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January 2006

Rs 60

Tourism and Civil Aviation has boomed in 2005.What is in store for 2006?

Renuka Chowdhury and Praful Patel at Delhi’s Lodhi Garden

THE GULF WAR ATR REVOLUTION

IATA DIARY

TOURISM REVIEW PL US ALL OUR REGUL AR FEATURES

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EDITOR’S NOTE

A few stray thoughts

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hat a marvellous year it has been for tourism and aviation. Business is really booming. You have had double-digit growth and there seems no end to the excitement and euphoria. Ticket prices are falling each week and one can travel to London for Rs 10,000 (It is another matter, though, that a trip to Kochi can put you back by close to Rs 25,000.). You have multiple choices and the travelling bloke is truly the king.

It’s been an exciting year for tourism as well.

Domestic tourism has finally taken off and the number of overseas visitors has grown by close to 15 per cent. We continue to be one of the top five destinations worldwide and Incredible India continues to fascinate travellers from across the board. So what next?

I thought it might be a good idea to draw up a checklist of things we ought to do in 2006: ATC modernisation: More aircraft will come in; more companies will launch business this year. But why burn crores worth of fuel waiting to land or take off? The average delay is close to 30 minutes for most flights. Could we have a time-bound modernisation plan in place?

Civil aviation policy: Can you please finalise the policy? We have been promised the blueprint ad nauseam. There is a desperate need for a clear-cut policy on ground handling/MROs and a host of other issues.

Standards: If the boom is anything to go by, there is going to be a huge shortage of pilots, engineers and cabin crew staff. Could we have a road map on how to bridge the gap? Also, could some standards be evolved for all these training schools that have mushroomed all over the country?

Overhauling the DGCA: This regulatory arm of

CRUISING HEIGHTS January 2006

civil aviation needs a complete overhaul. The sooner, the better.

A school for guides: Incredible India needs plenty of quality guides and not just the ‘Raju Guide’ variety.

Is it too much to expect qualified, licensed professional guides across Incredible India who take one exam and qualify in a nationwide examination?

A policy for smaller hotels: We cry hoarse each year for more rooms in the big metros. But nothing gets done because of the land price. Could we change land use in some areas, like residential colonies, to bring in smaller hotels and inns? Where will the 1,00,000 rooms for the Commonwealth Games come from?

A road map for the Commonwealth Games: Till now everything about this is in the grey area. Could we have a clear-cut structure that will clearly define responsibility and tell us the way ahead?

Less hypocritical: Could we be less hypocritical and charge the same from all visitors to our monuments and could we pick a dozen for upgrading facilities around the park, so to speak.

One of the great things about 2005 was that everything was booming—the economy, the GDP and there was a general feeling of well being. Worldwide, as the oil prices surge, there is sluggishness and a general slowdown of the economy. Whether we are moving into a full-fledged recession is a matter of debate as yet. But the point is, every year won’t be 2005. And growth figures of 25 per cent and 15 per cent will sound unreal. Perhaps our real test lies in preparing for an era when the figures will be more conservative and closer to five-six per cent. The good news is that, that day seems some distance away.

The wise will use the interregnum to prepare for that date.

Season’s greetings.

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Off the cuff

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Fogged Out The year 2006 has begun with a bang. It’s been a newsy start to civil aviation. The airport privatisation fracas, the Jet Airways-Air Sahara deal, the fog and the AI’s tyre burst at San Francisco airport have all contributed to making sure that the ministry is bang on Page One day after day after day.

The fog really is an old story. If you look at the papers of last year or the year before (or for that news clips of the past two years), the story is really old wine in a new bottle. It’s the same woes, the same problems of large numbers in the terminal, harassed passengers and harried staff that make for the sublime and the ridiculous.

This time an added element is the great flyover that’s coming up on the National Highway close to the international airport. That’s another cause for huge traffic jams. But really you can’t blame the airlines or the airport staff for this mess. Maybe the highway authorities could learn a lesson or two from Sreedharan and his Metro ethics. Anyway, that’s a different story altogether.

But the hot story really is the airport privatisation spectacle. It has all the elements of a perfect potboiler: corporate rivalry, politics, committees and super committees, groups of ministers with dollops of prime ministerial intervention and advice. No wonder the newspapers (and TV channels) have gone to town on the story.

In a way it is also reflective of the state of affairs of our decision making process. It is laboured, opaque and far from being time bound. Maybe there are some lessons to be learnt from the present process. The fact of the matter—the whole thing has got fogged.

The EGoM is perhaps the equivalent of a CAT III that will allow a safe and soft landing!

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contents PLENTY TO SMILE ABOUT

p24

Renuka Chowdhury and Praful Patel preside over two of India’s most happening departments—Tourism and Civil Aviation. In fact, the most happening ones. With growth rates pegged at 15 per cent and 25 per cent, respectively, the sky is literally the limit for them in 2006. Exclusive interviews with the two of them.

WHERE’S MY SLICE OF THE PIE? p30 It’s perhaps the most lucrative sector in aviation business—flying planeloads of India to the Gulf and onwards to Australia and the Americas and bringing planeloads back on vacation. It’s a bitter, fratricidal war for market share that’s fought at many levels.

R. Krishnan reports.

CRUISING HEIGHTS January 2006

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ARTICLES NEWS VIEWS EDITS INTERVIEWS CLIPPINGS TRAVEL & TOURISM PROFILES NEWS DIGEST

IATA DIARY p18 Sudipt Arora spent a few days in Geneva chatting with IATA boss Giovanni Bisignani and other top officials. A special report.

CRUISING HEIGHTS K. SRINIVASAN

OFF THE RECORD p6 What was Boeing man Thomas Pickering doing with Ratan Tata?

Editor

R. KRISHNAN Consulting Editor

ANAMIKA VERMA Editorial Coordinator

THE ATR REVOLUTION p10

DUSHYANT PARASHAR

From a no-no aircraft, the turboprop ATR has become a best-seller in the Indian market. A look at the remarkable turnaround. Southern dispatches.

Creative Director

BHART BHARDWAJ Art Director

RAJESH KUMAR BHOLA Designer

RAJIV KUMAR SINGH

NEWS DIGEST p13 Boeing and Airbus battle it out to get the final numbers right?

Tourism Digest

p40

Gays head for Cape Town

Aviation Digest

Last page

p48

Why is Rahul Dravid holding Sahara’s airplane?

p22 Sunglasses in the Dreamliner

Gen. Manager (Admn.)

Editorial & Marketing office: D-11, Nizamuddin (East) New Delhi-110 014 Tel.: 41825251/50, Fax: 41825250 All information in CRUISING HEIGHTS is derived from sources we consider reliable. It is passed on to our readers without any responsibility on our part.

Opinions/views expressed by third parties in abstract or in interviews are not necessarily shared by us. Material appearing in the magazine cannot be reproduced in whole or in part(s) without prior permission. The publisher assumes no responsibility for material lost or damaged in transit. The publisher reserves the right to refuse, withdraw or otherwise deal with all advertisements without explanation. All advertisements must comply with the Indian Advertisements Code. The publisher will not be liable for any loss caused by any delay in publication, error or failure of advertisement to appear.

Published and edited by K. Srinivasan for and on behalf of Newsline Publications Pvt Ltd. D-11 (basement), Nizamuddin East, New Delhi-110 014 and printed by Bhart Bhardwaj at Kaveri Print Process, 114, Patparganj Industrial Area, Delhi.

Cover Photograph by Ashu Sharma

CRUISING HEIGHTS January 2006

Vol 1 No 1

3

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PERISCOPE

Plan hi Plan “In

March or thereabouts we will throw open the expansion and modernisation of Calcutta and Madras airports to public-private partnerships.”

DR MANMOHAN SINGH at the ASEAN summit in Kuala Lumpur

No big deal “Clearly

if someone is intent on causing personal injury, a prohibition on small scissors and tools will not stop them. It’s not about scissors; it's about bombs.”

LETTERS TO EDITOR

Although I am in no way connected with the aviation industry—it is my hobby—I avidly read your magazine for the info it provides on the industry. Your cover story was simply mind-boggling.

But before, I must congratulate the photographer for the superb cover photograph of Vijay Mallya and the photograph creating an illusion of two airplanes colliding, in the story. The info that B-2 stealth bomber never lands in any country other than its designated base at Montana came to me as a revelation. Only you can provide such interesting and in-depth coverage.

Himanshu Parikh, Ahmedabad

You cover picture of Vijay Mallya was delectable, to say the least. It conveys everything—power, passion, arrogance and wealth. What a shot of the Kingfisher boss!

Sangeeta Deshpande, Pune

KIP HAWLEY Assistant Secretary for Transportation Security, On US decision to let scissors back on planes

Shedding Fat “[The

airline] That wants to move forward has to constantly seek opportunities to become leaner, more efficient and more productive.”

WOLFGANG MAYRHUBER Chief Executive, Lufthansa Speaking about his profit goal

I read with great interest the story on the evolution of Indian. Being a frequent flyer to all parts of the country, I managed to squeeze in my schedule a flight to Lucknow aboard the new A319. While the new look was refreshing, the service was not up to my expectations. It was the same old one. In other words, it was the same old food in new silverware. Indian really needs to spruce itself up on this score if it wants to beat the youngsters.

Avinash Kapoor, Jaipur I am an avid admirer of Vijaypat Singhania and it felt good to read about him in the magazine. But, I wish you had given more detailed account of the recordbreaking achievement. The accompanying photograph was simply out of the world.

Soman Nair, Thiruvananthapuram

All correspondence may be addressed to Editor, D-11, Nizamuddin East (basement) New Delhi - 110 014 OR mail at newslinepublications@rediffmail.com

4

Crowned again “I

am very honoured to have been endorsed once more. The 85 votes in favour show there is broad support for the guidelines and management of the Organisation. It would be worrisome if we were all in agreement.”

FRANCESCO FRANGIALLI On being re-elected to the post of WTO Secretary-General

Fly or else…

“All

carriers must train their pilots to use the newly installed Category III B instrument landing system at Indira Gandhi International airport [Delhi]… If they want to fly, they better get ready.”

AJAY PRASAD Civil Aviation Secretary’s blunt message to all airlines to train some of their pilots to operate in near-blind fog conditions

CRUISING HEIGHTS January 2006

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COLD STATISTICS

Incredible India

Into the top 20! z z z z z

z

Beijing Capital International Airport (BCIA) has received its 40 millionth passenger, thus enabling the airport to be listed in the top 20 airports in the world.

BCIA is China’s Number One gateway, normally termed as the window to the outside world.

Fifty-three airlines operate from this airport—nine domestic and 41 foreign ones.

The airport had received its 30 millionth passenger in November 2004 and the number kept increasing since early 2005, with average growth rate reaching 16 per cent.

The airport has reported exceptional results amid a major transformation and expansion. In the first half of 2005, the airport reported a 17.3 per cent rise in net profit, to almost US $50 million, or a 13.7 per cent rise in revenue.

China’s total aviation turnover reached 25.6 billion metric ton kilometres in 2005, with 139 million passengers transported.

Growth in tourism: 14.5 per cent Growth in foreign exchange earnings: 20 per cent Number of tourist arrivals: 3.35 million Earnings: Rs 22,958 crore Schemes launched: Atithi Devo Bhava, Priyadarshini and rural tourism Ranking (By WTTC): Amongst the top five hot spots of the world

LOOKING GLASS Dad, I am going off to Bangalore for the New Year blast...

Please take your woollens with you, your flight might get diverted to Jaipur...

Hey, you came back in two days... Didn’t you enjoy Bangalore New Year blast...

Grr... I was stuck at Dhaula Kuan...

Point of order 9 “Unshackle the AAI... They have the expertise to develop airports whereas (some of the bidders in the restructuring of Delhi, Mumbai airports) have experience in building shopping malls and some others in petrol pumps.”

9 “Declare that you will not shortlist those bidders who do not have any of the top ten airport developers of the world as their consortium partners.”

9 “Money will come on its own if process is carried in a credible and transparent manner.”

CPM MP MOHD SALIM is a vociferous speaker on all issues of airport privatisation.

There was plenty of sound and fury when he spoke in the Rajya Sabha in the just concluded winter session on all aspects of the issue.

CRUISING HEIGHTS January 2006

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OFF THE RECORD

Airborne Tales

FIRING THE

DEAL

F

INALLY WHERE did the 2,500 crore mega deal between Air Sahara and Jet Airways fire?

After all the two heavyweights—Naresh Goyal and Subroto Roy—had been talking to each other for quite sometime, but the deal really hadn’t moved forward to day. It finally happened, insiders state, when Saharashri, as the whole Sahara empire addresses Subroto Roy, and Naresh Goyal met in Mumbai, twice during the course of one week—at the time Amitabh Bachchan was in Lilawati hospital. Roy, a personal friend of the star, camped in the city and used the opportunity to talk to Naresh and see if they could bridge the gap. It is believed that the deal was finally clinched in the second meeting. But what’s the idea of

6

buying Sahara. Simple, straightaway you get a cool 25 airplanes that are the same as yours—Boeing 700 and 800.

Next, you have a well-developed hub in Hyderabad, the excellent slots and overseas routes and slots as well.

However, sources say that the issue is far from settlement, with many elements of the deal still waiting to be resolved.

Interestingly, one of the stories doing the rounds—off the record, of course—is that Goyal has been mighty upset with the company’s CEO and the top brass for the manner in which they were running Jet. He saw a sense of drift and wanted to correct it at the soonest. With a huge purchase order already announced, Jet’s valuation must just be right for Naresh to divest some more stock and get all the airplanes he can.

IN MIDDLE December, former US Ambassador to India, Thomas Pickering, who is a big-time roving ambassador with Boeing, made a whistle-stop trip to Delhi and Mumbai. Of course, in keeping with his state, Pickering was on his BBJ (Boeing Business Jet). There was one surprise guest who travelled with him on the Delhi-Mumbai leg of the tour: Ratan Tata. Now what did the two discuss? Tata’s aviation ambitions? Tata’s desire to purchase a BBJ? Or just to understand the direction Indo-US relations were taking?

Those in the know state that none of this was on Ratan’s mind. In fact he made a strong pitch for him to look at Tata InfoTech’s strength and consider it for future projects. Smart guy, never misses an opportunity to sell the House of Tata.

Bzz…zzz.zzz

Bzz…zzz.zzz

That Mantriji Praful Patel was to be on the flight with Vijay Mallya, Katrina Kaif and several others to watch the first Test at Lahore.

Unfortunately, Sreedharan’s report and the EGoM on the airport imbroglio forced him to cancel his plans.

Now if all goes well, he may go for one of the One-Dayers.

That the Heathrow airport authority has written a letter to Air India on the country’s national carrier’s performance. That the indices cover a wide range of activities at the airport.

Reports are that the communication is far from flattering.

CRUISING HEIGHTS January 2006

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Grand show Caught in Kerala NOW WHAT the hell was Lalit Modi doing in Thiruvananthapuram? The President of the Rajasthan Cricket Association and the Vice President of the Board of Control for Cricket in India (BCCI) was caught on the tarmac in the Kerala capital, with the ATC declining to let him proceed to Mumbai. The poor man didn’t know what had hit him. After all he was only there to refuel. So he called pal Praful Patel and requested him to bail him out. Promptly went the message to the DGCA, which then relayed instructions onwards to let Modi take off. Arre bhai, Modi saab theek se manifest kyun nahin file karte?

To get two of them together is such a difficult task that getting four of them on a single platform requires some skill and doing. Anita Khurana sure must be delighted. Clearly, she is a special person considering the number of senior officials, past and present, who turned up for her son’s wedding. And if that wasn’t enough, Minister for Civil Aviation Praful Patel chose to stay back in the Capital a few hours to bless the couple before heading back to Mumbai for the New Year. Coming all the way from Jaipur was former IA CMD Sunil Arora. Anita had become a director during his tenure and he had backed her efforts to turn around the cargo division into a real profit centre for the airline. Patel spent a long time chatting with the airline’s present CMD Sushma Chawla and the former CMD Raghunandan Prasad. Also

Bzz…zzz.zzz

spotted were former Additional Secretary in the Civil Aviation Ministry V. Subramaniam, Commercial Director Anil Goel, Deputy Managing Director Manet Paes and a host of others. As one of them remarked, “It was an informal delightful December evening, relaxed, warm and fuzzy.” Touche.

