Ch december 2008 by Newsline

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December 2008

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Rs 60

7th – 9th February 2009, Jaisalmer

-: ATTRACTIONS :-

Other Upcoming Fairs and Festivals

Nagaur Fair

Braj Festival

(2nd – 5th February 2009)

(2nd – 4th February 2009)

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Rajasthan Tourism

-: ATTRACTIONS :-

Department of Tourism, Paryatan Bhawan, Government Hostel, M.I.Road, Jaipur - 302 001 Ph.: 0141-5155137, 5110598 Fax: 0141-5155101 www.rajasthantourism.gov.in

For Information Contact: Delhi: 011-23389525, 23383837, Mumbai: 022-22040417, Kolkata: 033-22132740, Chennai: 044-25365554, Ahmedabad: 079-26469580, Jaisalmer: 02992-252406, Bharatpur: 05644-222542, Ajmer (for Nagaur Fair): 0145-2627426

The programmes may change due to unavoidable reasons

Once a year in winter the vibrant and glittering yellow sands around Jaisalmer come alive with the brilliant colour, music and gaiety of the Desert Festival - when the desert blooms with the riotous colour of Rajasthan 's rich cultural heritage.

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EDITOR-IN-CHIEF’S NOTE

The babus aren’t impressed!

hy is it that despite the awful mess that Indian aviation finds itself in, there are few takers and sympathisers for Messrs Naresh Goyal and Vijay Mallya? It’s poor Praful Patel who has to huff and puff on their behalf. So much so that it’s often said that Mantriji is the rock, or Rahul Dravid, (Thankfully, Praful isn’t out of form, as poor Rahul is at the moment) of the Jet-Kingfisher team! Pose that question to the Minister, and he is unfazed. His point is simple. If Jet and Kingfisher come unstuck, it will have horrific consequences for the industry. He doesn’t want a GM-Chrysler-like situation, where they have cash just for a few days, the debt has piled high, and everyone is caught in a cul de sac. Which brings us back to the original point: why is no one willing to shed tears for Naresh Goyal and Vijay Mallya? Astute observers, if I name them, Naresh and Vijay are sure to wring their neck next time they spot them — list a few good reasons why the dostana couple are looked at with plenty of sceptism, both within the industry and the government. Here is a list of their observations:

U-Turn specialists: in the case of Naresh Goyal, they cite two classic instances of how the Jet Airways chairman was willing to take a 180-degree turn and argue the exact opposite, because that is what suited him best. The first instance was when the Tatas, partnering Singapore Airlines, wanted to enter the aviation business. Naresh created a hue and cry about security and nationalism, and had the project dumped. Now a few years later, he is willing to welcome Foreign Direct Investment in the airline business because his badly bleeding Jet requires a huge infusion of funds. Through the 90s, he asked the government to lay off, and actually completely deregulate the sector. Now he wants everything regulated, including ticket

CRUISING HEIGHTS December 2008

prices. Similarly, Vijay Mallya consistently maintained that he would keep Deccan as a separate entity because it was a different model and a great brand. A year down the line, Deccan has vanished from the radar, there is no LCC, and Kingfisher Red is really Kingfisher Lite! ‘Looking London, Firing Tokyo’ Syndrome: It’s also called the Kahin pe nighayen, kahin pe nishna syndrome. When Vijay Mallya and Naresh Goyal travelled in the buggy at Hyderabad, during India Aviation 2008, it was clear that it wasn’t anything more than a great photo-op. In the two months since, if anything, the facts on the ground only confirm opinion. Kingfisher is preparing to fly to London and take on Jet in its best-known overseas route. Dostana? You must be kidding! Lone Rangers: This is a tag that eminently fits Naresh Goyal more than Vijay Mallya. For the Jet Chairman, the equation is simple: If it’s good for Jet, it must be good for the industry. Occasionally, Mallya falls in the trap. Both wanted the LCCs to cap the match tickets process of the legacy carriers, with a differential of just Rs 500. It took a Rahul Bhatia to tell them to scoot. “I decide my own price,” he is believed to have said at a meeting of the Federation of Indian Aviation(FIA). It’s this perception that’s sharply etched in the minds of most civil servants. “How come,” asked one of them, and added, “the biggest noise comes from the guys who have the biggest fleets, bought two of their biggest rivals, have the most routes, and are constantly wanting to expand. After all, they had everything their way.” And that’s the reason why their constant refrain for help leaves the babus unmoved.

Off the cuff

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Algae for jets A 737-800 operated by Continental Airlines will be the first aircraft from North America to fly on biofuels. It will be the second flight by a commercial airliner using biofuels. Virgin Atlantic carried out the world's first flight of a commercial aircraft powered with bio-fuel in February. The demonstration flight will take off from Houston on January 7, 2009. The flight, according to Continental, will be operated with no passengers and will be powered by a special blend of 50 per cent jet fuel and 50 per cent components derived from algae and from jatropha plants. These sustainable, second-generation fuel sources do not impact food crops or water resources and do not contribute to deforestation. The demo flight will

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contents

THE YEAR OF AIR POCKETS APLENTY p30 be the first by a commercial carrier using algae as a fuel, and the first using a two-engine aircraft. The Boeing Company and other aerospace companies and airlines are betting that algae, a simple organism that comes in hundreds of strains that can be genetically modified, will prove a green fuel to power jet planes. It also could be blended into diesel and gasoline and, perhaps one day, it could actually replace petroleum-based diesel and gasoline. Boeing has emerged as one of the leaders in the effort to develop algae-based fuel and was instrumental in forming the Algal Biomass Organisation, or ABO, which is based in Seattle. Boeing won't disclose how much it is spending on developing green fuels, though it's far less than the billions of dollars it spends on developing a new airplane.

2008 has been a particularly difficult year for the aviation industry in the country. On the one hand, carriers have faced mounting losses while, on the other, infrastructure problems continue to plague the sector. Nevertheless, there have been issues like the opening of two world-class airports to cheer about. A detailed look at aviation’s major issues through the year that has gone by.

OFF THE RECORD

Airports Authority of India chief Dr K Ramalingam will say goodbye after five glorious years. He has seen the country’s airports take off: from virtually nothing to world-class standards. Plus: Aera is finally a reality.

CRUISING HEIGHTS December 2008

NEWS DIGEST

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The economic meltdown has slowed aviation’s growth but has not affected signing of bilaterals. Plus: Air Works gets the green signal from DGCA to start MRO operations.

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

CRUISING HEIGHTS Editor-in-Chief

K SRINIVASAN Managing Editor

TIRTHANKAR GHOSH Senior Editor

RENU RANGELA

CARGO

Consulting Editor

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Undeterred by the slowdown, the aircargo story in India continues on its growth path. Cashing in on the opportunities are the Gulf carriers and a few others busy ramping up operations.

GUEST COLUMN p40 IATA chief Giovanni Bisignani predicts that 2009 would be tougher than 2008. Almost every region will see red in the coming year.

R KRISHNAN Copy Desk

BIRENDRA KUMAR Art Director

BHART BHARDWAJ Layout Artists

RUCHI SINHA PRADEEP JHA RAVINDER GUSAIN Co-ordinating Photo Editor

H C TIWARI Subscription

SNIPPETS

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Jet starts Bengaluru-New York and Toronto flights, while SpiceJet gets the “2008 Emerging Company of the Year Award for Indian Commercial Aviation”. Air India launches scheme to woo frequent fliers. Plus: More aviation and tourism news.

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It’s time to go back to the age of the zeppelin in the San Francisco Bay Area, while the discovery of a human skull in a piece of checked luggage sent airport security staff at Tucsan scurrying in shock.

Gen Manager

RAJIV SINGH

Taarek Hinedi, FedEx’s Managing Director-India Operations, believes that the economic downturn will help his company improve its competitive position.

BACK PAGE GLOBETROTTING

JAYA SINGH

INTERVIEW p42

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From the pressures of racing to the hassles of flying, Australian Formula One driver Mark Webber has a lot to say on his blog, which makes for highly interesting reading.

CRUISING HEIGHTS December 2008

Executive Director

RENU MITTAL Editorial & Marketing office: Newsline Publications Pvt. Ltd. C-15, Sector 6, Noida 201 301 Tele: +91-120-4145555 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. Owned and published by K Srinivasan 4C Pocket-IV, Mayur Vihar Phase-I, Delhi-91 and printed by him at Nutech Photolithographers, B-240, Okhla Industrial Area, Phase-I, New Delhi 110020 Vol III No 8

RNI NO. DELENG/2006/16897

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ATF issues

PERISCOPE

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Airlines have accumulated huge losses because of the extremely high ATF prices from April to August. We spent Rs 1,400 crore more than budgeted for fuel for that period. One has to first liquidate that. Moreover, the gain of ATF price fall has been partially offset by the 20 per cent depreciation of rupee against the dollar. AI ED JITENDRA BHARGAVA on why the Maharaja isn’t reducing fares.

LETTERS TO EDITOR

The Grand New Alliance! (Cover Story, November ’08), was a pleasure to read. There were startling facts about the airline sector of India. Indeed, Indian aviation is passing through tough times. And to sustain in these tough times is not easy, as the article states. The writer has gone deep into the problem while presenting both sides of the story: the negative as well as the positive aspects of the alliance between Kingfisher and Jet and what it holds for the future of the aviation industry of India. Ram Sahoo, Aligarh November 2008

Illustrations: Rajeev Kumar

Jet Airways CEO WOLFGANG PROCK-SCHAUER.

Rs 60

The interview of Sandahl Sorenson, CEO, SAS International (“We fly where our customers want us to”) in the November ’08 issue brought out some interesting facts about the future course of action in the context of SAS’ operations in India. As a matter of fact, it is a welcome step considering the fact that the aviation sector is going through turbulent times. Indian aviation needs such kinds of encouragement from foreign airline players, which can boost the morale of the ailing sector. By entering the Indian airline sector, SAS International would also pave the way for other foreign airline players who are jittery about entering the Indian market. Sumit Kumar, Ludhiana

ATF prices may be at March 2008 levels but even that is 30 per cent higher than March 07, and the rupee has also depreciated. We have already passed on the benefit of the recent reductions by taking steps like launching apex fare schemes. We will assess the situation, but fares remain unchanged for now.

The air cargo industry in India is still in its nascent stage because it has not got enough encouragement from the Ministry of Civil Aviation. In the story, Opportunity knocks for a regional cargo hub (November ’08), it is quite evident that there is great scope for air cargo operations to flourish, but the cooperation on the part of Ministry of Civil Aviation is lacking. The writer has quite rightly stated that India could emerge as regional cargo hub, if it gets enough encouragement. Clearly, there is lack of political will or India could surely have emerged as a regional “air cargo hub”. Prashant Rai, Solan All correspondence may be addressed to Editor, Cruising Heights, C-15, Sector 6, Noida 201 301 OR mail to cruisingheights@newsline.in

Oil prices have fallen over 50 per cent from $147 to about $65 now. ATF prices dropping by 38 per cent is natural. We are considering a reduction in fares and a final decision could be taken in the next few weeks. SpiceJet Director AJAY SINGH.

Big Plans

We have been looking for amphibious aircraft and are in talks with several manufacturers and their representatives. When this is completed, we can move into the fixed-wing market, where there is growing demand for charter services. Pawan Hans Chairman R K TYAGI on their future plan of action.

New Initiative We believe that children are valuable guests. Keeping that in mind, and to ensure that our young guests have an exciting and enjoyable flight, we have introduced ‘Little Wings’, in association with Disney Publishing, on-board to cater exclusively to our young guests. Kingfisher’s Head-Marketing VIKRAM MALHOTRA on their new initiative.

Big Task Our focus is on three Ms — men, material and machinery. That is helping us give shape to this major project. It is a challenge for DIAL (Delhi International Airport Limited) to complete the mega project in the stipulated time of 37 months; major airports like Changi in Singapore took 76 months for completion, while Heathrow’s T5 and Beijing’s new terminal took 60 months. DIAL CEO (Airport Development) I PRABHAKAR RAO on the challenges of modernising Delhi Airport.

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The Mumbai attacks have slowed the growth rate of the tourism industry. According to figures compiled by the Tourism Committee of The Associated Chambers of Commerce and Industry of India (ASSOCHAM), 2008-09 will witness a negative growth in tourism sector due to the global slowdown. Inbound tourism from US to India is already adversely affected and by the end of current fiscal, its adverse impact in terms of percentage is likely to be to an extent of between 10-15 per cent. Outbound tourism from India would fall to an extent of 5-7 per cent as the meltdown affects all segments of the Indian economy.

COLD STATS

The tourism sector was expecting a growth of around 15 per cent for current fiscal, which is now going to slip to around five per cent as the adverse fallout of global meltdown is being felt. ASSOCHAM states that foreign exchange earnings through tourism would not have much of erosion during fiscal 2008-09. The loss due to fewer tourists from US and Europe would be compensated from other countries in Middle East and South East Asia.

Meltdown blues

Italian chef Emanuele Lattanzi walks out with his daughter, after being rescued from Oberoi Trident Hotel where suspected militants were holed up in Mumbai, India, November 28, 2008. (AP Photo).

LOOKING GLASS

Does anyone know how to fly this plane? Ever since the company decided to sack pilots, we ask for volunteer pilots on every flight.

Expanding role Every time we have an opportunity like this, we will use it. Hyderabad is the next in line. We are also looking at Mumbai, Delhi and Kolkata. DHL Express Asia Pacific Senior Vice President and Area Director South Asia, MALCOLM MONTEIRO, on their future plans, post the Bangalore launch.

Big loss They (terrorists) just (want) to dissuade people (from coming) to India. Even when people are coming on business, and they can do it on phone, they would much rather do that than show up in person. It will impact everything. International Air Transport Association (IATA) Former Country Head ROBEY LAL on the impact of the Mumbai terror attack.

CRUISING HEIGHTS December 2008

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OFF THE RECORD

fter five tumultuous years at the top, Dr. K Ramalingam will finally say adieu to the Airports Authority of India on December 31. He will be succeeded by Member (Planning) Vijai Prakash Aggarwal, one of the youngest CEOs in the long history of the AAI. When he takes over, Aggarwal will have close to seven years at the top. For Ramalingam, it’s been a long and glorious innings at AAI, although the last five were particularly tough. Tough considering he was co terminus, more or less, with the accent of Praful Patel. Here was Ramu, a dyed-inthe-wool socialist who believed that the AAI had the wherewithal to deliver world-class services at our major gateways, and on the other side was a minister who was determined that the old order must change, and the new must take over. For the AAI, this was like a clash of civilisations, but for Mantriji, it was the writing on the wall. So there was Ramu, hemmed in from both sides — on the one, from his officers and workers, who wanted him to defend their rights and protect their turf, and on the other, a belligerent and determined Minister and his committed secretary (Ajay Prasad), who said they would change the face of airports in India. Five years down the line, that facelift is a work in progress, but Ramu, hemmed on all sides, has never been the same man again. For the Ministry, he wasn’t the

committed babu, who fell in line straightway (although that’s a bit of an unfair assertion, considering Ramalingam did almost everything they wanted him to). The problem was that the Ministry wanted him to swish the wand and say ‘Jack Robinson’, and for things to move. As Praful impatiently fumed in those early days: ‘Why does it take so long for such simple issues?’, the retort at AAI, just a stone’s throw away, was the other way round: ‘Why this great rush?’ For Ramu, life was like being between a rock and a hard place! Within the AAI, there was plenty he had to contend. His member (Finance), V Prasad Rao, felt he had been unfairly done in the selection process. But his was a silent and sullen sense of anger. Not so with Executive Director V K Kalra. He declined to buy the argument that Rab ne bana diya Chairman, and went to war with Ramu. For close to four years, Kalra dealt directly with the Ministry as head of KID (Key Infrastructure Development), and simply declined to accept that he had a Chairman to report to. So you had the key privatisation of Delhi and Mumbai airports stuttering through a set of tangled wires: the AAI reporting to the Minister and coalescing the entire project on the one hand, and Kalra directly reporting to the Joint Secretary and the Secretary on the other, and acting like a Narad Muni. No wonder the privatisation process was so full of drama. There were charges of the goalposts being moved, of the conditions being changed. But deep down, what irked Ramu the most was that key properties like NIAMAR (National Institute for Aviation Management and Research) and the Cargo complex were lost because Kalra was batting with a vengeance to spite him and do the

