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EDITOR-IN-CHIEF’S NOTE

Will it work?

f it was a question of plain and simpler hardware, there is no doubt Air India (Air India plus Indian), as the new public sector avatar will henceforth be known, will have some of the best aircraft in the business. In the wide-bodied section, it is the super-hit 777 LR and ER and the 787, or the Dreamliner, as this best selling Boeing aircraft is better known. In the short haul or the narrow-bodied segment, it has the 737-800s and the 319s, 320s and 321s. Frankly, one couldn’t ask for more. All in all, a huge fleet of 110 aircraft, which is being viewed as the beginning of the renewal of the great Indian public sector adventure in the skies. Those who have been lucky to do the first non-stop flight, continue to rave about the product. Fellow journalists, who did the Polar route ferry trip from Seattle to New Delhi (when Air India CMD V. Thulasidas went there to receive the second 777 LR), say the 14-hour-20-minute trip was an experience. Not simply for the view as they overflew Canada and the icy magnificence of the Pole, but for the top quality service on board, the world-class interiors (particularly the flat bed first and business sections) and the mind-blowing 500 hours of entertainment on the in-flight system. Sadly, the in-flight crew didn’t serve the journos and the civil servants in their smart Pierre Cardin and Ritu Beri uniforms. That’s been rolled out with the first non-stop between Mumbai and New York that began service on August 1. But is all this good enough to get Air India off the ground? Would the passengers be happy watching Sholay on their personal screens and listening to vocals of Himesh Reshammiya? Or the ladies sashaying about in the Ritu Beri designed trousers? By and large, there are few complaints about the experience on board AI. The real issues are on the ground: delayed flights, of which the poor passengers had no information, interminable wait at the airports for technical glitches to be fixed, tense captains walking off flights. The adage that a passenger begins his journey the moment he steps into an airport to check in holds even more true in these troubled times when security is stifling, baggage rules are tough and a bottle of mineral water can be junked because it is a dangerous liquid. A pleasant experience as you prepare to check in can make a world of difference to the whole experience of a journey. Insiders, outsiders, passengers and diehard critics, all admit that the private-sector carriers (both

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Indian and foreign) are streets ahead when it comes to dealing with issues on the ground. Just the other day, my flight to Mumbai was late by over an hour and a quarter. There was no SMS, no call to inform me of the delay. When I complained while checking in, the AI staffer at the counter politely explained, “Mein akela aadmi kya karoon ji.” And that is the whole point. A poor soul like him can do nothing if the AI-appointed call centre fails to deliver. But surely he can be as concerned about the sloppy nature of their delivery as the passenger. He can docket the complaint and cry himself hoarse before his superiors till they find a solution. All he had as a solution was a helpless shrug. If Air India has to compete with the likes of Jet Airways, Singapore Airlines and Emirates, then the experience of first contact with the passenger has to undergo a paradigm change. And the experience when he arrives at the other end must be equally refreshing. Why should a business class passenger’s baggage arrive long after the economy class guy has gone home? Most important, they must ban the helpless shrug. Maharajas don’t shrug. They stand straight, proud and confident. They lead and they usually deliver. Isn’t that what the Air India mascot is all about?

PS: The Times of India’s Chidanand Rajghatta travelled from Seattle to New Delhi. He was delighted with the experience. Four days later he took the first flight out of Mumbai to New York. In between he spent three days with his parents and had a root canal fixed at one-eighth the price it would cost in Washington. In his piece in the TOI after returning to base, Chiddu wrote: “But new aircraft alone is not enough to win back passengers. Air India needs to clean up its act starting with the first ticketing call. … The inaugural flight took off from Mumbai on the dot at 12.45 am and landed in JFK on schedule at 7 am … Perfect for the day’s meeting on Wall Street. But the business traveller sitting next to me was far from happy. His check-in was tortured. The cabin crew was eager and earnest, but they didn’t have the first two duty-free items he asked for. And they couldn’t fix his TV screen that had blanked out.” Nonetheless, Chiddu is waiting for AI to announce its non-stop to Bangalore. There are scores like him who want to travel AI. But each one of us wants them not to shrug.

Off the cuff

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Fly business class with discounts

It is the in thing now to travel in discount business class airlines flying the trans atlantic route. One of the airlines, Eos, which began service in October 2005 between New York’s JFK Airport and Stansted, a secondary airport outside London, has upped its frequency to 32 flights a week. With averages totalling around 67 per cent, Eos is happy. This, despite the fact that the figure is below the average load factors for major airlines flying the North Atlantic. Among the other airlines is Maxjet, which flies between JFK and Stansted, Las Vegas and Stansted and next month will resume service from Washington’s Dulles to Stansted. These USbased carriers were joined this year by Britain’s Silverjet, which flies from Newark to another London secondary airport, Luton, and France's L'Avion, which flies from Paris Orly to Newark. The concept for all is basically the same. They fly either Boeing 757 or 767 aircraft that normally carry 220 passengers, and fill them with lie-flat or almost lie-flat seats. The number ranges from 48 on Eos to 100 on Maxjet. Each airline promises an escape from the usual travel hassles, offering quick check in, “fast track” to short security lines, a quick exit from customs and immigration, and airport lounges. The round trip fares vary, from less than $1,500 on Maxjet to about $3,000 on Eos. Major airlines charge $5,000 or more for a round-trip business class ticket.

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contents FUTURE READY! p24 Flushed with the successful launch of its direct flights to New York, Air India is looking to future. In fast-forward mode now, the carrier, with its fleet of new aircraft, is looking forward to connect more cities to US destinations.

INTERVIEW

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AI Chairman Vasudevan Thulasidas looks beyond 2011 and the plans of the country’s international carrier to take on the competition CRUISING HEIGHTS August 2007

CARGO

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British Airways and Korean Air were levied major fines for rigging cargo and passenger prices. What really happened? Who was responsible?

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

COLUMN

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Civil Aviation Secretary Ashok Chawla discusses what goes into the making of world class airports and what the country is doing to plan better airports

CRUISING HEIGHTS K. SRINIVASAN Editor-in-Chief

TIRTHANKAR GHOSH Managing Editor

R. KRISHNAN

Consulting Editor

SUNIL BHASIN

AERA

Editor (Quality)

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SHIVANGI SHARMA

Two years in the making, the Aviation and Economic Regulatory Authority bill is ready to be placed in Parliament. With new airports opening and the aviation sector growing at a rapid pace, AERA is the need of the hour.

Editorial Coordinator

RUCHI SINHA PRADEEP JHA Layout Artists

BHART BHARDWAJ Art Director

H.C. TIWARI

Consulting Photographer

RAJIV SINGH

Gen. Manager (Admn.)

RENU MITTAL Executive Director

CONVENTIONS

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The next couple of months will witness three of the country’s travel and tour operators’ associations holding their annual conventions to discuss the challenges in the tourism sector

NEWS DIGEST

GLOBETROTTING

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Hollywood star John Travolta has sued the airport outside his home for fudging records

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Southeast Asian carriers, particularly the low-cost ones, are becoming very aggressive to tap the Indian market. Nok Air, Air Asia and Tiger Airways are offering not only low fares but also purchases combined with night stays in Bangkok and Kuala Lumpur.

BACK PAGE

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Ten lucky children got a rare opportunity to meet Don Shah Rukh Khan, courtesy Jet Airways

CRUISING HEIGHTS August 2007

Editorial & Marketing office: Newsline Publications Pvt. Ltd. C-15, Sector 6, Noida 201 301 Telefax.: +91-120-4257701-03 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 by K. Srinivasan 4C Pocket-IV, Mayur Vihar Phase 1, Delhi 110091 and printed by K. Srinivasan at Nutech Photolithographers, B-240, Okhla Industrial Area, Phase-I, New Delhi 110 020 Vol II No 4 Cover Photo: Courtesy PIB

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Land woes

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“The cost of real estate is shooting up and acquiring land is becoming an expensive affair. The states have requested the centre to see whether they can bear some of the cost of land acquisition. No decision has yet been taken on this matter.”

Civil Aviation Secretary ASHOK CHAWLA on the rising cost of acquiring land for new airports.

LETTERS TO EDITOR

I READ WITH great interest Gopinath’s candid interview (I am Giving the Merger a Fair Try, July 2007). Now that Jet Airways has gobbled up Air Sahara and Kingfisher has gotten a slice of Air Deccan, competition has VISION 2020 reduced a bit. Everybody expressed hope that probably with more M & As, the aviation industry will settle down a little, which is probably a good thing. But will it last? To make matters worse, Mega Airways, Magic Air, Mukti Airways, Sky King Airways, etc., are waiting in the wings to take off. Assuming that even all these start-ups begin operating, where is the infrastructure to support them? Looks like ultimately hovering time would be more than the actual travel time and distraught air passengers will help Lalu Prasad Yadav chug on merrily. Shyam Sunder, on email July 2007

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A LOOK AT PROPOSED AVIATION POLICY

Illustrations: Rajeev Kumar

WHAT'S the liquor baron up to? First, he launches a fullservice when LCC is the order of the day. Then he brings the A380 to India and even serves booze in flight. Now he wants to hire foreign FAs. Is he playing out his fantasies or his guests? Wonder how many have seen his swimsuit calendars? If it were to become a reality, courtesy PP, I wonder, what would be next on his agenda. Belly-dancers? Srinivasa Rao, New Delhi

CAPTAIN RAHUL S. PURANIK’s tête-à-tête (Budget Carrier with Service, July 2007), in which he reveals his plans of flying non-stop into India, was quite interesting. But the point is will the new airline survive at the prices he is mentioning. Probably, he is banking too heavily on cargo and not passengers. Anyways I wish the venture luck, but at this stage it sounds like another Gopi in the making. Sheila Kumar, on email All correspondence may be addressed to Editor, Cruising Heights,C-15, Sector-6, Noida-201301 OR mail to newslinepublications@rediffmail.com

Naresh speak

“We are not here to get into fare wars. We are here to give you the best product, which hopefully no other airline gives you.” “American passenger-airlines ‘dump people’ from one point to another. (But) with us, you get a hot meal within a half-hour of take-off.” “It’s (productivity) higher and better than other carriers. Our cost ratio in aircraft is one of the lowest in the world.” “We’ll start service to JFK, San Francisco, Chicago and LA (Los Angeles) in the next year.” “There is traffic already. You don’t have to do anything. There are 2.5 million Indian-Americans living in the US.” Jet Airways Chairman NARESH GOYAL on the ambitious North American operations.

Equal pay “The pay structure of the two organisations (AI and IA) would be rationalised to bring it at par with each other. Whilst integrating at any particular level, there will be harmonisation of policy and wages and review of productivity norms and linked incentives.” Air India Executive Director S. VENKAT on the merger woes and the salary parity of employees.

Star dreams “From the Star (Alliance) perspective, we wanted a partner in India, which has access to international routes traffic rights and also domestic network, not just to fit flights in Delhi and Mumbai. One pre-condition was the merger between Air India and Indian Airlines. The government has approved it. So the pre-condition has been met.” Star Alliance Chief Executive Officer JAAN ALBRECHT.

Same strategy “The Re 1 and Rs 99 tickets will be used more for penetrating the virgin routes and to build up the demand. But we want to see how much more we can get from the top end of the market. But whatever we do, we will see that our basic business model remains the same.” Air Deccan’s Chief Revenue Officer SAMYUKTH SRIDHARAN on the airline’s strategy.

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The online boom Centre for Asia Pacific Aviation (CAPA) recently surveyed almost 2,000 passengers at major airports in India, the first such study to be conducted. Here are a few stats: 43 per cent of LCC passengers in India bought their tickets over the Internet. 48 per cent of LCC passengers in India used credit card to pay for their ticket.

COLD STATS

The figures relating to Indian passengers travelling on full-service carriers were significantly lower: 21 per cent bought their tickets over the Internet. 61 per cent bought their tickets through a travel agent. 31 per cent used credit card to pay for their ticket.

LOOKING GLASS

“Namaste, Lady Liberty. Permit us to take a quick look of the New York skyline before we land....”

May I fly? "The aspiration levels in small towns are very high. These proposed centres would offer two short-term courses, which will cover various facets like communication skills and personality development. After completion of these courses, our team would shortlist students who would then go for the full-fledged course.” Air Hostess Academy Consultant SAPNA GUPTA on moving into the hinterland.

Donkey drops “Most Indian runways become tricky after rains. It is a benchmark set donkey’s years ago. It needs to be updated.” Captain A. RANGANATHAN, former pilot and instructor.

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OFF THE RECORD

Celebration time

hat is common among Rahul Bajaj, Farooq Abdullah and Surinder Ruia? Simple. All are Praful Patel fans and were there in full strength at the Air India party at the Hyatt in Mumbai to celebrate the arrival of the airlineâ&#x20AC;&#x2122;s new aircraft and the launch of the first non-stop to New York. It was an evening full of bon-

CRUISING HEIGHTS August 2007

homie, good cheer and playful banter. Both Indian and Air India, for whom this was the first common do, turned out in full strength. The top brass and the EDs were all there in full strength. The new Ritu Beri and Pierre Cardin designed dresses were unveiled and the hit ensemble Broadway gave a musical edge to the evening. The Maharaja partied hard that evening and then took off for New York at 40 past midnight.

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OFF THE RECORD

Ferry passengers Soon after the Delhi function, AI’s 777 200 LR took off for Mumbai with a select number of VVIP passengers. On board were Civil Aviation Minister Praful Patel, AI CMD V. Thulasidas, Agriculture Minister Sharad Pawar and Boeing’s Dinesh Keskar. Incidentally, Keskar had travelled on the ferry as it flew over the North Pole into Delhi from Seattle. There are no prizes for guessing that Pawar loved the aircraft and the ambience it provided. But that wasn’t the only trip. In Mumbai, Patel, who had convened a special meeting of the Parliamentary Consultative Committee to coincide with the launch of the non-stop flight, took the MPs on an hour-long sortie over Mumbai when they were served

lunch and given a feel of the in-flight entertainment and the luxury of the first and business class sections. Keeping them company was a host of directors of the two merged entities—AI and IA. For Praful, this isn’t the first ferry. Just some time back he had flown into Delhi on Jet Airways’ spanking new 777300 ER after inaugurating its hub in Brussels. That was just around the Uttar Pradesh elections and keeping him company on the flight was, of course, Naresh Goyal along with R.K. Singh and his OSD

Robey exits IATA Robey Lal, energetic, knowledgeable, but extremely low profile and reticent, has quit IATA after close to two years as head of India office. Lal, a former Airports Authority of India director, confirmed he was leaving, and added that it had more to do with his own desire to get out of wholetime assignments. But those in the know state that Lal was disappointed at the manner in which his assignment was

shaping up and felt it was better to get out than drift. The fact of the matter is that IATA is all about Giovanni Bisignani and the adventure of ‘cult building’. Almost always it is that Bisignani said this or said that and he wasn’t saying something, then he was issuing warnings and outlining deadlines. The Delhi office, insiders state, is a perfect case study of the atrophy in IATA. With

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Kamal Choubey. For record, it may be mentioned that Singh’s senior and the ministry of civil aviation’s additional secretary and financial advisor Raghu Menon was on the trip from Seattle to Delhi. Finally, on August One, as the first non-stop took off from Delhi for New York, Dinesh Keskar was back on board. This time as a paying passenger who was going home. He must have had a restful 14 hours in his first class seat, considering he had successfully completed one of the biggest orders that Boeing had achieved in the recent past. But he could be back in Delhi sooner rather than later. With 60 more planes waiting to be ordered, Dinesh will have his work cut out for him. LCCs expected to capture over 60 per cent of the market share in the next few years—and with this being the trend worldwide—IATA, which represents the full-service carriers, has its task cut out for it. But you can’t do that by making your outposts a reservation office for his regional team in Singapore or the fat cats at headquarters. Giovanni Bisignani has been saying ad nauseum that airlines need to trim the fat if they have to survive the cutthroat competition. He is dead right. But the lessons have first to be learnt at home—by the IATA biradari that gallivants the globe even as losses keep mounting and the LCCs keep stacking up the numbers.