Bzz…zzz.zzz

That Tourism Minister Renuka Chowdhury has returned from a hugely successful tour of Egypt and wants the Archaeological Survey of India to pick a leaf out of the Egyptian authorities’ work ethics. And the magical manner in which they have marketed their heritage sites.

The problem is Culture and Tourism don’t go together. Will Jaipal Reddy, a fellow Andhrite, listen?

That the Ministry of Civil Aviation will have two new officers—one Joint Secretary and one Personal Secretary for Mantriji in the next few weeks. Shortlisting and meeting the hopefuls is on in full swing. Meanwhile, there is nothing happening at Tourism. Rajeev Talwar had packed his bags at one point in time. But he seems to be staying put for the moment.

CRUISING HEIGHTS January 2006

That there are some issues about the proposed Member (Finance) at the Airports Authority and it may still be some time before the file gets the Ministry’s okay.

Issues at stake?

Naturally, vigilance matters. Batting has already begun for and against the candidate.

At the moment both sides are level.

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OFF THE RECORD

New Year in Gondia

Where is the moolah?

SAHARASHRI SUBROTO ROY’s present Boeing Business Jet (BBJ)’s lease expires soon. To offset the eventuality of having to fly by commercial airplanes, he has acquired a brand new BBJ, for which part of the money has been paid. Where will the rest of the moolah come from is the real question. Apparently, $18 million has been tied up through Srei Limited, a Kolkata-based lease and finance company. But the rest of the $22 million is still awaited by Boeing before it can deliver the BBJ. The original lease was through Gecas, who had backed out at the last moment.

Last heard, the interiors of the new jet had been ordered. It has a living room, live TV, Internet on demand, air map, entertainment and what have you.

Spare a thought THE BRAND new convention centre at Hyderabad, where the Pravasi Bharatiya Divas was held, has had every Tourism Minister and Chief Minister salivating. In fact, each one of them now wants a replica of this showpiece centre to be constructed in their state capital. But spare a thought for Chandrababu Naidu, who initiated the project and was determined to make Andhra Pradesh a tourist hub. One is sure, Renuka Chowdhury and Andhra Pradesh’s Tourism Minister Geeta Reddy will vociferously disagree.

Boardroom stories IT WAS one of the shortest and sweetest meetings possible in the history of Indian Airlines. The board met and ratified the accounts in less than sixty seconds and that was it. The airline had made profits and the new board members had made a sugary start to the lien in the top management structure of the national carrier. It was a different ball game at Air India where CMD V. Thulasidas, after waiting for a long, long time held the first meeting of the reconstituted board. The only leave of absence was Commercial Director V.K. Verma. There are reports that Verma is likely to have his cleared before the end of January. In that case he should be part of the next board meeting.

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CRUISING HEIGHTS January 2006

PRAFUL PATEL loves spending time in his gaon. That’s Gondia, an hour and a half from Nagpur in the heart of Vidarbha, right amongst the adivasis. That’s where he spends each new year. This year was no different. But when he is there he spends much time tending to his favourite project—the upgradation of Gondia’s tiny airport and the upscaling of its facilities. Year 2006 could well be the year when the IGUA (Indira Gandhi Uran Academy)–two finally takes off at Gondia. But this one is likely to be more modern and comprehensive in its training of the huge number of pilots that we need. But he did summon one person to discuss issues in detail— Airports Authority Chairman V. Ramalingam. The good man spent time at the airport understanding what the Mantriji wanted done immediately. Also, he got a chance to say Happy New Year personally to Praful. Now how many officers will be so lucky?

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SOUTHERN DISPTACHES

ATR is back in fashion

The lowly turboprop ATR is back in fashion.

Every domestic player wants to use the airplane and there has been a huge revival in the small route, thanks to this airplane.

A special report.

N

EW-AGE carriers are driving change in domestic aviation business. These have helped to demystify flying with dynamic fares and easier access, and, more recently, these are responsible for making small planes fashionable.

For instance, who would have thought, until recently, that operating 50-seater turboprop planes could be a commercially viable option in India? Some years back, Indian (erstwhile Indian Airlines) made it clear that flying 50seater aircraft was a losing preposition in the Northeast. This equation became healthier only some years back when the government approved a subsidy for IA to operate in that region, and also lowered the airport levies for smaller planes.

However, budget carrier Air Deccan threw a googly recently by claiming that it can operate in the region at a lower subsidy than IA’s. It’s now also said to be bidding for a Northeast Council tender inviting an operator to fly within the region. The airline has already mounted two ATRs in the Northeast, ostensibly at a lower operating cost than IA’s, which is operating four airplanes in the region.

ATR, the Franco-Italian aircraft maker, which was in financial distress in the face of drying demand for turboprop planes, suddenly found a fresh lease of life with the order for 30 airplanes in purchase and half dozen on lease from Bangalore-based start-up Air Deccan in January 2005. More recently, Vijay Mallya-promoted Kingfisher Airlines also ordered for 20 ATR-72 planes at the Dubai

10

ATR turboprops are lighter and burn less fuel...

The ATR has aligned one set of engines for all functions

CRUISING HEIGHTS January 2006

Air Show—a reflection of the growing confidence in turboprop airplane operations. Incidentally, the same cannot be said for the Bombardier turboprops or jets (CRJs are flying with Air Sahara), which have made little impact on the Indian market. ATR turboprops are lighter and burn less fuel, while the Bombardier Q400 turboprops are heavier and consume more fuel. The latter also uses an independent engine for its APU (auxiliary power unit), unlike the ATR that has aligned one set of engines for all functions.

So what makes the turboprops tick? To start with, analysts say it would be incorrect to assume that IA’s apprehensions about turboprop operations are ill founded. When the airline arrived at its findings, air traffic, especially in the Northeast, was still small in number.

IA’s conventional structure also has a higher operating cost platform. The airline, because of its PSU status, is also under pressure from different state governments to fly on routes where the operating economics is weak.

Today, air travel is booming on the back of cheaper fares, growing trade and commerce and higher disposable income in the hands of customers. Time, as a cost-saving mantra, is gaining credence in smaller towns; hence people are ready to fly if the premium over road or rail travel is not too high. As a result, tier-two cities are fast becoming important

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sources of air traffic, encouraging airlines to connect these centres. Air Deccan is the best example of linking up smaller places with its 50/70-seater ATRs. These routes offer load factors in excess of 85 per cent, leaving the airline with satisfactory operating margins.

Since the capacity is modest, it’s easier to fill the plane and turnaround time is faster compared with a larger commercial airplane, enabling more flights during a day. More importantly, lower operating costs help the airline peg its fares at lower levels than competition, thereby drawing more traffic.

Even though there is no official verification, industry estimates place the seat-mile cost for Air Deccan’s ATR operation at Rs 3.75/3.85; Jet Airways (lease rentals are higher), at just over Rs 4; and IA, above the two carriers. Even the composite (all aircraft types) seat-mile cost of Deccan is pegged at around Rs 3; Jet, at nearly Rs 4; while IA is closer to Rs 4.50. These numbers, in turn, get reflected in bottom line.

Much before Air Deccan came into business, Jet Airways started flying a fleet of eight ATR-72 planes on several feeder nontrunk routes. Even IA is now supporting that small planes have a future in India. It is trying to lease six more ATR-320 for non-trunk connectivity in the South, West and North. A larger ATR fleet may improve the airline’s operating economics.

Interestingly, the fate of Kingfisher’s ATR operations is yet to be seen. The airline’s average system wide load factors on its brand new A320 and A319 planes are not exciting.

While on routes where the airline has been flying for some months now, the load factors have improved, on new routes (which it keeps adding with every new plane), the occupancies are yet to be built up. Its turboprops will, for the first time in India, sport modern in-flight entertainment system comparable to the larger Airbus planes. While

There has been constant debate on how regional jets will revolutionise air travel business, but continued fuel price hikes have made it difficult for airlines the world over to induct such jets, as it has resulted in rise in operational costs CRUISING HEIGHTS January 2006

competitors say it will add on to the cost— international is $75 per hour—Kingfisher is said to believe that amortised over 68 passengers, the additional costs will be marginal, but as an USP it will be great for the airline.

Analysts say operating economics look attractive only when the market is buoyant, but will pinch the airline when loads are soft.

Kingfisher’s domestic operation, it appears, will be driven by the A320 family of planes (A319, A320 and even A321) and ATR-72.

International flying is proposed to be done with A330, A350 and A380. The new-gen super jumbo can be switched with an A350 or vice versa depending on which plane offers better economics when international routes are opened for the airline.

Since mid-1990s there has been constant debate on how regional jets will revolutionise air travel business. But continued fuel price hikes have made it difficult for airlines the world over to induct such jets, as it has resulted in rise in operational costs. Accordingly, many airlines have shifted to and are shifting to larger 70-seater aircraft, which offer lower seat-mile cost, and in this category falls the fuel-efficient turboprop. At the start of 2005, Franco-Italian turboprop manufacturer, ATR, entered the year with a firm backlog of just seven aircraft and there were deep concerns that the company would have to shut down production of its 50- and 70-seater ATR 42 and ATR 72 models. But in just one year, its order book with firm commitments has soared to nearly 120 airplanes. Of these, orders placed by Air Deccan and Kingfisher account for a major share. At least Air Deccan’s purchase of ATRs is on track, as it is already connecting many smaller cities where perhaps it is the only player.

The Chief Executive of the company, Filippa Bagnato, has been quoted as saying, “We are currently just enjoying the spring of the return of turboprop and we look forward to a fruitful summer.” According to Paul Sabin, CEO of UK-based operator Air Atlantique, gas burn of the turboprop is just one third of that of a pure jet over a similar distance.

According to Bombardier Aerospace, its own 70-seat models—the CRJ 700 and Das 8-Q 400—when compared with similar turboprop shows that the latter type of airplanes burn 28 per cent less fuel over a 200-nautical-mile distance. In 2002, the number of firm orders for new turboprop models hit a low of just 26 aircraft. In 2003 and 2004, there was small growth to 41 and 47, respectively. But in the year 2005, provisional figures show that the order book has risen aggressively to nearly 120 (provisional). Both ATR and Bombardier have signed additional orders. ATR has forecast a demand for 725 new turboprop aircraft over the next 10 years—78 of 30-seaters, 232 of 50-seaters and 415 of 70-seaters—worth an estimated US $12 billion.

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NEWS DIGEST

A

IR INDIA has inked the purchase agreement with US airplane manufacturer Boeing for acquiring 68 airplanes and a separate deal with engine manufacturers GE and CFM to power its new fleet of airplanes at an estimated value of Rs 36,000 crore. Air India Chairman and Managing Director V. Thulasidas and Boeing Commercial Airplane Company’s President Alan Mullaly signed the agreement in Mumbai on January 11, 2006.

Earlier, on December 24, 2005, the Empowered Group of Ministers, constituted by the Union Cabinet, gave its green signal to Air India to ink the deal after it extracted a price concession of Rs 1,000 crore from Boeing. GE will provide the engines for the new long-range, wide-body, state-of-the-art technology airplanes. The 50 widebody airplanes include 27 Boeing 787 Dreamliners, eight Boeing 777-200LR Worldliners and 15 Boeing 777-300ER. CFM engines will power the remaining 18 airplanes—all smaller, narrow-body Boeing 737-800—meant for Air India’s low cost carrier, Air India Express. Following the signing ceremony, Air India placed the Letter of Intent with Boeing and the engine manufacturers.

This is the single largest order by the airline in its history after it started operations in 1953 under the Air Corporations Act. The deliveries are expected to commence from October 2006. The present agreement will be converted into final commitment after completion of pre-delivery commitments, such as raising 15 per cent margin money by Air India from international Exim Bank, etc. Air India is also to make a formal application to the US Exim Bank to obtain preliminary commitment from it with a sovereign guarantee. This is for securing financial support from the US Exim Bank for 85 per cent of the total acquisition cost. Independent of this, Air India has already floated tenders to arrange interim bank loan totalling US $429 million as advance payment for the 68 airplanes. This includes US $306 million for Air India and

D

US $123 million for its low cost subsidiary, Air India Express.

According to Air India General Manager and Company Secretary, S. Venkat, the airline has floated two tenders for the interim loan of US $429 million on January 6, 2006, and hopes to finalise the bank from which it will take the loan by the end of January 2006. Air India has to make an advance payment for the first 22 aircraft that will be delivered between 2006 and 2008. These include 12 Boeing 737-800 for Air India Express, besides five Boeing 777200LR and 11 Boeing 777-300ER for Air India. The loans, with six-month tenure, may be raised in national or foreign currency or a mix of both and would meet about 15 per cent of the total cost of fleet acquisition.

The balance, as stated earlier, will be raised based on bank guarantee from the Exim Bank. Air India will also enter the Indian capital market with an IPO to raise money by divesting 20 per cent of its equity.

As part of the Rs 35,000 crore Air India deal, Boeing has initiated talks with authorities to set up its US $100 million Maintenance, Repair and Overhaul (MRO) facility. So far it has shortlisted Delhi and Thiruvananthapuram, but there is a bright possibility that it could also come up in a location in Maharashtra. The visiting Boeing team has already had a luncheon meeting with Maharashtra Chief Minister Vilasrao Deshmukh. Boeing has also committed US $75 million for setting up four training simulators and US $10 million for training and other civil aviation requirement. Yet another issue to be settled shortly is the modalities of the counter trade that Boeing has finalised as part of the airplane purchase agreement. This, sources said, could be as much as US $1.5 billion, divided between outsourcing to HAL, software requirements to Indian IT companies and a specific avionics design requirement to be contracted to Indian hitech majors like TCS, Infosys and Wipro. However, nothing has been finalised so far on these aspects, though Boeing is committed 100 per cent, according to a top official of the company.

The Maharaja embraces Boeing!

ECEMBER 2005 turned out to be a great year for state-owned carriers Indian Airlines (now rechristened Indian) and Air India. Indian Airlines not only got its new livery, but also signed a Letter of Intent with Airbus Industrie for the purchase of 43 aircraft, comprising of 19 A319, four A320 and 20 A321. The deliveries are expected to start from September-October 2006, by when the actual purchase agreement will be signed along with the necessary deposit payments. Incidentally, Indian Airlines is acquiring new airplanes after a gap of 17 years. The last time it placed orders for new airplanes was in 1985-86 when the then prime minister late Rajiv Gandhi ordered the induction of A320, first in the world by any airline.

The IA deal, worth nearly Rs 9,800 crore, had been approved by IA Board in FebruaryMarch 2002. For Air India, too, the year just gone by was great. Its own fleet-renewal programme got a major boost when the union government, cabinet and EGoM approved the purchase of 68 Boeing airplanes, comprising of 50 wide-bodied airplanes—Boeing 777-200LR, Boeing 777-300ER and Boeing 787—and 18 narrow-bodied Boeing 737-800. The Air India deal, worth Rs 34,000 crore after negotiations between Boeing representatives and the EGoM, was cleared on X-Mas night. Air India completed its last new-airplanes induction plan in 1994 when it received six new Boeing 747-400. In all fairness to the Civil Aviation Minister Praful Patel, he really went on an overdrive to complete the new-airplanes acquisition programme for Indian Airlines and Air India, which are collectively worth Rs 44,000 crore net of discounts and other aviation related facilities promised by the manufacturers. But one should not forget the huge work put in by former IA CMD Sunil Arora, AI’s V. Thulasidas and IA’s present boss Sushma Chawla in taking the process forward at various stages.

Signing the deal

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A story of delays

State to state THE NEXT big thing in Indian civil aviation sector will be intra-state connectivity. The state-owned Indian Airlines (now rechristened Indian) is expected to sign agreements with Karnataka, Jharkhand, Maharashtra

Vilasrao Deshmukh

Arjun Munda

and Uttar Pradesh. Later, it may sign similar deals with other interested states. The central government is willing to deploy four of the six airplanes leased by the airline to operate services within these states.

According to Civil Aviation Minister Praful Patel, Maharashtra government has been asked to sign an MoU with the airline for at least one year on the same lines as in Northeast.