Change of guard

K Ramalingam

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Ministry’s bidding, and quietly incorporated all this in the OMDA agreement. As one of his colleagues plainly asked: “What stopped the Chairman from tweaking Kalra’s ears and asking him to fall in place? After all, he was an ACC appointee as Chairman, and he had absolute right to provide leadership and direction to his officers. Why was he so much in awe of the Ministry?” His supporters state that if the Chairman had behaved as a mercenary, he could have had a great run, but that’s not his style: “He is from the old school and believes that co-opting people to his perspective would be much better than commanding them,” said one confidant, and added, “At the same time, he believes that the Minister is the supreme commander of the team and his word must be implemented.” Simply put, Ramalingam tried, like the late V P Singh, to ‘manage contradictions’, and failed in the process. He was desperate to protect the AAI turf, and he was equally keen to implement what the Minister told him. The point was that they were like the banks of the river and the twain, alas, could never meet. Protecting the AAI turf meant saying ‘nay’ to privatisation. That wasn’t possible, it was a cabinet decision and when he went out to please the Minister, AAI officials viewed him as weak! It also didn’t help that successive Joint Secretaries (JS) had a poor working relationship with the Chairman. The first of them, Sanjay Narayan from the Maharashtra cadre, was literally a one-man show by himself. He threw protocol to the winds, dealt directly with Kalra, couldn’t care less about the Chairman, and was like a battering ram on all issues concerning privatisation. No surprise that this career civil servant quit, and moved to the private sector and joined GVK Infrastructure. His successor, K N Srivastava, has been no different. Although he doesn’t say so publicly, it’s evident that there were plenty of differences between the two. On scores of occasions, Srivastava and the AAI have clashed, most recently on the privatisation of the 35 non-metro airports. Srivastava believes (as did former Secretary Ashok Chawla) that cityside development by the private sector should include the airport terminal. But for the moment, it has gone back to the AAI, although it is still uncertain what will happen in the final analysis. Anyway, to cut a long story short, the last five years must have been tough, but Ramalingam can retire with a sense of satisfaction. AAI budgets have shot

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through the roof. Over Rs 3,000 crore is spent year-on-year on getting the modernisation process under way, the number of airport terminals built in the past five years is completely unprecedented, the process of getting world-class infrastructure at Kolkata and Chennai has begun and, to have the airports running in spite of the modernisation process, must be a feather in his cap. On most issues, he delivered time and again. It’s a pity, though, that his interpersonal relations, be it the Ministry or the Authority, were never what they ought to be. As one great supporter of his summed it up: “Ramalingamji did everything the Minister wanted. But he got no marks for it.” Was there a reason for that? One serving babu at Rajiv Gandhi Bhavan had the last one on the subject: “With Praful Patel, you have to deliver 100 per cent, you have to manage your subordinates and his associates, you have to do it on time and you have to do it as per expectations.” It’s a tall order, but there is something to ponder for Ramalingam too: Why is it that his relations with his comradesin-arms, both in the Ministry and the Authority, were also tense and formal? Why is it that his was a lonely furrow with few sympathisers? His successor, Vijai Prakash Aggarwal, has his job cut for him. But he has a few advantages. His relationship with the Ministry is exceptional, he has been hand-picked for the job by the Minister, he has come through the mill and has a huge support base in the Authority. He will have the opportunity to start on a clean slate with a new JS who will handle AAI matters in the Ministry, he will have an opportunity to appoint a few members in the next two years and create a team of his choice. He is on the board of Hyderabad airport and has a splendid working relationship with the private sector players. In a few weeks, as he takes charge, his life will change forever. His colleagues eagerly wait to see if it will change V P Aggarwal for them too! CRUISING HEIGHTS December 2008

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OFF THE RECORD

Ala Rey Aera

V Thulasidas

Kanu Gohain

o the Airport Economic Regulatory Authority is finally a reality. Parliament has passed the bill, the President has given her accent and it’s now an act waiting to be implemented. For the Ministry of Civil Aviation, what that means is putting the people in place to handle the job. So who are the Mantriji’s choices? S Ramalingam, Kanu Gohain or someone else? Those in the know are categorical that the first Chairman of Aera will be V Thulasidas. The former Chairman and Managing Director of Air India is a clear favourite with the Minister for a variety of reasons, and reports are that he has more or less ‘bagged’ the top job. No surprise indeed. Thulasidas also has the support of the all-powerful PMO and the Cabinet Secretary. At one time, the indications were that the job would go to Ajay Prasad, who had been a loyal and steadfast supporter of the

Minister’s agenda. However, over the past 12 months, Prasad has been a key advisor to the opposition Prime Ministerial candidate Lal Krishna Advani, and makes no bones about his preference for the leader of the opposition. Kanu Gohain rules himself out as a member because the retirement age for the two members is 62. Gohain has just a few months to go, and it is unlikely that he will make the cut. Ramalingam, on the other hand, will have a clear two years if chosen. But there are two issues with his appointment. Aware that his candidature could come up, certain key airport players have already got into the act to stop that happening. Their argument is that how can someone who presided over the AAI for so long be a member in a regulatory authority, where questions will be raised about the very organisation that he was part of for so long? So it’s a 50:50 chance that Ramu will make the cut. There was talk at one time that Praful

ICAO Update

t’s all on course for R K Singh to move, sometime in the new year, to Montreal as India’s representative in the UN Body for Civil Aviation. The process is slowly winding its way through the bureaucratic labyrinth and by the end of the year, the process should hopefully be completed. Will RK get another extension? Unlikely. Not because there isn’t work in the Ministry, but simply because ICAO is waiting, and it isn’t really good form for the Ministry to put its hands up, time and again, for an extension. Singh’s predecessor Naseem Zaidi has already taken over at the DGCA and is

K N Srivastava

R K Singh

V K Verma

Naseem Zaidi

CRUISING HEIGHTS December 2008

Patel had the former Commercial Director at Air India, V K Verma, in mind for the chore. But that’s clearly history now. Verma has a huge job as the Secretary General of the Commonwealth Organising Games, with a staff over 500 people under him, and he has most certainly moved on. So who will be the two other members of Aera? Insiders say that it is unlikely that the new team will be constituted till early January, and that gives everyone plenty of time to jockey with Mantriji to make the cut. But there is one thing that you can be sure of: anyone who comes into Aera will have to be pro private sector, pro modernisation, and pro the carriers. In other words, the two big casualties will be AAI and the airport owners. “The AAI has a mandate to develop airports, not make money from the business,” said one source caustically, and added, “the private operators must understand that if there are no airlines, there will no airport. So they take precedence” Translation: If there is a battle between Naresh Goyal and GVK or GMR, Naresh will win, irrespective of whether he bats first or second. So the toss really doesn’t matter. Wonder what Thulasidas thinks about all this?

busy setting up systems in place and holding review meetings. Zaidi’s appointment has had its own chequered history, but that’s all a thing of the past now, so far as the Ministry or he are concerned. Nonetheless, it must be mentioned that the High Court will be hearing the case in February. Meanwhile, the man who was to take over from RK when he moved, Prashant Shukla, may well end up taking over from K N Srivastava, the other JS in the Ministry who has been promoted as Additional Secretary and is waiting for a suitable appointment. Reports are that Srivastava will be moving as the Director General of the Archaeological Survey of India (ASI), and it is only a matter of the formalities being completed, again by the year end. As things stand, Srivastava may exit Rajiv Gandhi Bhavan sooner than RK.

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NEWS DIGEST

OPEN

SESAME! I

ndia and the UAE will soon ink a new bilateral Air Services Agreement (ASA), which will supersede the earlier ASA of March 21, 1989. A decision to sign a new agreement to promote greater trade, investment, tourism and cultural exchange between India and the UAE was taken by the Union Cabinet. Once the pact is signed, it will enhance manifold the air services between the countries, as the nature of the new deal will be in the form of a “mother agreement.” The agreement will allow India to negotiate new bilateral MoUs with the seven emirates constituting the UAE, that include the latter’s prime airline players in Dubai (Emirates) and Abu Dhabi (Etihad). Accordingly, India will now be able to negotiate new air services agreement, under which connected issues — how many seats each airline can operate and cities they can fly etc. — will be decided with each of the seven emirates of UAE. The highlights of the new agreement include: Both countries will be entitled to any number of airlines for operation of mutually agreed services, for which the respective country shall grant appropriate authorisation or permission. Either country may revoke, suspend and limit the operating authorisation or technical permission of an airline designated by the other country, if specified conditions are not upheld. Both countries will follow, under the agreement, the obligations to protect the security of civil aviation against unlawful interference. The designated airlines of either party may enter into cooperative marketing arrangements, like code share etc, or commercial arrangements. The designated airlines of the two countries shall have fair and equal opportunity to operate the agreed services on specified routes. Designated airlines will be free to ON THE RADAR: The Dubai International Airport.

decide tariffs in respect of agreed services at reasonable levels based on commercial considerations. The designated airlines of both the countries shall not be required to agree on fares to be applied. However, each party shall have the right to intervene, so as to prevent tariffs whose application constitutes anti-competitive behaviour, which has or is likely to have the effect of crippling a competitor or excluding a competitor from a route. Each party will also have the right to protect consensus tariffs that are excessive or restrictive due to abuse of dominant position, and there is also protection from predatory or artificially low tariffs. Industry observers feel this is a clear give-away to the individual emirates after the break-up of Gulf Air, which was the only airline of UAE before the likes of Emirates, Etihad, Air Arabia, RAK Airlines etc. came on the scene. In fact, the rise of Dubai-based Emirates, and increasing interaction between India and Dubai, saw the presence of Emirates rising fast and strong in India. Wanting not to be left behind, the other newcomers on the scene, like Etihad and Air Arabia, began to nudge India that they also needed to be given more rights, and which India had been granting. After Gulf Air got restructured it also demanded more rights and began to get it. In a way, there was huge pressure on India to grant each of the seven Emirates, separately, more and more entitlement. On the other hand, previously, only Indian and Air India had the rights to fly to the Gulf. But when the private airline Jet Airways fulfilled the five-year rule to qualify for international flights, including the Gulf, after the withdrawal of its exclusivity to state- owned carriers, it also needed to be accommodated. Jet was followed by Air Deccan, now owned by Kingfisher. In another two years, practically all the

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NEWS DIGEST present carriers, like Indigo, SpiceJet, Paramount, and even GoAir, will be entitled to fly overseas. In the absence of an Open Sky arrangement, it will only be ASA that will determine the number of flight frequencies, and also as to who will be entitled to operate such flights. Obviously, it cannot be that the frequencies are so shared that all the qualifying Indian carriers get very few frequencies a week because of the overall cap. It is also true that distributing the limited frequency to more number of Indian carriers will also impact the very economics of the Gulf route. It is in view of all this, perhaps, that the new ASA is being signed to replace the 1989 agreement. However, the way it has been worded, the business of code share etc seems to suggest that some of the Indian carriers may just prefer to sign such a code share and merely collect toll money, as Air India used to do in the past, before the system was scrapped recently. The most logical extension of this is to expect the India-UAE agreement to become an Open Sky agreement, which will also allow Fifth Freedom rights. Even before this deal came through,

An inside view of Dubai International airport.

Emirates, Etihad and, just beyond, Gulf carriers like Qatar, have begun advertising in Indian newspapers of their services to the US from India, with a stop-over in their home base, like a Air India or Jet announcing flights to the US via, say London, or Paris or Brussels. What was earlier a wave has now become an inevitable tsunami in the Indian aviation

ATF: WOULD IT BE POLITICALLY

WISE?

fter the terrorist attack on Mumbai from the sea, and the consequent blame game and its political fallout, aviation issues have naturally gone into the background. Just a day before Mumbai was attacked, on the night of November 26, 2008, the then Finance Minister P Chidambaram told the annual Economic Editors’ Conference in New Delhi that the UPA government wants to accord ATF “declared good status” under the central sales tax, so that a uniform four per cent sales tax could be levied on jet fuel nation-wide, instead of the present practice where various state governments levy between four per cent and 30 per cent on ATF, making it one of

history. The only difference will be that instead of merely flying West, via the UAE and/or Doha, it could also be a case of flying East via India by the UAE-based carriers. With the Indian government actively following Look East policy, it is only a matter of time when ASEAN carriers will also look West via India.

the most expensive in the world. Chidambaram added that he would be able to pilot the amendment bill in the Winter Session of the Lok Sabha, perhaps the last of the present Lok Sabha — provided Minister of Civil Aviation Praful Patel could secure political consensus on the issue across parties. A political consensus was absolutely necessary to get the bill passed, as it was a “money bill”. It may be mentioned here that defeat of a money bill during voting in the Lok Sabha would mean a defeat of the government on the floor of the House. It will lead to dissolution of the Lok Sabha, given its last days. In the current political climate, with the UPA government under serious pressure, will it go for such an adventure? After the terrorists were killed and Mumbai liberated — but not before many were killed and seriously injured — the Finance Minister was shifted to head the Home Ministry. The Finance portfolio was taken over by the Prime Minister, who

P Chidambaram

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once was the FM in the early 90s, when he initiated economic reforms, including the opening of the civil aviation sector to private players. The government, soon after the global meltdown became a reality, stopped talking of Indian economy’s fundamentals being sound and strong. With India Inc also starved of funds, the government began to cut interest rates and went on to announce a fiscal stimulus package that may ultimately boost demand and put India on higher growth path once again. Seen in this context, the whole idea of reducing ATF prices was to make the cost of airline operations cheaper, and therefore, allow lower fares and hence boost demand for air travel. A crucial link in this chain was ATF being given the ‘declared good status’, so that only a four per cent sales tax could be levied. This was notwithstanding the four rounds of cut in the base price of ATF by oil companies following the fall in crude prices. Incidentally, the ATF prices today are just about the same as they were in October-November 2007, when we were still talking of 38 per cent growth in the domestic passenger traffic. After the crude prices began to skyrocket, beginning Manmohan Singh April 2008 (for three

months before they began to decline again), the airfares reached the skies, leaving the passengers stranded on the ground! When they began to decline, at least the LCCs like Spice and Indigo began cutting the fares. However, full service carriers like Air India, Jet Airways and Kingfisher Airlines continued to hold the fares high. There was actually a contraction in the passenger growth, which became negative before a slight uptrend once again in the last one month, mainly due to the fare cuts by LCCs. At the Hindustan Times Leadership Summit on November 21 and 22, 2008, Civil Aviation Minister Praful Patel said, pending the grant of ‘declared good status’, the central government had already abolished the five per cent customs duty on ATF. The PSU oil companies had also steeply cut ATF prices consequent to the drop in crude prices. From nearly Rs 75,000 per kiloliter in July-August 2008, the prices of ATF have now come down to Rs 40,000 per kiloliter in Delhi (if that is used as a reference point). ATF, which constituted 45 to 50 per cent of the airline costs, is now once again on an average of about 40 per cent or less, depending upon the kind of airline. Obviously, the cost of Air India will be huge as its staff cost is very high. Kingfisher costs are very high because its product cost is very high. Jet also has the same problem. LCCs like Spice and Indigo did sustain some problems but not as serious as the full service carriers. Net conclusion — there was room for fare cut, which was strongly conveyed by Praful Patel to Naresh Goyal of

Jet and Dr Vijay Mallya of Kingfisher, who were present at the HT summit. Patel also referred to the breather he got for the airlines on their ATF dues to oil companies. But players like Mallya said it would not be feasible to cut fares substantially unless ATF was made a declared good with uniform four per cent sales, and also in view of the losses they had sustained in the past two years because of various cost push factors. Praful Patel, however, was able to command Air India to cut fares even though marginally but symbolically, as the message would go to other full service carriers like Jet and Kingfisher. As a follow-up, Jet too cut prices across the board by Rs 400. It is to be seen how this will impact the so-called alliance between Jet Airways and Kingfisher. On the other hand, even if the Prime Minister has taken charge of the Finance Ministry, the fast changing domestic political climate may act as a speed breaker on a host of issues, including ATF. Perhaps it is becoming something like the Cauvery river issue between Tamil Nadu and Karnataka. If there are no rains in Tamil Nadu and Cauvery river goes dry in that state, then water sharing becomes a major issue. And if there are heavy rains as it has been in the last two years, then Cauvery is not an issue. In the process, even though it has remained an issue for more than three decades, it continues to defy a solution. Similarly, if crude prices remain high then the decibel level in the demand for ATF as a declared good to be entitled for four per cent central sales tax becomes loud. Should

Graphisads bags Srinagar Airport Delhi-based outdoor media owner Graphisads has bagged the OOH advertising rights for the Srinagar International Airport. The contract is for a period of five years and includes exclusive advertising rights for both within and outside the international and domestic terminals. The contract is valued at Rs 7-8 crore. Other media owners in the fray for the Srinagar Airport rights were Big Street and Helpline Publicity. Mukesh Gupta, MD, Graphisads, said, “We have won the advertising rights for the Srinagar International Airport for both the international and domestic terminals. The advertising rights exclude the right to advertise on the trolleys, but give us an additional right to put up 30 uni-poles within the area that comes under the Airports Authority of India (AAI).”