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Mishra unlimited

Sortie over Delhi

You cannot have enough of A.K. Mishra, the portly former member (planning) at the Airports Authority of India, who is what can best be described as a ‘free thinker’. He thinks independently and acts independently, but has great admiration and love for Mantriji. As a key member of the AAI team, Mishra oversaw a huge amount of purchases during his 18 months in office. One of these includes radar equipment for Bangalore and Hyderabad airport from Selex, an Italian company with a mile-long reputation. Now BIAL (Bangalore International Airport Ltd) was having problems with the equipment. They reportedly were less than satisfactory in the several tests that were held, and BIAL called Selex for a meeting to discuss the issue. Wonder of wonders, one of those who turned up for the meeting at Bangalore on behalf of Selex was the good man Mishra. Now how does

THE NEW PAWAN HANS CMD R.K. Tyagi has got off to a cracking start in his new assignment. The high point surely has to be his desire for a chopper hub at Akshardham and his sortie over Delhi in the company of the ministry’s joint secretary Arun Mishra to understand the complexities of chopper flying. For a man who has spent three fourths of his working life in Oil, Tyagi is remarkably well-informed on-theball professional as far as the helicopter business is concerned. All this knowledge gleaned over the few years he spent as the general manager (logistics) at Oil and Natural Gas Commission (ONGC). Incidentally, that was a job he was literally thrown into soon after one of the worst accidents at Mumbai offshore during the torrential downpour three seasons back. Tyagi has taken upon himself the task of completely revamping the operations of Pawan Hans and making it a modern fleet, with 60-100 choppers, that has a long-term perspective and extends not just its position as the leader in the helicopter business, but also creates a huge lead between itself and the next best.

this equation work? Don’t ask us. Ask Mishraji. Obviously for him AAI = Selex = BIAL. Therefore, you can seamlessly transfer your allegiance to anyone of them as long as you have worked for one of them. Some equation this!

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COLUMN

Planning Better

AIRPORTS Civil Aviation Secretary Ashok Chawla discusses the challenges that go into the making of world-class airports. What is important is that aspirations of both domestic and international travellers as well as future growth have to be kept in mind when new airports are set up. Delhi and Mumbai account for 45 per cent of passenger traffic and if we include Bangalore, Hyderabad, Kolkata and Chennai, this rises to over 70 per cent. This has put enormous pressure on the runways, parking bays, takeoffs and landings, etc. 10

IRPORTS in India are no better than buildings from which we take off, land and make our exit. Aspirations of both domestic and international travellers, over time, have raised the bar and it is now becoming very difficult to continue like this. None will accept or use them. This is a challenge and opportunity. It is a challenge because the airports will have to be built according to the need and requirement of all stakeholders. As for opportunity it is an even greater challenge. Growth in traffic has surpassed all expectations. It is not just a flash in the pan; it is here to stay. With India growing at nine per cent annually, it will create its own demand, leading to further pressure on the infrastructure. While traffic growth was a hefty 46 per cent in 2006 over 2005, the average of more than 25 per cent is expected to continue for some more years. Crystal gazers have suggested that number of travellers could easily reach 400 million by 2020, while the Airport Council International (ACI) feels the numbers could reach even 700 million. The number of aircraft could rise from the present 312 to 1,000 in the next few years. The story will be similar for general aviation and helicopters. There will also be substantial growth in CRUISING HEIGHTS August 2007

cargo. All these will pose a big challenge. A massive effort will have to be undertaken to improve and increase Indiaâ&#x20AC;&#x2122;s aviation-related infrastructure, both in terms of quantity and quality. What do we have today? At present, Delhi and Mumbai account for 45 per cent of passenger traffic and if we include Bangalore, Hyderabad, Kolkata and Chennai, this rises to over 70 per cent. This has put enormous pressure on the runways, parking bays,

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take-offs and landings, etc. At the same time the government also realises that the funding for quick and substantial upgrade cannot come only from the government and the PSUs. It is in this context the public private partnership (PPP) initiative has come to stay. This will be very necessary to meet the crying needs of Tiers II and III cities for more and better infrastructure. But for all this to happen, India does not have the luxury of time. A mixed approach and strategy has become inevitable. It is in the context of these developments, the government has not only thought of merchant airports—a proposal for which would be moved to the Cabinet shortly—but also dedicated airports for low-cost carriers. In the next four to five years, airport development in India, which includes the six metros and the 35 non-metros, will require over Rs 41,000 crore, or $10 billion. So obviously it has to be a mixed approach. As for the non-metro airports development, AAI will develop the airside, including the terminal buildings, while the cityside will be developed on the PPP model. There are 24 such airports and contracts for building 15 terminals have already been awarded. The committee on infrastructure, headed by the Prime Minister, has assured that all the 35 non-metro airports will be developed by the middle of 2010.

However, as is in the big cities, land availability and land acquisition are becoming problems in a number of non-metros as well. So the ministry of civil aviation has asked AAI to write to various state governments to provide land for expansion, modernisation and development of some of the non-metro airports already earmarked for renovation and expansion. Besides, the ACI may also be approached to rank Indian airports. Let me also clarify the situation on Chennai and Kolkata. Besides the socio-economic factors, one of the main reasons for awarding the contracts for these two airports to AAI is its robust financial health and management ability. Government feels there should be healthy competition between the state/private and PPPJVs. I am confident AAI will develop these two airports, if not better then no less than the ones coming up at Delhi, Mumbai, Hyderabad and Bangalore. There should also be multi-modal connection to the upcoming airports and those that are being modernised. While in Delhi, there is already a proposal for linking the airport with the city through a dedicated Metro rail connection with only two stops en route, the idea is to ensure multi-modal connectivity to at least 10 big airports in India in the coming couple of years. It could be an expressway, rail link, etc. The fact is no passenger using an LCC and paying very low fare can be expected to pay as much to commute from the airport to the city. For instance, in Bangalore, while the new BIAL is at least 34 kilometres from the city centre, Bangalore hardly has any public transport. Equally important is the management of air space. AAI is in the process of installing the ISRO-AAI—driven GAGAN by the end of 2009. There is also a proposal to restructure some of the services of AAI. This could be in the form of separation of certain functions, such as navigation, air space management, from the other equally important functions, such as focussing on building and operating airports. As for cargo, the growth has unfortunately not matched that of passenger’s. However, the ministry of civil aviation is planning to set up one or two multi-modal cargo hubs. A beginning has been made with Nagpur. Given a high GDP growth, cargo growth is bound to be high. Cargo will be the next big story. A beginning will have to be made by reducing the dwell time. Globally, it takes two to three hours to clear export cargo and double of that for clearing import cargo. But in India it takes a much longer time. We are looking to address that urgently. Gist of the remarks made by Civil Aviation Secretary Ashok Chawla at a seminar on World Class Airports, organised by the Foundation for Aviation and Sustainable Tourism (FAST) on July 25. CRUISING HEIGHTS August 2007

There should also be multimodal connection to the upcoming airports and those that are being modernised. While in Delhi, there is already a proposal for linking the airport with the city, the idea is to ensure multi-modal connectivity to at least 10 big airports in India. 11

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FOCUS

Hurrah for

AERA? Two years in the making, the Aviation Economic Regulatory Authority bill will be introduced in Parliament. Once it is passed, the Authority will be able to adjudicate all disputes between airport owners and users.

FTER A TWO-YEAR debate and many drafts, the AERA (Aviation Economic Regulatory Authority) bill is all set to be introduced in the Monsoon Session of Parliament. With the session expected to conclude by mid-September, the ministry of civil aviation is optimistic that a properly staffed AERA, with a chairman and two full-time members, should be in place early 2008 or perhaps before to adjudicate disputes between airport

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owners and users on host of issues. The matter assumes importance considering that two major metro greenfield airportsâ&#x20AC;&#x201D;GMR Hyderabad International Airport Limited and Bangalore International Airport Limitedâ&#x20AC;&#x201D;will become functional by March-April 2008. A sort of dress rehearsal of the need for AERA arose when Rajeev Naithani, National Airports Manager of SpiceJet, told a meeting on World Class Airports, organised by the Foundation for Aviation and Sustained Tourism (FAST) and chaired by Civil Aviation Secretary Ashok Chawla, in New Delhi on July 25, 2007, that the upcoming Hyderabad International Airport Limited had suddenly told SpiceJet that it will have to pay Rs 70,000 per day for handling aircraft as against the present Rs 15,000-Rs 20,000 paid by it for services AAI rendered at Begumpet airport. Apparently, HIAL has made similar demands on other airlines as well, though they have not gone public with their grievance. It was a telling comment by Naithani that, while everyone accused that airlines were making losses, everyone connected with airline business, but not in the business of actual flying, are making money. His hint was obvious and clear that

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airports were becoming a law unto themselves. He virtually stated that the state has managed only to replace the government monopoly by private monopoly. Even in the US, Mecca of capitalism, private monopoly is feared more than state monopoly. But are we heading towards it? The answer to this question will depend on how soon, fast and efficiently the proposed AERA will be allowed to function. In one sense, AERA will be testing uncharted waters, as even the airport promoters will be in that business for the first time. Thus, we will have an AERA that has no precedence to go by except for international case studies and few major airports in India being built and operated by private enterprises for the first time, like Delhi, Mumbai, Hyderabad and Bangalore. The remaining airports in India are still run by state-owned AAI. The industry does not have a regulator today and all disputes are handled directly by AAI despite being an operator and mai baap ministry of civil aviation and, of course, an ever-vigilant DGCA, which has been allotting the slots, etc. Perhaps all that is set to change and that too drastically from an administrative point of view. But the real spark for triggering the early establishment of AERA could be due to reasons such as the one aired by SpiceJet executive at the FAST meeting. The response of Chawla was along expected lines that the government would introduce the much-awaited AERA legislation and ensure its early passage in the forthcoming Monsoon Session itself. We can only offer best wishes to Chawla and good luck to Naithani. The proposed bill for introduction in Parliament to set up AERA received Union Governmentâ&#x20AC;&#x2122;s okay in May 2007. It could not be introduced in the Budget Session as it was rescheduled and shortened because of UP assembly elections after the passage of Union Budget for 2007-08. Normally, Monsoon Session begins in the third week of July and lasts a month. Since the Presidential election had to be completed and new President of India sworn in before July 25 and a new Vice President elected to preside over Rajya Sabha by August 10, the Monsoon Session was delayed to August 10 and will end by September 15. This slightly longer session suggests that, among other legislations, AERA bill will be definitely passed. The prime objective of AERA will be to create a level playing field and foster healthy competition among all major

AERA: Administration and functions About AERA and what it will do The authority shall consist of a chairperson and two persons, to be appointed by the central government from among persons having adequate knowledge and professional expertise in aviation, economic law, commerce or consumer affairs. The member shall be whole-time appointees. Whenever the authority is deciding a matter involving a civil enclave in a defence airfield, the defence ministry will be represented by an additional member on the AERA, who will be nominated by the ministry of defence. The functions of AERA will be as follows: Determine tariff structure for aeronautical services taking into consideration the capital expenditure incurred and timely investment in improvement of airport facilities; service provided, its quality and other relevant factors; economic and viable operation of major airports; concessions offered by central government in any MoU, etc., provided that different tariff structures are determined for different airports; determine the amount of development fees in respect of major airports; determine amount of passenger service fee to be levied under the Aircraft Rules; monitor the performance standards relating to quality, continuity and reliability of service as may be specified by central government or any authority authorised by it; call for information as may be necessary to determine the tariff. Perform such other tariff related functions as may be entrusted to it by the central government or as may be necessary to carry out the provisions of the Act. Besides AERA will also have penal powers like: Penalise for wilful failure to comply with its orders and directions of the AERA Act; Punish for non-compliance of the orders of the authority; Penalise for offences by companies Penalise for offences by government departments.

The prime objective of AERA will be to create a level playing field and foster healthy competition among all major airports (government owned, publicprivate partnership based and private) CRUISING HEIGHTS August 2007

airports (government owned, public-private partnership based and private), encourage investment in airport facilities, regulate tariffs of aeronautical services, protection of reasonable interest of users, and operate efficient, economic and viable airports at notified airports. Major airports are understood to be those that handle more than 1.5 million passengers annually. AERA will determine tariff once every five years and may, if it considers appropriate in public interest, amend the tariff from time to time during the five years. However, AERA will have no role in fixing airline fares. It will be modelled on the lines of TRAI, ensuring level playing field for all participants. In times to come, different operators would run different airports and airlines would need assurance that tariffs charged from them would commensurate with the facilities being provided. It may be necessary to mention about TRAI here. When the telecom regulator came into being in 1997 and was headed, then, by Justice Sodhi and bureaucrat B.K. Zutshi as Number Two, there were too many fissures, either because the Department of Telecom (DoT), the policy making body, refused to accept the recommendations of TRAI, which, in any case, are not binding, notwithstanding the fact that it was itself a player, evident from

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FOCUS International experience In the UK, Civil Aviation Authority (CAA) recommends price cap to the Competition Commission, which sends its comments back to CAA for final decision. In Ireland, the Commission for Aviation Regulation levies and reviews charges every five years. In Australia, Australian Competition and Consumer Commission monitors tariffs and service quality. In Canada, the government is the owner. Hence it operates, invests and regulates airports. However, the Federal Competition Bureau issues guidelines for prevention of monopolies. In the USA, there is no specialised airport regulator. In the case of telecom, precedents were available, like FCC in the US, Oftel (Office of Telecom) in the UK and Austel in Australia performing the role of regulators. In the US, we have the FAA, which not only combines the role of Indian DGCA but also some functions of the proposed AERA. In India people can be very petty. At the height of the DMK’s blue-eyed boy’s regime in telecom, few adverse findings or rulings by TDSAT saw few functionaries’ TA bills being disallowed or payment deliberately delayed. One hopes administrative ministry of civil aviation will go by the rule book, as it is going now in the run up to the establishment of AERA.