Alliance Air has already held preliminary talks in this regard with Maharashtra, UP and Karnataka. In response to an advertisement by Jharkhand for operating flights from Jamshedpur and Ranchi under a subsidy scheme, Indian Airlines has already submitted its letter of intent.

Kerala is very keen to float its own airline to cash in on the traffic between the state and the Gulf countries. But Patel spiked the proposal, stating it had to conform to the civil aviation guidelines—have requisite ASKM, minimum fleet size of 20 airplanes and operated domestically for five years. He said there was, however, no objection if Kerala government desired to start a domestic airline.

PERHAPS UNION CIVIL AVIATION MINISTER Praful Patel was not far off the mark when he requested the media at Delhi airport, in early December 2005, to look at Indian Airlines (now rechristened Indian) rather more compassionately than just be driven only by sound bytes. Fog-led delays are well known. But delay in clear weather has everything to do with the airline itself. It is not an act of god. Recent fog, during December 2005, showed how the private carriers failed to manage their passengers on ground. Although there were delays, there was not one incident involving Indian Airlines (We won’t say the same for Air India or its Jumbo’s infamous LA tyre burst) that led to fracas like it happened with Air Deccan, Spice, etc.

But there were clear-weather delays as well in early December 2005. The DGCA ordered a probe into the landing of a Kingfisher airplane on the grass, instead of the runway, at Pune airport five days before Maratha strongman Sharad Pawar’s birthday was celebrated on December 12. The airplane had taken off from Ahmedabad and was headed for Bangalore via Pune. It landed on the grass and damaged the arrester bar, which was erected to stop fighter planes. For the uninitiated, it must be mentioned that Indian Air Force manages Pune airport. An ex-pat pilot, Capt H. Abbas, was commanding the Kingfisher A320 and the co-pilot was an Indian.

P. Shaw, Deputy Director, Air Safety, DGCA, Mumbai, investigated the incident, because the airplane after stopping on the runway crossed the flat barrier chain while executing the back track (180-degree U-turn) on the clearance from ATC, Pune airport, to proceed to the parking bay. Kingfisher said all reports of overshooting the runway, thereby affecting passenger safety, were completely unfounded. Meanwhile, the airline has entered into an arrangement with Air Arabia to connect its passengers both ways from other points in India where the Bangalore-based carrier has presence. Air Arabia flies from Sharjah to Mumbai and Nagpur and hopes to get rights to fly to Hyderabad as well shortly. Its frequencies to Nagpur may be raised to five a week from three at present.

Air Asia’s freebies MALAYSIA’S POPULAR no-frills airline Air Asia is giving away two million free seats to mark its fourth anniversary. The offer, according to the airline, will cover all domestic and regional flights departing from its four hubs—Kuala Lumpur,

Bangkok, Jakarta and Senai, in Johor. To be eligible for free seats, Air Asia insisted bookings be done online or on mobile or wireless devices between December 7 and 28 for travel from February 7 to October 10, 2006. This is the biggest online freeseat campaign ever offered in Asia. The airline has already carried 15 million passengers in the region and offer of two million seats would enable more Asians to travel by air.

The birds get ‘Go’

E Jeh Wadia

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ARLY DECEMBER 2005, Go Air, belonging to Bombay Dyeing’s Nusli Wadia, also suffered a setback.

Its two Airbus A320 had to be grounded. One was grounded for a couple of days following a bird hit that damaged the cowling of the engine. In the other case, the nose cone area of its other airplane had to be set right. As a result, for about two days Go Air had to stay grounded, as both planes were on terra firma. Meanwhile, sources tell us that Jeh Wadia, Chairman of Go Air, was talking to Boeing on the possibility of inducting 737-800. But what made him opt initially for A320 is as much a mystery as is his chatting with Boeing at the moment. In any case Go continues to fly the Airbus A320 notwithstanding the bird hits.

Talking about grounding, Air Sahara, which recently won the bid and is to spend Rs 313 crore for Sahara logo to be sported on the playing arm of Indian cricketers for the next four years, is still to find a suitor for the beleaguered airline, though news is that Naresh Goyal has won the bid. While one of its CRJ remains on ground in Goa, yet another foreign pilot parks another Boeing 737-400 in damaged condition at Mumbai following a miscalculated landing in October 2005. As if these were not enough, a Boeing 737-800 is also on tarmac in Delhi, as Air Sahara had to settle payment issues for spares for the aircraft.

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Naresh’s plans

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ET AIRWAYS plans to induct 32 additional airplanes, valued at US $2.5 billion, which will take its total fleet strength to more than 80 airplanes by 2009. Jet, hailed as one of the best in the world, expects to record US $3 billion in revenues by 2010, of which 50 per cent is expected to come from international operations. Following the launch of daily services between Chennai and Singapore, Jet Airways’ COO, Peter Luethi, said Jet Airways Board has cleared the purchase of 12 Boeing 737 for its domestic

Long haul blues

network in the next 24 months, besides approving the purchase of 10 Airbus A330 and 10 Boeing 777.

However, Cruising Heights has learnt that Jet Airways will induct one leased A330-200 in the whole of 2006 and no other wide-body aircraft.

As per the current plans, Jet will begin to induct at least nine, if not 10, Boeing 777-300ER (one a month, beginning April 2007) and five Airbus A330-200 in the second half of 2007, by when three of its currently leased A340-300 will return to its owners, South African Airways. Jet Airways is thinking of taking the A330 on the sale lease back route (In other words, sell the aircraft and lease it back.) to create new room for fresh choice when Boeing and Airbus come out with newer types of aircraft.

Jet Airways Chairman Naresh Goyal is on record stating he is seriously considering inducting the stretched version of Boeing 747 that can seat at least 450 passengers in a three-class configuration. While Jet is already flying to London from Delhi and Mumbai, it will launch a third service to the UK in the summer of 2006. It will also fly to Brussels, Frankfurt and Paris. It is still awaiting permission from the US authorities to fly to the Big Apple. Jet hopes to get it in 2006. We don’t know if it is at the beginning or at the end of 2006.

The flip side

TALKING ABOUT point to point, following Continental, the world’s largest airline, American Airlines, with a fleet size of 1,000 planes and operations to 40 countries, has launched its Delhi-Chicago non-stop flight. The 16-hour odyssey is the longest non-stop flight ever operated by American Airlines, forcing it to stretch the scheduled duty time of its pilots from 18 to 20 hours. The flight carries two pairs of pilots. While one pair rests in the first class, the other two fly the aircraft. They will switch midway through the flight. Successful, this long-haul operation (at present on a 777) could change the way India-US traffic flows. With connections to every nook and corner of the US, including to cities with huge Indian ethnic presence from coast to coast, it is going to be competition for Air India as well as Jet when it flies into the US. The India-US open skies will come into full play once American Airlines starts non-stop flights to Shanghai, in China, from April 2006. It is well known that it is shorter to fly to India from the west coast via China over the polar route. Considering the huge fleet orders placed by Chinabased carriers, competition will only rise. Irrespective of the Maharaja’s new wardrobe, which is on the anvil, Indians will not be fired by patriotism, as stated by Air India CMD V. Thulasidas. They will travel if connections are direct and fares, competitive.

ON THE other hand, desi airlines— Indian and Air India—are being told to fly to Southeast Asia and the Gulf even without a proper market study.

In these days of direct or point-topoint service, Air India was asked to fly to Dubai from Pune. Had it been a direct flight and the traffic justified it—no problem. But Air India has been told to fly from originating station, Mumbai, to Pune, pick up passengers and fly all of them to Dubai. Similarly, Indian Airlines (now rechristened Indian) fared a little better. Its Hyderabad-Singapore sector is hot and doing pretty well.

Rather than ruin a good thing, it has extended the Hyderabad leg to Pune. In effect it’s a Pune-Hyderabad-Singapore flight. We are told that on the inaugural flight from Pune to Singapore, on December 13, 2005, there were only 11 passengers who boarded from Pune. Strange, isn’t it? American Airlines flies from Delhi to Chicago. But IA and AI fly indirect to Dubai and Singapore.

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Manufacturers’ tales

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T MAY take some time before the Boeing website proudly puts up the big-ticket order of nearly $10 billion (at list prices) placed by Air India for 50 wide bodied aircraft (comprising of 27 Boeing 787 Dreamliners and 23 Boeing 777-200LR and 777-300ER) and 18 Boeing 737-800 for its Air India Express.

This comes after it won an equally large $10 billion order from Qantas Airways to deliver 65 Boeing 787 Dreamliner jets, with an option for 50 planes. Industry experts are speculating that even Singapore Airlines may go the Boeing way. Two years ago, Airbus had beaten Boeing in the race for the Singapore Airlines order. In fact, its muchtouted, across-the-polar-route sortie to New York direct from Singapore was on the fuel guzzling A340.

Interestingly, the frequent visits of the Airbus team to India to bolster its presence among the private players is a bizarre replay of what Boeing was doing earlier when it found the Indian Airlines order going the Toulouse way. Airbus, in order to bolster its order book, has prominently projected the Indigo order of 100 A320 on its website.

What a role reversal. But in the yo-yo world of aircraft manufacturers two bad seasons could be followed by three spectacular ones as has happened often enough in the past with both the manufacturers.

Even in terms of aircraft type, the two competing manufacturers have not hesitated to borrow ideas from each other. For instance, when Boeing came out with the newer version Boeing 747-400 over 17 years ago, Airbus had by then clearly established its lead

Modern and new!

16

in the narrow-body section by launching its famous fly-by-wire A320. But the European consortium did not have anything big like the 747. After a thorough study of the market, Airbus came out with the A330 and A340 family—based on the philosophy of point-to-point travel with lesser seats. Clearly it didn’t want to reinvent the 747 Jumbos. Meanwhile, through the 1990s, Boeing 777 did not do as well as anticipated forcing it to focus more on point-topoint version with improved 777ER, 777-300ER and 777-200LR, which has nearly circumnavigated the globe—flying non-stop for 23 hours from Hong Kong to London.

Even as Boeing focussed on its 777 series, Airbus strangely had a nagging feeling of unease for not having its own version of Jumbo. It then decided to go in for A380. As Airbus went in for super Jumbo, Boeing went in for twin-engine, all-composite material airplane—Boeing 7E7—which is now known as Boeing 787, in deference to the wishes of the Chinese, who, as one of the launch customers, told Boeing to name it 787, as the year 2004-2005 (Chinese year), numerologically, was Eight. Left behind, Airbus began developing a

similar composite-material stuff and named it Airbus A350 with two engines like the 777 series.

Thus if Airbus went in for two engines, Boeing, after having lost the race for the super Jumbos, is now seriously looking at stretching its own 747 Jumbos. It is good to be copycats, but more important than that is the timing when you introduce your own copies.

I

NVESTMENT TO improve airport infrastructure and develop ground facilities in India might cross Rs 40,000 crore over the next five years, according to Civil Aviation Secretary Ajay Prasad. Since the government cannot raise this kind of money, private sector will have to get involved, he said, while inaugurating a conference, Aerodrome India 2005, in Bangalore. He admitted that airport infrastructure and ground facilities in India were hopelessly inadequate and were nowhere near meeting the growing demand. Plan for modernising and upgrading 30 smaller airports located in state capitals (non-metros) is on track. Technical and financial consultants to prepare detailed project report for each of the 30 airports have already been appointed. Ten reports looking at potential and route financing have already been prepared. On the occasion, Prasad announced that Mumbai would get a new international airport. This was different from the proposal to modernise the existing Mumbai airport, for which technical and financial bids had already been invited and technical bids evaluated. The Civil Aviation Secretary’s announcement of building a new airport in Mumbai has added further twist to the Delhi-Mumbai airport modernisation saga.

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SPECIAL REPORT

IATA DIARY Sudipt Arora was in Geneva recently at the invitation of IATA. He files this exclusive report.

I

IATA wants more ‘crossing points’

ndia is yet to respond to the possibility of opening up more air crossing points with Pakistan. Nearly 80 per cent of the flights between Europe and Asia funnel through just two crossing points over the two countries. “We need to increase this to four,” says Gunther Matschnigg, senior vice-president of IATA’s safety, operations and infrastructure division. The distance saved by airlines in each flight could be 94 nautical miles, which will result in annual operational savings of 23 million dollars, he says.

In 2001, the International Air Transport Association (IATA) had secured a new border crossing agreement between India and Pakistan. But the December 13, 2000, terrorist attack on Parliament in New Delhi resulted in politics intervening and prohibiting the implementation of this new route and border crossing point. Later, India banned flights to and from Pakistan. Both countries also stopped flying over each other’s territory.

In early 2005, Airports Authority of India (AAI) indicated that the current political climate should once again allow the border crossing point. IATA officials visited Pakistan and secured an agreement in principle for the border crossing point selected in 2001.

“We’re still awaiting the final commitment from the Airports Authority of India, as it is yet to secure the agreement of the Indian Air Force (IAF) for the India portion of the route,” said Matschnigg.

Cash-strapped airlines across the world are keen to save dollars on their fuel bills following relaxation in global flight path restrictions. While some countries have retained minimum cruising altitudes for passenger aircraft or continue to bar commercial flights during daylight hours, the only strict no-fly zones now left are over Iraq and parts of Afghanistan.

MORE POINTS: It’s has been a sore point with the international community for years, but India and Pakistan can’t even settle this issue!

18

“

TOUGH TALK: Bisignani minces no words as he relentlessly badgers others to fall in line and help aviation survive and prosper.

We’re still awaiting the final commitment from the Airports Authority of India (AAI), as it is yet to secure the agreement of the Indian Air Force (IAF) for the India portion of the route

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Giovanni blasts ACI

M DON’T PATRONISE US: IATA is furious at the airports for treating aviation companies like cash cows.

They are now on his radar.

eanwhile, IATA’s director general and CEO, Giovanni Bisignani, has launched an attack on major airports around the world, saying their business models are archaic, inefficient and wasteful. He says airports should become more transparent in their financial dealings with airlines that last year paid 45 billion dollars in airport and air traffic control charges.

“The Airports Council International (ACI) should encourage an overhaul of airport business practices. But it has failed to lead its members toward the efficiency that is the reality of aviation today. Their current business models hide inefficiencies and rake in profits.”

The proof is in ACI’s statement that airports have been stable and profitable during the most turbulent five years in aviation history, he said. “That is a comfortable situation which must be challenged. They cannot consider airlines as cash cows.” Bisignani said airports often build “expensive cathedrals” rather than tailoring new facilities to meet carriers’ needs. He urged ACI to benchmark efficiencies and become more transparent as a first step to improving airports’ dealings with airlines.

Airport charges are highest in Asia, Latin America and some parts of Europe. IATA— representing 270 airlines that carry 93 per cent of the global air traffic—has been driving increased efficiencies in the airline industry, saving 350 million dollars with new landing procedures at Hong Kong and constantly helping carriers find economies in new route planning.

Airport charges are highest in Asia, Latin America and some parts of Europe

A

ISOA Audit Must

ll 270 member airlines must complete IATA’s Operational Safety Audit (IOSA) by the end of 2007 or else they will be thrown out. “They must be audited by the end of 2007 to keep membership. If they are not, they are out of IATA,” said the IATA Director General. “Safety is the Number One industry priority,” he added, highlighting an improvement in the safety record of air passenger transport despite some concerns, notably in Africa.

The year 2004 was the safest ever for air transport, but August to September 2005 was among the worst periods ever. The IOSA, introduced in 2001, has been completed by 140 airlines so far.

IATA’s move follows growing concern about safety, notably in Africa following a recent spate of accidents, and in Europe. Belgium, Britain, France and Switzerland introduced lists of banned airlines following inspections that uncovered faulty aircraft. The European Union is considering a similar EU-wide list.

The United States has long banned some foreign airlines, notably African ones, from its airspace because of safety concerns. “We do not believe blacklists move the industry forward on safety,” said Bisignani. IATA is aiming to reduce the accident rate from 2004 levels next year based on its assessment of aircraft hull losses. Of the 1.8 billion passengers carried last year, there were 470 deaths.