What to do with Haj terminal? The Haj terminal of the Indira Gandhi International

Haj terminal

Airport (IGIA) is currently being used exclusively for the annual pilgrimage to Makkah and Medina, the holiest cities of Islam in Saudi Arabia. The terminal, which came into existence in December 1999, has recently been given a major facelift. Operations at the upgraded terminal began on October 30, and pilgrims will be using it till the end of December. After that, the terminal will remain unused for 10

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crude prices fall, then the demand becomes feeble. However, the major issue is: will the state governments forego Rs 4,000 crore annually that they mop up collectively as sales tax on ATF? It must be mentioned here that even this sum is variable, depending upon the base price and duties on ATF, before states enter the picture. Additionally, a further twist to the issue

Ram Naik

was given by former Petroleum Minister Ram Naik of BJP. In his criticism of the cut in ATF prices, the former Lok Sabha MP from Mumbai (he lost to the perpetually No Show film actor turned politician Govinda) said ATF was cheaper than even petrol and diesel used by the common man. Ram Naik, who has been speculating with friends that should BJP return to power he would be the definite choice as Petroleum and Natural Gas Minister, seems to suggest that dark clouds may continue to ground Indian domestic carriers and not the dark gold which is being touted ‘misleadingly’ as the real cause. As for PM-cum-FM Dr Manmohan Singh, seeking a firm political ground is a far more important priority than keeping the Mallyas and Naresh Goyals in the air.

Page 17

HEARTACHE ON THE

GROUND!

o Air India has finally tied up with Singapore Airport Terminal Services (SATS) for providing Ground Handling services in all the six metros — Hyderabad, Bangalore, Delhi, Mumbai, Chennai and Kolkata. The JV will also be for handling cargo. Some non-metros still remain, and in all likelihood these will also be with SATS if need be. An Air India spokesman said the agreement will soon be sent to the Union Cabinet for approval. Cruising Heights had reported in its Special Outlook issue of October 2008 that Air India had finally decided to tie up with SATS. While that may only be a formality, the very issue of ground handling may acquire a different meaning due to the Mumbai terror attack and the earlier attempts of Jet Airways and Kingfisher to sack some of their staff to cut costs and overcome the continuing lean season following the global meltdown. When Jet Airways, as part of its cost cutting exercise, announced the sacking of 1,900 of its staff, led mainly by high profile

months till the pilgrims begin to use it again next year from around the end of October. The multi-use plan was to use the terminal during this period, especially to accommodate the increasing passenger load at the existing international terminal. The IGIA is currently straining at the seams as it was built to cater to 12 million passengers a year, while the current flow at 24 million passengers is double that. The new Terminal 3, which would be an integrated terminal with a handling capacity of 34 million passengers, will be ready only by 2010. For this reason, in March this year, a Civil Aviation Ministry team, led by the ministry’s Joint Secretary K N Srivastava, had asked DIAL to submit a detailed plan for better utilisation of the terminal during the months when it is not used by the pilgrims. In response, the GMR-led DIAL asked the DGCA and airlines to accommodate regular passengers at the Haj terminal to take the load off the existing terminals. DIAL Managing Director Kiran Kumar Grandhi had also stated that the upgraded Haj terminal would be used for international operations from next January. But now, DIAL too seems to have given up this plan. An official of the Airports Authority of India (AAI) was quoted

cabin crew, there was virtual reality show on electronic channels and Naresh Goyal was forced to appear on TV channels personally to announce the reversal of the sack decision. Goyal, unbelievably, even claimed that he had no knowledge of the sack decision taken by his officials.

Subsequently, the domestic airlines had a meeting with Praful Patel to plead for cut in ATF costs as it accounted for 45 to 50 per cent of the total airline costs. This led Patel to the PM, and soon a meeting was summoned of PSU oil companies, to whom the airlines owed a couple of thousand crores in unpaid ATF bill. It was then decided that airlines would be given a six-month time, till March 2009, to clear their ATF dues,

saying that the government was hesitant to use the Haj terminal for international operations owing to political compulsions. ‘It (Haj terminal) is an exclusive terminal in India. Elections are nearing and so the government is not willing to take a decision regarding multi-use of the terminal,’ the AAI official was reported as saying.

Chandigarh airport can take off now Things have finally fallen in place for the start of construction of the Chandigarh International Airport, with the Punjab government receiving Rs 230.43 crore from Haryana as part of the latter’s share towards land acquisition Chandigarh Airport for the project. In another related development, the Airports Authority of India (AAI) has given sanction for the construction of the boundary wall of the airport, which will cover an area of 306 acres.

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provided they did not sack any employee lest it gave a bad name to the UPA government. The airlines agreed as a quid pro quo. It was only after this deal that the Finance Minister spoke of ATF being accorded ‘declared good status’ and oil companies began to adjust jet fuel prices once a fortnight or monthly, depending upon international crude prices. Meanwhile, there was complete silence on the issue of ground handling — a policy effective from January 1, 2009 sought to allow only three players in the six metro airports. The players were to be state-owned Air India and its JV partner SATS, a second JV who wins the bid, and the third, the private airport developer (as part of the PPP) himself, or AAI could offer GH services in JV. Unless the likes of Jet Airways, Kingfisher, Spice, IndiGo, Paramount, GoAir etc set up GH JV and successfully bid for offering services in the six metros they will not be allowed to do self-handling. Incidentally, this GH policy was first cleared by the NDA government in 2003. It was again changed and reintroduced by UPA and received cabinet clearance in 2007. The fact was the Home Ministry, IB etc did not want too many players swarming the Indian airports in the name of GH and endangering security which could be threatened by terrorists. So far so good! Now switch to the new policy of only three players and no self-handling of January 2009. The implementation of this policy would mean sacking nearly 8,000 persons who are connected with providing GH services in the six metro airports mentioned above. Much of this is due to self-handling by Jet,

Kingfisher etc. There is also no self-handling for international carriers and the same new rule would be applicable to them, subject to some specific variations and conditions. Question number one, therefore is: if the government did not allow Jet Airways to sack its employees and forbade others to do the same, will it now allow the sacking of few thousand ground handling employees stationed in the six metro airports? But in the aftermath of the Mumbai terror attack, will the government risk even easier access to the unknown someone who could possibly do even more damage than was done on the terror nights beginning November 26? Will the government now disband non-registered self-handling of ground services at the six metro airports? This would be by the same airlines who were not allowed to cut cost by sending back home the cabin crew in the first place. What happens now when several thousand employees are shown the pink slips? Can the government allow that? We don’t know. There is talk of shifting the policy implementation to a new date, to March 31, 2009. Perhaps this will be a better option, as by then the UPA government would have completed its term and the Election Commission might possibly have even issued the poll notification. Since no policy decision would be allowed then, the same old ground handling policy may continue, leaving the onus of implementing the new policy on the new government. After all, there is no change in the cabinet decision but, possibly, only a change in the date of its implementation.

According to the letter received from the AAI, the construction will start straight away after floating of tenders for the project. The AAI is likely to spend Rs 550 crore on the construction of various facilities, including the main terminal, at the airport. The process of the formation of a Joint Venture Company (JVC), which was earlier coming in the way of receipt of payment from Haryana by Punjab, is also likely to be expedited, with PricewaterhouseCoopers set to present a final draft of the proposed JVC to the tripartite committee, consisting of members from Punjab, Haryana and Chandigarh, next week. Punjab Civil Aviation Secretary Visvajit Khanna confirmed that a cheque for Rs 230.43 crore had been received from the Haryana Urban Development Authority (HUDA) on behalf of Haryana. This represents Haryana’s 50 per cent share in the Rs 460 crore odd spent by the Greater Mohali Area Development Authority (GAMADA) to acquire land for the project at Mohali on behalf of Punjab.

Kohima to get its first airport soon Kohima, the only state capital in the country without an air-

umbai International Airport Limited (MIAL) figures among the top 40 airports in the world in terms of passenger traffic handled, and is the largest in India — not in terms of the land on which it stands but passengers handled. The land constraint is evident from the fact that it has just 7.48 square kilometers, which is only about one third of the land available for Delhi airport. The fact that nearly half or even more land is technically with MIAL but physically with encroachers, is clearly visible and requires no rocket science to understand or even see. After the GVK group took over, it was with great difficulty that about 11 acres of land was reacquired from the far side that has now allowed a partial construction of an exit way and also serves the purpose of allowing aircraft to make a U-turn for take-off. As we proceed on the taxi way, any passenger can see, on his left side, numerous shanties, with places of worship, including temples and mosques thrown in for good measure. You can also see children playing, and just before monsoons even flying kites that sometimes do some kind of aerial survey of the far-end parking bays and sometimes even the runway. We are saying all this because of the recent terror attack on Mumbai, when the perpetrators of terror came in small dingy type vessels to get into the Gateway of India, which once saw

port, will get one at Chiethu, about 15 kms from the Nagaland State Secretariat, at a cost of Rs 700 crore. An official said the Detailed Project Report of the proposed airport has already been accepted by the AAI. Chief Minister Neiphiu Kohima Rio accompanied the AAI Member(Planning) V P Agarwal, along with ministers T R Zeliang (Planning), M C Konyak (Forest), Deputy Chairman of State Planning Board Neiba Kronu, Kohima legislator Dr Nichy Kire and senior government officials. They made an aerial survey and later visited the site by road. The helipad constructed at the airport site at Chiethu was used for the first time, and it will be used in future for landing of helicopters. As per the Project Report, a runway of about 2.2 kms in length is being proposed at a cost of about Rs 700 crore, which included other aspects of the complete project.

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A view of Mumbai international Airport

WHAT ABOUT

THE SECURITY RISK? King George V stepping into Mumbai as the Emperor of India. After this daring attack, should the authorities still not bother to shift the shanties and its illegal occupants around the Mumbai airport, it will be a definite case of gross neglect of passenger safety, not just in the air but on the ground itself. Nobody wants to give any ideas, but anything can be done with even a hand-held weapon from the periphery. The after-

spectacle of the Mumbai attack saw the CM and Deputy CM quitting, the Navy and Coast Guards blaming the intelligence agencies of not giving them enough actionable evidence etc. When a mere post-mortem can reveal so much, why is it that the clear daylight vision of the slums illegally occupying the land around MIAL is oblivious to the law enforcement and intelligence agencies. What is even more depressing is that

No liquor ads at airports! Union Health and Family Welfare Minister Anbumani Ramadoss has written to Civil Aviation Minister Praful Patel seeking removal of advertisements on alcoholic drinks on display at the Delhi and other airports. Dr Ramadoss expressed disappointment Anbumani Ramadoss over the “grandiose display inside airport in various cities throughout the country, aiming to advertise alcoholic drinks with famous brand names, in the form of large sized hoardings, vinyl/digital boards and banners, despite a ban on such advertisements.” Citing various scientific and technical studies, Dr Ramadoss requested Patel to issue instructions to the authorities concerned, as advertisements for alcoholic drinks were already legally banned in the electronic and print media.

Hassan airport on course If the remaining land (400 acres) was handed over to Jupiter

the BCAS and CISF have jointly decided to tighten the airport entry rules in general, and for passengers in particular. But what we will see is another round of politics, where political parties will enlist support to retain the slums on ‘as is where is’ basis. Everyone knows how the Congress has been playing politics by extending the cut-off date for shifting the slums away from the airport. In another 10 years — provided there is no untoward incident — people living in shanties around the airport will demand multistorey accommodation, as was done in Dharavi, and also complain against noise pollution by aircraft! Should this happen, the present decision to construct the Greenfield airport at Panvel, Navi Mumbai, indeed appears to be a visionary move. The total area of Navi Mumbai airport will be 21 square kilometers, of which 11.50 square kilometers will be the built-up area. CIDCO, the executing agency, is already in possession of 11.53 square kilometers. The remaining area will be used for access roads, channels, creek diversion etc. MIAL will reach its saturation by 2012, and the new Navi Mumbai airport will become operational by 2015 and will have two runways, along with two full length taxi ways on either side to facilitate quicker turn-around of aircraft and vacation of the runway for the next incoming aircraft to either land or take off. It is reported that Navi Mumbai airport has received environmental clearance and its first phase should be ready in another 40 months.

Aviation Company by the district administration before December 31, then the Hassan International Airport would be ready by May 2010, said Karnataka Principal Secretary to the Government, Infrastructure Development Department, Arvind Jadhav. Jadhav said he had directed the Town Planning Department not to develop any layout near the airport, and also not to issue licenses for constructing buildings. He said the district administration had already handed over 540 acres of land to the Jupiter Aviation Company and the remaining 400 acres is to be handed over, for which land acquisition is to be made — 4(1) and 6(1) notification had already been issued. However, clearance from the Union Civil Aviation Ministry and environment clearance was awaited. The Environment Department has already conducted public hearing in this regard.

Airport gallery opens A sprawling gallery, constructed at a cost of Rs one crore, was recently inaugurated at Tiruchi airport. Visitors can enjoy the breathtaking sight of landing and take-off of flights from the comfort of the swanky gallery.

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NEWS DIGEST

o celebrate the launch of its new KL-Tiruchi service, AirAsia offered an unbeatable low fare — starting from Rs 699 or RM (Ringgit Malaysian 49) one-way. This offer, available online exclusively at AirAsia’s website, for the booking period October 30, 2008 to November 9, 2008, for travel anytime between December 1, 2008 and July 31, 2009, is believed to have been a huge hit. Now couple that with its officially announced £99 (US$153) flights from London to Kuala Lumpur. Booking opened on November 25 for the fivetimes-a-week direct flights, which begin in March 2009 between London Stansted Airport and Kuala Lumpur International Airport Low Cost Carrier Terminal. Economy air travel from

Tony Fernandes

AIRASIA ARRIVES London to Malaysia typically costs in the region of £500-£600. What in effect it means is that you can travel to London for Rs 8,500 if you book now and book smartly! All this when fuel prices are supposed to be bleeding airlines! Tony Fernandes, the iconic CEO of the Airline, says this is not the end: “As time passes, there will be more promotions and the fare could well fall further — we always look to make the fare as low as possible,” he told journalists. With AirAsia offering an extensive route network encompassing over 108 routes in Asia, including the ones served by AirAsia X, its long-haul affiliate, to Gold Coast, Perth, Melbourne, Australia and Hangzhou, China, it is now more convenient than ever to fly to Kuala Lumpur from Tiruchirappalli. Moreover, compared to other budget carriers, the route network offered by this award-winning airline is the most extensive in the region. AirAsia said that the London-Kuala Lumpur route — “an aviation revolution” — is a major step in realising the company’s international aspirations.

According to Airport Director S Sreekumar, the Rs 79 crore new terminal can handle 200 incoming passengers and an equal number of outgoing passengers. The building that Tiruchi airport’s old terminal front measures 11,700 square feet — 7,000 on ground floor and 4,700 on first floor — will have three escalators, five lifts, 13 check-in counters, one common use terminal equipment system, six immigration counters, seven customs counters and two security hold areas, one each for domestic and international passengers. Of the three aero bridges in the new terminal, two will be put to use and one will stand by. Sreekumar was confident that, notwithstanding the withdrawal of 10 flights a week by Deccan Airways, the airport would register up to 30 per cent growth in passenger movement

AirAsia Group CEO Tony Fernandes commented: “AirAsia X’s London-Kuala Lumpur route is the realisation of a long-held ambition to open up affordable access between Malaysia and Europe for both ASEAN and European communities.

“AirAsia X and AirAsia boast a brand new modern fleet of Airbus aircraft, fitted with leather seats and spacious cabins, diverse selections of hot meals and high quality service plus fun and friendly cabin crew. On top of that, our On Time Guarantee and the recent ‘No Fuel Surcharge’ initiative will further improve the AirAsia experience. The new route will be serviced by an Airbus A340 aircraft with a 286passenger capacity including 30 premium XL seats.”

this fiscal. AirAsia has started operating a direct flight on the Tiruchi-Kuala Lumpur sector from this month, and SilkAir, Air Arabia and Oman Air have already conducted feasibility studies and are looking for the right opportunity to start their operations. Eighty five per cent of the passengers travel abroad from Tiruchi airport, and hence the impact of the increase in air fare was not felt, Sreekumar said.