Why AERA? the role subsequently played by corporatised DoT. The same TRAI went through major changes when the new telecom operators were often found fighting policy maker DoT and taking recourse to courts. Once and for all, the government, in 1999, amended the TRAI Act and gave more teeth to the telecom regulator, which had final say on number of issues that DoT or the Telecom Commission could not oppose. TRAI’s orders could be challenged only in Telecom Disputes Settlement Appellate Authority (TDSAT). Further, the TDSAT verdict could be challenged only in Supreme Court. By amending the earlier TRAI Act, the then government curtailed the jurisdiction of high courts where most telecom cases had begun to accumulate. Learning from this experience, the government is now proposing to set up an appellate authority to hear the verdict of AERA, in case of dispute, and with Supreme Court being next and final court of appeal.

AERA will determine tariff once every five years and may, if it considers appropriate in public interest, amend the tariff from time to time during the five years CRUISING HEIGHTS August 2007

In India, civilian airports, including civil enclave at defence airports, are managed by AAI. Airport Infrastructure Policy, formulated in 1997, allows private sector participation for improving quality and efficiency and increasing competition. As a result, greenfield airports are coming up in Bangalore and Hyderabad in PPP mode. A private Cochin airport is in operations for last few years. Joint ventures for taking up the projects of modernisation and development of Delhi and Mumbai have already been selected and these airports have already been handed over to the JV companies led by GMR and GVK in Delhi and Mumbai, respectively. Soon the government is going to start implementing the modernisation and expansion of 35 non-metro airports led by AAI. Despite all these developments the fact remains that airports are natural monopolies and there could be likely economic abuse of their positions, as hinted by the SpiceJet executive.

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Photo: H.C.Tiwari

Besides, prospective investors want certainty about regulatory and commercial regime over the concession period. They also pleaded with government that it was imperative to have a regulator in place as soon as possible. When the debate on AERA got serious, there was one suggestion that AERA should be more than an independ-

When the debate on AERA got serious, there was one suggestion that AERA should be more than an independent economic regulator for airport operations, as had been envisaged by Naresh Chandra committee CRUISING HEIGHTS August 2007

ent economic regulator for airport operations, as had been envisaged by Naresh Chandra committee. It was felt that the entire civil aviation sector could be brought within the ambit of economic regulation. But after careful consideration, it was felt that civil aviation sector on the transport side already has marketbased competition, where fares, entry and exit of firms are market determined. Among airlines, their anti-competitive practices can be checked through competition laws coming under the Competition Commission of India. Hence to begin with AERA must cover only major airports. Even in airport sector, the economic regulation regime can be extended to cover all airport-related functions, ranging from tariff to slot allotment. But on careful consideration the ministry of civil aviation, based on the current level of private sector participation, felt that to begin with tariff regulation and monitoring of pre-set performance standards should be included in the economic regulation. In future, depending upon the maturity and further development of the sector with PPP other functions could be considered for assignment to the AERA. Thus, AAI levies/charges, such as route navigation facilitation charges and terminal navigation landing charges, are approved by the central government. These are supposed to core and monopoly aeronautical services, which may be included in the bundle of aeronautical services and subjected to economic regulation.

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NEWS DIGEST

India is the best S

OUTHEAST ASIAN CARRIERS, particularly the lowcost ones, are becoming very aggressive to tap the Indian market, which has become a sort of gold mine for airlines from the West or East. Quite simply: East or West, India is the best. The likes of Nok Air, Air Asia and Tiger Airways are offering not only ridiculously low fares but also purchases combined with night stays in Bangkok and Kuala Lumpur. The latest we hear is that Silk Air, not exactly an LCC, is seriously contemplating connecting Coimbatore with Singapore; but even grander is the plan of Tiger Airways, which is planning to connect the city-state with Chennai and Kochi in the last week of October. The airline has stated it would offer a return airfare on these routes for about Rs 10,000, which is about 50 per cent lower than the normally discounted fares. Not just that, Tiger Airways is launching four new flight combos linking Kochi and Chennai to its two Australian destinations—Darwin and Perth, both on the west coast of Australia—and thus dividing the continent in the outback vertically. That leaves only Sydney on the eastern coast and perhaps Melbourne, besides Brisbane and Adelaide. Except for Sydney, in the east, and Perth, in the west, even the state-owned Air India never connected any other point during its glory days.

So it means there is already a low-cost alternative being offered by Tiger to the grand plans of Indian, whose leased A330-200 are arriving in October and November. Never mind that they will be intercepted by Air India for its proposed flight between Mumbai and Hong Kong and then from there to Tokyo, replacing the A310s, which may progressively carry only cargo. So it is possible that Indian’s plan, even after merger, to fly to Sydney may remain unrealised and in meantime Tiger Airways, with its combo offer, will clean up passengers from South India to the west coast of Australia. Of course, the traffic may not be as large as it is from the west coast of the US, but the fact that an LCC, like Tiger Airways, from Singapore is keen to

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open a new chapter in its flight history by extending one leg into Southern India is an amazing aspect of the type of competition in the air that the national carrier will face in the coming months. The combo flights through Singapore will facilitate not just value for money but will be hassle-free and allow access to the budget terminal in Changi and convenient immigration formalities. The return fare will start from AU $599 (AU $1 is roughly equivalent to Rs 30). So what we are witnessing is a return fare from Chennai and Kochi to Perth/Darwin for less than Rs 20,000. Should one wish to go to Sydney across the continent, perhaps Tiger will come out with new schemes or the LCC Jet Blue will carry them to the east coast. The combos to Chennai will start from October 28 and Kochi from October 30. This offer, based on existing offers on other routes, has revolutionised low-fare travel by allowing passengers to coordinate their flights between two sectors, minimum transfer time and virtually seamless travel. Tiger has announced it will offer low fares throughout Asia-Pacific. All the biggies better watch out, whether you are SIA, Malaysian, Thai or the just recast and reenergised Air India. A new Air Deccan, if one could say so, is also on the horizon with the tag line “We pick ‘em before others pick ‘em”.

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Slot issues Delhi International Airport

AT ONE POINT in time, it used to be the DGCA that allotted the slots to various airlines. After the handing over of Delhi and Mumbai airports by AAI to consortiums led by GMR and GVK, respectively, the new bosses—DIAL (Delhi International Airport Ltd) and MIAL (Mumbai International Airport Ltd)—believed they could take over the all-important function of allotting slots to various airlines wanting to come to the two cities. After all, they were running the two key airports on a day-to-day basis. But the ministry of civil aviation thought otherwise and played a masterstroke. It constituted a committee, com-

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prising a top representative of AAI, as it continues to be in-charge of air space management, DGCA, the previous allotter, a representative of DIAL and MIAL, respectively, and K. Srivastava , the joint secretary in-charge of airports in the ministry of civil aviation, as the chairman of the committee, to allot slots. Both DIAL and MIAL are, reportedly, upset with this decision, as it takes away a huge discretionary power from their hands. Those familiar with the process state that earlier the official concerned in AAI’s operations department would work closely with DGCA for finalising the allotment of slots and the permission letter was signed by the DGCA himself. It was mandatory that any request from any airline, domestic or international, requesting for slot had to be answered in three days—Yes or No and sometimes with reason as well. This spirit and letter, and not the other way around, was followed. For instance, when Etihad came in initially, it was granted evening slot in a major metro city, instead of the requested morning slot. Later the situation changed. By con-

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stituting the committee and getting too many people on it, the ministry of civil aviation has sent a clear signal to the new developers that they will have to work under the authority of Rajiv Gandhi Bhawan. However, the fears are that, though this mechanism may be good for one or two airports, it will certainly not be a good idea to have a committee to decide on the requests from many new airports in the future. What is also not known is whether this committee will be applicable to slots in DIAL and BIAL only or will extend to slot requests from new airports coming up in Hyderabad and Bangalore as well, because they are totally private, with minority participation by AAI, at 13 per cent and 26 per cent, should the stakes of the state government concerned be also included. But compared with DIAL and MIAL, the airports in Hyderabad and Bangalore are greenfield. One wag had the last word: the committee, he hoped, would not begin a Bharat darshan, like various Parliamentary committees, to decide on slot request “then and there”.

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“Unrealistic,” says

Europe

INFRASTRUCTRURE NEWS

BIAL signs pacts with service providers Bangalore International Airport Limited (BIAL) has signed key agreements with the following service providers: a consortium of Skytanking and IndianOil for aviation fuel facility front; a consortium of GlobeGround India and Air India/Singapore Air Terminal Services (SATS) for

THE EXACT WAY in which the US has gone about calculating the level of support for Airbus came under scrutiny recently as World Trade Organisation (WTO) experts met to consider the latest transatlantic arguments over support for the European air framer. In the latest exchange on July 25, the international trade dispute panellists, appointed to decide on the merits of US’ case of the granting of member state launch aid for Airbus aircraft, heard public statements from either side—the US Trade Representative and the European Commission—before entering into closed session to consider the effect of aircraft pricing and subsidy calculation methodology. The two sides took their dispute over the funding of large civil aircraft to the WTO after the US withdrew from the 1992 bilateral EU-US agreement in late 2004. The US challenges what they term ‘state sponsored aid’, while Europe has complained of similar support mechanisms provided to Boeing. Both parties have now tabled written submissions revealing their legal arguments supporting their respective cases, with the US response to EU’s challenge scheduled to be heard before a different WTO panel on September 26-27. “The written submission of the US filed ahead of the hearing is characterised by equal parts of unwillingness/inability of the US to respond to key points raised by the EU or US attempts at artificially

ground handling; two consortia, consisting of SATS/Air India and Bobba Group/Menzies Aviation, for cargo facility. The partners were selected after an extensive technical and financial evaluation, said BIAL CEO Albert Brunner.

A320s begin landing at Visakhapatnam airport With a new 10,500-foot runway becoming operational at Visakhapatnam airport, the first A320, operated by Air Deccan on the Hyderabad-Visakhapatnam-Kolkata route, landed recently in the city. So far only 737s, Dorniers and ATRs were servicing the city. Further, the airport will soon have Instrument Landing System (ILS) and night landing facilities. Efforts are being made to secure permission from the Indian Navy, which controls the airport, to operate flights during night. Presently about 60 flights are being operated every week to Visakhapatnam on Hyderabad, Kolkata, Chennai, Mumbai and Delhi routes.

Punjab offers land to AAI The Punjab government, desirous of new airports at Chandigarh and Ludhiana, has offered 200 acres of land in the cap-

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enlarging the figures involved,” says the EC. They have laughed off the US allegations and said, “The US now seeks to argue that the benefit of Member-State Financing (MSF) alone amounts to as much as $205 billion. This ‘estimate’ is completely unrealistic. It is more than eight times the capitalisation of EADS, $25.8 billion, or roughly 12 times the net assets of EADS, $18.4 billion. The calculation method used is contrary to accepted wisdom, practices and WTO subsidy rules. If the US methodology were to be applied to the massive federal, state and local subsidies benefiting Boeing, the amount challenged by the EU would be not $23 billion, but rather $305 billion.” They further add that the US argues that without MSF, Airbus could not have launched its aircraft programmes. The US conveniently overlooks that a number of Airbus models were launched without any MSF, just as launch has also taken place in situations where Airbus in fact obtained financing on better terms and conditions in the commercial market. This is fatal to the US argument that MSF caused adverse effects to Boeing. In fact the EU has shown that all Airbus aircraft launched in the last 15 years could have been launched without MSF.

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Boeing’s stellar financial performance makes any US claim of ‘injury’ highly implausible: the EU shows this by pointing at Boeing’s record numbers of order backlogs and profits. The US filed its reply to the EU’s challenge on July 6. The following points will be the focus of the hearing before the WTO panel, scheduled for September 26-27: The US readily acknowledges that FSC and successor schemes were prohibited export subsidies and that Boeing was a main beneficiary thereof. For certain subsidies granted by the State of Washington and the State of Illinois, the US puts up a less-than-vigorous defence and appears to agree with the EU that subsidies have benefited, and will benefit, Boeing. For other subsidies, such as those granted by Kansas authorities, the US makes sweeping statements that Boeing has not benefited, and will not benefit. The US offers no or very limited evidentiary support for these claims. The two aircraft disputes are now at a key stage of the dispute settlement process, with both parties having tabled written submissions revealing their legal arguments and the relative strengths and weaknesses of their cases.

911, says Boeing Fresh from the conquest of the Indian skies, Boeing projected that the country would require 911 planes by 2027. Boeing’s Senior V-P, Sales, Dinesh Keskar released the current market outlook (CMO) for India over the next 20 years (2007-2027). The new figure of 911 costing over $86 billion was more that the earlier estimate of 856 aircraft valued at more than $72 billion. Incidentally, this market forecast has quadrupled in the past three years from a projection in 2004 for $20 billion worth of aircraft orders for the period 2004-2024. The 911 will consist of 55 regional jets, 674 single-aisle aircraft, 173 twin aisle and nine Boeing 747 or bigger airplanes. “The 2007 CMO projects that commercial airplanes in the 90-400 seat categories will account for most of the growth in air travel over the next 20 years, and the airlines will continue to accommodate that growth by adding frequencies and point-to-point non-stop flights,” Keskar said. As for freighters, Keskar confessed that the domestic air cargo market in India was still in its infancy. While he could not give any figures, he did mention that the market was looking up what with Air India and Indian in conversion programmes.

ital city to Airports Authority of India (AAI) for developing the international airport and wants to use half of the land for commercial development. The state wants the new airport to primarily cater to cargo. The combined cost of developing new airports in Ludhiana and Chandigarh is expected to be about Rs 1,000 crore as the land is being offered by the state. The existing airport at Chandigarh is on a mere 15-acre site and has no scope for further development. That’s why the state has offered a new site at Mohali.

No bidders for aircraft parking slots at Bajpe Airlines are not using the Bajpe airport of the Airports Authority of India (AAI) here for overnight parking of aircraft though it is the second customs airport in the state, after Bangalore. The airport has four parking slots, of which three can be easily provided for overnight parking. Good passenger traffic to Bangalore and Mumbai would ensure no operator suffers loss because of overnight parking. Moreover, the AAI offers 50 per cent concession in parking fee at Bajpe airport between 10 pm and 5 am. Overnight parking of aircraft would help stabilise the regional network. It would benefit transport, hotel and allied sectors and offer connectivity from early morning to late evening for the benefit of passengers.