The IOSA audit of operational management and airline control systems, conducted by seven approved independent firms, is meant to set a minimum benchmark for safety. Its checklist includes aircraft maintenance, ground handling and cabin operations. The audit does not replace certification or airworthiness checks on individual aircraft by national aviation authorities. It has been recognised by the US Federal Aviation Authority.

BETTER CHECKS: IOSA, which is a key element of IATA’s safety drive, is likely to get a further fillip in 2006.

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Profits next year?

osses for airlines will continue this year as well and could total up to 4.3 billion dollars. Although final figures are yet to come in, IATA has trimmed its estimate of industry losses in 2005 to six billion dollars, down from 7.4 billion dollars it had set earlier due to rising oil prices.

“That’s encouraging,” said its chief economic Brian Pearce.

“But let’s not forget that total losses of the airlines industry in the past five years run up to 42 billion dollars.”

The main reason for lower net losses in 2005 has been recent decline in fuel prices. In its last forecast during August, IATA had assumed average oil prices of 57 dollars per barrel. It now looks the average will turn out to be 54 to 55 dollars a barrel. Pearce said the fact that the industry can now break even at this level of oil price is mainly because of two reasons: strong revenue environment and efficiency gains achieved by the airlines. “The improvement in operating financial performance over the past three years has been remarkable,” he said, adding this does not imply that the industry as a whole could now break even if oil prices fall to around 50 dollars a barrel. The other factor to bolster airline revenues has been fuel surcharges and the improvement in yield this has allowed. In India, nearly one-third of an airline’s operating cost comprises the fuel bill.

But US airlines’ net losses deepened last year dramatically, while European airlines have been reporting improved net profits. “We expect US airlines to lose 10 billion dollars in 2005 after 9.1 billion dollars in 2004,” Pearce said, “European airlines are performing well in this environment and are expected to increase their profits to 1.3 billion dollars.”

Part of the reason is fuel hedging, which has been low for US airlines but very high for European carriers, allowing the latter to suppress the rise in fuel costs and benefit from the strength of revenues.

Asia Pacific remains the region generating the most profits—1.5 billion dollars—but has seen operating earnings shrink, as fuel hedging has been lower than in Europe. But overall, the airline industry remains in a situation where it is unable to cover all its costs. “In the long run, this is not financially sustainable.” The no-frills business model, with some exceptions, also fails to generate returns sufficient to cover its cost of capital. These are structural challenges to profitability here that face all members of the airline industry.

Interestingly, no economic recession is on the horizon, but global growth is slowing, and the trend of decline in yields is likely to resume in many markets. However, oil market fundamentals are little changed and so higher prices are still possible. Airlines across the world typically operate on a profit margin of 1.5 per cent.

By 2007, according to IATA, the global airline industry could post profits of 6.2 billion dollars.

(The writer is special correspondent at the United News of India (UNI) covering the aviation sector.)

LCC WOES: IATA believes that no frills business is no frills business.

In the long run there is no money to be made.

MAKING MONEY: The global aviation business is likely to make profits of $6.2 billion by 2007.

Asia Pacific remains the region generating the most profits—1.5 billion dollars—but has seen operating earnings shrink 20

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Tehran connects with Hyderabad THE ANDHRA PRADESH State Museum, in Hyderabad, recently organised IndoIranian Cultural Exchange Programme in the state capital. Participating in it, Ali Hashemi Baharmani, Director of Iran Tourism Affairs and Cultural Heritage Corporation, announced that the Iranian Government proposed to operate direct flights between Tehran and Hyderabad to give a fillip to tourism in both the countries.

Hashemi said the Iranian and Andhra Pradesh Governments had sought permission of the Civil Aviation Ministry to operate the flights. Stating that there was tremendous scope to boost tourism between Iran and Hyderabad, Hashemi said his government had held meetings with the tourism operators of Hyderabad and Secunderabad and invited them to participate in a conference being shortly organised in Iran. Hashemi said the Iran Archaeological Department would seek assistance from the State Museum to preserve monuments.

Wheels oiled for disabled passengers DISABLED PASSENGERS recently won new rights of access to airline travel in the European Union (EU), when the European Parliament adopted measures to ensure EU airports help challenged travellers. The outrage was set off partly when Irish airline Ryanair made a disabled man, Bob Ross, pay for the use of a wheelchair when he took an international flight in March 2002. Under the new rules, the airport would have to provide a wheelchair at either end of a flight within the EU. Further, airports will be responsible for providing service to move disabled people from their arrival at the airport car park to the check-in counter, enable them to check-in, register baggage and board the airplane. If the flight lands in another EU country, the airport there would have to help the passenger as far as the car park. EU member states have already given their informal approval to the measures, which are to be introduced over a two-year period.

UK court dismisses DVT claim against airlines

Illustrations by Zahid Ali

Boeing offers ‘sunglasses’ in its Dreamliners PPG AEROSPACE, a business unit of PPG Industries, will provide electrochromic windows for the passenger cabin of Boeing’s 787 Dreamliners, which will be the first commercial jetliner to feature this new technology. The passengers will be able to electronically shade their windows, replacing the plastic screens found on other airplanes. Mike Bair, Vice President and General Manager of

22

the 787 programme, said that the new electronic shades are like sunglasses for the airplane, and passengers will be able to see out of the big Dreamliner windows even when they choose to shade them. He hopes that the 787 Dreamliner will provide passengers with a noticeably better flying experience, and the windows are a big part of that improvement.

CRUISING HEIGHTS January 2006

A UK court dismissed the claim of a group of eight people seeking compensation that British Airways and other airlines had failed to warn them that the combination of cramped flying conditions and long hours in air could give rise to Deep Vein Thrombosis (DVT), or blood clots, which can be fatal. DVT made headlines five years ago and airlines came under pressure after a report that a British woman had died from DVT contracted on a 20-hour flight. Studies have shown up to one in 100 longhaul fliers could develop blood clots. Airlines would have faced huge damages claims if the claimants had won.

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Sri Lankan Airlines may become regional hub

IATA predicts profits for global airlines in 2007

CHIEF EXECUTIVE Peter Hill believes that Sri Lankan can turn the island into a regional air hub to tap a growing Asian market, but is apprehensive that any return to civil war could harm the carrier, already hurt by the tsunami. Colombo’s airport has the capacity to become a regional hub. Coming to terms with a crippling past—a devastating attack by Tamil Tiger rebels on the airport in 2001 destroyed half the Sri Lankan fleet; then came 9/11, and finally the tsunami—Hill spoke of expanding the current fleet of 14 long-haul jets, currently all Airbuses, to 20 or 25, possibly including Boeing airplane, and create a true regional hub in seven or eight years.

IATA PREDICTS that the airline industry could return to profit in 2007 after suffering heavy losses for six years. Brian Pearce, IATA’s chief economist, attributes it to cuts in operating costs and strong passenger growth, but added that the high price of fuel still weighed heavily on the industry.

TV on board AS OF January 16, 2006, EL AL passengers will be able to watch live television during flights. The service will be accessible to all passengers with compatible wireless enabled devices via EL AL Fly Web, which is EL AL’s new Wi Fi ConneXion

by Boeing. Unlike Web access, for which a small charge is made for surfing, once the passengers have connected to Fly Web, CNBC, BBC World, Euro Sport and Euro news would be available free of charge.

Singapore to open terminal for LCCs

Annan is pleased NATURALLY THE UN has welcomed the French Parliament’s adoption of a levy on airline tickets to help developing countries and urged others to follow suit. Set to begin next July on locally issued tickets, the initiative will help improve the health sector of poor nations. A spokesman for UN Secretary General, Kofi Annan, called the scheme “a significant step, raising additional sources of innovative financing in support of the efforts by developing countries to reach the Millennium Development Goals (MDGs).” These time-bound tarCHINA IS building its first airport free-trade zone within gets were set at a 2000 UN Summit and Beijing Capital International Airport, a move that is aim to tackle major global ills, such as expected to sharpen the country’s competitive edge in poverty, illiteracy and hunger. logistics.

Annan, a long-time advocate of innoBeijing-based Capital Airports Holding Co (CAH), Chivative solutions to provide financing to na’s largest airport group, has launched the design of the developing countries, noted that the idea bonded area and its first phase, covering two square kilomehas been around for some time, but tres, will be put into service in 2008. The entire zone, acknowledged that it faced opposition. expected to span six square kilometres, will be completed in “There are governments that see this as 2010. CAH is trying to attract private and international captaxing their citizens, and they believe ital to help finance the project. A free-trade zone, or bonded only they can tax their citizens,” he said. zone, allows companies to ship various types of merchan“But, the idea of finding a creative way dise into the country without going through formal customs of raising money for development and entry procedures or paying import duties. The zone is to assist the poor and to fight poverty, appealing to importers, who can defer paying dues and fight diseases and epidemics, is a real thereby increase profits. CAH controls and holds stakes in challenge and I think we need to explore more than 20 Chinese airports. Beijing Capital International all creative ways of raising funding for Airport, fully owned by CAH, is China’s busiest airport. development.”

A trade zone in an airport

SINGAPORE PLANS to open a dedicated terminal for low cost carriers (LCCs) on March 26, 2006. Fliers can now enjoy cost savings, as the Civil Aviation Authority of Singapore (CAAS) is introducing a total passenger low charge for travellers departing from the new terminal. The charge is much lower than at Changi Airport’s Terminals 1 and 2 and is also the lowest passenger charge for international flights in the region. To keep the operating costs low at the new terminal, the single-storey terminal will not have travellators, escalators and aerobridges, but will have money changers, Internet facilities, duty-free shopping, food and beverage outlets, and a free shuttle bus service to link passengers to Changi Airport’s existing terminals.

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GROWTH DRIVERS ‘IT’S BEEN A YEAR OF LEARNING AND CHURNING’

Civil Aviation Minister Praful Patel has been, by popular mandate, one of the three best ministers of 2005. When he is not in the spotlight, he is in controversy. But he is unfazed by the attacks and believes they are part of the territory when you are making a paradigm shift There is a in thinking. Excerpts from an hush-hush exclusive interview with suggestion that K. Srinivasan and R. Krishnan.

Q

Q

Are you rattled by all this negative publicity in the newspapers, fog apart?

A: There is no question of getting rattled. Any major policy initiative has a little bit of a negative and a positive side. It cannot be entirely painless; the fact is that modernisation and infrastructure initiatives haven’t been implemented for far too long.

Q: One of the controversy stems from the fact that you are close to many of the applicants that have bid.

A: I know virtually every corporate in the country.

By this yardstick, I shouldn’t be in public life and I shouldn’t be holding any ministerial position. If that is the case, then I think it applies not only to me, but also to lot of other people in public life. There is no question, I am sitting in a chair, and I take decisions in the interest of civil aviation and the country. I am surprised to raise the issues raised about them [the consultants]: they have been appointed after a due process—it was a global bidding for all the three; they have been appointed by the Airports Authority;

24

you want to help your friends?

A

I don’t wish to take names, but everyone who has applied is a friend. What matters in the end is the integrity of the process!

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‘I HAVE SPREAD MY NET ACROSS THE COUNTRY’

Q

What is your roadmap for 2006 ?

A

Frankly, by the end of my tenure I should have been able to reach the country’s aam aadmi, because that is where real India and real progress and development lie.

CRUISING HEIGHTS January 2006

Tourism Minister Renuka Chowdhury has never been known to mince words. She is articulate, forthright and blunt as ever. Excerpts from an exclusive interview.

Q

What are the issues that will be the drivers for 2006?

A: Macro-accelerated growth of infrastructure simultaneously. We can’t sit and write letters to CMs and wait for replies and ask for plan allocations that ‘please build a road to this destination’. Now, there should be reverse engineering. Identify your spots and start building the amenities. I want to put the sub-plans into working mode so that there is simultaneous growth. I think it is absurd that we still sit and think that when the Games [Commonwealth Games in 2010] loom, we will build the hotels.

We need hotels yesterday.

Q: Any particular projects that you have in mind?

A: It is not just one project; I have spread my net across the country. For the first time, I have opened up seaways, inland waterways, we are talking about high-end tourism and a much more visible sustainability and, most important, I am talking about fulfilling the promise we made on employment. Tourism is the one sector that will solve this problem.

Q: Are you happy with what you have managed to achieve in 2005?

A: Yes, given the kind of limitations... I don’t like to be satisfied with anything, because I

25

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GROWTH DRIVERS ‘IT’S BEEN A YEAR OF LEARNING AND CHURNING’

Civil Aviation Minister Praful Patel has been, by popular mandate, one of the three best ministers of 2005. When he is not in the spotlight, he is in controversy. But he is unfazed by the attacks and believes they are part of the territory when you are making a paradigm shift There is a in thinking. Excerpts from an hush-hush exclusive interview with suggestion that K. Srinivasan and R. Krishnan.

Q

Q

Are you rattled by all this negative publicity in the newspapers, fog apart?

A: There is no question of getting rattled. Any major policy initiative has a little bit of a negative and a positive side. It cannot be entirely painless; the fact is that modernisation and infrastructure initiatives haven’t been implemented for far too long.

Q: One of the controversy stems from the fact that you are close to many of the applicants that have bid.

A: I know virtually every corporate in the country.

By this yardstick, I shouldn’t be in public life and I shouldn’t be holding any ministerial position. If that is the case, then I think it applies not only to me, but also to lot of other people in public life. There is no question, I am sitting in a chair, and I take decisions in the interest of civil aviation and the country. I am surprised to raise the issues raised about them [the consultants]: they have been appointed after a due process—it was a global bidding for all the three; they have been appointed by the Airports Authority;

24

you want to help your friends?

A

I don’t wish to take names, but everyone who has applied is a friend. What matters in the end is the integrity of the process!

CRUISING HEIGHTS January 2006

‘I HAVE SPREAD MY NET ACROSS THE COUNTRY’

Q

What is your roadmap for 2006 ?

A

Frankly, by the end of my tenure I should have been able to reach the country’s aam aadmi, because that is where real India and real progress and development lie.

CRUISING HEIGHTS January 2006

Tourism Minister Renuka Chowdhury has never been known to mince words. She is articulate, forthright and blunt as ever. Excerpts from an exclusive interview.

Q

What are the issues that will be the drivers for 2006?

A: Macro-accelerated growth of infrastructure simultaneously. We can’t sit and write letters to CMs and wait for replies and ask for plan allocations that ‘please build a road to this destination’. Now, there should be reverse engineering. Identify your spots and start building the amenities. I want to put the sub-plans into working mode so that there is simultaneous growth. I think it is absurd that we still sit and think that when the Games [Commonwealth Games in 2010] loom, we will build the hotels.

We need hotels yesterday.

Q: Any particular projects that you have in mind?

A: It is not just one project; I have spread my net across the country. For the first time, I have opened up seaways, inland waterways, we are talking about high-end tourism and a much more visible sustainability and, most important, I am talking about fulfilling the promise we made on employment. Tourism is the one sector that will solve this problem.

Q: Are you happy with what you have managed to achieve in 2005?

A: Yes, given the kind of limitations... I don’t like to be satisfied with anything, because I

25

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COVER STORY then they have been approved by the inter-ministerial group (IMG) and the EGoM of the previous government; then approved by the IMG and the EGoM of the present government; all the people concerned with this case have approved the whole process on how it should be taken forward; and the RSP was prepared after due consultation with the IMG and the EGoM. To question today, at this stage about any person or persons or issues is only trying to vitiate the process.

Q: Let me be a bit more blunt. The whole controversy seems to be over the Anil Ambani bid along with the Mexican airport.

The PM has no role in directing that A or B or C be appointed.

A: I am only concerned with the process. And we are at arm’s length from the process. The process is being decided by different people, primarily the IMG, which decides on how the process moves and what the consultants have marked and evaluated. It was a government review committee that was formed specially to ensure that the marks have been uniformly applied to all the bidders. How and why they have come up with two names is not an issue before us. The issue, if at all, should have been resolved at that stage. However, now that the issue has been embroiled in this kind of crossfire, I think the EGoM has, in its wisdom, taken the right decision to refer it to a committee of secretaries headed by the CabSec (Cabinet Secretary), and he, in turn, because it is a technical issue, has handed it over to a committee headed by Mr E. Sreedharan (Chairman, Delhi Metro), who is a man of integrity and, more importantly, from infrastructure.