Night landing at Tuticorin The night landing navigation facility at Tuticorin airport is to become operational soon. Disclosing this at a special executive committee meeting of All India Chamber of Commerce and Industries held at Tuticorin Tuticorin airport recently, Mr Siddhartha Ghosh, Manager (ATM), Airports Authority of India, Tuticorin Airport, said that extension work of the runway was being initiated. The Chamber submitted a memorandum seeking better facilities at the airport.

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NEWS DIGEST

THANK

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ALBERT BRUNNER

Terminal Building, Bangalore airport

IAL CEO Albert Brunner is on his way back to Germany as he has called it quits. He was associated with BIAL for seven years, since it was formally decided to set up a new airport for the city of Bengaluru. Brunner has decided not to extend his contract and he will be replaced by the COO of BIAL, Marcel Hugerbuehles, with effect from January 2009. This was made known in a release issued by the consortium responsible for BIAL. “I have greatly appreciated the

Albert Brunner

CRUISING HEIGHTS December 2008

various excellent interactions with business leaders, politicians, officials, the highly competent and motivated staff of BIAL and personal friends over all these years, and my decision to leave BIAL is purely personal. After seven years in this position, the time for a change has come. I initially came here on a three-year contract but ended up making Bengaluru my home for seven years,” said Brunner. The new airport opened on May 24, 2008 at Devenahalli, and in more than six months since then it has suffered a loss of over Rs 200 crore due to default in payment by various airlines and non-levy of User Development Fee (UDF) on the domestic passengers. At present, UDF is applicable to only foreign-going passengers. With the global meltdown and domestic economic problems, the flight frequencies have also come down sharply compared to the earlier expectation of a sharp rise in flights. The loss on account of non-levy of domestic UDF is already causing monthly deficit of Rs 22 crore. This has already forced the promoters to shift the expansion plan for BIAL by 24 months. One thing is sure. You come to India, face the problems, you get Indianised. In India, everything is executed on a small scale, even though the plans might have been big. This is the difference between India and China. For instance, China was ready with its Olympics arrangement one year in advance, and we in India will be lucky if we are ready with infrastructure even a year after the event. The proof will be seen and known when Commonwealth Games are inaugurated in the second quarter of 2010 in Delhi.

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EASY WAY TO AUTOMATION AUTOMATED BAGGAGE SORTING PROMISES BIG GAINS IN COST, TIME AND SORTING QUALITY FOR SMALL TO MID-SIZE AIRPORTS

t big airports there’s no doubt about it - automated baggage handling is the only way to go. But many smaller-to-medium size airports still haven’t automated, or have done so to only a limited extent. There are around 100 airports handling between 1.5 and 6 million passengers a year in Europe alone. For many of them, there are still big gains to be made - in cost, time, efficiency and sorting quality - by introducing automated sorting. The problem for many of those airports is finding the right systems to do the job. Because in many cases, solutions designed primarily for the larger airports where much of the automation market is to be found are not cost-effective for lower? volume environments. And as well as that, those systems often can’t be accommodated within the space constraints of smaller terminal buildings - many of which have to handle today’s constantly increasing passenger and baggage volumes in facilities that were originally built for much lower traffic levels.

Solutions designed for larger airports are not cost-effective for lower? volume environments and often can’t be accommodated in smaller terminal buildings On the other hand, smaller and simpler carousel-based sorter solutions may not have the flexibility or volume capacity to handle the peak demands encountered in many of today’s mid?size terminals. And nor may they be able to deal with the ambitious growth plans of many regional airports, for example as a result of the booming budget and holiday travel business. That means low-end systems may ultimately prove to be a poor investment if they have insufficient reserves for extension and higher capacities.

ELIMINATING SORTING ERRORS Targeting this apparent gap in capacity, system vendors are developing solutions that will meet today’s demands cost?effectively while still offering ample reserves to meet future growth plans. One of them is Vanderlande Industries, the Dutch-based company that has installed more than 400 systems at both regional and international airports around the world. “Our aim was to develop a system based on proven technology that would offer the highest possible sort quality”, says Gijs Bartelet, senior systems engineer for baggage handling systems at Vanderlande Industries. “In other words the system should eliminate the mis-sorts that can frequently happen with manual handling, and which are the most important cause of lost bags. Our experience is that sorting errors are the biggest fear of airport managers responsible for baggage handling operations, because of the high costs and delays they can cause. Next to that of course, they want to reduce manpower levels because of the ever-increasing costs of labour, difficulties in finding staff and increasingly stringent ergonomic and occupational health regulations.” NEED FOR A SIMPLE, ROBUST SYSTEM The company’s answer to these demands is the BaxorterÔ, a simple, robust system designed to meet a wide range of airport demands which is due to be launched at the InterAirport show in Munich, to be held in October. Key features of the system are its compact size and flexibility in terms of capacities - typically around 2,000 to 3,000 bags per hour - and numbers of outputs to flights or destinations. Most applications for the Baxorter are expected to be in final sorting to flight make?up or presorting, for example routing

both check-in and transfer baggage to manual coding stations, storage lanes, Hold Baggage Screening and Early Bag Storage systems. The advantage of presorting is that it allows optimum capacity utilisation of the usually relatively costly EBS and HBS systems by controlling bag allocation dynamically in line with the workload. Also possible are combinations of presort and final sort, so that a single system handles all sorting tasks.

Positive sorting action is key to a reliable and predictable sorting process and high conveyability for bags of all shapes and sizes Underlining the system’s simple, robust concept is the basic technology used: the friction drive means only a single electric transport motor is used for the whole system, and this together with the sturdy frame is based on the proven TriplanarÔ carousel, of which more than 1,000 units have been installed. A further benefit of the friction drive principle is that there is no need for frequent chain maintenance and lubrication as with conventional transport systems. The sorting action itself is based on the use of divert blades, which are mechanically actuated by rails under the baggage trays. Each tray has its own divert blade, which positively yet gently guides the bag into the destination output. The divert blade can move either at right-angles or at a sloping angle to the transport direction. This allows varying sort orientations to be achieved, to match the angles of the output chutes or belts. RELIABLE AND PREDICTABLE SORTING PROCESS The resulting positive sorting action is key to the reliable and predictable sorting process and the system’s high conveyability for bags of all shapes and sizes up to 1

CRUISING HEIGHTS December 2008

metre in length. Sorting is possible to both right and left sides of the track, enabling optimum use to be made of the available space. A further benefit of the positive sorting action - in contrast to passive systems such as those relying on gravity - is that it allows full tracking of baggage in the transport and sorting process. This is particularly important during transport to screening systems, where the security status of each item must be registered before and after screening. The controlled motion of the divert blade also combines secure sorting with a low impact on the baggage items handled. The integrated divert blade and tray mean a completely closed deck, so loose handles or straps and other protrusions cannot become trapped in the transport mechanism. The closed deck also allows high conveyability and reliable operation to be achieved without the need to use baggage tubs. The Baxorter’s compact design fits into restricted floor areas but also minimises height requirements. The sorting process takes place without lifting the baggage, unlike the widely used tilttray sorters in which the tray carrying each item is raised to sort it into the destination chute. The system is normally supported on the ground, but can also be suspended from the ceiling if unobstructed access is required at ground level. The small sorting pitch allows a maximum number of flight make-up positions to be served within the available floor area, while the gap between trays can be varied to match system capacity to the current requirements. “We believe that sorters of this kind will meet a big demand from the many airports that are currently considering the implementation of fully fledged automated baggage sorting”, Gijs Bartelet adds. “As well as cost-effectiveness, flexibility and growth potential, we expect that it will most of all be the guarantee of very high sort quality that proves to be the most convincing argument for airport operators.”

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NEWS DIGEST

IATA: ‘CASH GRAB

BY THE UK TREASURY’

ATA (The International Air increased APD save? The blunt Transport Association) has instrument of taxation does nothing to labelled the increase in UK Air improve environmental performance,” Passenger Duty (APD), and its said Bisignani. reform into four bands, as an None of the APD revenue is enormous mistake. The changes were earmarked for environmental initiatives. announced in the UK Chancellor’s Pre- “I ask a question that I have asked many Budget Report, with the increases to take times before. How many trees will the effect from November 2009. Treasury plant with the cash? And where “The Chancellor wisely abandoned is the commitment to end APD when plans to introduce Aviation Duty, the aviation joins the European Emissions proposed per plane tax, on the grounds Trading Scheme in 2012? We cannot that this is no time for introducing greater accept tax upon tax in place of a sound instability in the airline environmental policy,” said industry — a catalyst for Bisignani. economic growth. IATA also criticised the Unfortunately, the wisdom UK Government’s proposal stopped there. Adding millions for creating commercial of pounds to the cost of travel distortions. “The from the UK will not help the restructured APD does Chancellor set the UK almost everything wrong. It economy back on a growth is a disproportionate burden path. We have the right UK Minister of Treasury for trips over 2,000 miles. It diagnosis but the wrong prescription,” disadvantages UK carriers compared to said Giovanni Bisignani, IATA’s Director their rivals. The highest travel taxes in General and CEO. the world reduce the UK’s “This is another cash grab by the competitiveness for businesses that Treasury, thinly disguised as an depend on global connectivity. Increases environmental measure. The UK in economy fares are a step backwards to Government already admits that the the days when world travel was only current GBP 2 bn take from APD more accessible to the wealthy. The than covers the cost of aviation’s climate environment won’t see even a penny of change impact. Airlines take their the cash collected. And, the proposal environmental responsibility seriously. In puts the UK’s 200,000 aviation jobs at this year alone, IATA-led efficiency greater risk. The only one smiling is the measures have saved over 14 million Chancellor as the Treasury counts its tonnes of CO2. How much CO2 will the billions,” said Bisignani.

INDIA-EU HORIZONTAL AGREEMENT APPROVED The government has approved ex post-facto the signing of a horizontal agreement for air services between India and the European Commission. The horizontal agreement was signed between India and the European Commission on September 28, 2008 in Marseilles, France, during the visit of the Prime Minister. Further, following the Open Skies judgement of 2002, the EC proposed to India that ASAs (Air Services Agreements) between the member states and India need to be brought in conformity with EC law, failing which these would be vulnerable to legal challenge, and had suggested amendments to certain clauses. The EC had the mandate from the member states to conclude a Horizontal Agreement (HA) with India, which enabled the EC, in one go, to effect amendments in the ASAs of the member states to address the legal issues arising out of the “Open Skies” judgement.

INDIA-IRAN BILATERAL A new and more liberalised air services agreement between India and Iran has been signed. A new ASA was initialled between the two countries after bilateral talks in April this year. This comes 28 years after the last one was signed in June 10, 1980. As per the agreement, the capacity entitlements for the designated airlines of each side were enhanced from the existing 14 services per week to 23 services per week. However, the Iranian designated carriers can operate from several points of call in India: Mumbai (2 services per week), Delhi (7 services per week), Cochin (7 services per week) and Amritsar (7 services per week).

INDIAMALAYSIA DEAL India and Malaysia ratified the present air services agreement comprehensively, that will allow carriers to operate between 18 points in India and Malaysia. The two countries agreed that the designated airlines of each country shall be entitled to operate 20,410 seats per week in each direction, on the routes specified in the respective Route Schedule from Summer 2009.

Heathrow Airport Terminal

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NEWS DIGEST

AIR WORKS MOVES INTO

THE BIG LEAGUE Fredrik Groth

ir Works moves into the big league. It must require some savvy, plenty of sweat and vision to become the country’s first private sector player in the MRO (Maintanence, Repair and Overhaul) business. Air Works, an over 50-year-old company has received the DGCA’s (Director General of Civil Aviation) nod for its operations in Hosur, near Bangalore. With that announcement, Air Works has become India’s first DGCA approved independent airline MRO and will perform services such as Line and Base maintenance, Aircraft painting, structural repairs, cabin upgrades, and avionic upgrades. Air Works will also be offering component repairs and spare parts sourcing. Speaking on the occasion, Fredrik Groth, Chief Executive Officer, Air Works, said, “Air Works has been working tirelessly to build a strong aviation infrastructure in India. We are extremely happy on being recognised for our efforts by the DGCA, and are now all set to commence operations as India’s first commercial maintenance, repair and overhaul facility. We now look forward to performing our services to the airlines of India, which so far have had to either build up in-house maintenance capa-

bilities or send their aircraft abroad for servicing.” What does Air Works have on hand for the business? One hangar capable of housing two ATR 72 size aircraft or one narrow body aircraft. 13,000 sq feet of office and back shop space. The Hosur airport has a newlyextended 7000 ft X 150 ft runway, capable of accepting all commercial aircraft types.

Engineers at work in one of the MRO workshops The company will start operations with one existing hangar and will soon build two more hangars, to be ready by no later than year-end 2009. It plans to invest up to US $40 mn to set up the additional hangars, the paint

CRUISING HEIGHTS December 2008

operation, and future engine /component MRO activities. It has already announced a joint venture, with Air Livery Plc — UK as its partner on the upcoming dedicated state-ofthe-art paint hangar. Air Works’ General Aviation MRO is already the largest in India, with over 60 per cent market share. Starting with the maintenance and overhaul work on a few DC-3s in the early 1950s, Air Works currently does DGCA-approved maintenance on over 75 aircraft including Gulfstream, Bombardier, Dassault, Hawker, Cessna, Beechcraft and others. The company recently announced an authorized service centre agreement with Honeywell, under which Air Works will offer maintenance, repair and service facilities for Honeywell engines TFE 731 and CFE 738 series, along with Auxiliary Power Units [APUs]. In addition, Air Works will also service Honeywell’s complete range of navigation and communication equipment. With the DGCA approval of its Commercial MRO, Air Works aims to strengthen its leadership position and provide Maintenance, Repair and Overhaul (MRO) services to support the growth of general and commercial aviation in India.

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COLUMN/CHOCKS OFF

R Krishnan

ack in early 1991, Yashwant Sinha, as Finance Minister in late Chandrashekhar’s cabinet, grappled with one of India’s worst economic crises and severe foreign exchange crunch by pledging the nation’s gold. There was widespread criticism. It stood the test of time and helped open the way for negotiating a structural adjustment loan of over US $3.5 billion from the IMF. In June 1991, Dr Manmohan Singh took over as the Union Finance Minister in the Narasimha Rao cabinet and went about the job, started by Sinha, with clinical precision. He not only carried forward the IMF loan and its conditionality, but also devalued the Rupee viz-a-viz the US dollar in two installments and liberalised forex transaction. In the next 17 years, we saw massive accretion to India’s forex reserves and to India Inc. The privatelyowned airlines were of course benefited. As

nomic recession. The investors disappeared, airline orders — not just fresh ones but even placed long back — were either dropped or deferred, routes cut, frequencies reduced. In the last 30 months, Indian carriers — both that fly only domestic and those which have foreign rights — have suffered severely. While they made a loss of US $ one billion in fiscal 2007-08, they are set to lose US $ two billion in 2008-09. The Union Civil Aviation Ministry tried to save the situation by holding back all fresh applicants wanting to start new airlines, and discussed, with its counter-parts in the Ministries of Finance and Petroleum & Natural Gas, steps to save the dying Indian carriers. The events recounted above show that India, as a nation, needed US $ three billion about 17 years ago to navigate its way out of a foreign exchange crisis. In contrast, only three of India’s major carriers (nothing compared to

Will they rise India needed US $ three billion about 17 years ago to navigate its way out of a foreign exchange crisis. In contrast, only three of India’s major carriers today account for a loss of this magnitude 28

from

THE ASHES?

stars of India Inc, they were able to raise money from all sources, both domestic and international, to fund their aircraft acquisition. In May 2004, after the UPA assumed office, the civil aviation sector witnessed yet another landmark. The progressive liberalisation of the sector, induction of more players, and maturing of the LCC concept, which was first launched by Capt Gopinath with his Air Deccan earlier in August 2003, saw the sector reap passenger traffic growth of an average of 33 per cent for the next three years, from 2005 to 2007. This period saw new start-ups like Kingfisher, SpiceJet, IndiGo, Paramount, besides the already in business Jet Airways and Air India-Indian (now merged), announcing huge aircraft acquisition programmes. The rapidity with which orders were being placed and money sought to be raised (there were any number of foreign financial institutions and private equity firms willing to lend, and even over-reach if there was need) made India a darling among the global aviation community. Then came the Tsunami, in the form of a massive rise in fuel price, beginning early 2008, followed swiftly by US-led global ecoBLEAK SCENARIO: Indian carriers are desperately looking for ways to tide over the current crisis.

