I have digressed considerably in my last two Posts and now am reverting to my stint with Kuwait Airways. Within a short period of time, I became aware that on reflection, there was little or no challenge in my job. I found that our stations in the USA and Canada were concentrating primarily on generating traffic to India and Pakistan. In the process, they kept asking for lower fares to compete with other 6th freedom airlines for this market segment.
It was obvious to me that we had a target which was not difficult to achieve if my team concentrated solely on the Indian market. At the same time, we were confronted with a bottleneck at Kuwait. A large number of Regions competed with each other in trying to get seats on the Kuwait - India flights. There was the U.K. (a predominant market), Europe to a lesser extent and then Kuwait itself, in addition to Iraq and other Middle Eastern countries.
There was another danger in concentrating on the Indian market, in that it was very price sensitive and with a limited number of seats beyond Kuwait at our disposal, I did not want to lower our yields, which would require greater efforts in achieving our overall target. In fact, my objective was to increase our yields.
With the limitation of available capacity beyond Kuwait, all we needed was an average of “x” number of Indian passengers weekly and a series of meetings with Indian agents revealed that we could hope to get these without unduly dropping our price below that of Air-India. At the same time, selling India from California or Texas meant sharing revenues with domestic carriers with the resultant lower net yield.
I informed our Sales Managers in Los Angeles, Chicago and Houston to direct their efforts to generating traffic to Yemen, Iraq and the Gulf States. There was and is a large concentration of Yemenis and Iraqis settled in the western states and the midwest. With a good marketing strategy we should be able to get a share of this market. The other stations were told to develop close relations with a few selected Indian agents and let them provide us with the requisite number of passengers to meet the “x” number and use their time more profitably to sell the Gulf countries.
This strategy paid off quite well. We met and exceeded our targets each year and I spent quite some time in renewing my relations with Indian agents and developing new relations with agents handling the Pakistani market. In addition, I traveled all over North America studying the other ethnic markets, such as the Iraqi, Yemeni and Iranian.
Since Kuwait Airways flights operated all of its flights via London, we had considerable spare capacity across the Atlantic. It was not an easy job to fill this capacity firstly because we did not have a daily flight and we did not serve liquor. However, we did develop good contacts with a few Consolidators who handled this market segment and managed to fill some seats. In the process, I renewed contact with a woman whom I had met way back in 1962 when I was a bachelor.
She was then an air hostess with American Airlines who had met my roommate Nichi (B.L. Nichani) then a Purser with Air-India on one of his flights. Nichi had invited her and another AA hostess to come and stay with us. These two women showed up one day and stayed a few days with us. I caught up with one of them 22 years later at which time, she had established herself as a Consolidator handling traffic to Europe.
In addition to traditional markets, we had a wholly captive market among Kuwaiti students who attended American Universities and “obtained” their MBA’s. Our Sales office in Washington, DC would receive requests from the Embassy to issue their tickets once they graduated and they were than re-settled back home in various jobs in Government or in organizations like Kuwait Airways.
I was very intrigued to learn that we had two Accounting Staff whose entire working day was spent in trying to reconcile the Invoices sent to the Embassy with the latter’s payments. We never seemed to get a closure. On the one hand, we received individual requests for tickets and on the other, payment was made in arbitrary amounts without reference either to the Invoice/ticket numbers or the names of the passengers. This payment was made by the Embassy directly to our Sales Office in Washington, DC which then deposited the checks into their local Bank.
On one of my visits to Kuwait, I raised the question of computerizing our accounts, but was rejected at every step. Kuwait Airways’ accounting system left me astounded. They had their own “method of madness” when it came to accounting which made absolutely no sense.
The New York office had two Bank accounts. There was the “Chairman’s account” which we, as an outstation, were not allowed to touch or even look at, except to deposit all receivables into this account. Head Office and our bank - Irving Trust - dealt directly with each other and the Accounts Manager was kept out of the picture.
Then, there was the Manager’s account from which we withdrew monies to pay wages and all Invoices. This account was replenished from time to time by Head Office with instructions issued directly to Irving Trust.
Each of the Outstations had one account where they deposited all receivables. They were not allowed to withdraw any funds from this account. All monies received in this account were wire transferred by the local Bank, e.g. Riggs in Washington, DC, directly into the Chairman’s account at Irving Trust.
On the first business day of each month, Head Office sent telexes (copied to the Accounts Manager) to each Bank in New York and every Outstation in USA and Canada and asked for the balance in each account. Each Bank then replied directly with a copy to the Accounts Manager.
During my entire tenure with KU in the USA, this system appeared to work and I had no cause to raise any questions, except in one incident which had completely slipped my mind, but reared its ugly head about one year after I had left KU. I was, at that time, consulting with PanAm and will speak about it when I post this period of my life.
Meanwhile, the North American region was meeting and, at times, exceeding its target and initially, I was well received in Kuwait on my visits to the Head Office. However, by 1984 (about 4 years after joining KU), I got the impression that “all was not well”. When I joined KU, most young Kuwaitis appeared quite happy to let the expatriate do all the work and they relaxed in their air-conditioned offices during working hours at H.O.
However, this was bound to change when more and more of these youths received advanced education. Many of them were “studying” in the USA and obtaining MBAs. While most of them enjoyed their relaxed time at KU, the few more ambitious ones were getting impatient to be gainfully employed.
I will comment on this change in the atmosphere in my next Post.
Before I left Air-India, Peter Mahta had retired as RD - North America on March 31, 1980. As expected, I had received a number of requests from senior AI executives to be posted as Peter’s replacement. One of them was the then Deputy Commercial Director and he pushed very hard for this posting. I told him that he was in line to become C.D. once I decided to relinquish this part of my job (I was, at that time holding two portfolios - Dy. M.D. and C.D.)
He told me that his priority was to give his children the opportunity of an education in the USA. He indicated quite categorically that he was not interested in staying in India any longer and was willing to give up the chance of further advancement.
I was, therefore, extremely surprised when he went back to Bombay to take over as C.D., when Malcolm Barretto retired. There were certain “murmurs” which left me rather perturbed. I felt that this gentleman’s decision to return to India had some underlying reason and this was confirmed to me after I spoke with a particular person in the U.K.
Unfortunately for him, his stint as C.D. did not last very long and he was transferred as Planning Director. This move again left me quite perplexed and unhappy with the “murmurs” that I heard; the manner in which it took place and the involvement of his replacement in the lateral transfer. Some insiders in AI very confidentially told me that this gentleman had been “stabbed in the back” by his replacement.
The entire episode left a very bad taste in the mouth.