Q: But within the Ministry, too, there have been voices of dissent. The Chairman and Member (Finance) at the AAI and the Additional Secretary have put in dissenting notes. What do you make of that?

A: Two issues have to be separated very clearly. To the people that are opposed to the issue of evaluation, I have nothing to say. But as far as the people that are opposed to the process are concerned, then it is an absolutely untenable position.

Q: You have no issues with policy differences?

A: That is fair enough. A committee is not mandated to give a decision; a committee is mandated to evaluate a decision. On that process, no issues. But if someone is trying to derail the process, in effect the fundamental issue, then that is not acceptable.

Q: What about Mr Sreedharan’s appointment?

A: The CabSec has appointed Mr Sreedharan. He has taken this decision because it concerns infrastructure. The PM has no role in directing that A or B or C be appointed.

Q: So you weren’t uncomfortable with Mr Sreedharan’s appointment?

A: When I was informed that Mr Sreedharan would look into this matter, I was in fact pleased. He has delivered on the Delhi Metro in spite of all odds. That is precisely what I am trying to overcome in this ministry, trying to get things moving in terms of infrastructure.

Q: There is also the question of Greenfield airport for Mumbai. The entire modernisation of Mumbai airport looks hollow when a new airport is planned just a few years down the line.

A: I am absolutely confident that even after the second airport comes up, as and when it does, it will not affect the first one. From Day One, even when my critics were not giving much credence to my optimism about this sector, I was confident about the potential in the sector. There is potential for even more growth than what has been witnessed in the last 18 months and the scenario holds good for the next ten years. What telecom did to India in the last 10-15 years will be witnessed in aviation in the coming years. Mumbai can take more than two airports; Delhi can take more than two airports.

Q: You have had a great 2005. What are the high points as you look back?

A: The highs of 2005 are that we have cleared the Air India, Indian aircraft acquisition plans. We have given a definite policy direction to the two carriers. As far as airports are concerned, we have been able to take it to the stage of bidding and the whole process coming almost to the last stage. I can draw full satisfaction that the Delhi-Mumbai process has been taken so far ahead and had it not been for the initiative of the ministry it would not have reached this stage. One can take immense satisfaction in that.

We have also taken the 35 non-metro airports a step forward towards modernisation. In fact, most of the homework, the preparatory work and the groundwork for these airports are in place and a roll out will be there in 2006-07. The Hyderabad airport was cleared in 2005. Both Bangalore and Hyderabad have achieved financial closure and, thanks to the enthusiasm built up in the sector, financing will not

26

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A committee is not mandated to give a decision; a committee is mandated to evaluate a decision. On that procedure, no issues. But if someone is trying to derail the process, in effect the fundamental issue, then that is not acceptable.

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I always want more. Yes, Atithi Devo Bhava, Project Priyadarshini and the Gurukuls have begun well, and will see their growth this year.

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think it stops growth. I always want more. Yes, Atithi Devo Bhava, Project Priyadarshini and the Gurukuls have begun well, and will see their growth this year. We are trying to tie up with universities so that the Gurukuls are recognised for semester studies and children get credit for it. I do believe this will bring about a radical change. Also, entering the villages does not mean we are condescending or favouring our villages. We are, in fact, utilising their talents and assets, which would mean bringing in infrastructure.

Q: How can one agree with all this when you have a fringe benefit tax, a luxury tax and a huge sales tax burden on aviation fuel? The government actually doesn’t understand tourism.

A: We have taken up the issue. The industry representatives have been meeting the FM and

we, too, are doing our bit on this issue. However, we are fortunate in one way—in that the Planning Commission, the FM, the PM and Mrs Sonia Gandhi, who heads the UPA, are all interested in one core area of tourism—directly or indirectly. That’s a great support. So, willynilly, I have got great support from across the board.

Q: Would you like some of these taxes to go?

A: I would like a better appreciation of these issues. India is out pricing itself as a destination choice. Since we are combating and fighting with the entire region and neighbourhood, all of whom unfortunately were afflicted by either Tsunami, bird flu, earthquake or some other natural calamity, they have already slashed their prices. The airlines are cheaper—they have an airline partner. So if we want to be competitive, then we have to be flexible somewhere. Now ATF is so high that buying an air ticket to a destination is killing.

Over seven million Indians are going to travel overseas and spend top dollars. India is now seen as a resource country for tourism and shopping. Maldives has threatened to open a special shopping area for Indian shoppers. That bothers me because they have never seen their own country.

Q: What about lobbying with the states?

A: We are putting in a concerted effort in lobbying with the states. We have also requested the FM that, maybe, we should look into setting up a group of ministers to look into these issues just as they looked at VAT. This will help us give a persuasive doctrine for them to understand. Many states are blind to this issue; they believe in growing taxes in ATF and view it as a resource pool. They don’t realise that it is not commensurate with the volume of traffic they are actually losing.

Q: Then, what’s the road ahead?

A: At the moment, we are busy putting the entire infrastructure in place. Our aim is to integrate tourism with different aspects of Indian life. There is a matrix on which we are working

India is out pricing itself as a destination choice.

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We visualise a growth close to 25 per cent. The only issue is infrastructure and we will address it.

be an issue anymore. We have given so much of new capacity both in the domestic and international sectors. It gives great satisfaction to see an additional capacity of 21 flights a week between India and the UK now—almost 100 flights a week—and seats still not available. The Indo-US open skies are symbolic of what it was then and what it is today. In 2005 we also emerged as the largest buyers of aircraft in the world and for the first time India, as an aviation power, is being recognised the world over. We have the Roy Paul Committee, the Kaw Committee; the amount of regulatory issues we have attempted to resolve is comprehensive. ATCOs have been appointed—70 of them after so many years—and trained. We have increased the age limit of pilots; ex-pat pilots are allowed to fly in India. These are all decisions that have long-term ramification for the growth of aviation in India. I think 2005 has been a watershed year for civil aviation in every respect. The footprints can be enlarged over a period of time.

Q: What about Chennai and Kolkata?

A: Let’s complete Mumbai, Delhi before we com-

ment on anything further.

Q: What’s your checklist for 2006?

A: First we have to ensure that Mumbai and Delhi (privatisation) are through. We have to see the IPOs of both Indian and Air India successfully through. I would like to see that the regulatory framework of the DGCA and the ATC issues are addressed comprehensively. We will definitely be coming out with a civil aviation policy. A lot of people wonder why we delayed it—simply because we want to reflect all these changes that have occurred in 2005. What has happened in 2005 will influence a lot of things we want to do in the years ahead. It has been a year of learning and a year of churning. We will bring the airport regulatory authority bill, as well. The year 2006 will really be one more year to give impetus to the pending issues before we start the process of consolidation. I think infrastructure will have to be given the highest priority.

Why only Anil?

I know virtually every corporate in the country.

By this yardstick, I shouldn’t be in public life and I shouldn’t be holding any ministerial position.

28

Q: Talking about capacity, the Gulf carriers have easy picking from India. They are living off the planeloads from the subcontinent.

A: The market is going to grow exponentially in India once the infrastructure is in place. We have to live with it. If anyone [in the Gulf] wants to subsidise his carrier, he can do it in a hundred ways.

Q: But Indian and Air India are easy targets for the government to serve its interests. Now why can’t you have all carriers ferry Haj passengers as you do with the mandated Northeast routes?

A: Over a period of time this situation will evolve for the better. Even now Saudia takes sixty per cent of the Haj traffic. There was a time when Air India used to do 100 per cent; then there was a time when IA got added into it. Now we are getting outside airplanes for Air India. Air India is only a facilitator.

The government, and not AI, is incurring the loss, if any. But I do agree that AI and IA sometimes are made to do things in national interest that, as a commercial organisation, they would not have done. It affects their credibility as a reliable airline if at the last minute flights are withdrawn or other issues come up. But the fact of the matter is that certain things, which are in national interest, are maintained. But I am not happy with this arrangement continuing for all time to come. Therefore, we will explore ways.

Q: What are your plans for Indian and Air India?

A: Let the IPO be over, and then you will see our real plans unfolding. I have asked the secretary [Ajay Prasad] to personally monitor and come up with a blueprint by end-January so we know what’s the time frame.

Q: What growth do you visualise this year?

A: We visualise a growth close to 25 per cent. The only issue is infrastructure and we will address it.

We will redistribute this growth across other cities and not just over Mumbai and Delhi. Even today, once you redistribute, there is potential to maintain this level of growth.

Q: Has the boom in tourism helped you?

A: I would put it this way: the boom in tourism is because of the boom in aviation, and the general well being of the economy and the feel-good factor about India. All this is compounding the boom.

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and tourism is the hub, with spokes into each ministry. The first time ever those initiatives are being taken creatively. We are not waiting and crying about lack of budget. Now railway traffic is shifting towards air, but for Indian railways is a fantastic tourism product. magnitude of what we are doing, the fruits will actually be seen in five years’ time.

Q: What sort of growth are you looking at this year?

A: I expect the momentum to continue—15 per cent for sure. We also have several advantages. We have no bird flu, a buoyant economy, a growing GDP, an aggressive stock market, on every front we are doing well. There is a growing respect for Indians across the world. We are visible on more fronts than one. In addition, we have that intangible India that really catapults us forward; it is that magic that really drives us.

Q: You have held huge road shows this year. How has the experience been?

A: Yes, every visit to every country has been a learning experience. The last thing most of these countries remembered was the Eighties festival of India. After that, they have no memory. Some of them are completely blank as far as the modern contemporary young Indian face is concerned. Most countries do not realise that we have one of the youngest populations in the world—below 25. And they are amazed and disoriented when they see our hotels and hospitality. Take Korea, for example. One says it with great respect that here is a tiny little country that’s a force to reckon with in world trade and industry today.

But I wondered: where is the architecture?. It was sterile. I have great respect for what they have achieved, but you must never forget your identity. So, there are always lessons to be learnt. And, mind you, this is no criticism at all. My God, they are one of the cleanest people in the world. I have never seen a country as clean as Korea. It has been a great learning experience.

Q: What’s your MoU with Afghanistan?

A: I was there to simply understand what we could do to help them. We shall work to help them develop their tourism, including training, formulating regulations and get some of their artisans to participate in the Surajkund Mela.

Q: How much help has aviation been in the tourism boom that we are witnessing?

A: It has been good in the past. But what is hurting tourism at the moment is the lack of an aviation partner. If you notice other countries, they are all working in partnership with an airline. It’s crucial for driving tourism. Today we are turning away tourists because we do not have adequate airlines, we do not have adequate seats, we do not have adequate airports. Even if I say other countries can fly in, there is no holding area, there is no place to park the aircraft; so actually it is the reverse: my business is hurt ■ because we don’t have the airlines.

I expect the momentum to continue—15 per cent for sure. We also have several advantages.

We have no bird flu, a buoyant economy, a growing GDP, an aggressive stock market, on every front we are doing well.

We are visible on more fronts than one. In addition, we have that intangible India that really catapults us forward; it is that magic that really drives us.

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Illustrations by Zahid Ali

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SPECIAL REPORT

Indian Indian began flights to the Gulf some dozen years back. Today it has the largest number of flights to the Gulf for any one carrier. The main operating base is Sharjah, though its flights touch Dubai and other points in the region. Its greatest strength is its point-topoint service across the country. And the easy connectivity it provides to the rest of India.

Notwithstanding the squeeze, the Gulf still remains the most profitable operation for both Indian and Air India. Instead of competing with Gulf carriers, Indian and Air India are fighting each other in the same market, which could soon become the proverbial pie in the sky.

The travel trade in Dubai and Sharjah clearly suggests that the desi carriers stand no chance in the long run. Also, it clarifies, between Indian and Air India, the latter could be dented even more, in spite of its spanking new subsidiary, Air India Express. While the UAE is represented by Emirates (Dubai), Etihad (Abu Dhabi) and Air Arabia (Sharjah),

32

The Gulf still remains the most profitable operation for both Indian and Air India. But the travel trade in Dubai and Sharjah clearly suggests that the desi carriers stand no chance in the long run.

CRUISING HEIGHTS January 2006

the rest of the Gulf is represented by others such as Qatar Air, Oman Air, Kuwait-based new LCC Jazeera Airways besides, of course, Kuwait Airlines and the truncated Gulf Air, which is seeing fresh infusion of funds from the leftover partner, Bahrain, for acquiring a brand new fleet.

According to Air Arabia (an LCC with current fleet strength of five A320) CEO, Adel Ali, the Middle East and the Indian subcontinent remain some of the most tightly regulated air transport markets in the world. He says there are restrictions on the number of seats, number of flights and even on the fares to be charged. Many of the routes are governed and regulated by bilateral agreements, where the rights are conferred only on legacy carriers of each country, with stipulation on capacity and, in some instances, even fares. As a result of such an overregulation, says Adel Ali, on certain routes it is impossible to get seats, for example, during Eid holidays in and out of the UAE. Air Arabia, owned by Sharjah government, is fighting to get more points even within the Middle East and India.

Ali may be eminently qualified to talk about the Middle East, but his argument is not true of India that the recent past has seen massive doling out of additional frequencies and seats per week to the detriment of Indian and Air India. His argument is the passengers ultimately should have the choice to fly with whomsoever they wish to. The governments must therefore realise that the interest of their flag carriers alone should not weigh their decisions. It may be fine to protect stateowned airlines reporting profit of a few million dollars a year, but if it is at the expense of billions of dollars worth of potential investment in other sectors of the economy, then it will be a very shortsighted view. His observations had appeared in the November 2005 issue of Aviation Business.

There are two implications to his argument. First, he is definitely lamenting the pincer-like bite of Emirates and, perhaps, Etihad—both legacy airlines. It is also evident he would like to plan his investment based on how much of the Indian market is opened to him. Clearly, he would like to connect as many points in India to Sharjah as he can. Currently he has rights to fly to Sharjah from Mumbai and Nagpur; he wants Hyderabad as well. Adel Ali has no problems if similar rights are conferred on Indian and Air India. Now this is something the state-owned legacy carriers cannot respond to immediately, considering that it takes four years to buy even a single aircraft, compared with a time frame of close to six months to plan and order fleets for airlines based in the Gulf, including Air Arabia.

Hasan Talat, of SATA (The commercial arm of Air Arabia that flies to 23 destinations, including the two points in India, under the same management.), in Sharjah, said, “We

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are negotiating for more points in India, a country that is generating very good business.” He said Indian connects 14 points in India and Air India connects Sharjah with Kozhikode, where the frequency could be increased to daily from the present four.

Between Indian and Air India, they have roughly about 54 flights a week. In contrast, Air Arabia flies only to Mumbai and Nagpur seven and five times a week, respectively.

Despite being an LCC based on the philosophy of using narrow-bodied aircraft, Talat, an MBA, remarked, “We can consider using bigger aircraft if we get more points in India.” He praised Indian for being more flexible and dynamic, but in the same breath he said, “Air Arabia fares were 30 to 40 per cent cheaper than Indian and Air India.”

Asked about fuel cost, he was cagey, “Why do you look for cheaper fuel prices; why not the cheapest?” Of course, he didn’t reveal airlines in the region run on virtually free fuel.

Obviously even his own airline, Air Arabia, cannot charge 30 to 40 per cent cheaper fare at nearly zero fuel cost. Strangely, his statement flew in the face of Air Arabia CEO, who spoke of some kind of fare regulation.

Radhika Markan, of Emirates, clarified that the premier carrier in the Gulf operates 43 flights a week from Dubai to five gateways in India. These include 19 flights a week to Mumbai, seven to Delhi, eight to Hyderabad, five to Kochi and four to Chennai. Between 1995 and 2004, Emirates received a total weekly seat entitlement of 10,200. But in the beginning of 2005, its entitlement was raised by another 8,300 seats a week. These seats will be gradually mounted through the next twelve months. If 10,200 seats a week means 43 flights a week, another 8,300 seats will take the weekly flight frequency to 80 flights, or an additional 37 flights a week. If Indian and Air India

The whole business plan of Emirates is based on the philosophy of promoting only long-haul traffic where there are no LCCs as of yet.