CRUISING HEIGHTS December 2008

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the biggies of India Inc) today account for a loss of this magnitude and require financing that is more than what all of India sought then for its structural adjustment. Look at Air India. It wants Rs 4,550 crore, of which nearly Rs 1,000 crore is required for IT network, to enable its inclusion in Star Alliance, which wants this done before March 2009. The remaining money is needed for working capital loan and equity enhancement support. So far, Air India has not been able to get anything. Additionally, Air India is also seeking to raise US $1.1 billion to fund the acquisition of the 23 Airbus aircraft it is buying from Airbus Industry. Reports suggest that it is tying up with KfW, Barclays and Deutsche Bank. The terms are not known, but, for at least the loans it has sought from the Government of India, it is thinking of paying 11 per cent interest. Further, Air India has also decided to sell and lease one Boeing 747-400 and five A320s to shore up its finances. It could also possibly lease two of its recently converted Airbus A310s. Jet Airways had been talking of raising US $400 million for the last two years by part divesting its promoter equity. Unfortunately, after the stock market tanked, Jet scrip has fallen from its Rs 1,150 IPO issue price four years ago to Rs 130 in early December 2008. Only Naresh Goyal knows how much more equity he will have to pledge to get that US $400 million. Since it is a bad idea to sell a good airline at a bad time, he has now begun hunting for money even more furiously than

Page 3

his commercial staff is hunting for passengers to fill his planes. He has approached the Abu Dhabi government-promoted investment company, Mubadala Development Company, to raise Rs 1,000 crore. Besides, he is also in discussion with SBI and PNB in India to raise Rs 1,500 crore. On his own, he has already leased out three of his brand new Boeing 777-300 ERs and two Airbus A330-200. While two Boeings have already been leased to Turkish Airlines, the third one will also go to Turkish Airlines by February 2009. The Airbus A330 has been leased to Gulf Air. In all, Naresh Goyal hopes to raise nearly Rs 300 crore, or roughly US $ 62 million per year, for the period of lease (provided the current exchange rate holds). The lease is understood to be for a minimum of two years. If necessary, he is ready to lease two more of his Boeing 777-300 ERs. He has also forced a wage cut for his entire staff, except resident Indian pilots so far, which may save him 10 per cent of the total wage cost estimated at Rs 1,200 crore annually. Taking the lease rentals and wage cost cut, Jet Airways could save about Rs 420 crore yearly to tide over the current crisis. This would reduce his network and weaken the so-called alliance with Mallya’s Kingfisher Airlines, which is in even deeper waters. At a recent meet, he said both his businesses took people high, be it the airline or Daru. And it was in that spirit, he said, after receiving the clearance from the government to fly more overseas routes, that Kingfisher Airlines would launch Mumbai-London flights from January 5, 2009. Mallya’s logic was “there is untapped potential and this new route promises to serve the unmet needs of discerning corporate and leisure flyers”. Certainly, it is a new route for Mallya, but not for those who have burnt to ashes like the proverbial phoenix bird. BMI withdrew. Air India tried to share its rights with that angrezi Mallya Richard Branson and his Virgin. Naresh Goyal found his Jet not really attracting as many jet-setters as he had expected earlier. BA, in any case, is thinning out, with so many connections from India to London Heathrow. So, we come back to the opening of this column — India undertook structural adjustment of its economy and survived. Will Indian carriers do the same in order to survive? Often, one hears of Mallya critical of the LCC model and of how it was destined to doom. But what we are seeing today is virtual doom of full service carriers. As for the high, it is anyone’s guess as to what will happen when the King meets the Virgin on way to London or amchi Mumbai. Will they blossom like the magnificent Kingfisher, or will they be extinct like the phoenix? Only time will tell. (Veteran journalist and long time aviation watcher R Krishnan is Consulting Editor at CH. He can be reached at rkrishnanji@yahoo.com.) CRUISING HEIGHTS December 2008

Taking the lease rentals and wage cost cut, Jet Airways could save about Rs 420 crore yearly to tide over the current crisis. This would reduce the network and weaken the so-called alliance with Mallya’s Kingfisher Airlines 29

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January KINGFISHER, DECCAN MERGE

July FARNBOROUGH FLIES HIGH DESPITE GLOOM

Kingfisher offers three shares for every seven held in Deccan

May PRAFUL, MONTEK SQUABBLE It was a battle royale between an incensed Mantri and troubled Monty

June MIAL IS A STATE Mumbai High Court ruled that MIAL, though registered as a private company, performs a public function and is therefore a ‘state’

August AIRCARGO GETS GRIM FORECAST International freight traffic has declined by 0.8 per cent

7 8

February MAGIC FUEL

Virgin 747 flies, fuelled in part by 150000 coconuts and babassu nuts

March VIRGIN GALACTIC ANNOUNCES FLIGHT INTO SPACE For $2,00,000 (Rs 80 lakh), Virgin Galactic will prepare space travellers for five minutes in space

The aircraft has accumulated 8,500 flight hours in service and 4 lakh passengers

October JET AIRWAYS CRISIS AS 850 SACKED

Naresh Goyal sacks 850 air hostesses bang in the middle of the Air Show at Hyderabad

Called Olympic Bypass (B208), it is inaugurated. Flights bypass Beijing

BUT SLOWLY INTO CRUISING HEIGHTS December 2008

September SIA COMPLETES 1,000 FLIGHTS WITH A380

April IATA HAILS NEW AIR ROUTE OVER CHINA

November

2008... DARKNESS, 30

The big-ticket orders came from the Middle Eastern carriers, for whom fuel was a non-issue

LIGHT

It’s a gloomy year-end. Is there light at the end of the tunnel, ask airlines and airport operators.

he encircling gloom. That is how the aviation sector in the country looks today at the end of 2008. With losses mounting daily to the tune of Rs 100-150 million by some carriers, the “India story”, somehow, does not look optimistic any more. Indeed, that is a far cry from the situation at the beginning of the year. At that time, there was optimism all around. Our two Greenfield airports were nearing completion, the AIIndian merger was going ahead, with Air India moving closer to joining the Star Alliance, and Indian carriers were getting ready to tackle the pilot shortage. Suddenly, the world turned upside down. Air Turbine Fuel prices shot through the roof and the aviation industry was shattered. But, it must be said that, to a large extent, the problems were largely self-inflicted. Momentarily, yes momentarily, for a mad three-month period, there was no control over oil prices. But they have since come down to CRUISING HEIGHTS December 2008

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January KINGFISHER, DECCAN MERGE

July FARNBOROUGH FLIES HIGH DESPITE GLOOM

Kingfisher offers three shares for every seven held in Deccan

May PRAFUL, MONTEK SQUABBLE It was a battle royale between an incensed Mantri and troubled Monty

June MIAL IS A STATE Mumbai High Court ruled that MIAL, though registered as a private company, performs a public function and is therefore a ‘state’

August AIRCARGO GETS GRIM FORECAST International freight traffic has declined by 0.8 per cent

7 8

February MAGIC FUEL

Virgin 747 flies, fuelled in part by 150000 coconuts and babassu nuts

March VIRGIN GALACTIC ANNOUNCES FLIGHT INTO SPACE For $2,00,000 (Rs 80 lakh), Virgin Galactic will prepare space travellers for five minutes in space

The aircraft has accumulated 8,500 flight hours in service and 4 lakh passengers

October JET AIRWAYS CRISIS AS 850 SACKED

Naresh Goyal sacks 850 air hostesses bang in the middle of the Air Show at Hyderabad

Called Olympic Bypass (B208), it is inaugurated. Flights bypass Beijing

BUT SLOWLY INTO CRUISING HEIGHTS December 2008

September SIA COMPLETES 1,000 FLIGHTS WITH A380

April IATA HAILS NEW AIR ROUTE OVER CHINA

November

2008... DARKNESS, 30

The big-ticket orders came from the Middle Eastern carriers, for whom fuel was a non-issue

LIGHT

It’s a gloomy year-end. Is there light at the end of the tunnel, ask airlines and airport operators.

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COVER STORY

2008 32

“We have to prepare a growth plan for the period 5-7 years after we receive the last aircraft in December 2011. The plan should ensure that we get aircraft from the beginning of 2012 itself.” Air India CMD V. THULASIDAS on the need for new aircraft

WAITING TO MATURE

“The fundamentals of the aviation business are not right to go to the market... I’m sure the rest of the industry knows better, but before we go to the market, I’d like to be making money.” Indigo Chairman RAHUL BHATIA on why he hasn’t gone to the market

There is hope yet, considering that aircraft manufacturers continue to be gung-ho about India. Both Airbus and Boeing feel that the slowdown is temporary and the situation will soon correct itself. Airbus’ Executive Vice-President (Sales and Marketing) Kiran Rao was quoted as saying: “There is now too much overcapacity, but the potential for growth in India is huge… If the Indian economy is growing at 7-8 per cent, then air traffic growth will be 14-15 per cent. So we are very much focussed on India.” Even Boeing’s Senior Vice President (Sales) Dinesh A. Keskar echoes his sentiments: “India is the growth story of the world, and it is going to be the future,” he said. They are not alone. The country’s flight penetration is a mere 0.2 per capita, compared to 2.2 in the US and 1.2 in China. And with only around 40-odd airports serving a population of more than a billion, the potential is immense, if not unlimited. Showing the way were our two Greenfield airports at Hyderabad and Bengaluru. World-class, both braved the odds and have come out on top. Or, for that matter, there is air cargo. The lack of basic infrastructure — no cargo villages, delayed turn-around timings, etc. — has not deterred carriers from showing an interest in India. For these carriers, India is the growth story in the world. That the Indian aviation industry has grown — and is looking forward to significant growth — was apparent, perhaps more than anything, at Hyderabad during the India Aviation 2008 show. The first-ever outing by India in the international aviation scenario, the show brought home the fact that the country had made it to the top. As we ring out the old and ring in the new, here is a review of the year that’s gone by, and the hope that we shall soon forget this Anus Horribilis and look for the first rays of a new dawn.

WE ARE AT IT

“There is need for both the airlines to ply on metro routes. Deccan will pull out from the sector where it is losing money and Kingfisher will do the same.” Simplifly Kingfisher Vice Chairman CAPTAIN GOPINATH on the route rationalisation process

CRUISING HEIGHTS December 2008

NAMASTEJI!

“I would like to assure them (employees) that as far I am concerned, I come with no baggage of either being a part of erstwhile Indian or Air India and I am more than willing to talk to all the employees directly or through the unions...” Air India CMD RAGHU MENON on his relationship with employees

WORLD-CLASS AND MADE IN INDIA

f there is one crowning achievement that Indian aviation can be justifiably proud of, it is the two world-class airports at Hyderabad and Bengaluru. The airport at Hyderabad is truly world-class, boasting of all facilities that a world traveller can ask for. Additionally, it is classy and people-friendly. The Greenfield airport in one of the country’s fastest growing cities, it has provided GMR the opportunity to show to the world that the country is capable of the best. The airport construction is in phases: the first phase ended with the commencement of operations at the airport in March 2008. The ground-breaking ceremony took place on September 1, 2005. In just under 31 months, the first phase was ready. The new terminal caters to 12 million passengers and can be expanded to handle 20 million passengers. In keeping with the global practice of expanding without dislocating all future growth, the airport is planned in a modular fashion. This will see passenger-handling capacity increase from 12 million to 16 million, and further to 20 million. As for connectivity, the traffic distribution is roughly: 30 per cent to US and 30 per cent Middle East, and the rest balanced between South East Asia, Australia and Europe. And

EGO PROBLEM

“At UB Group, we build brands, we don’t destroy brands for ego purposes.” VIJAY MALLYA on retaining Deccan as a brand

WAITING FOR GODOT

“At the moment, it’s 80 per cent, but I will definitely dilute. We are waiting for the right time and when the market situation improves, I will divest 5-10 per cent stake.” Jet Airways Chairman NARESH GOYAL on diluting his stake in Jet

in the near future, more international carriers propose to touch Hyderabad. In addition, the airport authorities have also enhanced cargo operations. However, it is the other new Greenfield Bengaluru airport that has had problems. To begin with, it had a troubled start. Its operations were delayed, with politics and politicians playing a major role. To top it all, the DGCA identified 59 safety irregularities in BIAL. Barely a week after it started, a petition was filed by Bangalore City Connect, a citizens’ advocacy group, which contested the government’s 2004 commitment to BIAL to close down the city’s old airport. Another objection was that the new airport was small because planners underestimated demand. On September 1, 2008, the Bengaluru International Airport Limited (BIAL) completed 100 days of commercial operations. The airport had by then seen 2.42 million passengers, 29,446 aircraft movements, and the handling of 44,357 metric tones of cargo, besides seeing a 30 per cent increase in international airlines and air freight carriers flying into the city. The growth, despite the downturn in the economy and route rationalisation by many airlines, was encouraging. The new airport, which started services on May 24, 2008, has a rated capacity of about 11 million passengers a year. Despite the belief that it is nearing capacity, those who have been using the airport are happy. The airport boasts of a 71,000 sq ft terminal building, 53 check-in-counters and 18 kiosks, and a capacity to handle 341 flights a day. Once again, however, there is a silver lining. The new Cargo Village, claimed to be the first of its kind in the country, has been started at the Bengaluru International Airport. A long-standing demand of the cargo fraternity, the village will have the capacity to accommodate 120 freight forwarders and 80 custom house agents. Spread over 11 acres, the new facility will strengthen Bangaluru’s position as a trade and commercial hub, while ensuring quick clearance of import and export consignments from the cargo terminals at the airport.

BLOW HOT, BLOW COLD

“It is an unfortunate decision, which all of us regret, but it is an attempt to save the company and the jobs of the remaining employees.” Jet Airways Executive Director SAROJ DUTTA on the sack notice to employees

FUTURE PLANS

“It (expansion) will be partly carried out through internal accruals and through the typical aircraft funding options … but we are certainly not in the market for raising funds.” Paramount Chief M THIAGARAJAN on their future plans

‘

LOOKING AHEAD

That the Indian aviation industry has grown — and is looking forward to significant growth — was apparent, perhaps more than anything, at Hyderabad during the India Aviation 2008 show

2008

realistic 2007 levels. However, the airlines still continue to bleed and are still in intensive care. Why is that? For one, over-ambitious fleet planning, with huge orders that are now coming home to haunt and hurt the airlines. Jet Airways, not wanting to be left behind, as the saying goes, by the Joneses, is now ruing the very orders and straining every muscle to lease those planes. Ditto for Kingfisher. If that is one side of the coin, the great first round of consolidation that saw Jet and Sahara get together, and the second that saw Kingfisher and Deccan merge, have also added to the large blobs of red. Ironical as it may seem, one prime reason why Jet bought Sahara was to have an exclusive and clear edge in overseas operations for a good two years till the next contender came along. Those very routes are now like an albatross around its neck. It is chopping and pruning them one by one. Why, at the very start of this year, it strained every muscle to get the green signal from the Chinese to fly to the US West Coast via Shangai! Less than a year later, Jet announced it was shutting the route. This was just the first of several other announcements, including plenty on the domestic front. If the airlines are caught in a tailspin, the airport operators are in a worse position. As one of them pithily said: “Who do we leave our airports to? Airlines can send their planes elsewhere, what do we do with the infrastructure that we have created on the ground.” In an industry that is airline-centric, their voice has so far remained unheard. A pity, considering the two worldclass airports that have come up at Hyderabad and Bengaluru, and the two under modernisation at Delhi and Mumbai. But is it all dull and gloomy? Is there no light at the end of the tunnel?

CRUISING HEIGHTS December 2008

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WAITING TO MATURE

WE ARE AT IT

CRUISING HEIGHTS December 2008

NAMASTEJI!

WORLD-CLASS AND MADE IN INDIA

EGO PROBLEM

“At UB Group, we build brands, we don’t destroy brands for ego purposes.” VIJAY MALLYA on retaining Deccan as a brand

WAITING FOR GODOT

BLOW HOT, BLOW COLD

FUTURE PLANS

‘

LOOKING AHEAD

That the Indian aviation industry has grown — and is looking forward to significant growth — was apparent, perhaps more than anything, at Hyderabad during the India Aviation 2008 show

2008

CRUISING HEIGHTS December 2008

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ARE WE SAFE?

