is around six billion. Hence there are various tempting opportunities to diversify the work but we would not want to drift from our core competencies. Strategic decisions of Buddha Air are- firstly our total focus was on our loan reduction and exposure reduction. We have paid billions of rupees of loan and what it does is that it creates a track record. We can always ask for the pre-paid loan. Every entrepreneur should be very critical about the loan and loan reduction is one of the major factors. Secondly, we never compromise on quality or safety. Every year we spend hundreds of millions of rupees to train our staff. Our pilots go to America, Bangkok etc. for simulations and our engineers go for training every year. We have a huge amount of spare parts and we have not compromised a bit in training our staff. Besides this, it is also important for the staff to feel the sense of belongingness.
LESSON 3: LOOK AFTER YOUR TEAM WELL
Buddha Air is the property of more than five hundred staff member. Another strategy is- we generally try to figure out the anticipated problem and we try to list out the solution before the problem occurs. Finally, what we pay attention to is innovation. We do not follow precedents because if we had followed precedents, Buddha Air wouldn’t have existed in the first place.
Questions & Answers with Birendra Basnet
What is corporate social responsibility in the view point of Buddha Air and what are you doing in the very issue?
For me, my CSR is my staff members because we have many staff and there are many expectations- facilities, benefits etc. So to fulfill it is our major responsibility. We have an understanding between the union and the management regarding the salries being reviewed in every two years. Last year, the salaries were increased by 40% and we have been giving several facilities like health facilities, provident fund, job security etc. So for me, before being of service to the society, first we should fulfill the expectation of our staff. In case of Nepal, entrepreneurs are not well wealthy enough to invest on CSR like Bill Gates, but let’s see if we can reach to the position where we could really invest on CSR.
What scope do you see for the management graduates of Nepal in Buddha Air and other business in Nepal?
Definitely, in case of Buddha Air, it is hundred percent Nepali managed, Nepali staffed and everyone is a Nepali. In our case we have very little staff turnover. One of our policies is- the officers are made mangers and decision makers according to their growth. We do not put new staff in higher position and we have never created a new managerial band. The entire managerial bands were from our own organization. Next thing is, we have been doing in-house trainings for those who wanted to go in the managerial band and we are even providing them academic exposure. So, definitely there is a lot of scope for those students in Buddha Air.
What are the distinctive competencies of Buddha Air to other domestic airlines of Nepal?
Motivation of our staff, their loyalty and their sense of ownership is the difference between us and other domestic Airlines. It’s very difficult for us to get tickets during the festival season but if I know someone in your organization, I can easily get those tickets. So is that a good practice? We have put all of our reservation in the software and there is first come first basis. During the festivals, there is an over demand of the tickets but we have never taken more money. And if there is black marketing from traveling agency and if anyone complains, we take action against them. But if any one has relatives or friends working in Buddha Air and if they give tickets during the festival season, for me it’s not a big issue. It’s just a human factor. During this year’s Dashain, in the Biratnagar flights, combining all the airlines operating there, about 800 passengers per day were transported. We also decreased the prices of return tickets from Biratnagar so that people who have never traveled by air could come to Kathmandu by air. These are purely human factors and it happens everywhere else in the world. Our computerized system will not allow block booking or holding even if we try. Do you ever have any negative staff in your team member, how did you handle them? If anyone shows continuous negative mentality, we fire them immediately. We don’t tolerate that and there have been instances where people have been fired.
Why didn’t you invest in twin otter sector (for flying to remote airports)?
That is a core competency. We deliver only those services in which we are specialized. So as we are best in investing in only one sector, we have been providing air service for Nepalese in cheaper rates. Are there any opportunities for aspiring entrepreneurs to invest in the aviation sector as the industry is growing bigger? There are many technologies required in our industry like ticketing, accounting etc and till now everything has been developed by Nepalese. There is no e-commerce in our industry and we are not being able to sell our ticket through credit card. So, if any one can develop the technology, there is always an opportunity. How was your experience dealing with the bureaucracy of Nepal? We have not yet faced many hurdles from the bureaucracy. I think that the service we give and the requirements of aviation which we fulfill might be the reason we have not faced so much of hurdles from the bureaucracy.
Are you thinking about operating in Himalayan region for tourism?
That type of service can be provided with single engine aircraft but we need lots of resources to operate single engine aircraft. So, if we do everything in the entire sector, than what’s for others? At present there are around 6-7 company who have taken license and are waiting to start single engine aircraft. And we wouldn’t like to shift from our core competence. At present we want to expand on an international level but not in other sectors of aviation.
What was the scariest part during your business career?
During 2001/02, where we were up to our nose in debt and we have just come into operation, I think that was the scariest part of my life. But the good part its that we were able to ride through it with our excellent team.
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