DIAL signs insurance deal Delhi International Airport Private Limited (DIAL) has signed an insurance deal to provide cover for upgradation of the existing terminals, construction of new runway and an integrated passenger terminal (T3). Estimated to be worth Rs 5,400 crore, the deal has been inked with a consortium comprising three major insurance companies—Oriental Insurance Company, the

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Retirement blues & lease fundas EMPLOYEES OF MERGING Air India and Indian are glancing at each other to know if their retirement age would be raised to 60 from the existing 58 years. After the Fifth Pay Commission submitted its recommendation in 1996, the retirement age of central government employees was increased to 60 years in 1998 following the acceptance of the Pay Commission recommendations. This was also extended to PSUs, which included Air India and Indian Airlines. However, when they started making massive losses, the retirement age was brought down to 58. Since then numerous attempts were made to raise it back to 60 but without luck. Often the government representatives on board chose to differ, as happened with the efforts of Indian Airlines board. So when the Union Cabinet recently decided that PSUs can raise the retirement age of its employees to 60, there was a broad grin all around for various reasons. But the caveat that rode with the cabinet decision made everyone sulk. The caveat included that the PSU concerned should have made net profits consecutively for the last three years, that its net worth is positive and that it will not seek any budgetary support from the central government. All these three conditions are not met by either Air India or Indian Airlines, sources say. The two carriers might have made net profit in the two fiscal years

2004-2005 and 2005-2006, but the new cabinet decision came only in June 2006 and therefore included the financial year 2006-2007 as well for retirement age calculation. However, massive fuel price increase for the international carrier Air India and coupled with it falling yields for the domestic carrier Indian has made the calculation to take the balance sheet to the net profit region a little difficult. To ensure they get into profit zone,

both the carriers, first Air India followed by Indian, sold and leased back six A310 and seven A320 in March 2007. While Air India got $80 million as sales proceeds for its 1986 vintage A310s, Indian got $126 million for its seven 1989 delivered A320s. Both airlines showed the proceeds as other income, which is very much in line with accounting practice anywhere and also recognised as a legitimate accounting practice. It is like selling real estate at high

National Insurance Company and ICICI Lombardâ&#x20AC;&#x201D;in India. Sources say DIAL is paying Rs 8 crore as premium charges for the insurance cover of its project during the construction period, expected to be complete in 2010.

Apollo Hospitals to provide medical facilities at GHIAL GMR Hyderabad International Airport Limited (GHIAL) has selected Apollo Hospitals for setting up a medical centre inside the Passenger Terminal Building (PTB) in the new international airport in Shamsabad, Hyderabad. It was selected preferred bidder from among several hospitals through a highly transparent and competitive bidding process. As per the agreement, Apollo Hospitals will set up a medical centre spread over an area of over 300 sq metres in Level B of the PTB and first-aid kiosks in the passenger restricted areas. It will provide permanent staffing and dedicated paramedics in this centre, which will be a 17-bedded medical centre, having facilities such as ultrasound/ECG and 24-hour emergency

price in later years after acquiring it decades ago when prices were low. Air India, in its lease-back agreement, has incorporated a clause for converting the A310s into freighters just like the two it has already refurbished and pressed into cargo service. The lease rentals are supposedly $230,000 each with rights to convert the commercial liners into freighters. As for Indian, it will pay $148 million as lease charges for six-and-a-half years beginning April 2007. Thus the lease will end only by September 2013. Officials familiar with these affairs said, even the sale and lease back has not made a difference to the bottom line. Some executives wondered that at least the new company, called the National Aviation Company Limited, need not follow the service rules of Air India or Indian Airlines and therefore when the ministry of civil aviation takes the proposed service rules of the National Aviation Company to the Union Cabinet, the 60-year retirement age could be built in. But, then, how can the new company show net profits when its first balance sheet is yet to be worked out. Whatever may be the permutation and combination of reasons for raising or not raising the retirement age to 60 years, the fact is everyone is looking upâ&#x20AC;&#x201D;not at the sky or the new planes but at the mai baaps in the ministry to see if they are grinning or growling.

dental services. The medical centre will serve as an emergency treatment centre for passengers who may develop medical complications while on travel or in the airport premises. It will provide medicare to the needy airlines and airport staff working in the airport, and will also act as a centre for conducting preflight medical tests for pilots and flight crew.

New airports identified Nearly 25 greenfield or unutilised airport projects have been identified by state governments and will be up for bidding by the private sector. The investment could range from Rs 60 crore to Rs 150 crore per airport. Located mostly in Tiers II and III cities, the towns identified include Hassan, Shimoga, Gulbarga, Bidar and Mysore, in Karnataka; Shirdi, Jalgaon, Solapur and Akola, in Maharashtra; Kannur, in Kerala; Madurai and Tiruchirappalli, in Tamil Nadu; Rupsi, in Assam; Ajmer, Mount Abu and Kailashar, in Rajasthan; Behala, Cooch Behar and Malda, in West Bengal; Jharsuguda, in Orissa; Muzaffarpur, in Bihar; Kamalpur, in Tripura; and Passighat, in Arunachal Pradesh.

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GLOBETROTTING

AT A GLANCE

John Travolta sues airport No luck with good luck fishes

ohn Travolta has brought a lawsuit against the owners of Greystone Airport outside his home in Jumbolair Aviation Estates (JAE) in Ocala Florida, USA, claiming they lied to the FAA to keep him from flying his Boeing 707 there. The actor claims that airport owners falsely changed the airport’s records in 2006 to indicate it could not support large airplanes. Travolta built an $8 million residence there and has used the runway without incident. JAE is a 550-acre “fly-in community” with a $6 million runway.

Airport in the

Pacific?

ceanWorks, a company based in Encinitas, California, has offered a new site, as an option, for the crowded San Diego Airport—in the Pacific Ocean. The airport has, for years, been in search of a new site located in crowded Southern California. The company proposes to build an airport 10 miles off the coast, on the high seas, and its CEO, Adam Englund, feels that the offshore option is the best and the only viable one for San Diego, and says the company will make it the most secure, self-

sustaining, economically vibrant and greenest airport ever built in the USA. OceanWorks has sent a notice of claim to federal, state and local agencies claiming exclusive rights to 40,000 square miles of ocean to develop, build and operate its floating international airport. The company claims that an offshore site eliminates noise complaints and enables aircraft to land safely even in foggy conditions. As regards accessibility, it has suggested the use of fast ferries, a floating bridge, and underground or underwater tunnels. The company has not answered the million-dollar question—costs and viability. It merely says that it is a business proposition, and won’t be loss making. CRUISING HEIGHTS August 2007

asheer Ahmad decided to change his destiny by smuggling Good Luck fishes while returning from Malaysia to India. Alas, he was held at Chennai airport. Customs officials asked him to open his two suitcases and found 496 ornamental fishes hidden in polythene containers. The species seized from Basheer were the clown loach, arowana, red parrot and tiger barb. Each pair fetches 20,000 rupees in the market in India. The fishes were meant for Vastu. Certain species of fish are kept in homes in the belief that they bring good luck.

Laser threat to jets

elbourne Airport authorities are facing a new kind of problem— laser beams. Passenger jets landing at Melbourne Airport have been putting the lives of hundreds of airline passengers at risk as laser pointers are being shone at them in a series of incidents over several days in the past few months. The beams have the potential to distract or even blind pilots and put the aircraft at risk of crashing. More than a hundred incidents have been reported by pilots nationally since January last year. Pen-sized laser lights, commonly used in surveying equipment or by professional and hobby astronomers, can project beams up to five kilometres and cost as little as $25. In March, pilots issued a mid-air alert after a laser beam hit the cockpit of a plane over Sydney. Increasing incidents of lasers beamed into the cockpits of commercial and military aircraft in the US has sparked fears terrorists could use them. Lasers can produce a beam of light of such intensity that can cause permanent damage to human tissue, in particular the retina, even at distances of over ten kilometres. Even at low intensities, lasers could seriously affect vision.

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Illustrations by Rajeev Kumar

Female pilots to tackle attrition

he Nigerian aviation authorities have come up with a unique plan to arrest the continuous loss of the nation’s pilots to other countries and improve the paucity of skilled manpower in the industry. They have decided to train more female pilots and engineers to rejuvenate the industry, which has been predicted to lose more than 70 per cent of its management personnel to retirement and migration in the next five years. Dr Harold Demuren, director-general of Nigerian Civil Aviation Authority (NCAA), said that men were like rolling stones, they go all around, but the females, when they are there, they get married, have their children, have their families and they stay.

‘Air rage’ attack

Off by chopper

British man has been charged with endangering an aircraft after he opened an emergency exit while the plane was taxiing to the runway. The 36-year-old from Aberdeen had boarded a Blue 1 flight to Turku in Finland, and as it was preparing for take-off he leapt out of his seat, screaming that he wanted to get off the plane. The staff tried to calm him, but he tried to break into the cockpit. When that failed, he opened the aircraft’s emergency exit, releasing the inflatable slide while the plane was in motion. The cabin crew overpowered the man, who was taken away by Arlanda police. During questioning, the man said that he could not remember anything about the incident. He was later found to have buprenorphine, a narcotics class preparation used for treating drug addicts, in his blood. The man has said that he is prepared to reimburse the airline for the cost of his actions—a bill estimated to be 171,000 kronor (26,000 dollars).

n true filmi style, a convicted killer made a daring escape from Grasse prison in Southeast France with the help of four masked men and a helicopter. The well-planned getaway took only five minutes. What’s astonishing is that this was the second time 43-year-old Pascal Payet had used a helicopter to escape from jail. They landed on the prison roof at the start of the night shift and used heavy machinery to break open two doors and enter the isolation ward where Payet was held. The French police are now hunting for him. Payet was serving a 30-year jail term for killing a guard during the hold-up of an armoured car. He was moved from one prison to another almost every three months because of his escape record—he escaped from Luynes prison by helicopter in 2001 and flew himself to the same jail to free three friends in 2003.

Building an airplane—in ten months

assion can work wonders and John Maus’ proved it. When he returned to aviation, he decided to build his own airplane. Not only did he complete the task, he finished the work in ten months. He worked on it eight hours or more a day. So much so that his wife termed the job as his mistress. Maus modestly says that usually it takes people about five years to do this if they do it in their spare time on weekends, “I just worked on it full-time.” In early July Maus took his plane for an FAA certification. It included five hours of flight in a designated area as well as taxi and other ground tests at French Valley Airport, California, where Maus had based the airplane. The total testing consumed approximately ten hours, and Maus was given approval. He is now entitled to go any place with it and take passengers.

President on No-Fly list

BS news magazine “60 Minutes” has happened to get a copy of the official No-Fly list and it’s quite interesting to see whose names appear. Among the findings are Osama bin Laden; Francois Genoud, a Nazi sympathiser and financier of Arab terrorism, who’s been dead for 10 years; and Evo Morales, the president of Bolivia. But to top it all, an eight-year-old boy, Bryan Moore, was red flagged as a threat to national security because his name popped up on the national watch list. According to the Transportation Security Administration, no children are on the terrorist watch list. The TSA said if a child’s name matches up, it’s up to the airline to make the necessary changes and let them board the plane.

Upside down

he pilot of a light plane that landed on its roof at Darwin Airport, in Australia, is believed to have escaped injury in a miraculous end to a freak accident. The Cessna 172 was spun upside down by a 20-knot crosswind as it came in to land at Darwin Airport.

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COVER STORY

FUTURE Air India is on the fast track to bring back its glory days. After years of just marking time, there is a new excitement in the air, as K. Srinivasan and R. Krishnan discovered. An exclusive report.

READY A

T $1,00,000, the Maharaja sure will be splurging plenty of moolah as he stares down Broadway selling Air India. Is it money well spent? Frankly, thatâ&#x20AC;&#x2122;s the million-dollar question that almost everyone seems to be asking. After years and years of sloth, ageing planes, a despondent and lackadaisical staff and a service that seems to have run to the ground, there is a new buzz and fizz in AI. And the energy and effervescence is no surprise. After almost a quarter century, the airline has obtained a fleet of brand-new aircraft that will be the envy of anyone in the business. An all-Boeing fleet of 777s and 787s for the long and

Photos: H.C.Tiwari

DEDICATION CEREMONY: Prime Minister Manmohan Singh was at hand at Delhiâ&#x20AC;&#x2122;s Palam Airport to flag off the merger and the launch of the new aircraft with a brand new livery.

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Photos: H.C.Tiwari

DEDICATION CEREMONY: Prime Minister Manmohan Singh was at hand at Delhiâ&#x20AC;&#x2122;s Palam Airport to flag off the merger and the launch of the new aircraft with a brand new livery.

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COVER STORY medium haul and the 737-800s for the short haul. Add to it the merger with Indian (Airlines)—which will bring its brand new A319s, A320s and A321s to the party—and you have an airline that will have over 110 aircraft, which will make it one of the biggest in Asia. And a route network that will be the envy of anyone in the business. If the international operations expand as they have been planned and you combine it with the domestic leg that Indian brings to the merger, you have what Hindi film producers quaintly describe as ‘a super duper hit’. No wonder global alliance partners are salivating at the prospect of adding Air India to their list of members. Civil Aviation Minister Praful Patel met Star Alliance CEO Jaan Albrecht on August 7 to discuss AI’s joining the alliance. This was followed up the next day with a meeting between Air India CMD V. Thulasidas and Albrecht. But before all that happens, the new avatar of Air India, with a new logo, new livery and Ritu Beri and Pierre Cardin inspired dresses, have to convince hardnosed passengers that it means business this time around. Both the airlines have been battered by the onslaught of the private carriers and the LCCs, on the one hand, and the liberal bilateral regime that the ministry of civil aviation has adopted, on the other. And if that was not enough they have to report to the maai baaps at Rajiv Gandhi Bhawan before every little step, report to every conceivable Parliamentary committee and listen to MPs all the time. “All right, we are a government owned carrier and have to fulfil obligations as laid down by the owner. But then don’t expect us to be dexterous and nimble footed. That’s not possible,” said one senior executive director at AI, who declined to be named. Prime Minister Manmohan Singh hit the nail on the head when he said that as far as the people at large are concerned, it is only the airline’s sense of purpose and service that will matter. The sense of enthusiasm, the sense of excitement and indeed an element of euphoria that these new aircraft have brought to the two airlines are indeed heart-warming and very satisfying. I hope they will rekindle the lost élan of the two national carriers. New aircraft and new terminals are only the new hardware of your business. New management styles, better service quality and more focused customer care are the more valuable elements of your business. Your business is not just about getting world-class aircraft, but also about ensuring that world-class service levels

Countering the competition

ithin days of the Mumbai-New York flight commencing operations, AI had to lower fares to meet the competition offered by the likes of Delta, Continental and Jet (Delta is non-stop like AI, while Jet goes through Brussels). They have proved to be a bigger pull than the ‘unprecedented’ comfort promised by AI on its 777 LRs. AI has reduced economy class fares by Rs 4, 000 to Rs 50,700. But it is the business and first class tickets that have taken the biggest hits, coming down by Rs 66,000 to Rs 90,000. A business class ticket now costs Rs 1.59 lakh, instead of Rs 2.25 lakh, while first class will now cost Rs 3.6 lakh, instead of Rs 4.5 lakh. After AI’s first flight on its new 238-seater Boeing 777 LR took off from Mumbai on August 1 with just 80 passengers AI clearly realises that passengers are keen to have top quality service, but the costs matter hugely.

