Tuesday, December 15, 2009

Dr. Dinesh A. Keskar, President, Boeing India

Dr. Dinesh A. Keskar is President of Boeing India and Vice President of Boeing International. He is responsible for leading Boeing’s efforts in pursuit of new growth and productive initiatives in India. Before joining Boeing, Dr. Keskar worked as a research associate in the Flight Dynamics and Control Division at NASA Langley Research Centre. He has served on several boards and organizations including the American Society of Engineers of Indian Origin and as the chairman of FICCI’s civil aviation committee.

Markathon: Please tell us about the various sales and marketing approaches and strategies involved in the aircraft manufacturing industry?

Dr. Keskar: The most critical marketing approach in the aircraft manufacturing industry is to ensure that the customer’s requirements are well understood. These requirements are with regard to aircraft performance characteristics such as weight, range, speed, fuel efficiency, strike capability (in the case of defence aircraft) and so on. Such a customer-centric approach may be said to be common for any industry but it assumes even more importance in the aircraft manufacturing sector. This is because aircraft manufacturing is extremely cost and time intensive which means that any error in comprehending customer requirements invariably means heavy penalties either in terms of product modifications or lost sales.

The second most important marketing approach is to appeal to a customer’s airline economics – particularly for commercial airplane customers. As a result, it is essential to get the product pricing right - not just the initial acquisition cost but also the total lifecycle cost of operating an aircraft.

Given that the typical service life of an aircraft can range from 30-40 years, the after-sales support is another key differentiator in the sales process.

Finally, aircraft sales are often accompanied by reciprocal obligations to invest a certain proportion of the sale back into the purchasing country to “offset” its purchase of the aircraft. In India too, offset obligations are incurred by an aircraft manufacturer when making a sale to government customers (Air India and the Indian Armed Forces). Boeing’s approach towards fulfilling offset requirements has been to demonstrate its commitment to partnership with India. This commitment is evident through high-technology manufacturing that Boeing has initiated with the Indian industry as well as through our technology collaborations with research institutions and government labs.

Markathon: The airline industry has been deeply affected by the recession and thus the aircraft manufacturers are also feeling the heat. What steps are you taking to counter this?

Dr. Keskar: The aerospace industry is a cyclical industry. In times of downturn, we continue to focus our efforts on both customers and suppliers to drive costs down at various stages of the value chain. To do so, we leverage tools such as Lean+ and Six Sigma to drive operational efficiencies. We also work with the customer in areas such as route optimization, flight scheduling and crew management so as to help them make adjustments that optimize yields in times of reduced demand. Developing a strong and long term relationship with the customer enables us to serve as their trusted partner to help them consolidate and utilize their resources effectively.

Markathon: What are the important characteristics that should be analyzed, to find out the market potential for airline manufacturer like you?

Dr. Keskar: At a macroeconomic level, the demand for both commercial aircrafts and military products is directly correlated to a country’s GDP. To gain a deeper understanding of the drivers of market potential, one has to start by examining the customer’s motivation to purchase.

In the commercial airline business, the objectives for air travel could be any of the following: tourism, conduct of business, Visit Friends and Relatives (VFR) or connectivity to remote parts where travel by other modes of transport is difficult. One of the most important driving factors that influence these objectives is disposable income. The quality and network of associated aviation infrastructure such as airports and Air Traffic Control (ATC) services is another key driver. A proper fuel policy to help reduce the cost to fly is another important driver. Finally, air travel is driven by the relative availability of air services as compared to other modes of transport. This could be either in terms of low ticket prices or the number of available flight options to the customer. By analyzing these and many other drivers for India, we estimate a demand for 1000 commercial aircraft valued at $100 billion over the next 20 years.

From a defence standpoint, a country’s motivation to purchase is driven by its need to safeguard its economic interests, protect its borders and combat terrorism. The Indian government has embarked on an ambitious fleet modernization drive, positioning India among the top 10 military spenders in the world today. Boeing estimates an addressable market potential of $31 billion in Indian defence over the coming 10 years.

Markathon: How is Boeing planning to take on competition in the Indian market by other players especially Airbus?

Dr. Keskar: The Boeing Company has focused on continuous innovation throughout the history of its evolution. The 787 Dreamliner will be the most advanced and efficient commercial airplane in its class and will set new standards for environmental performance and passenger comfort. Its exceptional performance will come from improvements in engine technology, aerodynamics, materials and systems. It comprises over 50% composites, an industry first, that makes it 15% more fuel efficient than previous generation aircraft.

Another discriminator for Boeing is that our product strategy is based on a point to point transportation paradigm. Boeing believes that passengers would want to fly from their port of origin directly to their end destination with no intermediate stops. The 777 aircraft transformed inter-continental travel by offering non-stop travel to the US. Similarly, the 787-8 and 787-9 variants offer a range of over 15,000 kms non-stop. Point to point travel reduces overall travel time as well as the likelihood of lost baggage and missed connecting flights.