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2008

ways by this time next year.” Naresh said that everyone around the room was making losses, and there was no way the industry can recoup from the present situation unless there was drastic action, both in terms of cooperation between airlines and more enlightened government policies. It was almost the same thing that was repeated across the table, as industry leaders spoke turn by turn on the issues that confronted them.

Mallya, of course, also had a few biting words for his favourite subject: LCCs Praful, of course, spoke and said the only way out was to be united in asking the government for help. As usual, the PM was ‘sympathetic’ to the industry and promised them all help. As a first step, the Government will set up an inter-ministerial group, headed by the Union Cabinet Secretary, to find solutions to combat price rise in Aviation Turbine Fuel (ATF), which is affecting the profitability of the domestic airline industry. In another twist to the tail, Kerala has decided to renege on its promise to lower tax on ATF to four per cent. This was proposed in the State Budget 2008-09. “The State planned to lower the sales tax on the condition that airlines lower their fares. This has not happened, so we will review the decision to lower sales tax rate,” said the State Finance Minister, T M Thomas Isaac. “At the moment, industry is reeling under heavy losses, which could cross Rs 4,000 crore during 2007-08 and double to Rs 8,000 crore in the following years. Rising cost of fuel and the low yields that airlines are reporting are two major factors for losses. Every possible step is being taken for handling the situation, but it’s a similar situation across the world,” said Ashok Chawla, former Secretary, Civil Aviation. It is becoming a strange phenomenon. Airline industry loss is doubling every year. From Rs 2,000 crore in 2006-07, it rose to Rs 4,000 crore in 2007-08, and is now estimated to go up to Rs 8,000 crore in 2008-09. What do you do with an industry where the loss (of, say, Rs 8,000 crore) is nearly 40 per cent of the industry turnover of Rs 20,000 crore?

100 per cent for helicopters and sea planes operations. February

AIR INDIA NON-STOP FROM DELHI

January

GOVERNMENT CLEARS FDI POLICY

A liberal FDI regime for certain areas finally passed muster in the Union Cabinet: 100 per cent for MRO and flying schools, 74 per cent in non-scheduled airlines, chartered and cargo carriers, and

The Maharaja began its 777-200 LR direct to the Big Apple from

CRUISING HEIGHTS December 2008

Delhi. Those who travelled on the aircraft said it was a ‘dream flight’ — spacious, comfortable and truly world-class. Fit for a Maharaja! March

RAGHU MENON IS THE BOSS After a long and tortuous process, Raghu Menon was appointed Chairman of Air India. With long years of handling Civil Aviation at Rajiv Gandhi Bhavan, Menon was viewed as the right man for the difficult assignment.

ATA chief Giovanni Bisignani is the top propagator for cutting out the flab that troubles commercial aviation around the world. He has been espousing the cause of e-tickets (ET) to ensure that aviation becomes lean and more efficient and, as of June 1, 2008, the country’s airlines stepped into the new, hi-tech world. IATA had spearheaded the mandatory move. The days when air passengers were required to flout colourful air ticket booklets are gone. Instead, all they need to remember is the PNR number of their flight. The rest is taken care of by the airline’s computer. Electronic tickets, with all the details of a passenger’s reservation and payment that are now stored on the airline’s computer network as of June 1, have supplanted a large share of paper tickets in the country. The journey to a paperless ticket has been bumpy. A few deadlines were missed earlier, and even today, the chances of every airline in the world changing over to the electronic system are nil. But the average Indian air traveller will possibly never see a paper ticket again. A salutary move, it has seen airlines around the world saving huge amounts of money, along with cutting down on the usage of paper. The move towards ET started in June 2004, when IATA’s board of governors and its annual general meeting — which represents 250-plus airlines — asked the association to get on with its ‘Simplifying the Business’ (StB) Programme. The four-year ET project has been the flagship of the StB programme ever since its start. The IATA had carried out a survey in 2007 that revealed significant figures. It said that 88 per cent passengers preferred electronic tickets to paper tickets. But now that the eticket regime is on, it has brought mixed responses from the airline industry stakeholders. While the GDS providers — Galileo and Amadeus — look forward to 100 per cent ET, there are others who think otherwise. One such stakeholder is the Travel Agents Association of India (TAAI), which

April

The Madras High Court dismissed a batch of petitions challenging the land acquisition for the Chennai airport expansion project. The Bench, in its observation, said “it is clear the acquisition is an independent power under the Seventh Schedule of the Constitution”.

former Aviation Secretary Ashok Chawla said: “I don’t think in terms of three times the GDP for 20 years. It is neither possible nor desirable. But it certainly offers a great opportunity and a greater challenge.” How right he was!

May

June

ASHOK CHAWLA WARNS AGAINST RUNAWAY GROWTH

BISIGNANI WARNS OF MOUNTING LOSSES

CHENNAI EXPANSION GETS HC NOD

Addressing industry experts,

IATA DG Giovanni Bisignani warned that if oil averages US

2008

hey were all there: Naresh Goyal, Vijay Mallya, M Thiagarajan, Jeh Wadia, Bulu Kansagr, and the inscrutable Rahul Bhatia in one of his rare public appearances. It was a meeting called by Civil Aviation Minister Praful Patel in the wake of the severe crisis caused by the sky-rocketing cost of fuel. The highlight of the meeting was, perhaps, the speech made by Naresh Goyal, who said in a dramatic fashion that “if things continued as they are, there could well be no Jet Air-

went on to point out that the IATA decision to implement ET was a rushed one. Terming the move as “unwarranted and self-defeating,” TAAI pooh-poohed the idea of saving paper and reducing the costs for airlines. Such savings cannot be achieved by getting rid of paper tickets. Instead, 100 per cent ET has to be brought about across the board, it said. TAAI had its reasons, the first being Africa, which is only 60 per cent e-ticket enabled, and the second being countries in the former Eastern bloc that are 50 per cent e-ticket. The Association also pointed out that, of the more than 60 airlines operational in India, less than 10 had a policy and procedure in place for e-ticketing. On hindsight, IATA’s move was well-timed. The millions of dollars saved through e-ticketing will help airlines around the world a great deal in these difficult times. But, as Bisignani points out elsewhere in this issue of Cruising Heights (see page 40), IATA is delivering efficiencies through our ‘Simplifying the Business’ Programme. “In June, we achieved 100 per cent e-ticketing, saving US $3 billion annually. What is left to do? There are billions more in cost savings to be achieved.”

$107 per barrel, the fuel bill will be US $176 billion — US $40 billion more than in 2007. This would push us back into the red, with a loss of US $2.3 billion in 2008 — US $7.9 billion less than 2007. July

HIGH-POWERED COMMITTEE SET UP A high-powered panel was constituted to examine the difficulties faced by airlines, and recommended remedial measures. The committee has been asked to submit its recommendations at the earliest possible.

CRUISING HEIGHTS December 2008

HYDERABAD AIRPORT COMPLETES 100 DAYS

It was a learning curve for the Greenfield venture at Hyderabad airport, with two new international flights taking off and it becoming the second airport in the world to be LEED (Leadership in Energy and Environment Design) certified. August

IGIA’S THIRD RUNWAY INAUGURATED Indira Gandhi International Airport’s (IGIA) brand new runway, 11-29, was inaugurated.

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100 per cent for helicopters and sea planes operations. February

AIR INDIA NON-STOP FROM DELHI

January

GOVERNMENT CLEARS FDI POLICY

A liberal FDI regime for certain areas finally passed muster in the Union Cabinet: 100 per cent for MRO and flying schools, 74 per cent in non-scheduled airlines, chartered and cargo carriers, and

The Maharaja began its 777-200 LR direct to the Big Apple from

CRUISING HEIGHTS December 2008

Delhi. Those who travelled on the aircraft said it was a ‘dream flight’ — spacious, comfortable and truly world-class. Fit for a Maharaja! March

April

May

June

ASHOK CHAWLA WARNS AGAINST RUNAWAY GROWTH

BISIGNANI WARNS OF MOUNTING LOSSES

CHENNAI EXPANSION GETS HC NOD

Addressing industry experts,

IATA DG Giovanni Bisignani warned that if oil averages US

2008

CRUISING HEIGHTS December 2008

HYDERABAD AIRPORT COMPLETES 100 DAYS

IGIA’S THIRD RUNWAY INAUGURATED Indira Gandhi International Airport’s (IGIA) brand new runway, 11-29, was inaugurated.

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2008

he year has been bad for Indian aviation, but there were a few sparks that brought cheer to the despondency all around. One such was the staging of the first-ever aviation show in the country --- India Aviation 2008. The international exhibition-cum-air show managed to provide a perfect platform for the booming aviation sector to showcase its opportunities. The four-day Hyderabad show in October this year although it did not create the kind of hype that similar shows like the Paris, Farnborough or Dubai air shows around the world do -- featured exhibits, chalets, flying displays, customer demonstration flights, static displays and media conferences. The show became a perfect business platform not only for aviation companies to showcase their products but also to bring together leading domestic and international airlines that have a stake in the India aviation story. That the Hyderabad show did not create genuine waves in international aviation history was no surprise. It was put together in a tearing rush and in all of six months. Nevertheless, it was pretty muscular. All the biggies were there, although one could com-

TIMELINE 2008

September

WILBUR ROSS BITES INTO SPICEJET

History was created. The runway has given the IGIA the unique distinction of becoming one of the very few civilian airports in Asia to have three operating runways.

A GREAT START

2008

ong-time aviation watchers had plenty to say about the `dostana` between Naresh Goyal and Vijay Mallya. Some called it dostana.com, others joked that it was Go(yal) Mal(lya)-11. One could pick one’s choice. The bottom line, though, was that no one took the great news of an alliance between Jet Airways and Kingfisher seriously. For most industry observers, it was a nono. Why, even diehard supporters of the duo within their own companies wondered why this entire façade in the public eye, when privately they knew they were on ground zero. Some believe that this was the sort of imagery that would capture the imagination of the country (read decision makers) and show the industry as united. In fact, if anything, it only fueled enormous amount of interest in the two airlines, and the dangerous consequences for the industry, if indeed they came together. The almost overwhelming feeling was that this was bad news for the industry. It could lead to cartelisation of routes and ticket prices — powerful platform that could blow away the smaller players and rob the passenger of the choices available to him. Moreover, there was the mercurial Naresh Goyal on the one side and the enigmatic Vijay Mallya on the other. One a Kane who had come up a scrappy but gusty street-fighter who had made it good, the other an Abel who got things on a platter and had the moolah and the style to make the best shiver. It was like chalk and cheese. Good on paper and for photo ops, but never good in practice! The two dominated the India Aviation 2008 headlines. Their alliance made the headlines, their buggy ride at Hyderabad was the picture that went around the globe.

NEVERTHELESS,

SpiceJet concluded a deal with US billionaire WS Ross and Goldman Sachs & Company for US $ 100 million. The investment gave rise to speculation that LN Mittal may be interested in buying SpiceJet lock, stock and barrel .That was a false alarm.

CRUISING HEIGHTS December 2008

plain that the aircraft on display were fewer than what one would expect even for an inaugural edition. Visitors to the show did have a field day. Among the beautiful birds that landed at Hyderabad was one of Air India’s spanking new A319s. The aircraft — the seventh A319 to be inducted in the Air India fleet — flew in from Hamburg to Begumpet and the show grounds. In addition, there was the Airbus 380, along with small aircraft like IL-114 from Uzbekistan, the 10-feet long and four-feet wide Sport Star Plus from Czech Republic company EvektorAerotechnik and eight and six-seater Hawkers. While Bombardier had brought in the CRJ900 NextGen, Learjet 60 XR, Challenger 605 and Global Express XRS, there were Gulfstream and Beechcraft planes too, along with a whole range of helicopters. And, it was not totally devoid of deals. There was Engine Alliance — a 50:50 joint venture of Pratt & Whitney and General Electric Aviation — strengthening its presence in India. The Hyderabad Air Show came at a time when the aviation sector has been going through difficult times. But it did make its mark by becoming a strategic platform where local and international stakeholders, including airlines, regulators, airport authorities, project developers, investors and aviation

KINGFISHER COMMENCES FLIGHT TO LONDON The King of good times commenced operations between Bengaluru and London with a

brand new A330, food from Chutney Mary, direct TV and a host of other goodies. It is the beginning, said Vijay Mallya. October

AERA BILL PASSED After years of ping pong, the

service providers, convened to discuss regulatory policies and collaboration strategies necessary to build and support a growing aviation industry that would achieve long-term sustainability and excellent financial growth. According to the organisers, the Ministry of Civil Aviation, the Federation of Indian Chambers of Commerce and Industry (FICCI), the Airports Authority of India (AAI), Air India, the Directorate General of Civil Aviation (DGCA) and Pawan Hans Helicopters Ltd., along with Farnborough International Limited of UK — the event was an excellent opportunity for all international civil aviation and airport infrastructure companies, who wished to take advantage of the tremendous opportunities, to do business in the booming Indian aviation market. Perhaps, what was most noticeable was the fact that till the Hyderabad show, the rivalry between Boeing and Airbus hogged the limelight. At Begumpet, however, it was bonhomie between the two giants. There were no orders from any of the air carriers, unlike the last show at Paris which had seen orders of around 700 aircraft, with Kingfisher Airlines ordering 50-odd planes. In November last year, the Dubai Air Show saw 350 planes worth US $69.7 billion being ordered, and at Farnborough this year, US $64 billiong worth of orders were completed.

Airport Economic Regulatory Authority Bill was approved by Parliament. A first step, really, in delinking the Ministry of Civil Aviation from overseeing airports across India. November

IT’S GLOOMY, SAYS IATA IATA announced global international traffic results for September. Passenger traffic declined 2.9 per cent, while cargo traffic dropped 7.7 per

CRUISING HEIGHTS December 2008

cent compared to the same month in 2007. International load factors tumbled by 4.4 percentage points in August, to 74 per cent in September.

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TIMELINE 2008

September

WILBUR ROSS BITES INTO SPICEJET

History was created. The runway has given the IGIA the unique distinction of becoming one of the very few civilian airports in Asia to have three operating runways.

A GREAT START

2008

NEVERTHELESS,

CRUISING HEIGHTS December 2008

KINGFISHER COMMENCES FLIGHT TO LONDON The King of good times commenced operations between Bengaluru and London with a

brand new A330, food from Chutney Mary, direct TV and a host of other goodies. It is the beginning, said Vijay Mallya. October

AERA BILL PASSED After years of ping pong, the

Airport Economic Regulatory Authority Bill was approved by Parliament. A first step, really, in delinking the Ministry of Civil Aviation from overseeing airports across India. November

IT’S GLOOMY, SAYS IATA IATA announced global international traffic results for September. Passenger traffic declined 2.9 per cent, while cargo traffic dropped 7.7 per

CRUISING HEIGHTS December 2008

cent compared to the same month in 2007. International load factors tumbled by 4.4 percentage points in August, to 74 per cent in September.

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et Airways gave marching orders to 800 cabin crew on October 14, and indicated it will show the door to 1,100 more as an economy measure to weather the turbulent times in the country’s aviation scene. Jet Airways Chief Executive Officer Wolfgang Prock Schauer said the airline was releasing only those employees who were on probation or on temporary contract, and it will not have any impact on 11,000 permanent staff. “It is an unfortunate decision, which all of us in the company regret, but it is an attempt to save the company and the jobs of the remaining employees,” Jet Airways Executive Director B Saroj Dutta had told reporters at the airlines headquarters in Mumbai. Even as his press conference ended, a group of people shouting “Shiv Sena Zindabad” entered the third floor of the Jet Airways premises and broke glass panes. A number of sacked employees had gathered in front of the Jet Airways office to stage a dharna. The news completely upstaged the Indian Aviation 2008 show, and Naresh Goyal had quickly to backtrack and describe the sacked employees as his children. He shed copious tears and rescinded the order in double quick time. Even his best friends in Delhi were amazed at the ham handedness of the whole episode, and wondered what had happened to Goyal’s deft strokes. The ripple effect was felt elsewhere. After declaring that it would do whatever it takes to cut flab, Kingfisher Airlines has now said it will not retrench cabin staff. “We have no excess staff, and so there is no question of a retrenchment of any cabin crew,” Kingfisher Chairman Vijay Mallya said. Mallya, after backing Jet’s retrenchment of staff, had earlier said: “Jet had sacked people, we have sacked people and we will do whatever it takes to cut down cost and flab.” Singing a different tune, the Kingfisher Chairman said, “We have gone through a very laborious process of training our cabin crew, who provide the finest standard of service in the Indian skies, and we respect them and we don’t have excess numbers.” Battling a clawing downturn enveloping the aviation industry, Jet Airways had announced laying off 1,900 jobs across all operations, that will result in savings of $1 million a month.