Dr Manmohan Singh hit the nail on the head when he said that as far as the people are concerned, it is only the airline’s sense of purpose and service that will matter CRUISING HEIGHTS Augsut 2007

become the norm. I would like you to focus your attention on that aspect with greater and renewed vigour. But before it becomes nimble or dexterous, AI has to deal with the gigantic task of assimilating people who have dedicated their lives to opposing each other and fighting from letting go every little portion of the turf in their control. Both IA and AI have flights into the Gulf and South Asia. Now that they are one, these are bound to be rationalised and the spectacle of back-to-back AI-IA flights should come to an end. The flights can be pruned, the reservation system meshed, the livery redefined, but what do you do with two different cultures, two different value systems that have for years looked upon each other. Confronted with the reality

that the next RD in New York could well be a senior Indian director or for that matter the head of operations in Chennai could be from AI, staffers on both sides are slowly acknowledging each other. But in this entire exercise, at least so far, Indian staffers feel they have consistently got the wrong end of the stick. As one of them eloquently pointed out, “There are no mergers when companies get together. You either buy or acquire another company. In this case it is Air India acquiring IA. They are calling the shots in every which way. This isn’t fair.” Already the unions of both the airlines that want their wages and arrears settled before the amalgamation. They are also demanding clarity on their career progression before the merger. This is the latest roadblock that the

“Any merger will bring with it its own set of issues. But that doesn’t mean you abandon the exercise. You address the issues and move ahead,” says Civil Aviation Minister Praful Patel CRUISING HEIGHTS Augsut 2007

merger has encountered. There is a scramble at every level to make sure that any change in the status quo does not mean instability. And it is at such a crucial juncture in its history that the two airlines are receiving billions of dollars worth of cutting edge hardware that they hope to deploy in their effort to revive the airline and regain their glory days. Civil Aviation Minister Praful Patel is sanguine about the prospects of the merged entity. I am confident and certain that the new Air India will be a worldbeater.” He also declines to accept that it is AI acquisition of IA as some would like to view it. “That precisely is the point. It depends on what spectacles you are wearing. I see it as an equitable coming together of two great airlines to form one great airline.” At least so far, the employees haven’t exhibited any of the gung-ho feeling that the minister or the top brass at the airline exude. And unless they are on board, a billion dollar worth of hardware, worldclass in-flight service and ground-breaking interiors could all come to be a big naught. After all, it is a service industry and it’s the people who will finally maketh the airline. Chairman and Managing Director V. Thulasidas, however, is confident that AI is at the cusp of greatness. In a freewheeling and candid conversation, he spelt out the future that awaits the Maharaja, his subjects and all his guests.

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Countering the competition

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INTERVIEW

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INTERVIEW

AI chief V. Thulasidas is excited and confident. He belives the new-look carrier is a resurgent AI. Excerpts from a free-wheeling interview:

AI has suddenly jumped to the next generation. What has been the impact of a new fleet? How does it impact AI? What we are now doing will have an impact over the next three years. One is the new fleet; second is the merger; and the third is what will happen in a few monthsâ&#x20AC;&#x201D; joining an alliance. All the three will yield value in a three-year timeframe. So if you are looking at 2010 or 2011, 68 plus 43 aircraft would have already come in by then. So we will have an almost-new fleet of aircraft, which is something happening after 15 years or so, if you put both the airlines together. I am not talking of the number of aircraft, but about the new fleet. When the plane was ceremonially handed over to us in Seattle they told us the last function of this type held for Air India was in 1993. I could see in the voice of the people of Air India almost a kind of limitless excitement. When I came to Delhi, the people here, everybody was excited. So that is the kind of impact a new fleet can create in Air India. So, by 2011, this fleet renewal is complete, with its attendant impact on the morale of the people, on the attitude of the people, on the excitement that we can produce in the people of Air India.

What about beyond 2011? With the sort of growth projections under way, what are you looking at beyond 2011? Are you looking at only leased aircraft and are you looking at only widebodied aircraft? At one time, you used to fly to a huge number of points. Are

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you looking at services to some of these stations or you looking at multi-services to some stations? What is really the mix you are looking at? All those three elements I mentioned to you are having a bearing on all that you are saying now. The new fleet we are adding, the integration of Air India and Indian Airlines and the energy that it can unleash and the additional demand for capacity, as a result. And, then, as a member of the alliance, again we expect more traffic and, as a result, perhaps demand for additional capacity. Coming to the further demand for capacity, I have always maintained even when the 68-aircraft order was yet to be signed I had said that 68 is what we have worked out now. It does not mean that it is the end of the story. If Air India remains satisfied with the 68 and forgets about the market, as we have done in the past, then we will just be repeating the past. Therefore, we should continuously look at our fleet requirement and, instead of adding 68 or such a large fleet in one go, we should be adding aircraft every year. We should keep renewing the fleet almost regularly every year. You may not get the great deal you got this year. I agree, but now manufacturers know that Air India is a good customer and they cannot give us a raw deal any more. They will also know that it is not three or four aircraft that we are talking about, but it is a renewal every year that we have to keep adding aircraft. We have already given two rounds of presentations to the minister on the fleet and the likely requirement of additional aircraft, both wide-body and long haul and short-haul, but this exercise is not yet complete. Now, in this exercise we could look at both outright purchase and lease of aircraft. About four or five months ago, I have appointed a team in Air India to look at the fleet requirement, saying that both passenger and cargo requirement should be looked into by this group keeping in mind the fact that we will finish our deliveries by 2011. But if

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we require aircraft after that, you should finalise now and place order now, otherwise manufacturers’ order books are getting full and you will not get the aircraft. So this exercise has been on in Air India for the last threefour months and because of the merger it is getting an added impetus…

or five aircraft a year; so you could place another five-year order in, say, a year’s time? As I said, we have already given two presentations to the minister. So now we have to refine it, then take it formally to the board, then board has to approve it and then we have to think of giving it to the government.

Is there a time frame by when you would like to settle these issues? Yes, When I came there was a process for only 28. This budget proposal, I sent under my signature to the ministry. I sent initially 28. The proposal that was prepared before I came to Air India was forwarded to the ministry by me. And thereafter no progress was made. Then the elections came, the government changed, then there was a discussion. In the mean time, I had started my exercise in Air India; so when the ministry had a meeting, the question that was put to me was ‘Is this your requirement?’ I said ‘No. We have further requirements, but I would like to go ahead with these 28’. ‘Why?’ I said, ‘Because these are ready. While we have further requirement, let us go ahead with at least these 28.’ Then the ministry’s secretary pointed out that if you have a further requirement you cannot go back to the Cabinet for 28 now and for more in a few months’ time. You can’t do that. You should combine it and send one single proposal. We said that is okay, we will go back and complete the exercise and then it was August. In December 2004, the exercise was complete, presented to the board and RFP was floated for 68 aircraft.

Now in the AI combined you have the requirement of both domestic (narrow body) plus international (wide bodied). So what are the number we are talking about? There is some talk of another 60 aircraft. Number is something that we can only loosely talk about. It could be around 60. But this is yet to be refined. This is wide-body, narrow-body, long-haul, shorthaul, all combined.

What is the time frame for the next instalment? After all you cannot go to the Cabinet each year. We may go for a few years’ requirement together. Even these 68 aircraft we are inducting over a period of four years. So it is an average of about 12 or 13 aircraft per year. So we may not be 12-13 per year in future. We will need less. Hypothetically, you require four

In terms of destinations, which are you looking at? Let me talk about the earlier destinations where we used to fly, where we are not flying. Those were hopping flights, many of them. Today you cannot have hopping flights. So if you are having point-to-point flights, then the traffic should justify that. It is not that you can go two places and then go to a third place and cover each point with a little traffic. So you must have at least 200-250 passengers. Something like a good load for 787, smaller aircraft, but if you don’t get that you cannot fly. That is where the alliance comes in. If you can fly to Rome or Milan, you fly. If you think that the traffic does not justify that, you think you should fly to Frankfurt or Paris or somewhere, and give that traffic to another member airline, they will carry it to Rome or Milan. There have been so many questions on HR? How are you going about managing it? But who said that there would be two sets of scales? Has either Air India or Indian Airlines told this union that after merger your pay would be lower than Air India’s? But what’s the real story? So why are they raising an issue that does not exist? So it is just an

CRUISING HEIGHTS August 2007

“

Who said that there would be two sets of scales (for AI and IA)? Has either Air India or Indian Airlines told the union that after merger your pay would be lower than Air India’s?

“

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When Praful Patel recently addressed the US-India JBC, he spoke about making Nagpur do to India what Memphis did to the US. So if you are talking about a separate freighter company, you must think big. What are the thoughts on freighters? That is why we are having an SBU for freighter service, cargo service and let that come into position and they can then decide how many more 310s they need to convert and long-range, long-haul freighter, what should be the policy on that.

“

Regarding HR, there could be only one issue and that is seniority. That can be the only issue. Now you must have principles for bringing two sets of people together and decide their seniority.

“

issue being raised for the sake of raising an issue. Whoever has asked me a question about pay parity, I have answered by posing a question. In the same company for two persons doing the same job in the same rank, can you give two different pays? So the answer is obvious, and the issue is over. There is no issue as far as pay is concerned. Regarding HR, there could be only one issue and that is seniority. That can be the only issue. Now you must have principles for bringing two sets of people together and deciding their seniority. The consultant and the HR working groups are working on that. There is no other issue as far as the HR part is concerned. People have, what I call, a fear of the unknown. That is where we have given a written reassurance to them in the form of a letter sent to each employee more than once—from the company management, from the ministry. I wrote a letter to employees of both companies for the first time about two-three weeks ago. Earlier I wrote a letter only to Air India employees; today we wrote a letter only to Indian Airlines employees. Then ministry of civil aviation wrote a letter to employees of both, but after I was appointed the CMD of the new entity, I have written a letter to both. The minister had called a meeting of all the unions twice, all this has been

mentioned to them. The only issue that they raised is our charter of demands and things like ‘why don’t you finalise it before the merger?’. In fact I had a meeting of all unions of both companies in Mumbai about five days back. Even Air India unions asked this same question, where the charter of demands is yet to be finally settled. They were asking as to what will happen after the merger if our wage revision is not implemented before merger? Will it be forgotten? I said ‘No. Whatever issues are yet to be resolved, will be resolved in the new company also’. So they were satisfied with that.

ly because they will continue to fly separate aircraft for the time being. Then you have to gradually bring them together. Then ground handling. It is an easier issue to bring about integration. Low-cost airline is a little more complex because of Alliance Air, which is neither here nor there. It is neither full service nor is it low-cost; it is something in between, and there are very few aircraft. But still it is a company; there are more than 400 people. Air India Express is much bigger fleet. Air India Express employees are mostly cabin crew and pilots. So we need to resolve that issue.

But you start a new company on a new slate, why keep pending issues? No, equalisation is not possible like that. There will be differences because even where Air India has revised the wages, Indian Airlines is now revising the wages. There is still a disparity. This can now be removed only under the new company and not before the new company. There is an opportunity because all these wage revisions that have now been effected are effective January 1, 1997, and will be up to December 31, 2006. Which means from January 1, 2007, onwards there has to be a new wage settlement. That gives you the opportunity now.

What about reservations, which is a complex area? Single code can be achieved only when you, sitting in one terminal, can see all flights as one and book passengers singularly. It will take a minimum of 12 months to achieve this. First, we have to invite a tender for a combined CRS. AI and IC need to have a combined passenger reservation system, departure control system and all that. That integration would be brought about by appointing a common, single service provider, as against the two separate that we are having now. Then it will become one code.

What other issues? The other main issues will be network integration. One of the main operational issues is how do you integrate your network. Both Air India and Indian Airlines have common flights mostly to the Gulf and Singapore. Secondly, domestic cum international. How do you bring about some rationalisation there? The commercial working routes of the two companies, we are already working on that. They have already worked out some integration principles and you will see some of it from the winter schedule of 2007 and some will happen even before that. So those things are being worked out. That is the key operational area—integration of the schedule. Second, of course, is the engineering integration, which may not be an issue because the two sets of people will continue to work, as they are doing now, till they integrate. Third is the pilot operational integration. Again that is not an issue immediate-

CRUISING HEIGHTS August 2007

What about the sixth SBU? Sixth SBU is for developing new business opportunities. It could ultimately translate itself into a separate IT venture and so on. It has got nothing to do with the passenger reservation system. What really is your structure? As far as the corporate set up is concerned, there will be a CMD, a joint MD, some directors and all that. The number of directors is yet to be finalised. There are six business units (SBUs). The last one is now called a related business, where the attempt will be to find emerging business opportunity. One could be IT; one could be catering and so on, which can then be evolved into new business units. Those are not yet clearly defined business units. This can happen in the future. So would it be reasonable to say that 12 months down the line integration would more or less be complete? In fact HR is the one that will take

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long to settle. We believe that within six to 12 months, it will be complete in all respects. The seniority part will be over immediately and the rest in a phased manner, but in six to 12 months everything will be settled, which is the period for the IT notification so that it becomes one code. Even if it is two codes that is on our request that two codes will be continued by IATA because IT integration will take time. Whatever period we want to continue, IATA has said that it is no problem. When we are ready to integrate IT, it will become one code; IATA has no issue with that also. How would the whole-time directors be split—half Mumbai-half Delhi or...? That is not finally settled, but headquarters is in Mumbai. Basically it means that operations have to largely be out of Mumbai. What are you going to do about the MRO? MRO, for the time being, we are not planning that we start with a joint venture, etc., right in the beginning. We want the existing engineering set up of Air India and Indian Airlines to continue as it is, then take some time to get joint venture part raised and

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develop it into a proper MRO. Our first priority will be to complete the legal merger, go ahead with the HR part and complete the network integration. There are Airbus-certified engineers in the set up, there are Boeing-certified engineers; they will continue to do their work wherever they are. Do you hope to create a new market for yourself? Secondly, by having direct flights will you discontinue all hopping flights either via Paris to US or will you simultaneously have both? Yes. Simulpaneously both, but largely different destinations. These four (NewYork, Newark, Chicago and Los Angeles) themselves will have some additional flights. We will add San Francisco and Washington. The other is Houston or Dallas Fort Worth. So you will have seven points to the US? That’s where you get the maximum passengers coming in? In future we may have even Boston and so on. Chicago may have more than the existing capacity. As we come from US to Europe or Europe to Middle East, how do you deal with the Middle East

Was your first flight from Mumbai not fully booked? No, but it was quite good. Five out of the eight first class were sold, which, I think, is very good. But I am not concerned about that just one inaugural flight. We could have easily filled it up. Even if some seats are vacant in the early flights, we are not unduly bothered, because it is a new product that is coming into the market. The passenger must experience it, personally fly, then tell others, by word of mouth. The feeling that ‘Oh! Air India. We have a problem…’ That should change; they must understand what it is. So a few flights it may take, doesn’t matter. We are not going to come under pressure just because a few flights are light.

guys? You put more direct flights; they will get that many less passengers. If they carry passengers beyond Gulf, they are doing it because you are not doing it. You are not providing adequate capacity, and they are giving facilities. So now the point is having decided on the Gulf, we are now flying 310s. The 310s will all be out in, say, three-four years’ time? No, it will not take even 3-4 years. So you have your 800s, Indian has its 321s. Will the 321s be flying to Gulf? Yes. But you do not want any 321 to be in a uniform class like your 800s? In a two-class. Single class we wanted to be largely 737-800s, and, to some extent, some 319s. Which, then, are the other destinations you are looking at? Not Europe or America. South Africa (Johannesburg), Australia (Sydney), Mauritius, one more, if not two, points in China, more flights to Japan. Some of these other flights like Hong Kong, Seoul, etc., to be made non-stop. But aren’t you looking at 747 8F? No, Dash 8 is something we have not looked at so far. That will be looked at in future in the context of very large capacity, whether it is freighter or passenger, along with 380. And then we will decide which is better for us. We are looking at aircraft of 300-350 seats and below. We may look at the 747 freighter, but I am talking of the Dash-8. The Dash8 is a very large capacity aircraft in the same league as the A380, except that the Dash-8 will have fifty seats less or thereabouts. That requirement is something that we have not looked into at present. Obviously we can’t rule it out for the future. And you also do not rule out buying brand-new aircraft for your freighter service? We don’t rule it out. A350s are not something that we are looking into as… we are looking into only capacity requirement. What is the aircraft we should take comes after that. What is the capacity that you require.