Emirates The fattest amongst all the Gulf operators. In the last one year Emirates has doubled its capacity into India and is wanting more and more. One of the launch customers for the A380, don’t be surprised to see it offloading 500 Indians into Dubai each afternoon beginning 2007. Operating from five cities—Delhi, Mumbai, Chennai, Hyderabad and Kochi—Emirates has close to fifty flights a week. Wow.

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(Express) are using A320 and Boeing 737800 (progressively its A310 aircraft will be replaced), respectively, Emirates is using A340-300 or A330-200 in a typical threeclass configuration—12 first class, 42 business class and 213 economy class.

Emirates will be mounting close to 80 flights to and from the subcontinent by the end 2006. That compares perfectly with the 91 frequencies that it has each week to the UK. Some of the flights are operated with Jumbos (747-400) that may now yield place to its just ordered 42 Boeing 777. But the UK is not the only jam-and-jelly market for Emirates. It has a lucrative segment in down under, with 42 frequencies a week—three to Sydney each day. Just some months back, Emirates had filed an application asking for doubling of its frequency, to 84 a week. Qantas has already appealed to the Australian government to reject the request. In fact, if anything Qantas is incensed by is that Emirates had the gall to ask for so many flights, in the first place.

Take Australia, where Emirates flies over 40 frequencies a week. The number of Australians in the UAE is no more than 5,000.

Look at London-Dubai sector and onwards to Asia or Australia. A round-trip costs 350 pounds. But Dubai-London one-way costs 450 pounds. The whole business plan of Emirates is based on the philosophy of promoting only long-haul traffic where there are no LCCs as of yet. But the point is how Emirates can be the most profitable under the circumstances. At least no other airline believes this is possible. No airline believes in it. The profit and loss account is actually under the Emirates Group LLC. The fact, however, remains that Emirates is a very well run airline.

In fact, the issue has spilled over to the IATA general council meetings, where angry carriers, such as British Airways and Qantas, have been questioning air transportation authorities on the lopsided manner in which privileged and favoured airlines from the Middle East are undercutting other legacy carriers with unnaturally cheap prices that are laughable. In fact taking a leaf from efforts in other sectors, these carriers are asking for ‘anti-dumping’ measures. Qantas’ riposte against Emirates falls in the same category.

The story for Indian carriers is somewhat similar. Unlike Qantas, however, India’s public sector carriers aren’t supposed to complain. They may murmur in private or protest politely. That’s it. The over-the-top bilateral entitlement India gave to Dubai-based Emirates will give it huge onward traffic. It will now carry increasing number of upwardly mobile middle- to high-class Indians to various destinations in the world, be it the US, the UK and the Far East, including Australia. In fact, a Delhi-Dubai-Sydney ticket will be cheaper than a Dubai-Sydney passage. No surprise this, considering the whole idea is to

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The reverse swing from Sri Lanka

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mirates has another angle. It owns 49 per cent of Sri Lankan Airlines, which, under an open-sky agreement with India, currently operates nearly 80 flights a week to various Indian cities.

Thus, not only does Sri Lankan Airlines takes away Indian passengers to a third country or beyond destinations once it ferries them to Colombo, but also gives enough feed of Indian market to Emirates at Colombo or directly to Dubai, where Emirates is headquartered. Under the IndiaSri Lanka open-sky agreement, the new start-up of our own Captain Gopinath’s Deccan-Lanka will be yet another airline that will feed into and out of India back to Colombo, which will dry up the passenger reserves of Indian and Air India in its home base. Captain’s philosophy is fine: If you don’t allow me to fly abroad from India I will fly from abroad into India and go

make Emirates a great clearinghouse for subcontinental traffic.

The message is obvious. Emirates does not care for the low fare paying Indian workers in the Gulf wanting to go to India. But it wants the Indian cream to fly Emirates to beyond destinations. Logically it will hit Air India even more than Indian. But if Indian was also to get its wide-body aircraft to go to London and other points in Europe, then even the rechristened Indian will be hit.

A new route denial is not a story confined only to Indian and Air India. It is now happening even in the UAE. For instance, oilrich Abu Dhabi’s legacy carrier, Etihad Airways, lobbied very hard to keep Emirates out of the Canadian market—Toronto. There are any number of Indians wanting to visit home from Canada. Air India’s recent service, Delhi-Amritsar-Birmingham-Toronto, is a best seller, but it is a bit of a tiresome route.

Etihad, on the other hand, will carry them from India to Abu Dhabi and onwards to Toronto in brand new aircraft. What is even more interesting to see is that none of the UAE-based carriers allows each other to visit their respective Emirates. For instance, Etihad does not go to Dubai and Emirates does not go to Abu Dhabi. Air Arabia flies in and out of only Sharjah. Contrast this with the pool of India-based passengers, which is available for everyone to fish in.

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Oil-rich Abu Dhabi’s legacy carrier, Etihad Airways, lobbied very hard to keep Emirates out of the Canadian market-Toronto CRUISING HEIGHTS January 2006

Etihad Etihad is the new kid on the block. The Emirate of Abu Dhabi wondered why not get into the act. After all, if neighbour Dubai can so successfully manage to run Emirates, they thought it was time to set up their own national carrier. And now they want India to provide bilaterals to each of the Emirates on par.

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abroad again. At least this is better than many in this business who have personally chosen to fly and settle abroad as NRIs while hosting their airline in Bharat.

But, that apart, once there is the open skies two years down the line, Jet Airways, reportedly finalising its alliance or purchase of Air Sahara, is more than certain to send in multiple flights not just to Dubai but to several other destinations across the Gulf. It is only bound to intensify the war. While the yields may be alluring as of now, it is inevitable that there will arrive a saturation point.

But really, in this business five years is like an eternity.

Just look at the aviation scenario pre-9/11 and post 9/11 and you will have the answers.

According to Zafar Imam, General Manager, SNTTA, Sharjah, the market is obviously India. Emirates charges higher fare from originating place, that is Dubai, as it is not targeting Dubai market. As for a businessclass ticket, on the Dubai-Mumbai leg on Emirates, you will not get even a single seat.

Of the total population of 4.5 million in the UAE, the local population is only about 7,00,000, while Indian ex-pats account for 1.5 million, Pakistanis, another 5,00,000.

To prepare for the great Indian gold rush, virtually every civil aviation authority in the Middle East is on overdrive. Abu Dhabi airport is being upgraded with an investment of US $5.7 billion, which includes construction of a second runway, a mid-field terminal complex that would be capable of handling 20 million passengers annually by 2010.

Oman Air is upgrading its fleet and the Bahrain government is upgrading its airport to cater to 15 million passengers annually. It is even building double-decker aerobridge to feed its A380. “Is it not surprising that the population of each of these countries/Sultanates/Emirates, figuratively speaking, cannot be more than four A380 planeloads full?

But look at how they evolve their selfinterest. “Where are we?” asked one senior PSU official, rather acidly.

So, how is Indian competing? Firstly, Indian representative states that Indian does not

Air India Express The low cost carrier of the country’s international carrier is AI’s answer to the menace from the Gulf. They want to provide a competitive edge to their most lucrative operations with cheaper fares, newer aircraft and a sustained schedule. Unfortunately, a shortage of pilots has badly hampered their operations, and there came a point in time when the Kerala government wanted the government to allow other LCCs to get into the state. That would have been ruinous for AI Express. At present, it operates with three 737-800 to four cities in the Gulf (including Dubai where it arrives at Terminal Two) and plans to fly to Bahrain, Bangkok, Doha, Kuwait, Kuala Lumpur, Sharjah and Singapore in the coming years. In India, plans are afoot to introduce flights from more Indian cities, such as Chennai.

To prepare for the great Indian gold rush, virtually every civil aviation authority in the Middle East is on overdrive CRUISING HEIGHTS January 2006

operate with the kind of restrictions imposed upon LCCs nor bear the high cost that legacy carriers of the Gulf incur. Not only are Indian’s fares very competitive, but it also allows additional baggage of 10 kg. Its daily flights from Dubai take off at five minutes past midnight and therefore no need for elaborate dinner, but only supper. Being an originating flight, with connections to various points in India, Indian is able to compete effectively, notwithstanding other competitive elements.

Both Air India and Indian are together entitled to a total of over 19,000 seats (as available to Emirates) a week.

Air India has always complained that Indian should give up the Gulf, as it got rights into the territory primarily as an evacuating agent for stranded Indian workers following the Gulf War, when Iraq invaded Kuwait in 1990. But it stayed on to compete with Air India. Strange, is it not? Should the Maharaja not compete with Emirates, Etihad, etc. as well? Perhaps Air India Express, which is to acquire 18 Boeing 737-800, may do the trick.

But surely, it will again become a competition between Indian and Air India. While Emirates is flying direct, we have a funny situation where Indian flight to Chennai is via Hyderabad, when traffic justifies separate direct flights to each of the two southern cities. Indian flies twice a week to Kozhikode from Dubai when traffic justifies daily flight.

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Gulf Air Gulf Air is the oldest, but has been left to fend for itself by everyone, barring Bahrain. It operates out of seven cities and mounts close to 40 flights a week. At one time if you wanted to travel to the Gulf, there were just two options—with Gulf or Air India. But now, with so many options, Gulf has to fight for its share. It helps that the Indian market is so huge that it really has no issues as of yet.

Funnily, Air India has code share with Emirates and Thai for flights to Chennai. The largest force of white-collar workers in Dubai is from India, and not Europe. People are flying multiple times. This growth cycle is expected to continue for seven years. The outbound traffic from India is over six million a year. Indians have set up high-class medical/educational facilities in Dubai and other parts of the UAE. Gulf operations accounted for Rs 700 crore of Indian’s revenue in fiscal 2004-05. May be Air India and Indian should work out a common strategy that will do good to both state-owned carriers, especially at a time when they are going in for their maiden IPOs. Yet another dimension has been added to the new Gulf war that is hurting both Indian and Air India. Indian-origin passengers,

Qatar Airways Qatar flies to five destinations in India—Mumbai, Delhi, Kochi, Thiruvananthapuram and Hyderabad. The airline, which is one of the fastest growing carriers in the Middle East, is fast emerging as huge competition for Emirates and Etihad. Qatar’s Akbar Al Baker has relentlessly applied the pressure and the growing trade links between India and Qatar has ensured that it gets all the bilaterals it wants. The only problem is that, like Dubai, Doha will become a hub for re-exporting Indian passengers onwards.

Air India and Indian should work out a common strategy that will do good to both state-owned carriers, especially at a time when they are going in for their maiden IPOs 36

CRUISING HEIGHTS January 2006

including tourist types taking either Indian or Air India flight to the UAE or the Gulf, need a local sponsor to get entry visa to the city-states. However, if the same passengers fly Emirates, Etihad, Air Arabia, Voila, visa? No problem. Emirates already offers visa online to its passengers flying from India. Others are planning to follow suit.

Air Arabia, at times, even helps Indian’s passengers coming from India to get Sharjah visa. You want to go to the UAE or the Gulf, choose their airline, as the difficult task of getting a visa is almost eliminated.

Indian and Air India can do nothing about this non-tariff barrier even after they acquire the most modern fleet. No amount of external intervention can help them in this new Gulf war. With a government in Delhi that is only too eager not to hurt Gulfbased airlines, it is left with no alternative but to hurt its own carriers.

Today Emirates carries nearly 18 million passengers a year, which is nearly 20 times the size of the UAE population. The IndiaGulf market is growing at 11 per cent annually, while the global market is averaging a growth of only five per cent. Based on Emirates’ success, Abu Dhabi-based Etihad is now planning to spread its wings. Qatar, a small kingdom very rich in gas reserves, is planning to acquire 100 aircraft. The market obviously is India. The Gulf war we are all talking of will eventually become a war within the Gulf.

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PERSPECTIVE

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T IS a study in contrast. The adoption of open sky policy by China and India, even if in a qualified fashion, has certainly boosted the commercial aviation sector in the Asia Pacific region. By taking advantage of encouraging regulations and general upturn in the region (India posting seven per cent growth in GDP, China as usual a nine per cent and Singapore exceeding five per cent), several new airlines have either been given permission to launch services or have already begun operations. Asia Pacific airlines have leased more aircraft than their North American counterparts have and therefore point to a very promising opportunity for aircraft leasing industry.

According to an analysis from Frost & Sullivan in World Aircraft Leasing Industry Analysis and Growth Opportunities, the portfolio size of leased aircraft reached US $115.42 billion in 2004 and is projected to increase to US $143.93 billion by 2008.

This is besides the huge orders airlines have placed with both Boeing and Airbus Industrie. As per preliminary estimates, Boeing claims to have booked orders for more than 1,000 aircraft in 2005, compared with over 850 by rival Airbus Industrie. The aircraft

By R. Krishnan

Asia Pacific region continues to suffer from inadequate infrastructure and this makes it difficult to accommodate increased air traffic.

A study in contrast

The aircraft purchase scene may not be that hot in 2006 and therefore suggests that leasing, as an option, will once again come to the fore.

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purchase scene may not be that hot in 2006 that therefore suggests that leasing, as an option, will once again come to the fore.

Until early 2003, India, with a population of over one billion, had only two government run airlines—Indian Airlines and Air India—and two private carriers—Jet Airways and Air Sahara—with a combined fleet of only 160 aircraft. Today there are 11 airlines that have obtained commercial licences and range from those that have launched services to those that are just waiting to take off. Frost & Sullivan expects India to have a fleet of 350 aircraft in four to five years.

Infrastructure remains an area of concern that will limit opportunities for manufacturers and also leasing companies. Asia Pacific region continues to suffer from inadequate infrastructure and this makes it difficult to accommodate increased air traffic.

Further, shortage of pilots, cabin crew and other skilled personnel in maintenance will also prove to be a hurdle. Nevertheless, with growing number of low cost carriers, Asia Pacific region is set to emerge as the fastest growing segment of the aircraft leasing market. Despite the post 9/11 decline in air travel and rising fuel costs, the funda-

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mental evaluation measures for airline industry and cargo traffic, such as available seat-kilometres and revenuepassenger miles have continued to improve since the second half of 2003.

India, China and Russia are going to play a major role in the growth of the aircraft leasing industry.

While Frost & Sullivan has emphasised more on leasing aspect of the airline industry, Sydney headquartered Centre for Asia Pacific Aviation (CAPA) feels the year 2006 will be a make-or-break year for major expansion plans by airlines in the Asia Pacific region, with the possibility of the situation getting further exacerbated if the current rosy economic conditions deteriorate. However, the issue is why the economic conditions should deteriorate.

CAPA, outlining its expectations for key aviation markets in the year ahead, sees some uncertainty under an otherwise positive outlook and warns that slow progress towards airline restructuring and a greater liberalisation of air routes and critical pilot-shortages threaten the realisation of growth strategies.

However, one would like to point out here that CAPA, while doing a fine job, is also a body of consultants, which is often called upon by various airlines to conduct restructuring exercise. Perhaps it may not be correct to project a yearlong outlook based on such a perspective though some of its observations, particularly pilot shortages, are indeed a matter of concern for all those connected with aviation. If you have the planes and no pilots, you are in trouble.

Similarly, you have pilots and no planes, you are again in trouble.

CAPA noted, “As we enter 2006 there is a higher than usual level of unpredictability, as the still unknown impact of higher fuel costs continues to flow through to consumer spending. At the same time we are seeing unprecedented orders for new aircraft by Asian operators for delivery from 2007 in response to opportunities for expansion both on short- and long-haul sectors within and beyond the region.”

According to CAPA Executive Chairman Peter Harbison, “2006 in many ways will be the quite before the storm—a period when airlines need to consolidate and put in place

There will be a delicate balance between traffic growth and meeting capital needs.

CAPA, while doing a fine job, is also a body of consultants, which is often called upon by various airlines to conduct restructuring exercise.

CRUISING HEIGHTS January 2006

necessary foundations for a massive upgrading of fleet and route systems.” If for any reason, their efforts were thwarted, it would jeopardise the strategic development plans that are essential to their mediumterm futures and, in some cases, to survival.

There will be a delicate balance between traffic growth and meeting capital needs.