HOMING IN ON INDIA

he mother of big birds, the A380, has been to Indian airports a couple of times in the past few months, and it has always sent all those who have seen it in raptures: first, because of its size and second, its grace in the air. Critics — and there are many in the industry — might say the world is now interested only in smaller planes, but the A380 has proven itself. Singapore Airlines has been operating it from Changi International Airport to Sydney, London and even Tokyo. For those who are interested in dates, the A380 took off for its inaugural flight to Sydney on October 25, 2007. This year, on March 18, 2008, SIA flew into London, while on May 20, 2008, it landed in Tokyo. The plane was seen earlier this year at Delhi and, as late as October, at the Hyderabad Air Show, India Aviation 2008. Before the news of the downturn and the heavy aviation losses came, Vijay Mallya’s Kingfisher was the only Indian carrier which wanted to fly the plane. He wanted the aircraft for long-haul routes and had said: “I don’t think the A380 was built to fly an hour-and-a-half.” Kingfisher had plans to convert its five options for buying A380 into firm orders, but that was well before the downturn. At that time, Vijay Mallya had said: “We are planning to deploy the plane on the India-US route for

CRUISING HEIGHTS December 2008

SHINING STAR AMIDST THE GLOOM

non-stop services. I will be offering US flights 30 per cent cheaper with A380.” In fact, not too long ago, Airbus Industrie had hoped to sell 55 of its A380 planes, including 10 freighter aircraft, in India in 20 years. A number of sources had been quoted to state that Air Deccan, Jet Airways and state-owned Air India and Indian Airlines had evinced interest in the A380. When it does come into Indian fleets, it would certainly create as many waves as it did on its first commercial flight. There were hordes of enthusiastic travellers savouring every moment of the Changi-Sydney flight. For Thomas Lee, for example, “The flight was spectacular, just truly awesome.” Lee had flown in 1970, at the age of 17, on the inaugural flight of the Boeing 747 jumbo jet from New York to London aboard Pan Am. Lee created history when he took the A380 on its maiden flight to Sydney. “I’m thrilled beyond words actually. Just extremely excited. On a scale of 1 to 10, I’d put it at 12.” Indeed, as the Chief Executive of Singapore Airlines, Chew Choon Seng, put it, “This is indeed a new milestone in the history of aviation.” Celebrating the milestone, passengers had a rocking party at 40,000 feet up in the air. And with the bells and whistles that the A 380 has — from the spiral staircase, connecting the upper and lower decks at the rear of the aircraft, to comfortable and personalised cabins — flying will never be the same again. In Hyderabad, for the Air Show, the A380 showed its class. Its capability of landing and taking off from airports of all sizes and on shorter runways than previous generation large aircraft was seen, leading Airbus Chief Operating Officer (Customers) Johny Leahy to comment that it was an ide-

industry in the country is Rs 4,175 crore, and the average annual growth has been estimated to be 17.2 per cent. The past four years have witnessed a spectacular rise in the express business due to high flow of Foreign Direct Investment and MNCs migrating businesses or setting up business in the country. Home-grown aircargo carriers are busy putting the final touches before taking off. There is Capt G R Gopinath with his Deccan Cargo, an integrated air and ground delivery system that will offer a seamless transportation network. The venture will offer logistics solutions for manufacturing industries, which will have a cost impact by eliminating the need for warehousing and transportation infrastructure. Deccan Cargo will start flying from the end of this year or early next year. Next in line is Quikjet. Promoted by AFL Private Limited — a leading logistics company and a pioneer in the express courier sector and Singapore’s Cardinal Aviation — Quikjet would like to be known as a merchant air cargo carrier which is keen to open up capacity to all players in the market. There are others too, like Capt Mukut Pathak and his Delhi-based Aryan Cargo Express (ACE), which is interested in connecting India to the SAARC (South Asian Association for Regional Cooperation) nations. ACE will fly with a combination of A310/ 300-600Fs and MD11Fs. While some may snigger at the thought of new air cargo carriers coming in during these troubled times, it only goes to prove that the India story is alive and kicking.

2008

YOU ARE SACKED, NO YOU ARE NOT!

ong considered a step-sister by a passenger-centric aviation industry, aircargo has come into its own, thanks largely to what the world over has come to be known as the “India story” (see also page 48). Today, despite the slowdown, the country is experiencing a phenomenal growth in aircargo. And, notwithstanding the infrastructure hurdles, there are a number of new cargo carriers interested in setting up shop to take a major bite of the aircargo pie. In the country report presented at the 35th Executive Council Meeting of the Federation of Asia Pacific Air Cargo Associations (FAPAA) sometime earlier this year, the Air Cargo Agents Association of India (ACAAI) pointed out that the “Indian aircargo industry, amidst the present economic scenario, is soaring to great heights and its functional significance has magnified in today’s rapidly evolving era of globalisation…International trade has continued for years, but India’s booming economy has helped the Indian aircargo industry rapidly usher in globalisation, which, in turn, has shifted the world’s focus on the country.” In turn, airplane manufacturers are upbeat. Airbus, in its Global Market Forecast (GMF), predicted that domestic India FTKs (Freight Tonne Kilometres) would increase at 17 per cent per year average for the next 20 years, and that freighter aircraft purchases would outstrip passenger aircraft purchases in the country. The growth has been specially noticeable for the express market in the country. The size of the express

al aircraft for Indian carriers. Leahy went on to say that with its seating capacity of 525 in a standard three-class layout, the A380 was ideal to alleviate traffic congestion at busy airports, while coping with the growth. Civil Aviation Minister Praful Patel endorsed India’s need for such planes, pointing out that this was a “difficult

time for the aviation industry worldwide, but this is India’s decade and more people are flying in India than ever before. I think this is the time for India to expand,” he said at a cer emony near the aircraft at India Aviation 2008.

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HOMING IN ON INDIA

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SHINING STAR AMIDST THE GLOOM

2008

YOU ARE SACKED, NO YOU ARE NOT!

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“The flag on the aircraft tail is killing the industry” Giovanni Bisignani

Giovanni Bisignani is not known to mince his words. Speaking recently at the IATA Global Media Day 2008, he warned that the aviation industry would lose $2.5 billion in 2009. Excerpts from his speech:

ough times continue. Since 2001, airlines achieved a 13 per cent reduction in non-fuel unit costs, a 19 per cent improvement in fuel efficiency, and a 13 per cent decrease in sales and marketing unit costs. We celebrated a 2007 profit, but almost immediately, we were plunged back into crisis as oil rose to $147 in July. Oil is now near $40 per barrel, but the recession is driving industry losses. October traffic was down 1.3 per cent for passenger and 7.9 per cent for cargo. Airline stocks are 60 per cent down on last year and we, IATA, had to suspend 31 airlines from our $360 billion financial systems because they could not pay their bills.

Financial Outlook

The outlook is bleak and the chronic industry crisis continues as we face the toughest revenue environment in 50 years. Alone, airlines cannot overcome the industry's structural sickness 40

Industry losses this year will be $5 billion, followed by another gloomy year with losses of $2.5 billion in 2009. The seeming improvement is due to an extraordinary situation for North American carriers. With very little hedging, North American carriers were hit with the full impact of high fuel and will post a loss of $3.9 billion this year. To cope, they cut capacity early and are now benefiting from the full impact of low spot prices for fuel. As a result, they will post a $300 million profit, but this is still less than one per cent of revenue. All other regions will see red in 2009… Asia Pacific losses will more than double to $1.1 billion, the biggest next year. With 45 per cent of the international cargo market, the drop in freight is hitting hard. Japan is in recession, China is suffering from a major drop in export markets, and India’s carriers, already struggling with high taxes and insufficient infrastructure, can expect a drop in demand from last month’s tragic events. The outlook is bleak and the chronic industry crisis continues as we face the toughest revenue environment in 50 years. Alone, airlines cannot overcome the industry’s structural sickness. CRUISING HEIGHTS December 2008

Let me address some of our biggest issues including: liberalisation, environment, infrastructure costs, simplifying the business, security and safety.

Liberalisation The Chicago Convention delivers relevant global technical standards, but the 60-year-old bilateral system must change. It denies airlines the basic freedoms to access markets and global capital, or to merge or consolidate. Industry losses clearly show that airlines feel the recession like any other business. But we don’t have the commercial tools that other industries take for granted to manage through it. So, consolidation and partnerships have been restricted to “domestic markets.” The announcement of merger talks by British Airways and Qantas could help to break the mould, but ownership restrictions and political hurdles will certainly complicate the process. Travellers demand safety and efficiency. Nobody cares who owns the airline. The flag on the aircraft tail is killing the industry. It’s time to move beyond politics and government agreements to brands and business.

Environment Let’s move on to environment. Even with the drop in the fuel price, our commitment to the IATA four-pillar strategy on climate change is strong. The pillars include: invest in technology, fly planes effectively, build efficient infrastructure, and use positive economic measures. The IATA strategy is endorsed by governments and industry. Our vision is even more ambitious: carbon-neutral growth leading to a carbon-free future. In February, we signed a partnership with Solar Impulse, a project to fly around the world in 2011, day and night, using only the power of the sun. The pioneering spirit of Bertrand Piccard and the Solar Impulse team reminds us that air transport was built by turning dreams into reality. Unfortunately, we are drowning in environmental taxation because

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governments are focused only on punitive economic measures.

Infrastructure Our infrastructure cost campaign intensified as the price of fuel rose. The good news is that this year, IATA saved $2.8 billion in costs with the biggest savings — 1.2 billion — in fuel fees. The bad news is that cost increases are $3.8 billion, with $3 billion of that in taxation. We salute partners who understood the need for efficiency. Let me name a few. Toronto reduced cargo rates by 25 per cent, Nigeria dropped en-route charges by nine per cent, Seoul Incheon cut charges by 10 per cent, Bulgaria delivered a 20 per cent reduction savings in ANSP charges, Brazil reduced fuel taxes by $400 million and Belgium stopped its proposed EUR 132 million departure tax. Along with fighting tax increases, our 2009 priorities are a quick start for AERA, India’s infrastructure regulator; the break-up of BAA and reform of the UK’s phantom regulator; and working with the Chinese authorities to restructure airport charges.

TOUGH TIMES AHEAD: Airlines across the world brace for more losses in 2009

IATA is delivering efficiencies as well, through our ‘Simplifying the Business’ Programme. In June, we achieved 100 per cent e-ticketing, saving $3 billion annually. What is left to do? There are billions more in cost savings to be achieved. Behind the scenes is the IATA e-freight revolution, saving up to $4.9 billion annually by removing paper documentation from freight processes. Already, we are live at 16 locations with 13 documents converted to electronic messages, saving 52 per cent of the paper. By the end of 2010, we will be live with at least 44 international locations, the five biggest domestic markets and 20 documents converted to electronic messages. That means that we will have the capability to eliminate 64 per cent of the paper for 81 per cent of all cargo.

from 0.82 last year. IATA members did even better at 0.47, significantly better than the 0.68 last year. The IATA Operational Safety Audit (IOSA) is leading our efforts. In five years, IOSA has gained tremendous respect. Eight governments currently require IOSA in their national legislation. Others, like the US, recognise IOSA for code-sharing. It is also a requirement for IATA membership from the end of this year. By year-end, we expect over 260 airlines on the registry, including 210 IATA members. IOSA sets tough and transparent standards. IATA’s biggest satisfaction is to bring all our members on board, but for those that do not make the standard, there is no place in our association. Nine airlines that did not make the interim targets have lost their membership. Despite our best efforts, between 10 and 20 airlines will likely not make the registry and will have their membership terminated.

Security

Conclusion

Global standards will also deliver benefits in security. Our focus is on a risk-based approach for both intelligence and passenger screening. Advance Passenger Information (API) is critical to intelligence efforts, but governments have not harmonised their approach or adopted international standards. On screening, governments have created a security-monster by piling measure-uponmeasure. Our priority is to promote Security Management Systems and One-Stop-Security, risk-based with effective global standards.

Air transport is an important industry, driving US$3.5 trillion in economic activity and employing 32 million people. At this challenging moment, IATA plays a relevant role in the industry: $360 billion financial systems, $12 billion in fuel savings since 2004, $3 billion saved every year with e-ticketing, and $2.8 billion in savings from our industry costs campaign. I hope that you will continue to follow us closely as we navigate this crisis to emerge even safer and more secure, with higher levels of efficiency and environmental performance and with the commercial freedoms to achieve a financially sustainable future.

Simplifying the Business

Safety Safety is proof that global standards and government cooperation can deliver good results. The safety record as of December 1 this year is 0.77 accidents per million flights, improved

(The author is Director General and CEO of the International Air Transport Association.) CRUISING HEIGHTS December 2008

Our infrastructure cost campaign intensified as the price of fuel rose. The good news is that this year, IATA saved $2.8 bn in costs. The bad news is that cost increases are $3.8 bn... 41

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INTERVIEW

Photo: H.C. Tiwari

The ever-smiling and youthful Taarek Hinedi, FedEx’s Managing Director-India Operations, believes that the current economic downturn is a blessing in disguise. A company with strong foundations like FedEx will be able to improve its competitive position, he told Tirthankar Ghosh.

CRUISING HEIGHTS December 2008

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“ LOGISTICS MARKET EXPERIENCING

IMPRESSIVE GROWTH ”

Cruising Heights: First, the economic downturn. How has it affected FedEx — if at all? Any fall in the tonnage/packets being ferried? How do you see the next year shaping up for FedEx? Taarek Hinedi: These are challenging times and companies need to adjust their operations all the time. While overall volumes are being impacted we are also seeing industries witnessing growth, which is balancing the volumes. It is a mixed bag. In the case of air express, there is good news as the volumes of high value express cargo are increasing. Hence, even though the economy

is slowing, FedEx is doing highvalue quality business. Looking ahead to 2009, FedEx expects conditions to remain challenging and we anticipate the current economic weakness will continue, but companies with strong foundations always improve their competitive positions in economic downturns and FedEx intends to do just that. Notwithstanding the downturn, what are the key challenges FedEx faces in India/Asia for sustained growth? Strategically, how important are the India cargo operations in your global scheme? Do you have expansion plans for India? At this given point, the economic conditions are the biggest threat. However, for a sustained growth there needs to be a good and effective infrastructure to take the logistics industry ahead. The trade and logistics infrastructure in India has not kept pace with the development of the industry — resulting in a very high cost of logistics as a percentage of GDP. In India, logistics expenditure stands as high as approximately 13 per cent. Another key challenge is the tax structures; currently, goods shipped across inter-state borders undergo a clearance process, drawing octroi and other taxes upon increasing cost and delivery time in domestic distribution. There is a

comprehensive need for a single uniform tax system in India which will reduce the inter-state taxes. While globally, air cargo business is growing at 6 per cent, in India it has grown at 13 per cent and is forecast to grow at 7+ per cent, which highlights the bright landscape of the industry in India. FedEx has had 11 years of direct operations in India and offers the largest number of international flights to and from India, and connects more than 4,348 cities and towns across India, besides covering 90 per cent of the world’s GDP within one to three business days. India being an important market, FedEx is committed to implementing strategies that will improve profits by reducing expenses, enhancing the customer experience, gaining market share and ensuring the long term success of the company in the country. What is your assessment of the international express business in the country? The logistics industry in India is evolving rapidly: the logistics market is expected to reach a value of $125 billion by 2010, increasing from approximately $100 billion in 2007. Given the overall outlook for growth in India, and despite the challenges of the current economic situation,

CRUISING HEIGHTS December 2008

“

In the case of air express there is good news as the volumes of high value express cargo is increasing

“

ndeterred by the economic downturn, the global courier major was looking at doubledigit annual growth in India. Its business in the country has not been impacted much by the worldwide economic slowdown. In fact, during the last three years, the company has more than tripled the frequencies to and from India, while its employee strength has crossed the 3,000 mark. The company’s global business — business outside the US, where it is headquartered — accounts for around 40 per cent of its total annual revenue and India constitutes a major market for the future. Excerpts from the interview:

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INTERVIEW EXPRESS DELIVERY: (Right) Inside one of FedEx’s hubs; and, (extreme right) A FedEx delivery to a customer in Mumbai.

the Indian logistics market is experiencing impressive growth, primarily due to the manufacturing, real estate and retail growth in the country, besides being adequately fuelled by the other economic activities. Contrary to the economic scenario, commercial activities in the country will attract more international and local players in the market.