Markathon: In India, Boeing is mainly focusing on the defence and the government carriers and not on the private players. What are your opinions on this?

Dr. Keskar: Boeing is committed to the growth of the entire aerospace market. We focus on both private and government carriers in civil aviation and defence. The close relationship between Boeing and India goes back over 60 years when India entered the jet age on the wings of Boeing commercial jetliners. Boeing jets continue to be the mainstay of the country’s domestic and intercontinental commercial fleets not only through the national carrier, Air India but also through established private players like Jet Airways and SpiceJet. As in other parts of the world, the efficient 737 aircraft has become India’s preferred choice for domestic and low cost flights. Jet Airways has one of the youngest aircraft fleet in the world and is dominated by Boeing aircrafts such as the 737 and 777. In addition, Jet Airways has also placed orders for the 787 Dreamliner.

New opportunities for partnership with India have also emerged in the area of defence. In January 2009, the Government of India selected the P-8I to fulfil its long-range maritime reconnaissance and anti-submarine requirements. Boeing has a diverse portfolio of products on offer to India such as the combat-proven F/A 18 Super Hornet multi-role strike fighter, the C-17 Globemaster strategic-lift cargo aircraft, the Harpoon missile, the CH-47F heavy-lift Chinook helicopters and the AH-64-D Apache attack helicopters. We are also a leading provider of aerospace support systems and systems that enable Network-Centric Operations.

Markathon: How do you see India’s potential as R&D and manufacturing hub for Boeing?

Dr. Keskar: India’s technological prowess through the evolution of its 5000 year old civilization is world renowned. With over 380 universities, 11,200 colleges and 1,500 research institutions, India has the second largest pool of scientists and engineers in the world. Boeing’s belief in India’s potential for technology collaboration was reaffirmed when we opened our Research and Technology centre in Bengaluru earlier this year. This is only our third such centre anywhere in the globe outside of the US and will serve as a nodal point to further collaborate and grow our relationships with research institutes in India – in the areas of R&D, Engineering and IT.

The Indian Institute of Science (IISc) has been established as only one of the eight Boeing Strategic Universities worldwide and only one of the two internationally. In addition, several collaborative research projects are being undertaken with NAL, HAL, IITs and other leading public and private sector organizations in India. These projects span a wide range of aerospace technology – from Computational Fluid Dynamics, Radio Frequency Identification (RFID) and computational electromagnetism to composites, manufacturing processes, high strength alloys and smart structures. We have formed an alliance with industry and academia to form an Aerospace Network Research Consortium (ANRC) to collaborate on next-generation wireless and network

Boeing is also undertaking several high-technology manufacturing projects with Indian industry. These include both commercial as well as defence related work packages. Flight critical parts such as the floor beams and flaperons will be manufactured by Indian companies for Boeing aircraft sold around the world. These components incorporate some of the latest technologies involving hybrid composites and are being used first time anywhere in the world.

Another good example of the growth of the ecosystem is the recently started facility in Belgaum. Magellan and Quest together started a much needed sheet metal manufacturing facility and a precision machining facility. This is one of a kind facility and we believe is another important milestone in the growth of the aerospace ecosystem in India

Markathon: With so many Indian companies planning to enter in the aero component market, how it is going to help Boeing?

Dr. Keskar: Boeing follows a collaborative model in its supply chain. Boeing aircraft comprise components manufactured by suppliers from all over the world, including India. Boeing is strategically working with its Tier 1 partners to grow the network of Small and Medium Enterprises in India. The objective is to enhance collaboration that will lead to development of a mature aerospace ecosystem in India. Such an approach will not only increase number of jobs and enhance India’s industrial output but will also make Indian manufacturing capabilities available for the benefit of the global aerospace supply chain.

Markathon: Finally, we would like to hear about the scope of management graduates in the aircraft manufacturing industry.

Dr. Keskar: One of the most important constituents of any industry ecosystem is the presence of a large and skilled technical and managerial workforce. This is especially a critical constituent for our sector given the relatively nascent stage that the Indian aerospace ecosystem is in. This rapidly growing sector offers tremendous opportunities for management graduates across various functional disciplines. Operational experts can help incorporate quality and reliability best practices into aerospace manufacturing. Supply chain and logistics specialists are required to help Indian companies get better integrated into the global supply chain. Business development professionals will help highlight awareness of Indian aerospace capabilities across the globe. And finally, finance specialists will be crucial to identify innovative business models to drive investments in Indian aerospace as well as to ensure that products delivered are in line with overall budgetary estimates.

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