CAPA cites the case of China and India moving towards an increasingly liberal regime. After reviewing the status of civil aviation in member countries of Asia Pacific, the Centre, in its mention on India, refers to the proposed IPO of Indian Airlines and Air India that is to take place in the first quarter of 2006. After listing infrastructure ills and recent orders placed by the two carriers on Boeing and Airbus, CAPA has lamented, “Indian government has again scotched speculation that there would be a merger of Air India and Indian Airlines.”

The fact is that it would be entirely impudent and unwise to talk of merger on the verge of the IPOs. It is an issue that can be taken up after the public listing. What is inexplicable is the comparison of oranges with apples and the attempt to combine, merge or, should we say, graft them into one entity.

While the studies may not be entirely comparable, there are a few pointers on the manner they have been undertaken. Frost & Sullivan has done a purely economic study, based on available indicators.

CAPA, on the other hand, seems to have made a qualified projection. Perhaps we may not, after all, require the merger of Indian Airlines with Air India. Is it not possible alternatively to think in terms of further dilution of equity of the two stateowned companies and make them compete while looking for synergies in the routes being operated by the two.

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TOURISM DIGEST

AT A GLANCE

South Africa’s in a gay mood WHILE THE Civil Partnership Bill, permitting same-sex marriage, had been passed in the UK, it surely set the heart thumping of the South African Tourism. Lebohang Mokhesi, South African Tourism’s new Country Manager for the UK, was quick with his wedding gifts— Cape Town’s stunning beaches, great hospitality, and a buzzing social scene, with some of the world’s best-dressed and well-heeled. Cape Town has long been one of the leading holiday destinations for gay couples, indicated an extensive survey into the most desirable destinations for gay couples, undertaken by specialist tour operators Man Around Group. Mokhesi promises a fun-filled and unforgettable romantic break.

Thousands take the plunge ONE THOUSAND divers, inclusive of locals and tourists, will dive off from Sunlight Thila on February 25, 2006. This site has been chosen because of its bottom conditions—sandy, with few formations of coral and a maximum depth of 22 metres. The event has been put together by Maldives Tourism Promotion Board, along with Dhiraagu Maldives, and is an attempt at a new world record for greatest number of scuba divers simultaneously diving on a single site. The current world record is 722, held by Koh Tao Underwater festival, Thailand, in February 2005.

Illustrations by Zahid Ali

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Nepal has increased guests

Frangialli continues to be the boss

IN LAST November, 27,511 visitors visited Nepal. Arrivals from SAARC countries grew by 34.6 per cent (Bangladesh showed an increase of 116.3 per cent); China showed 51 per cent; Japan, 21.5 per cent; and South Korea showed 39.1 per cent. Arrivals from Singapore, Thailand, Malaysia and Sri Lanka, however, showed some decline. Commenting on the increased figure, Nepal Tourism Board CEO, Dangi, said that the increasing trend in arrival was not only the sign of increasing confidence of the markets towards the destination, but also a challenge to the Nepalese tourism to retain the growth for the coming days.

FRANCESCO FRANGIALLI has been re-elected by the General Assembly to the post of WTO Secretary-General for a further term, spanning from January 1, 2006, until the end of 2009. He was re-elected by 85 votes to 14. His stint began when he joined WTO as Deputy SecretaryGeneral in 1990, was elected Secretary-General in 1997, re-elected in 2001 for the years 2002-2005, and the present term. The former Director of the Tourism Industry in France says he is honoured, and went on to announce his goals for the present term: to consolidate what he has achieved, to build on the foundation of the major advances made, and preparing for the future.

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Air Canada is pinching pennies, condemns ACTA

Has the stiff upper lip wilted?

AIR CANADA has discontinued its Cash Reward Programmes to travel agents. Obviously, Association of Canadian Travel Agencies (ACTA) did not appreciate the move and it went on to state that Air Canada does not want to recognise the value of travel agents and is expecting them to work on its behalf for no base compensation. It alleged that the airline wants to conclude deals only with agencies that sell high volumes for it—such an approach will penalise all smaller travel agencies.

ACTA added that it is just sad that Air Canada does not see any value in the services of travel agencies, whereas, on the contrary, other major carriers do and agents appreciate this recognition of their value. The agency thanked the airlines and other travel suppliers that continued to recognise and compensate the value provided by retail travel agents.

VISIT LONDON’S annual London Overseas Visitor Survey revealed overwhelmingly positive responses on what visitors really think of London and its inhabitants.

Of those surveyed, 81 per cent said their first impression of London was ‘Excellent’ or ‘Good’; 98 per cent said they were likely to recommend London to friends; 84 per cent said they find Londoners ‘Very Friendly’ or ‘Friendly’; 28 per cent are expecting to return to London in the next 12 months; 93 per cent rated London as ‘Very Safe’ or ‘Fairly Safe’; and when asked how London could be improved, 59 per cent said there could be no improvements.

Tsunami recoveries ALMOST A year after the tsunami struck, the affected countries—Indonesia, Maldives, Sri Lanka and Thailand—are optimistic that business would show up. But a UNWTO assessment of the post-tsunami recovery indicates that hotel room capacity and air seat capacity in the affected countries is still substantially lower than before the tragedy. It concludes that a full recovery will not be possible until capacity is fully restored sometime in 2006. Recovery of tourist arrivals to beach resorts hit by the

tsunami has been sluggish. The most recent official statistics show arrivals to Phuket still down by 50 per cent in August, while October arrivals to the Maldives were still down by 23 per cent and foreign guest nights along Sri Lanka’s south coast were still down by 53 per cent in August. Indonesia presents a different recovery curve. As tourism facilities were not damaged in the tsunami that destroyed Banda Aceh, arrivals to Bali actually increased from March through September.

Sri Lanka is a hot destination THE ISLAND’S reputation as a world-class destination was further enhanced when four of its luxury hotels were featured in the USbased travel magazine, Conde Nast Traveler’s Hot List 2005 in May this year. US Vogue confirmed Sri Lanka as one of the ‘coolest getaways’ in its October issue.

DestinAsian featured three of the island’s hotels—Amanwella, the Galle Fort Hotel and the River House—in October’s Luxe List 2005. Sri Lanka Tourist Board (SLTB) Director General, Seenivasagam Kalaiselvam, said that the country has more diversity than any other destination’s, seven UNESCO World Heritage Sites dating back to 2,500 years, thousands of acres of rolling green tea country and 15 national parks that showcase the most amazing wildlife. He added that Sri Lanka is looking forward with confidence to the usual peak-season demand between mid-November and the end of March. Moreover, foreign investors, several international hotel and resort brands have moved to establish presence in Sri Lanka. Aman Resorts International has opened two new resort properties on the south coast and work has begun on a Hyatt Regency in Colombo. Big local players are also upbeat about the future.

Record attendance A RECORD 320 delegates from 170 companies and 40 countries attended the 2005 Middle East Duty Free Conference, held recently at Dubai’s Le Meridien hotel, underlining the region’s growing importance within the dutyfree and travel retail industry. The conference provided the delegates two full mornings of informative, interactive presentations and discussions, supported by excellent networking opportunities, including sponsored sessions and a lively gala dinner hosted by Dubai Duty Free. The clear message of the conference was the importance of customer focus.

Dubai Duty Free’s Recruitment and Employee Development Manager Rachael Green gave an excellent presentation on the importance of intercultural competence within the workplace. A panel discussion looked at the developments and challenges facing the future of the industry.

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Good times news Kingfisher and MakeMyTrip.com Mallya at offer unique service centrestage

in CAPA

KINGFISHER AIRLINES recently announced its unique tie-up with MakeMyTrip.com—all guests who buy Kingfisher Airlines’ ticket to any destination will enjoy a complimentary air-conditioned car transfer from the airport to any destination within the city limit.

Talking about the offer, Deep Kalra, Founder & CEO, MakeMyTrip.com, said, “By partnering with Kingfisher Airlines we are offering further convenience in travel at no extra cost. The offer is our way to express gratitude for using MakeMyTrip services and flying Kingfisher Airlines.”

Special for the Forces: Kingfisher has announced special fares for all personnel currently serving in the Indian armed forces, the Government of India, any State Government in India, and for employees of all public sector units in India. The immediate family members—parents, spouse and dependent children—of these personnel are also eligible for these reduced and special fares. These special fares are available for travel to all destinations served by Kingfisher Airlines, and are valid for booking and travel from now to March 31, 2006.

CAPA NEW AIRLINE OF THE YEAR award went to Kingfisher Airlines. This award honours a start-up airline that has had the most significant impact on the markets it operates in and to the development of aviation in the region.

Kingfisher Airlines burst onto the aviation scene in 2005, both in India and abroad. Commencing services in May, it quickly added new routes and now operates seven A320. The airline has brought a new standard of in-flight service in India, attuned to the increasingly affluent and globalised Indian consumer. The carrier has also announced plans to go in for an IPO. Kingfisher is expanding its fleet to 11 A320 by January 2006, but the headlines really started to flow from June last year, when it placed an order for 15 wide-body Airbus aircraft with an option for 20 more, followed last month with orders for 30 more A319 and A320 and 20 ATR 72500. The carrier’s fleet plan shows its intention to become a major player in India’s long haul, domestic and secondary regional markets.

Jet news Luethi to leave and Kingshott to arrive PETER LUETHI, Chief Operating Officer of Jet Airways, will be retiring at the end of his three-year contract, at the end of April 2006, when he will relocate to USA. The airline has decided to not fill in the position. Australian Garry Kingshott, an Australian national, as Jet Airways’ Chief Commercial Officer, will take Luethi’s place effective March 2006. Kingshott will report to the Chief Executive Officer, Wolfgang Prock-Schauer.

Kingshott brings to Jet Airways over 31 years of corporate experience, with 10 years in the airline industry. He will oversee marketing and sales, commercial, airport services, and all aspects of customer service.

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India’s first The UPS Store opens in Mumbai THE UPS STORE officially opened its first outlet recently at Nariman Point, in Mumbai. The announcement marks the opening of the first The UPS Store outside North America. The UPS Store is India’s first full-service retail concept that combines packaging, shipping and other business services, such as Jet Airways ticketing service. The UPS Store primarily serves smalland medium-size businesses, mobile workers, SOHOs (Small Office, Home Office workers) and private consumers. It operates in India through a Master Licence Agreement between Jetair Business Solutions Pvt Ltd, a wholly owned subsidiary of Jetair Pvt Ltd, and Mail Boxes Etc, Inc, a wholly owned subsidiary of UPS.

Jet launches Chennai-Singapore flight JET AIRWAYS commenced its daily flights between Chennai and Singapore with effect from December 7, 2005. Southern superstar Vikram flagged off the inaugural flight. An inaugural Economy Class return fare of Rs 12,000 is being offered on the ChennaiSingapore route. The Singapore-Chennai fare for the same is $700. The daily flight will be operated by a next generation B737-800 with winglets for improved performance, especially configured for international operations, with 16 seats in Club Premiere (Business Class) and 124 seats in the Economy Class.

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Amadeus and Jetstar Asia enter into distribution agreement AMADEUS, THE global leader in technology for the travel and tourism industry, has signed an agreement for the distribution of Singapore-based Jetstar Asia’s flight and fare information to travel agencies.

Jetstar Asia flights are now available for booking and sales through Amadeus’ system. The agreement makes Amadeus the first global distribution system (GDS) to allow the airlines’ flight information and content to be made available to tourism professionals in the Asia Pacific region. The decision by Jetstar Asia—to adopt an additional distribution channel—is in step with a new breed of value-formoney airlines looking to adapt their business models and distinguish their service to travellers. Amadeus distribution technology will help make these carriers more competitive by offering additional sales services and expanding their distribution channels.

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Oberoi news

Royal Johor Polo Club lifts Oberoi President’s Cup

T

HE GRAND finale of the Oberoi President’s Cup (Open) Polo Tournament saw two of the finest polo teams—Royal Johor Polo Club of Malaysia and Polo Sport of India—battling it out for the most prestigious cup of the season. Royal Johor, led by Lt HH Tunku Ismail Ibrahim (son of HRH Tunku Mahkota Johor Ibrahim Ismail, the Crown Price of Johor, Malaysia) has some of the very best international players, such as Santiago De Estrada, Martin Ravina and Gaston Moore. Martin Ravina and Gaston Moore scored four goals each adding eight to the team’s total kitty of 10. The President’s Cup was introduced in 1975 under the patronage of the then President of India, Late Fakhruddin Ali Ahmed, who was also the Patron-in-Chief of the Indian Polo Association. A prestigious cup, it is played as an

open tournament. A team with a minimum of 14goal handicap and maximum of 20 qualifies to enter the tournament. The inaugural tournament for this cup was played in February 1975. Since then, the tournament has been played in rotation. Extending its sponsorship to this tournament was a continuation of the Oberoi Group’s association with the game, which has now spanned more than 25 years.

The Group commenced its support to the game in the late 1970s and early 1980s.

Udaivilas tops THE OBEROI UDAIVILAS, the luxury resort in Udaipur, has received the highest rating for service amongst all hotels in the world in Condé Nast Traveller’s Gold List.

This annual Gold List announced

by Condé Nast Traveller, UK, one of the leading travel magazines in the world, lists the best hotels that set the standards for the hospitality industry worldwide. The Oberoi Udaivilas has received an exceptional score of 97.49 for service, placing it ahead of last year’s best, the legendary Copacabana Palace, Rio de Janeiro. The resort is also ahead of Four Seasons Resorts Maldives at Kuda Huraa; The Berkeley, London; Four Seasons, New York, and The Landmark Mandarin Oriental, Hong Kong.

Bollywood goes to Korea KOREA TOURISM ORGANISATION (KTO) has announced special support to Bollywood to consider Korea for its location shoots. This announcement was made in the wake of the successful completion of the first Indian commercial movie shooting in Korea— Gangster. The movie, produced by Vishesh Films, would be released in the summer of 2006 and will unravel the myriad treasures of Korea, highlighting the diversity of the exotic and breathtaking locales. The country’s hi-tech and multi-advanced Seoul Film Institute is renowned world over as the Mecca for moviemakers and Korean film enthusiasts. The studio is well equipped and has numerous movie theatres and realistic outdoor sets, which, in the past, have been part of numerous award-winning films.

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Praful is the best

Sarovar wins the UPHRA awards

CIVIL AVIATION Minister Praful Patel was the easy winner of the CAPA Minister of the Year award.

This award honours an Asia Pacific national government minister who contributed the most to the progress of aviation in the region. Patel has demonstrated leadership in aviation liberalisation, with far reaching consequences for the global aviation market. In 2005, India signed an open-skies agreement with the US and signed liberalised bilaterals with the UK, Germany, France, China, Singapore, Qatar, Canada and others. Patel announced an airport modernisation programme (worth around US $9 billion), progressed fleet and IPO plans for Indian Airlines (now rechristened Indian) and Air India and supported the growth of domestic LCC entrants.

Spinetta says India deserves the A380 THE UP HOTEL & RESTAURANT ASSOCIATION (UPHRA) Golden Jubilee Tourism Awards function was held recently at a glittering function in Lucknow. Nitin Joshi (Howard Park Plaza, Agra) was conferred with the Best Hotel Manager Award and La Place Park Inn, Lucknow, received the Best Hotel Award. The awardees received these awards for their substantial efforts in promoting tourism in their respective locations. The awards were given away by UP Governor T.V. Rajeswar. UPHRA organised the tourism awards for the first time in the state to mark its golden jubilee year and recognise and reward outstanding contribution, performance and services in the tourism and hospitality sector.

TRAC and Kenya get togethers KENYA TOURIST Board (KTB), the nodal agency to promote Kenya as a preferred tourist destination, has announced the appointment of TRAC Representations as their official public relations consultants for the growing Indian market. Optimistic on the appointment and the Indian market, Fred Okeyo, Regional Manager-Emerging Markets, KTB, Nairobi, Kenya, said, “We have always realised the tremendous potential the Indian market bestows, its growing economy, high spending by the large Indian middle class, with favourable government policies, are all leading to a boom in the tourism industry and we would like to be part of this growth.” Kenya, a dominant African country having close bilateral and cultural relations with India, would further like to strengthen these relations through the growing medium of tourism. In 2004, 24,000 Indians visited Kenya.