CRUISING HEIGHTS August 2007

“

In six to 12 months everything will be settled, which is the period for the IT notification so that it becomes one code. Even if it is two codes... that will be continued by IATA .

“

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FINANCIALS

Black replaces red SpiceJet out of red

iddhant Sharma has been redesignated as executive chairman and will now oversee executive responsibilities. Promoter Bhulo Kansagra, who is primarily responsible for Siddhant’s entry into the company, said, “Sid has been associated with the evolution of SpiceJet for over six years and has played a critical role at the Board level in bringing up SpiceJet to the present level. The Board is confident that he will carry out the responsibilities entrusted upon him in the best interest of the company at this critical second phase of growth.” The company has announced its Q1 results for the period April-June 2007 with a net profit of Rs 18.5 crore, compared with a loss of Rs 3.4 crore in same period previous year. Total income for the period registered a growth of 77 per cent, at Rs 311 crore, versus Rs 176 crore in the same quarter last year. Further, the company has benefited due to net foreign exchange gain on outstanding liabilities to the tune of Rs 20.6 crore, which is part of other income. Besides, other income also includes profit on sale of two aircraft of Rs 12.7 crore during the quarter. The company has almost doubled its

SpiceJet has announced its Q1 results for the period April-June 2007 with a net profit of Rs 18.5 crore, compared with a loss of Rs 3.4 crore in same period previous year CRUISING HEIGHTS August 2007

average deployed fleet to 11 aircraft versus 5.7 aircraft for last year. All operating parameters registered a huge growth. Growth in Available Seat Kilometre flown is 88 per cent, at 1,244 million, from 663 million, and the growth in number of passengers flown also registered a 63 per cent jump, at 9,14,000 passengers from 5,62,000 in the corresponding previous period. Partha Sarathi Basu, CFO, SpiceJet said, “The positive result has been achieved due to capacity addition and constant focus on cost. We have gained substantially in achieving a lower cost at Rs 2.35 per ASKM. We will keep our focus on profitable growth through continuous cost reduction, improved yield and focus on ancillary revenue.”

Jet Airways posts profit

he carrier reports profit after tax to the tune of Rs 309 million for the quarter ended June 2007. It grossed revenue of Rs 19,830 million, which was up 19.8 per cent as compared with the corresponding period last year. EBITDAR was Rs 2,235 million, which was up by 8.3 per cent as compared with the corresponding period last year. Profit before tax stood at Rs 495 million, up 183.1 per cent,

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compared with a loss of Rs 595 million as compared with the corresponding period last year. Profit after tax stood at Rs 309 million compared with a loss of Rs 450 million as compared with the corresponding period last year. System-wide ASKMs registered 4,757 million, up by 17.8 per cent compared with the corresponding period last year. System-wide RPKMs were notched at 3,288 million, up 11.8 per cent compared with the corresponding period last year. System-wide seat factor stood at 69.1 per cent compared with the 72.9 per cent registered during the corresponding period last year. Break-even seat factor was 66.9 per cent compared with the 76 per cent registered during the corresponding period last year. The airline carried 2.68 million revenue passengers as against the 2.81 million it carried during the corresponding period last year. Domestic operations accounted for 76 per cent of operating revenues (Rs 13,708 million) as compared with 87 per cent, or Rs 14,096 million in the first quarter of last year. The company achieved a domestic seat factor of 71.2 per cent in the quarter ended June 2007 versus 74.9 per cent in the same period a year ago. Revenues from international operations formed close to one fourth of the total operating revenues (Rs 4,359 million) as compared with 13 per cent (Rs 2,134 million) in the first quarter of last year. The company achieved a seat factor of 65.6 per cent for the quarter, compared with 66.4 per cent a year ago. Fuel costs were lower by Rs 454 million versus the same period a year ago; this was largely due to lower rates of fuel and the lower number of flights operated. The average fuel rate was lower, at Rs 38.37 per litre versus Rs 40.04 a year ago. The impact of fuel and other surcharges

fully mitigated the high costs of fuel and additional costs related to congestion during the quarter.

GMR records profit

The GMR Group and its consortium, during this quarter won the bid for Sabiha Gokcen International Airport (SGA) at Istanbul, Turkey, amidst intense competition from international firms

CRUISING HEIGHTS August 2007

MR Infrastructure Limited has announced its financial results for the first quarter of the financial year 2008. For the first quarter ended 2008, the company has achieved a 24 per cent increase in gross operating revenues, at Rs 562 crore, up from Rs 454 crore in the first quarter ended 2007. The operations at Delhi airport contributed Rs 186 crore, while the power business added Rs 334 crore, to the top line of the company at the consolidated level. Consolidated EBIDTA increased by Rs 28 crore with 21 per cent growth from Rs 130 crore in Q1 FY 07 to Rs 158 crore in Q1 FY 08. The main growth driver during the quarter was Delhi Airport, adding net operating revenues of Rs 48 crore as compared with the corresponding previous quarter. The GMR Group and its consortium, Limak Insaat Sanayi San Ve Tic A.S Turkey (Limak) and Malaysia Airports Holdings Berhad (MAHB), during this quarter won the bid for Sabiha Gokcen International Airport (SGA) at Istanbul, Turkey, amidst intense competition from international firms. This bid marks a strategic move of the Group to establish and make its presence felt globally. SGA is emerging as a second airport in Istanbul, as an alternative to the already traffic constrained Istanbul Ataturk airport. It is located strategically, placed in the midst of Turkeyâ&#x20AC;&#x2122;s most important industrial development zone, and within five kilometres of the Istanbul Formula One Race circuit. In the past two years, SGA has witnessed an average pax growth rate of over 45 per cent. The traffic in 2006 has already touched the three million mark (pax capacity of 3.5 p.a. million). SGA is a BOT (Build-Operate-Transfer) project that involves: Construction of a new international airport terminal with a 10 million capacity in 30 months from the transfer of the facility. The project cost involves a total estimated investment of 450 million euros. Managing the existing domestic and international terminals. Current international terminal to be converted to an all-domestic terminal, subsequent to construction of the new terminal. Concession fee of Euro 1.93 billion (approx Rs 10,808 crore) is payable over the tenure of the 20-year concession period, with no concession fee payable in the first three years.

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CONVENTIONS

Travel industry prepares to COUNTER CHALLENGES OF GROWTH India is on the move — quite literally. With the economy recording an astounding growth and disposable incomes increasing, there are more Indians travelling today than at any time in the past. Keeping pace with the Indian travelling public is the travel and tourism industry. The next couple of months will witness three of the country’s travel and tour operators’ associations holding their annual conventions to discuss the challenges posed by the growth.

A “Tour operators are slowly becoming an endangered species. In order to remain in business, we need to look into the challenges and identify immediate measures so that our future is secure.” Subhash Goyal President, IATO 34

S THE NUMBERS of tourists to the country rise—the number of foreign tourists to the country between January and May 2007 was 2.02 million, an increase of 12 per cent over the same period last year— travel agents associations are gearing up to accommodate the growth and change. First off the block is the Indian Association of Tour Operators (IATO). Celebrating the silver jubilee of its annual convention this year, the 2007 meet is scheduled from September 1-3 at Hotel Ashoka, New Delhi. The three-day convention could see an inauguration by the Prime Minister of India, Dr Manmohan Singh. As this edition of the convention would be a special silver jubilee one, IATO will be inviting delegates from more than 20 countries with which it has signed MoUs for tourism promotion. The meet will be held in the backdrop of the travel business margins getting smaller. With an apt theme—Indian Tour Operator’s Global Challenges—the convention will discuss ways out of the situation. According to Subhash Goyal, IATO president, “Tour operators are slowly becoming an endangered species. In order to remain in business, we need to look into the challenges and identify immediate measures so that our future is secure.” In addition, the IATO delegates will also discuss issues of global warming and how it could affect tourism in future. Aware of the immense potential of the Commonwealth Games in 2010, IATO will also talk about how it can contribute towards the games and cash in on it. Among the key issues that will be discussed are: Acquisition and mergers concerning players in the tourism industry; Adverse effects of growing terrorism on travel and tourism; Improving infrastructure in the hospitality segment; CRUISING HEIGHTS August 2007

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Utilising agricultural land in various cities (especially Delhi) to construct hotels; and Encouraging e-tourism in India. Away from home, the Travel Agents Federation of India (TAFI) would also be discussing the challenges posed by the changes in the travel and tourism industry. At its fourth annual convention in Borneo, Kota Kinabalu, Malaysia, from September 6-9, 2007, the TAFI delegates will be discussing ‘Driving the Change, to Stay on Top’. According to Praveen Chugh, TAFI president, the federation’s conventions have always been a great catalyst in promoting host country destinations. That is why Kota Kinabalu was chosen. Chugh felt that Indian tourist arrivals to Malaysia after the TAFI convention in 1999 had showed a dramatic increase year after year. Before that convention, there were only 30,000 Indian tourist arrivals to Malaysia annually and the number

has increased to about 3,00,000 last year. With India’s economic growth, TAFI expects the number of Indian nationals travelling to Malaysia to increase to 4,00,000 this year. He pointed out, “TAFI conventions have always led to promotion of the host destinations, and we expect the same this year, too. Indian outbound tourism can look forward to a significant move towards Sabah through the almost 1,000strong delegation expected to attend the convention. We anticipate that by bringing our own people here, we are trying to promote indirectly our base tourism destinations in India.” Other than promoting tourism, the convention would discuss whether there is really a boom “or is it just a myth and go on to talk about the survivors and the non-survivors,” Chugh said. One of the business sessions will focus on consolidation of smaller agents for survival by moving into specialised services

“TAFI conventions have always led to promotion of host destinations… We anticipate that by bringing our own people to Sabah, we are trying to promote indirectly our base tourism destinations in India.” Praveen Chugh President, TAFI CRUISING HEIGHTS August 2007

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CONVENTIONS

TAAI to the rescue

here are a number of issues that the three associations agree on. While the most pressing is the one concerning the shortage of hotel rooms in the metro cities, the other concerns air tickets, especially of the low-cost carriers (LCCs). With LCCs not being part of the GDS system, it was the travel agent who suffered a loss in business with customers preferring to book individually or with online travel agents. To overcome the situation, the Travel Agents Association of India (TAAI) has come up with its own solution: create its own reservation system, which would make it easy for its members to sell LCC tickets. TAAI has decided to launch the new GDS system during its annual convention in Chennai.

“Evolution is steadily creeping into potential growth markets… Every aspect of our industry is seeing growth through evolution and TAAI is going to showcase this amazing phase.” Rajji Rai, Convention chairman,TAAI 36

According to C.V. Prasad, TAAI president, the association was serious about what he referred to as the ‘TAAI-sponsored GDS’. There was reason enough to start such a system because the number of LCCs would grow over the years, he said. How do the present GDSs view such a move by TAAI? Most are of the opinion that TAAI was spending money uselessly trying to put a GDS system in place when a number of the present GDS facilitators had LCC inventories. Rajji Rai, vice president and convention chairman, TAAI, however, does not agree. He said that the present day GDSs were unable to provide travel agents access to LCC inventory. So, “to ensure our long-term survival, the GDS that TAAI proposes would supplement the existing GDSs and not compete with them.”

under bigger entities providing better opportunities. The third and one of the most important sessions of the convention would be on the ways to stop the power game played by the airlines on issues like BSP, etc. The last session will be dedicated to the tourism opportunities between Malaysia and India as well as Asia. According to Chugh, the convention will be attended by nearly 850 delegates along with the many Indian state tourism boards, which have been invited to participate. Almost a month later, the Travel Agents Association of India (TAAI) will hold its annual convention in Chennai from October 5-8, 2007. The convention, with its theme, “Growth through Evolution”, will highlight the massive growth that has been witnessed in the travel and tourism sector. Rajji Rai, the convention chairman, said, “Look at the increased number of inbound as well as outbound tourists. The number of arrivals in 2006 rose substantially over the previous year, while departures recorded a phenomenal growth. And why has this happened? Because of India’s improved economy, the stimulation of outbound as well as domestic travel, feasibility for low-cost carriers to operas even in staff, resources and training. He said, ate into our country as also being one of the “Every aspect of our industry is seeing growth most attractive destinations in the world.” through evolution and TAAI is going to showTouted to be the most prolific, high-profile case this amazing phase to our delegates at the and much-talked-about annual convention.” event of the Indian travel and The convention, which Meeting of minds tourism industry, the TAAI will be taking place in Chennai convention, aptly titled Indian after a gap of 18 years, is IATO: The Indian Association of Tour OperaTravel Congress 2007, will be expected to attract over 1,000 tors’ annual convention accompanied by an exhibition, delegates from all over the (New Delhi, September which will run concurrently country, especially the south1-3, 2007) with the convention. It will ern states. According to Chala TAFI: Travel Agents also point towards the changes Prasad, President, TAAI, Federation of India’s taking place in the industry. “With the travel industry in annual convention Rai pointed out that evolution South India booming and out(Borneo, Kota Kinabalu, was steadily creeping into stripping the growth rates in Malaysia, September potential growth markets, other parts of the country, the 6-9, 2007) long-haul and short-haul hubs, exhibition will be an excellent TAAI: India Travel low-cost subsidiaries, consoliplatform to showcase new and Congress (Chennai, dation, aircraft purchasing, innovative products and October 5-8, 2007) supply markets and fuel prices services.” CRUISING HEIGHTS August 2007

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PRICE-FIXING

Caught in the act

The international air cargo sector was recently rocked by massive fines levied on major carriers for rigging cargo and passenger prices. Among the airlines were British Airways, Europe’s third largest carrier, and Korean Air, the world’s Number One cargo airline. Who is to be blamed: the airlines or the freight forwarders? Tirthankar Ghosh pieces together the story.