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AIR FRANCE has expressed its willingness to operate the soon-to-be-launched double-decker airplane, the Airbus A380, on some routes to India, Jean-Cyril Spinetta, Chairman and Chief Executive Officer, Air France KLM Group, announced in Delhi during his high-profile visit to India to commemorate fifty years of flying between Delhi and Paris. Air France has come a long way since those early days when its turboprop airplane took close to 24-30 hours to get to Paris after multiple stopovers. It probably carried the same number of passengers in a month, as it will now in an A380 when it joins the fleet two years down the line. The airline is to take the first delivery of the airplane in April 2008. Commenting on the future plans of the airline in India, Spinetta said that it would look to enhance capacity to India by operating larger airplanes. The airline currently operates regular flights to five cities, including a daily service to Delhi. During his India visit, Spinetta made the mandatory trip to Bangalore and also called on the high and mighty in Delhi. There was a lavish dinner celebration with partners and associates who traversed the long road through five decades with them.

Going Swiss!

WITH A growth of 25 per cent registered over last year, India has become one of the top five emerging markets for Switzerland Tourism. Speaking at the “Switzerland Travel Experience” in Delhi recently, Federico Sommaruga, Director, Switzerland Tourism, said, “India is one of the fastest growing markets for Switzerland Tourism and is indeed the second largest market in Asia, after Japan. In the year 2005, there have been approximately 2,50,000 overnights in Switzerland from India. The Free Individual Traveller (FIT) segment has seen a tremendous growth, making it almost 50 per cent of the total leisure travel to the country.” India is now one of the leading emerging markets, which also includes China, Korea, Russia and the Gulf countries. “We were the first European state to set up a fullfledged office in India. In the coming months we plan to introduce an array of activities, including special programmes, such as Internet-based learning aids, local training sessions and on-site education trips to Switzerland, for Indian travel agents,” he added. Organised by Switzerland Tourism, the “Switzerland Travel Experience” is an annual event that promotes the country, its culture and various destinations.

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INDIAN NEWS Indian flies to Lucknow Indian Airlines Ltd reached another milestone when it operated its first A319 flight under the new brand—Indian—and in new livery. The all-economy flight, Flight IC 601, with Capt N.R. Pathak in command, took off from Mumbai airport with 124 passengers on board, for Lucknow, via Delhi. Of these, 94 passengers were bound for Delhi and 30 for Lucknow. An air of festivity prevailed at the airport prior to the flight’s departure. Indian’s

IT’S BEEN a brilliant year for Anil Bhandari, International Travel House’s Managing Director. This ISO 9001 company was adjudged the Best Travel Agency-India by readers of TTG Asia, a prestigious Singapore-based weekly. The award is bestowed, on an annual basis, upon an outstanding organisation of the travel trade within the Asia Pacific region. Reaffirming its commitment to the business traveller and keeping in line with the best global practices, Travel House has further strengthened its technology platform in terms of air ticketing, which includes satellite ticket printing and introduction of electronic process for strengthening its credit card payment mechanism, among other technological advancements.

Anil Bhandari who spent five years as the head of ITDC, promises that 2006 will be as exciting “if not more than 2005.” Here is wishing him all the best.

December 12, had a second international flight launched from his hometown, Pune.

While on December 11, Pawar had launched the Air India-Dubai connection, the next day saw the launch of the Pune-Singapore connection (via Hyderabad). It was a wellattended function, with the entire top brass of the airline flying out from Delhi with Mantriji to do the honours.

Profits soar

counters were decorated and rosebuds presented to passengers. Among the passengers were well-known drummer Shivamani and singer Shankar Mahadevan, who lit the inaugural lamp. On board, too, passengers were in for a pleasant surprise when Capt Pathak made a special announcement regarding the new aircraft and brand.

Birthday gift It was the perfect birthday gift from Civil Aviation Minister Praful Patel for Sharad Pawar. The NCP chief, who turned 65 on

Indian Airlines has recorded a net profit of Rs 65.61 crore for the year 2004-05. The net profit, for the second successive year, surpasses last year’s net profit of Rs 44.17 crore by 48.5 per cent. The board of directors, at its last meeting, approved the annual accounts of the company. The record profit of Rs 65.61 crore has been achieved in the face of rising domestic ATF prices during the year. Although the price of ATF increased by nearly 33 per cent in 2004-05, as compared with the earlier year, the increase in traffic and increase in total revenue, from Rs 4,677.50 crore in 2003-04 to Rs 5,362.57 crore in 2004-05, has been major contributor to the increased profit. Also contributing to the net profit was the strict cost control measures adopted during the year, on account of which a saving of Rs 76.59 crore was achieved.

AA’s Indian team AMERICAN AIRLINES, which commenced the first direct flight between New Delhi and Chicago on November 17, 2005, has announced the appointment of Nisha Maharaj as Regional Manager, Indian Subcontinent, and Vanita Bhatnagar as Sales Manager, Indian Subcontinent. As Regional Manager for India, Maharaj will be heading American Airlines’ operations in India Nisha Maharaj Vanita Bhatnagar and will also be responsible for all aspects of the airline’s operations in Bangladesh, Sri Lanka and Nepal. She has been associated with American Airlines for over 16 years and brings with her a rich and varied aviation experience, having worked with American in different countries across the globe. Prior to taking over her current position in India, she was the Country Manager for American Airlines’ Trinidad operations. Bhatnagar will be primarily responsible for leading American Airlines’ sales efforts in India, coordinating sales strategy with American’s partner—Air Sahara—and managing GSA relationships in India, Sri Lanka, Bangladesh and Nepal. She has over 14 years of experience in the travel trade and has been associated with American Airlines since 1999. Prior to joining American Airlines, she was working with National Travel Service, American Airlines’ GSA in India.

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OURISM HAS to be the priority sector for the country and it is essential for it to be recognised for its importance as a driver of economic growth. Addressing the CII Tourism & Heritage Summit, organised by Confederation of Indian Industry (CII) recently, Tourism Minister Renuka Chowdhury called on the Planning Commission to request each ministry of the Union government to set aside certain por-

Nilotpal Basu speaking at the conclave tion of their Plan expenditure, for upgrading tourism-related infrastructure in the country.

The return from investment in tourism has a ripple effect that permeates the entire economy and benefits a larger cross-section of society than any other, she said.

She said that India had already become the fifth most preferred destination in the

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holds Tourism Conclave world today and if there were proper integration between the various ministries dealing with infrastructure, the tourism sector would benefit immensely.

The Minister stated that her ministry had taken three major initiatives to make India the most popular destination. The first was the Atithi Devo Bhava campaign to train the guides, focus on hygiene and basic cleanliness for those dealing with foreign tourists. The second step was Project Priyadarshini, under which the ministry was training and promoting involvement of women in tourism-related professions. The project, which was recently launched, has women driving taxis in Delhi and other metros. She said that this had received good response from many states. The third and an important initiative was the need to integrate functioning with the other ministries, to create infrastructure that would attract foreign tourists. This meant looking at problems like road connectivity, issuing visas and making the tourists feel welcome in India.

The Minister called for development of a vision statement for the Indian tourism sector, for the next five to 10 years. Talking about niche tourism segments that India had an advantage in, the Minister mentioned medical tourism and adventure tourism as specific examples. Historically, there have been issues, with tourism not even being mentioned in the first two FiveYear Plans of the country, but was clearly optimistic about the future.

CRUISING HEIGHTS January 2006

Nilotpal Basu, Chairman, Parliamentary Standing Committee, Transport, Tourism and Culture, advocated the need for creation of a National Tourism Promotion Policy, if India had to make a mark in the tourism sector. “We have everything going in our favour—nature, mountains, cuisine, the people; but we must seriously analyse why we are so miniscule on the world tourism map, while even a country like Sri Lanka, with much less assets, was surging ahead,” he said.

Muzzafar Hussain Baig, Deputy Chief Minister and Minister of Tourism, Government of Jammu and Kashmir, said there are widespread misconceptions about Article 370 that need to be dispelled for industry to invest in tourism in Jammu & Kashmir.

“That industry cannot buy land due to Article 370 is only a misconception.” The Arti-

Amitabh Kant spoke at the concluding session

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cle does not pose any restriction for joint ventures with local entrepreneurs.

Baig identified several challenges that Jammu and Kashmir has to overcome to harness its true tourism potential. These challenges range from infrastructure bottlenecks to image perception and training and education in tourism. He lamented that the country has merely three universities that provide training and education facilities— awfully inadequate for a country of our size. He also stressed on the need for a campaign to bring about attitude change towards tourism in India.

Tourists want to feel at home, cherished and looked after.

Earlier, addressing the gathering, Vinod Zutshi, Secretary, Department of Tourism, Government of Rajasthan, stated that a new Hotel Policy was under consideration to provide a fillip to the development of budget and three- and four-star hotels in the state.

As a result of friendly and conducive policy environment and diverse tourism products, Rajasthan has regis-

Operation Priyadarshini, Renuka’s latest project tered a remarkable 55 per cent increase in foreign tourist arrivals in the state.

But it was left to Amitabh Kant, Joint Secretary, Ministry of Tourism, to elaborate on the real numbers. He mentioned that India’s growth in its tourism market has far outstripped the world average increase during 2004 and 2005.

In 2004, India’s tourism industry had grown by 24 per cent in volume terms, and by 36 per cent in value terms. The figures for January-October, in 2005, also indicated a similar pattern.

The biggest challenge for the country’s tourism industry today was to convert India into a year-on tourism destination. For this, India must be able to expand and grow its market with new areas in states. Opening up of the vast tourist hinterland in new states will add to the growth momentum for the tourism industry, he said.

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DECCAN KHABAR

More launches from Deccan

T

HE AIRLINE has announced the launch of direct daily flights from Hyderabad to Nagpur, Pune and Goa starting December 10, 2005. The bookings for these sectors opened on December 2 for travel starting December 10, 2005, till January 31, 2006. Capt Gopinath, Managing Director, Air Deccan, said, “While it is imperative to connect bigger hubs like Bangalore, Delhi, Mumbai and Hyderabad with each other, it is equally important to connect smaller cities with these hubs. It provides not only an opportunity to the residents of these cities to explore newer prospects, but also aids in the overall development of the city. Low cost air connectivity across the country is a vital ingredient for a successful and steady economy.”

ATR bookings: The airline also announced the opening of bookings on 127 ATR flights for travel between February 1, 2006, and March 31, 2006. Online booking for the same opened on December 4, 2005, at 6.30 am. Bookings for all Airbus sectors are already open for travel till March 2006. ATR sectors, for which bookings will open, include Amritsar, Aurangabad, Bangalore, Belgaum, Bhavnagar, Bhopal, Chandigarh, Chennai, Coimbatore, Dehradun, Delhi, Goa, Gwalior, Hubli, Hyderabad, Indore, Jaipur, Jammu, Jamnagar, Kandla, Kanpur, Kochi, Kolhapur, Kozhikode, Lucknow, Madurai, Mangalore, Nagpur, Pune, Rajkot, Thiruchirapalli, Thiruvananthapuram, Tirupati, Tuticorin, Vadodara, Vijayawada and Vizag. Bookings for Northeast and Kolkata sectors will open shortly.

Srinagar launch: The airline launched direct daily flights from Srinagar to New Delhi.

Amidst an extremely animated gathering, the first flight from Srinagar to New Delhi was flagged off by Shri Ghulam Nabi Azad, Hon’ble Chief Minister of Jammu & Kashmir, on December 6, 2005. A 180-seater, brand new CRUISING HEIGHTS January 2006

Airbus 320 has been deployed on this route.

Gopi bags ‘Galileo Express award’: Capping a wonderful year, Capt Gopinath won this award. Instituted two years ago, the ‘Editor’s Choice Award’ recognises the contribution by a personality in the industry who has changed the face of business, creating an impact in the way the industry works and also impacted the entire society. It also recognises the effort put in by an individual in starting a completely new mode of business channel, compelling others to follow.

Café Coffee Day in the sky: Forget the mix and drink coffee. Coffee Café Day will now be available on all Air Deccan flights. Café Coffee Day will be the single-point vendor to supply a range of delicious food and beverages to the consumer in the air. Air Deccan passengers will receive discounts on purchase of merchandise, like coffee powder and gift packs, at all Café Coffee Day outlets against their boarding pass. Café Coffee Day’s menu ranges from hot and cold coffees to several exotic international coffees, food items, desserts and pastries. In addition, exciting merchandise, such as caps, T-shirts, mugs, badges, etc., is also available at the cafés. The coffee is attractively priced between Rs 16 and Rs 65, while food items and desserts are priced between Rs 15 and Rs 60.

More A320s for Gopi: The airline has announced its plans to purchase 30 more Airbus A320 at a list price of $1.5 billion. The acquisition deal has been signed with Airbus Industrie and the delivery will begin from 2008. Earlier this year, Air Deccan had placed orders for 32 Airbus A320 and 30 ATR 72-500 and this fresh order will take up the total to 92 aircraft. Air Deccan currently has a fleet of 24 aircraft, comprising of seven Airbus and 17 ATRs. After the acquisition of the new aircraft the fleet size will go up to 110-115 planes by 2012-13. During the year, the airline will receive eight A320, followed by ten every year thereafter, taking the fleet size to 32 by the end of 2006.

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One Sheriff and one Ambassador ONE DOESN’T know why this Wild West coinage is used to describe this hugely ornamental position in Mumbai. Nonetheless, it is an honour that’s well deserved. In effect, it is the city applauding one of its favourite sons.

Although the Sheriff, who reigns for a year, does not have any executive powers, he has an office and staff and receives the same protocol as the Mayor’s. The Sheriff presides over various city-related functions and is among those who receive prominent foreign guests.

Vijaypat Singhania, 67, can take heart from the fact that there will be plenty of trips to the airport—one of his favourite places.

AT THE other end of the spectrum, batting legend Sunil Gavaskar has agreed to be the Goodwill Ambassador for Nepal tourism.

“Nepal is the best place for relaxation in the world, and I am very delighted to take the good memories of Nepal that I have during my stay in Nepal,” Sunny told the media after a brief holiday in the mountain kingdom.

Don’t be surprised if you hear of a cricket tournament in Kathmandu soon. “I will tell the people wherever I go to visit Nepal, do relaxation and adventure sport,” he promised.

Good idea.

100 per cent

man!

WHO WAS to know that India’s Metro man would finally be unleashed on the Civil Aviation sector. So strong and formidable is the good man’s reputation that no one was willing to lobby with him or even discreetly approach him with their perspective or point of view. And when he submitted his report, some people grumbled, some were delighted, but no one said that Sreedharan had an axe to grind.

That’s the magic of 100-percent integrity.

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Thank you, Sahara AFTER THE bumper serving from the House of Sahara (According to a BCCI official, the airline’s bid amounted to 3.138 billion rupees ($69.6 million), or, to put it simply, Rs 412 crore), it’s no surprise that Indian captain Rahul Dravid was the star at a photo op with the Air Sahara top brass a day before the team left on its tour of Pakistan. The occasion was to mark the airline’s inaugural Delhi-London flight and the free trip for the underprivileged children. Dravid said, “This is a unique programme aimed at the underprivileged children and I’m happy to be here. This would be an opportunity for the children to learn through travel and I can tell from my experience that I learnt more from travelling than anything else.” Under this cultural exchange initiative, twenty Indian children will visit Britain each year; five British children would also visit India. Local NGO Salam Balak and the National Children’s Home for Kids of London have been asked to pick the children for the tour.

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Maharaja’s gourmet ideas THE MAHARAJA has decided that the way to a passenger’s heart is through his stomach. Beginning January 5, Air India has organised a unique gourmet flight on the MumbaiLondon sector. The festival will end on January 31.

There will be both vegetarian and nonvegetarian fare and a chef from Taj-Sats, AI’s in-flight handlers, will be on board to cook for all three categories of passengers.

Now if the flights arrive and depart on time and if one can get a paneer pasanda or a murg mussalam at 37,000 feet with a glass of chilled wine, that’s what one would call a Maharaja bhoj. AI Chairman Vasudevan Thulasidas hopes that he can get the chefs on board ‘gradually’ on all AI flights.

The gourmet festival seems a good idea considering one of the big grouse that passengers always seem to have against the national carrier is their in-flight service. Now who is to tell them that the same kitchen supplies others as well.

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