T WAS A VERY cut and dry press release from the US Department of Justice (DoJ). Matter of fact and to the point, the words came as a lightning bolt. Press release # 07-569 stated: “UK-based British Airways Plc and South Korea-based Korean Air Lines Co. Ltd. have each agreed to plead guilty and pay separate $300 million criminal fines for their roles in conspiracies to fix the prices of passenger and cargo flights.” Acting associate attorney general William W. Mercer, commenting on the case, said that “when British Airways, Korean Air and their co-conspirators got together and agreed to raise prices for passenger and air cargo fares, American consumers and businesses ended up picking the tab for their illegal conduct.” In effect, it was protecting American turf and Mercer made it amply clear when he said that the “enforcement actions demonstrate that the antitrust division will investigate and prosecute illegal cartel

It was ironical that the blow to British Airways (BA) came at a time when the airline’s accounts books showed a profit CRUISING HEIGHTS August 2007

activity—here and abroad—in order to ensure that American consumers and businesses are not harmed by illegal cartel activities”. It was ironical that the blow to British Airways (BA) came at a time when the airline’s accounts books showed a profit. In fact, the carrier was hoping to start paying dividends again for the first time since the 9/11 attacks. Talking to shareholders at the company’s annual general meeting in London a few days before the DoJ announcement, in the beginning of August, BA chairman Martin Broughton said, “We intend to start dividend payments at a level that will allow them to grow over time.” The air carrier was slowly getting back on track, though over the last year or so, it has been troubled by labour disputes and security concerns. Perhaps, what was worse was that the American fine was not a one-off one. The British Office of Fair Trading (OFT) also levied a fine of £121.5 million. In fact, the fine could

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PRICE-FIXING have been higher. The OFT could, under the Competition Act, have fined BA 10 per cent of its turnover: around £850 million for the price fixing alone. It was almost a replay for Korean Air. The world’s biggest commercial air cargo freight carrier was humbled when DoJ slapped the fine of $300 million. More humiliation followed when the South Korean national airline reported a $232 million net loss for the second quarter. Both British Airways and Korean Air are among the top 10 international cargo carriers. Apparently, during the period under scrutiny, their combined United

There were 14 other US, European and Asian scheduled and all-cargo airlines that faced investigations by the justice department

Ticketed to conspire

ritish Airways has been charged with engaging in a conspiracy between March 2002 and February 2006 to suppress and eliminate competition by fixing the rates charged to customers for international air shipments of cargo, including shipments to and from the United States. Billions of dollars of consumer and other goods, including produce, clothing, electronics and medicines, are shipped by British Airways and its competitors in the air cargo industry. Between August 2004 and February 2006, British Airways was engaged in a conspiracy to suppress and eliminate competition by fixing the fuel surcharge charged to passengers on long-haul international flights, including flights between the United States and the United Kingdom. According to the Department of Justice (DoJ), the “conspiracy” by the airline raised the price on “virtually every ticket purchased between 2004 and 2006 for the long-haul international flights. Korean Air, too, according to the DoJ, participated in a similar conspiracy like BA. Between January 2000 and July 2006, Korean Air fixed fares for flights from the United States to Korea. In addition, the carrier tried to suppress and eliminate competition by fixing the rates charged to customers in the United States and elsewhere for international air cargo shipments from around January 2000 to February 2006. The two carriers have been charged with carrying out the two price-fixing conspiracies with co-conspirators by: a) Participating in meetings, conversations and communications to discuss the cargo rates on shipments to and from the United States and passenger

fuel surcharges, to be charged for flights between the United States and the United Kingdom and United States and Korea; b) Agreeing, during those meetings, conversations and communications, on certain components of the cargo rates on shipments to and from the United States and passenger fuel surcharges to levy for flights between the United States and the United Kingdom and United States and Korea; c) Levying cargo rates and passenger fuel surcharges in accordance with the agreements reached; and, d) Engaging in meetings, conversations and communications to monitor and enforce the agreed-upon rates. While Korean Air is the largest passenger carrier from the United States to Korea and averages more than $250 million a year on those flights, British Airways is the largest passenger carrier from the United Kingdom to the United States. In 2006, it had $14 billion in total passenger revenues. So, who were the biggest losers? According to reports, the ones who could have suffered the biggest losses were travellers from Southern California. Korean Air operates four daily non-stop flights from Los Angeles to Seoul, while BA has three flights a day from LA to London. Together, the two airlines take on around 1,10,000 passengers a month in Los Angeles. Although the fine has been levied, none of it will go to the passengers. Instead, the money is set to go to a crime-victims fund. The affected passengers, according to the authorities, would have to apply for compensation to the airlines separately.

CRUISING HEIGHTS August 2007

States-related cargo revenues were more than $1 billion annually. However, British Airways and Korean Air were not the only ones to have undergone investigations. There were 14 other US, European and Asian scheduled and allcargo airlines that faced investigations by the justice department and European Union over fixing of fuel surcharges on routes to Europe, the United States, Australia, Canada and New Zealand. Among the airlines was Lufthansa, the world’s second-largest cargo carrier, after Korean Air, which agreed in September last year to pay $85 million to settle a whopping 80 suits by US shippers over cargo price-fixing. That payment absolved the airline and it received conditional immunity from prosecution in the US and the EU. Among the other airlines were Air France-KLM, Cathay Pacific, Japan Airlines and Cargolux, the Luxembourg-based cargo airline. The conspiracy story by British Airways and Korean Air came to light after a two-year investigation by the US Department of Justice and British

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authorities, among others, into fuelrelated fees charged for cargo and passengers. Making the fines an example— the amount is the second-largest ever levied by the DoJ—Scott Hammond, the justice department’s deputy assistant attorney general for antitrust cases, pointed out, “The crimes committed by Korean Air and British Air are among the largest and far-reaching antitrust conspiracies we have ever detected. Virtually every American business and consumer was impacted by these crimes.”

he investigation into the allegations about hiking fuel surcharges by the British airline began in earnest in June last when BA’s offices were raided. At that time, there was another airline—Virgin—also in the crosshairs of the investigating authorities. The OFT pointed out that BA had admitted it had joined hands with arch-rival Virgin Atlantic between August 2004 and January 2006 to add fuel surcharges to

Along with Virgin, Lufthansa, too, cooperated with the investigators and has now been put in a conditional “leniency programme” CRUISING HEIGHTS August 2007

ticket prices. Virgin seemed to be moving in tandem with BA: BA’s surcharge of £2.50 came on May 13 of that year, while Virgin put it into effect on May 19. According to reports, around April 2007, both carriers were levying £35 extra on a long-haul flight. According to OFT reports, BA is supposed to have colluded with Virgin Atlantic on at least six occasions between August 2004 and January 2006. During that time, surcharges rose from £5 to £60 per ticket. However, BA’s chief executive, Willie Walsh, has gone on record to state that some of BA’s employees had erred, though he maintained that passengers had not been overcharged because the fuel surcharges were “a legitimate way of recovering costs”. Hammond did not agree and stated that virtually every American business and consumer was impacted by these crimes. “American companies rely on competitive shipping rates to export their goods to foreign markets, American consumers rely on imports for so many con-

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PRICE-FIXING “leniency programme” has been a valuable tool in breaking up illegal cartels. Till today, because of the leniency programme, the antitrust division has broken up dozens of cartels and has obtained more than $2 billion in fines in cases assisted by amnesty applicants. s news of fines against Korean Air and British Air Cargo sank in, Australian airline Qantas came out with a confession stating it could have fixed prices. Industry sources, however, maintain that the fines and price fixing issues are being blown out of proportion. There was absolutely no need for anybody in the airline cargo business to conspire about rates. Like the passenger business, rates and surcharges are published and made public, and everybody in the business knows about them almost instantaneously. Most of the fare increases or fuel surcharges are part of a business model followed by an airline. It would be, in fact, madness on the part of air cargo executives to conspire in an atmosphere where everybody knows what everybody else is doing. First, is there anything to conspire about? Customers report to each airline what other airlines are charging. The airlines had antitrust immunity for a long time with IATA and that never worked because most undercut each other. Putting the blame squarely on freight forwarders, the air cargo industry said that these forwarders operated in much more secrecy than the airlines. It is they who have wanted a piece of the airline surcharge and could have probably sparked the US/UK investigations. In fact, forwarders could add a surcharge, but they do not because their business is even more competitive than the airlines’ and they would have a hard time justifying a fuel surcharge to their customers as their operation is not as fuel-intensive as flying an aircraft. Where, then, does all this leave us in India? The demand for global air freight continues to be strong: the Airports Council International (ACI) has predicted that global airfreight will triple by 2025. For the moment, Indian carriers, or rather the lack of cargo carriers in the Indian aviation sector, remain untouched by the price fixing scandal. But surely, there could be many consumers in the country—both freight forwarders and passengers—who have had to face the effects of price rigging. Perhaps, there is a lesson in for all of us in the aviation business. With the aviation sector going places, it is time to put all the checks and balances in place before really taking off.

sumer and household goods, American families flew these airlines on international destinations … In every instance American businesses and consumers ended up paying more as a result of these crimes.” Meanwhile, on the investigation front, Virgin did an about turn. The airline, once it came to know that investigations were on, turned into a whistleblower. Now, Virgin Atlantic will not be fined since it has been granted immunity by OFT. A spokesperson for Virgin mentioned that it had informed the regulators as soon as its legal team was made aware of the nature of contacts that had taken place between “some individuals at British Airways and Virgin Atlantic”. According to the investigations, the fuel surcharge on cargo on British Airways flights between the United Kingdom and the United States during the period under review was changed more than 20 times and increased from four cents per kilogram of cargo shipped to as high as 72 cents per kilogram. Along with Virgin, Lufthansa, too, cooperated with the investigators and has now been put in a conditional “leniency programme”, which absolves it from immediate conviction and fines. In fact, Lufthansa has been in the process of settling a lawsuit that would pay out $82 million to cargo customers. According to Hammond, the corporate

In fact, forwarders could add a surcharge, but they do not because their business is even more competitive than the airlines’ and they would have a hard time justifying a fuel surcharge to their customers as their operation is not as fuel-intensive as flying an aircraft CRUISING HEIGHTS August 2007

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CARGO NEWS A380F still on the cards

Coming: Six cargo carriers

AIRBUS IS SLOWLY recovering from the withdrawals of the A380 freighters, first by FedEx and then by Emirates, ILFC and UPS. Last November, no cargo airline seemed to be interested in the A380 freighter. However, it was not the buyers who brought the plan for constructing the huge transporter to a standstill, but Airbus itself when it shifted many of its engineers to the passenger version. Now that flight tests with the first A380 for launching customer Singapore Airlines have begun, the Airbus management seems to have regained new capacity for future aircraft programmes. The A380F was a project that was only suspended, according to John Leahy, Airbus’ COO Customers, but would start again, probably in the middle of the next decade. This time around, it is believed that the newer version would be a much better freighter compared with the one previously offered. That should be good news for any future customer, who can expect to get an even better product compared with the first A380F. According to Jean-Luc Bersat, head of cargo and market forecasts at Airbus, there will be a demand of almost 1,000 large freighters until 2025.

WITH WAL-MART SIGNING a joint venture with Bharti to open cash-andcarry stores across India, the market is hotting up for the air cargo business. In the next one-and-half years, there are six carriers ready to take off. This despite the fact that infrastructure on the ground would improve only slightly from what it is now. According to Kapil Kaul, who heads the Centre for Asia Pacific Aviation (CAPA) in India, with export figures rising by the day and the fact that a targeted cargo hub will come up at Nagpur, the air cargo business is surely going to pick up. The fact is that there is no real hub between Dubai and Bangkok, Kaul said, and so a dedicated hub could obviously put more life into the sector. According to the Airports Authority of India (AAI), there was a 7.3 per cent increase in international cargo for April, compared with the corresponding period of the previous year. Domestic cargo for the same period increased by 13.4 per cent. The air cargo sector is forecast to grow at 20 per cent a year, according to the Directorate-General of Civil Aviation (DGCA). A CAPA study has also pointed out that the country is among the top 30 freighter markets in the world. It is no wonder, then, that a recent Airbus report stated that India would need more than 165 freighters by 2025.

FedEx leaves Frankfurt GLOBAL EXPRESS COMPANY FedEx will be moving out one of its principal European operations from Frankfurt Rhein/Main Airport to Cologne/Bonn Airport. FedEx has said that its plan is to relocate its largest German gateway from Frankfurt/Main to the Cologne/Bonn airport in 2010. FedEx will be locating its European hub in Paris, supporting its operations with an alliance with Geodis, which provides a ground network throughout France. The reason given for the move is that FedEx needs greater capacity for its European network. Germany is particularly favoured due to its proximity and connectivity to Central and Eastern Europe. Accordingly, FedEx has decided to invest in 50,000 square metres of new sorting facilities in Cologne. Another major reason for the global express giant moving out of Frankfurt is the airport’s ban on night flights. Frankfurt Airport authorities have agreed to close the airport between midnight and 5 am in exchange for local politicians agreeing to the extension of the airport. Cologne is Germany’s second largest handler of freight after Frankfurt/Main and already hosts the UPS Express hub along with UPS Supply Chain Services and Freight’s warehousing capabilities.

DTDC appoints Exec V-P for freight DTDC COURIER & CARGO LTD, one of India’s leading air express and cargo company today, announced the appointment of Kochat Narendran as executive vice-president, responsible for its operations and freight business. Narendran has been entrusted with the responsibility of setting up DTDC’s new initiative in freight forwarding business, which will help the company to grow as a global player. An industry veteran with over 22 years of experience, Narendran has worked for various companies like BPL, Xerox, TNT, DHL and Hindustan Cargo, where he managed cross-functional activities and has an intense knowledge of the global market. CRUISING HEIGHTS August 2007

Fraport growing with Asian cargo carriers EVER SINCE THE parent company Fraport AG made its cargo handling company, Fraport Cargo Services, an independent, but wholly owned, subsidiary, its cargo business, based at Frankfurt’s Cargo City South has been on a rise. Fraport, which runs Germany’s largest airport, is best known for its airport management and passenger services, but it also offers a host of cargo services to airlines. It recently signed a fiveyear deal with Emirates, Fraport’s second largest cargo customer after Cathay Pacific. The volume growth is leading the company to invest in capital projects, like a new 4,800 square metre warehouse near the company’s existing 47,000 square metre warehouse in Cargo City South. The new building should be completed next year and offer cargo handling services, including enhanced reefer capabilities.

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SNIPPETS

NATIONAL AIR DECCAN NEWS Nick White is DCOO: The airline has appointed Nick White as Deputy Chief Operating Officer-Technical. White comes with over 30 years of experience in the aviation industry. He began his career with Britannia Airways, a UKbased airline, in 1975 as an engineer and went on to become its engineering and maintenance director. Growth in traffic: The LCC has recorded a 22 per cent leap in passenger traffic for June 2007, compared with June 2006. In June 2007, the airline carried 6,63,355 passengers, representing a growth of 22.3 per cent over the same month in the previous year. The average load factor, too, has risen steadily, to 83.19 per cent from 81.21 per cent in June last. The carrier now operates 350 flights to 65 destinations daily, as compared with the 265 flights to 55 destinations in the same month last year. Bags contract for Amarnath Yatra: Deccan Aviation Limited (DAL) has been awarded a three-year contract by Shri Amarnathji Shrine Board (SASB) for providing helicopter services for Shri Amarnathji Yatra. The Amarnath Yatra is organised every year by the Jammu & Kashmir government during the months of July and August. Helicopter services for this year’s Yatra have already begun. Situated in a narrow gorge at the farther end of Lidder valley, Amarnath stands at 3,888 metres and 141 km from Srinagar. The trekking route to Amarnath, though extremely beautiful and captivating, can be rather risky, involving steep mountain routes, snow ridges and fast flowing streams. Helicopter is an essential mode of transport in these conditions.

Shantharaju is DIAL CEO DELHI INTERNATIONAL AIRPORT PVT LIMITED, the joint venture consortium led by GMR Group, mandated for

Hotel industry conclave in New Delhi

THE HOTEL ASSOCIATION OF INDIA headed by Priya Paul, has announced the holding of the country’s first-ever summit level meeting of hospitality industry leaders on August 23-24 at New Delhi. ITC Maurya Hotel has been decided upon as the venue of the HAI Hoteliers Conclave, which is likely to be attended by over three hundred general managers of hotels, owners and chief executives of leading hotel companies. Eminent national and international experts will share their views and perceptions with the hoteliers on diverse themes, ranging from ‘Marketing India’ and ‘What the Customer Wants’ to ‘Retaining and Rewarding Talent’ and ‘The Way the World Will Eat’. A talk by Railway Minister Lalu Prasad Yadav, aptly titled Lessons from a Moving

the modernisation and restructuring of Indira Gandhi International Airport, has appointed B.S. Shantharaju its chief executive officer. He was formerly the managing director of Gujarat Gas Limited. Prior to that, he was chief financial officer of Glaxo SmithKline.

Air India joins SITA AIRCOM AIR INDIA has announced that it is joining over 180 other airlines around the world as a user of SITA’s air ground communications services for both voice and data link. SITA’s AIRCOM Server facilitates airline implementation of the

Aircraft Communication Addressing and Reporting System, known as ACARS. In addition to straightforward communication between pilots and air traffic controllers, ACARS also allows, for example, the uploading of weather and flight plans and downloading of engine performance data, which helps an airline reduce costs and maximise IT investment. Train, to spell out his famous management success in the turnaround of the Indian Railways is also expected. Among other noted public figures who are expected to participate in the conclave are Vijay Mallya, Kingfisher Airlines chief; Vir Sanghvi, editorial director of Hindustan Times; N.K. Singh, former Planning Commission member; Suhel Seth, Equus CEO; and Dr C.L. Jenkins, managing director of International Hotel Management Institute, Lausanne, Switzerland.

CRUISING HEIGHTS August 2007

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INTERNATIONAL

First A380 flight to be sold for charity SINGAPORE AIRLINES—the first airline in the world to fly the new Airbus A380—has announced that all proceeds from the sale of tickets on the first commercial flight of the new double-decker jumbo jet, from Singapore to Sydney and return flight, will be donated to charities. The first flight will take place in October. Further, in response to requests from people all over the world to be passengers on the first flight, the carrier will auction the seats on eBay. Bids will be

invited for seats on this history-making flight, and winning bidders will know that every dollar they pay will go to worthwhile charities. All customers will receive a personalised ceremonial certificate confirming they were part of the first-ever commercial A380 flight. Those interested in pre-registering for notification on auction details, which will include the date of the flight and the charities to benefit from proceeds, may do so by visiting singaporeair.com/a380.

Galileo implements e-ticketing

SAUDI ARABIAN AIRLINES, Air India and Air Yemenia are the latest three airlines to implement e-ticketing via Galileo, a global distribution system (GDS) and subsidiary of Travelport. Galileo-connected agents worldwide will now be able to transmit ticket information directly to the databases of the three airlines, enabling passengers to check in and board their flights without a paper ticket. Bruce Hanna, President & CEO, Galileo India, commented, “Despite the fact that the IATA target to become e-ticket compliant has been extended to May 31, 2008, airlines still need to plan now in order to be prepared for the deadline.”

Gulf Air introduces revamped flight THE AIRLINE has totally revamped its flight schedule beginning July 1. The new network, based on a ‘wave’ model, offers as many as 588 flights every week in the Middle East, with more non-stop flights than any other airline.

Miles & More credit card launched in India Deutsche Bank and Lufthansa German Airlines have announced the launch of the Miles & More credit card in India, in association with Visa International. Available in two variants—Visa Platinum and Visa Signature—the Miles & More credit card gives cardholders automatic Miles & More membership with access to the Miles & More programme, the frequent flyer programme of Lufthansa. The Miles & More programme allows members to earn award miles whenever they fly with Lufthansa and other partner airlines, stay at a variety of partner hotels, rent a car or use products and services of other Miles & More partners.

SAA excels in World Passenger Survey SOUTH AFRICAN AIRWAYS (SAA) has claimed another two awards this year after being named “Best in Africa” and “Best Cabin Crew” by specialist air transport research organisation, Skytrax, recently. These accolades were presented as part of the World Airline Awards category, Best in Region Awards. CRUISING HEIGHTS August 2007

BA frequent flyers make a difference in Amber BRITISH AIRWAYS EXECUTIVE CLUB members will be able to donate their miles to support Amber Communities Trust, a registered UK charity, working in Amber, Rajasthan, since 1998. The charity improves social well-being within the local community through a four-strand programme targeting education, environment, health and heritage. British Airways' Executive Club members in India can redeem their miles at four different levels each relating to a different donation opportunity, for example, providing electricity in schools for a year or teaching underprivileged women to sew, thereby enabling them to earn a living. The Executive Club is British Airways' loyalty programme for frequent flyers, with more than four million members worldwide. Members are rewarded for travel with points and miles, and are able to enjoy benefits such as lounge access as they climb through the membership tiers.

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Etihad ups Johannesburg flights to daily

ETIHAD AIRWAYS has launched daily flights between its Abu Dhabi home base and Johannesburg. The airline began flying to the commercial capital of South Africa twice a week in December 2005, and the route has proved immensely popular with business and leisure air travellers. Much of the demand for the service to increase to a daily flight came from the expanding South African community that lives and works in the Gulf. There are currently an estimated 1,00,000 South African nationals living throughout the Gulf region, out of which an estimated 20,000 live in the UAE.

More entertainment KLM ROYAL DUTCH AIRLINES is planning to extend its range of personal in-flight entertainment aboard its intercontinental fleet, and during August, September, and October, passengers will be able to use the texting/email function of the in-flight entertainment. Passengers will be given free access to this service, which normally costs $2.50 per message, to promote the service. In September, the range of audio and video programmes will be extended substantially. Further, the airline will introduce four new programmes on September 1: language lessons, audio books, background information about flying and a business programme.

Qatar Airways wins three Skytrax awards QATAR AIRWAYS has, once again, been honoured with three Skytrax World Airline Awards this year. The airline has been named as having the Best First Class in the world. The carrier also saw its global ranking rise to be named among the top five airlines in the world. The elite top five group features airlines from the Far East.

EMIRATES NEWS More flights: The airline has unveiled plans to implement significant capacity enhancements to Mumbai, Chennai, Kochi nand Hyderabad. In a bid to strengthen its India operations, the carrier will introduce a third daily service to Mumbai and a double-daily operation to Chennai starting October 28. It will also add three additional flights each to Kochi and Hyderabad over the summer and winter seasons. The airline has also announced its plans to start non-stop services to Ahmedabad, providing a first direct link between India’s sixth largest city, and Dubai. It plans

to operate six flights per week to Ahmedabad at the start of the winter timetable, starting October 28. Flights will be operated in two- and three-class configurations using A330-200 and 777-200 aircraft. Launches ICE digital wide screen: Voted Best In-flight Entertainment in the World in 2005 and 2006, the airline has launched Digital Widescreen system. Available in all classes, the new system features the airline world’s largest wide-screen TVs, measuring 23” in first class, 17” in business class and 10.6” in economy. New features include My USB, which allows passengers to view their holiday photos onscreen during the flight home, and My Playlist, which makes it possible for passengers to create their own compilation from the nearly 10,000 tracks of music available. Dedicated flight catering facility: The airline has recently set up a $120 million flight catering facility, with a design capacity to produce 1,15,000 meals per day. The new flight kitchen is exclusive to Emirates, while the existing one, adjacent to it, continues to serve all other airlines. Emirates Flight Catering (EFC) operates both, which is 90 per cent owned by Emirates and 10 per cent by Dubai's Department of Civil Aviation. The new unit covers a total area of nearly 50,000 square metres, spread over four floors, and services around 95 departures and 90 arrivals per day. More Internet options: Irrespective of class, all Emirates customers can now select and secure their preferred seats on their flights at the time of booking, when they purchase their tickets online. The facility, previously available only to first and business class passengers, has been simultaneously launched and is available to customers in more than 50 countries served by the airline across Europe, North America, Asia, Africa, the Middle East and Australasia.

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TRAVEL & TOURISM Malaysia’s golden jubilee SATU WARISAN, Satu Matlamat, meaning One Legacy, One Destiny, is the slogan of Petronas for the golden jubilee of Malaysia’s independence and it reverberates through the country as it prepares to celebrate it on August 31. The main event will be held in Putrajaya. For more than 30 years, Merdeka Day celebrations have been marked by parades involving uniformed personnel, corporate players, schoolchildren, cultural dancers, athletes and Malaysians from all walks of life. However, in recent years, the event has grown into a much anticipated and exciting month-long celebration nationwide. Festivities start the night before with an open-air concert at the chosen venue during the ‘Merdeka Eve Celebrations’ with popular Malaysian singers and celebrities. To mark the occasion on the morning of Merdeka Day, the main event usually begins with a spectacular parade down at the pre-selected venue with His Majesty the King, the Prime Minister and other government leaders joining the mammoth crowd. Giving a golden spark to the celebration of 50 years of nationhood, Putrajaya International Convention Centre will be the venue for Malaysia International Firework Competition and the skies over Putrajaya will be lit by a sequence of firework performances for two weeks, giving a magnificent view across the lake overlooked by the grand Seri Gemilang Bridge. From August 18 till September 2, artistes from Australia, Japan, Italy, Russia, Malaysia and many other countries will be competing for the Merdeka trophy.

New MM in Chennai TOURISM MALAYSIA CHENNAI has announced the appointment of a new marketing manager, Nithya Manoj, for the South India region. Nithya brings with her a varied experience of eight years in the travel and tourism industry. Prior to joining Tourism Malaysia, she has worked with The Great India Tour Company and Airtravel Enterprises India Limited. Her last appointment was with Star Cruises.

Photo must for visas in Dubai The Dubai Naturalisation and Residency Department (DNRD) plans to implement the new photograph rule for the issuance of visas from the 20th of this month. As per the rule, DNRD now requires the photograph of the person to whom the visa is to be issued. As per the new rule, a sponsor has to submit the visa application—of the person he is sponsoring—along with a colour photocopy of the person’s passport. DNRD will fix the applicant's photograph on the visa.

SFO operates from India THE SAN FRANCISCO CONVENTION & VISITORS BUREAU (SFCVB), in partnership with San Francisco International Airport (SFO), has opened a representation office in India, making San Francisco the first, and only, US convention & visitors bureau (CVB) and airport to have representation services in India. San Francisco precedes even the US in having such service. In the recent report issued by Office of Tourism Industries, 4,07,000 Indians visited the US in 2006, an increase of 13 per cent over 2005. The San Francisco representative, based in New Delhi, will work to promote San Francisco to the professional travel trade, consumers and media and airlines. Importantly, they will work with airlines to encourage new service to SFO, generate press coverage of the region and assist the travel trade with information to help generate increased bookings to San Francisco. This includes business travel, technical visits and convention attendance as well as the rapidly growing leisure travel market.

ADTOI arrives in Kerala THE KERALA CHAPTER OF ADTOI (Association of Domestic Tour Operators of India) was recently inaugurated by Kerala's Minister of Tourism, Kodiyeri Balakrishnan. The aim of establishing Kerala Chapter is to carry the spirit of domestic tourism to new dimensions. The main objective of ADTOI was stressed by the three catchwords—Suvidha, Suraksha and Sadhana—which denote travel comfort by providing improved facilities, safety and security of visitors and dissemination of information. The aim is to make things easier and more pleasurable for travellers in every way.

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Kerala Tourism bags two PATA awards Kerala Tourism has once again bagged two prestigious Pacific Asia Travel Association (PATA) awards for 2007. These awards were in categories of culture and brochure. In the culture category, Kerala’s endogenous tourism project, Aranmula, has won the award for best implementation of village tourism project. In the brochure category, state tourism’s four-set series of brochures, launched to promote destinations like Kumarakom, Munnar, Wayanad and Thekkady have been selected for the award.

Sri Lanka among Asia’s leading destinations WORLD TRAVEL AWARDS has nominated Sri Lanka amongst the leading destinations in Asia for 2007, placing the Island nation amongst the big players in the region. The Asia, Australasia & Indian Ocean Ceremony of the World Travel Awards is due to take place in Bangkok on September 7, announced the organisers of the event. World Travel Awards were established in 1993 to acknowledge and celebrate excellence in the world’s travel and tourism industry. With thousands of votes cast by travel professionals from 1,60,000 travel agencies in over 200 countries across the globe, winning a

World Travel Award has become one of the highest accolades a travel product can achieve.

S. Banerjee new tourism secretary Sheelbhadra Banerjee, IAS, has been appointed as the new secretary, ministry of tourism, government of India. He will replace Badal K. Das, who was holding additional charge. Banerjee, a 1971-batch IAS of Andhra Pradesh cadre has been on central deputation since 2003 and has been director-general (acquisitions) in the ministry of defence prior to his new appointment.

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EVENT/ FAST Discusses Airports

FUTURE HOPE: By 2010, India will have 35 new airports in addition to the present 133 to cope with the rising demand for air travel. This was the forecast from experts at the seminar organised by the Foundation for Aviation and Sustain-

able Tourism (FAST). The country needed airports with worldclass infrastructure, according to Gurcharan Bhatura, secretarygeneral, FAST, which would include safety, security and efficient handling of passengers, freight and aircraft operations.

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Partying with the Don!

T COULD not have been a luckier evening for ten lucky kids. They were there to meet the King himself—King Khan we mean. The kids had taken part in the Jet Kids “Meet the Don Contest”. Based on the super-hit movie, Don, featuring Shah Rukh Khan, Jet Airways had produced a comic book in collaboration with Excel Entertainment, which was distributed on Jet Airways’ flights during May and June. Children under the age of twelve participated in the contest by answering four simple questions about Don, the movie. Jet Airways received responses from 7,800 contestants from all over India and 10 lucky winners were selected by means of a computerised random selection process.

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