“

India being a highly complex and fragmented market, there is a need for emphasis on consolidation and collaboration with other players

“

Apart from modernisation of airports, is there any allied infrastructure or facility, such as built-up pallets, trans-shipments, reduced dwell time, bonded warehouse, etc, which you would like to be addressed? Overall, I think there is a strong need for processes to be streamlined and simplified. If packages and people don’t move swiftly,

the purpose is defeated. Five years down the line, do you expect your freighters to touch down at non-metro destinations in India? Geographically, which regions within India interest FedEx the most and why? India is witnessing growth across the country, making all regions equally important. MNCs are looking for investments at lowercost locations with the foresight of leveraging on low rentals, low manpower cost and other operational costs. With increase in trade activities, the role of logistics and supply chain companies also builds, making non-metro markets an important destination for express transportation. India being a highly complex and fragmented market, there is a

Recently, FedEx took the initiative to bring American businesspersons to India. What was the response to the initiative and how much would FedEx be able to gain from the move? The trade mission was aimed at offering small and medium-sized US businesses across sectors (manufacturing, transportation equipment, engineering, business services, consulting, architecture, information technologies, pharmaceutical and consumer goods) an understanding of doing business in India. FedEx, which facilitates global trade in more than 220 countries, took this initiative to help SMEs understand and simplify international trade, particularly for small and medium-size businesses looking to source and sell in the global marketplace. CRUISING HEIGHTS December 2008

need for emphasis on consolidation and collaboration with other players. In India, FedEx acquired PAFEX in 2007; consequently, FedEx now has a widespread reach. Is there any noticeable trend in your business that you would like to comment on? The emergence and growth of high-value goods manufacturers, like pharmaceuticals, engineering, textile, gems and jewellery in India, has created an ideal atmosphere for the express industry. FedEx has been witnessing a rapid growth in the movement of high value goods in a time-sensitive manner, which has helped FedEx gain a highvalue quality business. Customers are also now looking for products that answer their entire distribution needs. Hence, they are looking to outsource the management of their distribution needs and maximise value for themselves, which could mean opting for the best service and the most cost-effective solutions. Also, another significant development is the emergence and extensive use of Internet based commerce.

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GLOBETROTTING

AT A GLANCE

Mao’s plane on sale MAO ZEDONG’S personal aeroplane has been put up for sale by the owner of a shopping centre in southern China to make more space for parking. Wang Zhilei, General Manager of property developer Ridong Group in Zhuhai, a city in southern Guangdong province, confirmed the company had put the 46-metre long plane up for sale. The jet is one of the three that the Chinese Air Force bought from Pakistan in 1969. One was given to Mao, the other to Lin Biao, Mao’s heir apparent, and the third

Skull in luggage

was reserved for the military. But Lin’s plane crashed when he fled from China in 1971 after a failed coup to oust Mao. The two remaining planes stayed in service until 1986, at which time Mao’s personal plane was put on display in an airport in Beijing’s suburbs until it was bought by the Ridong Group.

THE DISCOVERY of a human skull in a piece of checked luggage sent Tucson International Airport security scurrying in shock. It all happened when screeners that were scanning the luggage, which was going on an American Airlines, found the skull. TSA immediately contacted supervisors and law enforcement. The female passenger who owned the luggage had already

Freebies unlimited

An Onion lick

he world’s greatest newspaper of fakes, The Onion, has reported that American Airlines will begin charging non-customers for such things as luggage in their closet, $15 per bag; travelling on other airlines, $25; and a surcharge for people who stay home for the holidays, $30. The Onion, in a made-up quote from Gerard Arpey, Chairman, President and CEO of American said: “Tough times unfortunately mean tough measures. It’s never an easy decision to ask our loyal customers, as well as thousands of people chosen at random out of a telephone book, to pay a little extra, but that’s just the reality of today’s economic climate. We hope all Americans will understand this when receiving one of our new bills

in the mail.” Other American fees include $250 for watching television, $40 for being named Greg. The Onion also says other airlines were adopting similar fees. Southwest Airlines has introduced a $125 round-trip fee for walking down to the corner for groceries, and United has a $99 fee for spending the weekend reading indoors. As the Dallas News said: “Let us be clear — The Onion made this up. On the other hand, it certainly seems like something the nation’s airlines would have considered — except that Southwest fee. Southwest would have ads saying it wasn’t charging people to walk to the grocery store.” Looks like airlines in America and George Bush are in the same league, as far as popularity contests go. CRUISING HEIGHTS December 2008

IN A MOTHER of all incentives, Emirates’ recently released its internal staff publication, Emirates Dutyfree News, offering crew the opportunity to win a Hummer H3. Staff incentives are a key feature of the publication, now in its 25th edition. The ‘Up4Grabs’ section offers plenty of prizes for each month from December to April, sponsored by Clarins, La Prairie, Emirates Hotels & Resorts, Cartier and Clarins, etc. But that’s not all; there is plenty to learn as well. Under the heading ‘Protect your Commission’, the publication has pointed out that around US $136,128 was lost in October alone, simply due to credit card sales errors. A series of simple tips is offered to avoid such mistakes. Another nice touch sees the 25 top-selling crew between May and September individually named. Here are some financial statistics as well: “Revenue increased by over 24 per cent over the same period in the previous year, with the largest share coming from the sale of jewellery (28 per cent) and fragrances (28 per cent). The duty free sales commission earned by crew during this period was US $1.8 million. And what sells the most? Eduardo Verde Pendant & Earring Set, both in quantity and revenue. Lagos continued to be the route with the highest on-board duty free sales, with Moscow, Casablanca, Seoul, Accra, Athens and São Paulo also doing well.

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Tom Hanks 2

IN THE 2004 MOVIE, The Terminal, Tom Hanks played Viktor Navorski, a character who was stuck in a New York airport due to visa problems. But reality is stranger than fiction and in this real-life story, a man named Hiroshi Nohara has made Mexico’s Benito Juarez International Airport his home. His only excuse for doing so is, “I wanted to breathe the air of Mexico at the airport.” Since then, Nohara has

become somewhat of a celebrity in Mexico, posing for photographs and signing autographs. He flew in from Tokyo in September and since then, has found no good reason to leave. With a valid visa, Mexican officials can do nothing to force him to leave — that is until that visa expires in March.

Serena doesn’t survive !

Flying Car On eBay

CAROLE FEUERMAN’S ARTWORK, Survival of Serena, is a haunting, vivid sculpture of a woman clinging for dear life to an inner tube. But Survival of Serena, which travelled to Venice and Beijing, did not survive the trip to Miami. The sculpture, estimated at $300,000, was destroyed and crushed into pieces on its way from Venice to Miami International Airport, where it arrived recently. Its fragments now lie in a broken crate at a warehouse in West Palm Beach and will not receive its promised prominent display at Art Miami. “It’s almost fate,’’ Feuerman, noting the irony in her piece’s name, told the Miami Herald. The artwork’s imagery is meant to represent the survival of Venice, a city that has been drowning. Made of oil-painted fiberglass and resin, the 4-foot by 12-foot piece was seen by hundreds of thousands of people in art shows in Italy and China. Feuerman contacted the carrier — Continental Airlines — with hopes to receive some sort of explanation, and compensation. In response, they redirected her to their Claims Department and she was informed that she could receive up to $9,100 total — about $20 per kilogramme, well short of the $300,000 list price.

BUILT IN 1956, N103D is Aerocar Model One, Serial Number Two, sporting a 160 hp Lycoming engine with 1103 hours total time, and just 22 hours since major overhaul. Its last annual inspection was performed on July 30, 1976, although the listing states “an informal inspection of the plane by an FAA licensed A&P aircraft mechanic was performed in August of 2006.” Its last flight was in 1977, and it has been in storage ever since. Photos posted on eBay show N103D to be in pristine condition, complete with dual instrumentation — for both car and plane — and a vintage Narco Superhomer. The unusual design of the roadable Aerocar was the invention of Moulton B Taylor, who began its development in 1946. Its first flight was in 1949, sparking public interest but not enough orders to go into production. The Aerocar is the only vehicle ever certified for both flight and operation on the road. The wings and tail unit are detachable and self-trailering. Taylor claimed the conversion from car to plane could be done in five minutes by just one person. Only one of six Aerocars built remains in airworthy condition; most of the others have become museum pieces, including the prototype which currently resides at EAA’s AirVenture Museum in Oshkosh.

Controller oversleeps TWO PLANES were forced to circle over a Greek island awaiting permission to land after an air traffic controller overslept and was late for work. The incident, at the airport in the island of Lesbos, delayed a domestic flight from Athens and a charter from Slovakia. The air traffic controller told his bosses that his mobile phone alarm had broken down, causing his tardiness. While the planes circled over the island, the airport director called one of the controller’s colleagues. After waiting 30 minutes, the two aircraft landed safely. The European Commission told Greece in September to improve its airport safety to conform with EU rules, or face action before the European Court of Justice.

Illustrations by Rajeev Kumar

boarded her flight, but was pulled off by security personnel for questioning. According to TSA, the woman says the skull was brought back by her boyfriend after his military deployment in Okinawa, Japan. The woman says she was taking the skull to Philadelphia for Halloween. Tucson Police, who were also called in, questioned the woman and searched her home. She told them the skull belonged to her boyfriend and that it had been sitting in the garden for about four years.

6:44 PM

A new zeppelin arrives MORE THAN SEVEN decades after the giant Hindenburg burst into flames during an American (New Jersey) landing, the zeppelin is returning to the US. Costing a grand $495 per person, the zeppelin will relaunch itself with an hourlong ride above the San Francisco Bay Area. US aviation company, Airship Ventures’ newly built zeppelin, a canvas-covered airship with a gondola that holds up to 12 passengers, is 15 feet longer than a Boeing 747. Unlike the Hindenburg, which was filled with hydrogen, the modern version is kept aloft by non-flammable helium. Typical cruising altitude is 1,000 feet.

CRUISING HEIGHTS December 2008

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AIRCARGO

AIRCARGO FLIES ON

wings of Gulf carriers Downturn blues have hit the US, Japan and Europe. But the India growth story continues, regardless. Cashing in on the opportunities provided by the open skies regime, Gulf carriers, along with a few others, are busy ramping up operations, as Tirthankar Ghosh found out.

ircargo in and out of country has been going through ups and downs. Ever since the economic downturn became apparent, a number of carriers have either suspended services or reduced frequency. While Cargolux from Luxembourg, for example, has discontinued its flights to Chennai, Taiwan’s Eva Air no longer has its freighter services from Mumbai. On the other hand, Emirates SkyCargo has ramped up its services from India, while the Hong Kong-based Cathay Pacific Cargo and Germany’s Lufthansa have witnessed a rise in volumes. There are enough reasons for such ups and downs. Aircargo is a fair indication of the trends in world trade. So, whenever there is a slowdown in manufacturing, the result can be seen in dipping cargo volumes. This is the case with the United States: cargo from India has fallen drastically, with the hardest hit being garment exporters. Other commodities that have suffered are machinery spares and express cargo. Naturally, carriers have had to change their plans and rationalise routes as well as frequencies. Amidst the general feeling of ‘encircling gloom’, India and China continue to be bright sparks. While the European or Asian carriers do not seem to be too enthused by the India story, almost all the carriers from the Gulf region have seen growths — in aircargo — as if the economic downturn is not even there. Of the seven carriers from the Middle East — Emirates, Qatar Airways, Saudi Arabian Airlines, Gulf Air, Etihad Airways, EgyptAir and Israel’s El Al — at least three are bullish about the India story. Incidentally, these seven carriers are among the world’s top 50 in terms of international scheduled freight tonnes carried. To begin with, the path to cargo growth has been opened by the govern-

NO DOWNTURN HERE: (Top) An Emirates freighter being loaded

CRUISING HEIGHTS December 2008

ment’s open sky policy. In fact, Emirates, Etihad, Qatar Airways and others have taken advantage of the traffic rights. Result: the government has allowed Dubai-based Emirates to raise the number of its weekly flights from India to a whopping 163 flights by February 2009, leading Orhan Abbas, Emirates Vice President (India and Nepal), to state: “We are bullish on India. It is a power house for us. We are strengthening our operations in India, clearly

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depicting the country’s importance to Emirates’ global operations.” Witness what the hike in the number of flights translates to, so far as cargo is concerned. Emirates will be operating 31 more flights a week to India by February 2009. Belly cargo capacity will jump from 8,448 tonnes being carried in July 2008, to 10,588 tonnes in February 2009. Along with the number of flights, the number of destinations too, has gone up. From Delhi, for example, Emirates will have 25 flights a week from the 18 it had earlier. Cargo capacity from Delhi will increase to 389 tonnes per week. So, manufacturers and exporters of garments, pharmaceuticals, vaccines, chemicals, meat, fruits and vegetables will be able to quickly reach customers in the Middle East, Africa, Europe and America. From Mumbai, Emirates has added seven additional flights per week to its 28 flights per week schedule, effective from February 1, 2009. Correspondingly, the cargo capacity will increase to 641 tonnes per week. The carrier has introduced more flights from Bengaluru, Chennai and Kochi and hopes to see more cargo tonnage too. These new flights come at a time when volumes have grown, albeit at a slower rate than in earlier years. As far as outbound cargo to Australia, Europe, Africa and the Middle East is concerned, the growth has been around four per cent. However, for the US, the situation has been different: there has been a volume drop of between 20 and 25 per cent. These volumes, according to Ram Menen, Emirates Senior Vice-President Cargo, have grown in the Middle East. He was candid enough to comment that though the “global airfreight industry suffers from a volume crunch”, carriers like Emirates operating from the Middle East were fortunate because of the “high level of economic activity in the region”. Menen also pointed out that “the Indian subcontinent is one of Emirates’ most important markets, accounting for a significant percentage of our revenue.” He emphasised that growth had been slow, primarily due to slackness in the Indian market. While he did not mention why freighter services had been discontinued, Menen added that Emirates had added significant wide-body passenger aircraft capacity — from 98 frequencies a week to nine Indian airports in October 2007, to 149 frequencies per week in November 2008 serving 10 airports — thereby pushing up “our available belly capacity tonnages. We now offer more than 2,000 tonnes of aircargo capacity between India and our Dubai hub a week,” he said. While Emirates has the lion’s share of

EUROPEAN SHOW: (Top) Lufthansa freighter gets ready to take on cargo. Unlike other carriers, the airline has not yet taken its freighters out of India flights; and, (left) SAS carrier at an airport.

“We have observed an increase in the number of airlines operating between India and Europe…however, the situation changed from summer this year” — Pers Vranso Director, Cargo Asia and Pacific, SAS CRUISING HEIGHTS December 2008

outbound cargo, Abu Dhabi-based Etihad Airways is not too far behind. The carrier added Chennai and Kozhikode recently to the four destinations it served earlier: Kochi, Tiruvananthapuram and metropolitan hubs at Mumbai and New Delhi. According to James Hogan, Etihad Airways’ Chief Executive, “India is an enormously important market for Etihad and one that we are very keen to expand further. The appetite for air travel between Abu Dhabi and India shows no sign of relenting and we hope to grow our Indian flying programme even further in the future.” The new routes operated by Airbus A320 aircraft allow enormous belly-hold capacity. The first nine months of 2008 saw a record performance from Etihad Crystal Cargo. During the period, the airline’s cargo division carried more than 198,000 global shipments, an increase of 23 per cent compared to the first nine months of 2007. Incidentally, the carrier has MD11 and A300-600 freighters. While the MD11 continues to operate three times a week to Hahn and twice weekly to Mumbai and Shanghai, the A300-600 freighters fly Chennai six times a week, to Bengaluru and Kolkata twice a week, and to Delhi once a week. Among the other Gulf carriers is Qatar Airways. In a move that took many by surprise, the carrier has launched or will be starting flights to New York from nine Indian cities, offering one-stop services at Doha. Qatar believes that its A300-600 freighters are most suitable to service the Indian market. Says Vikram Singh, Vice President Cargo Sales, Qatar Airways,

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AIRCARGO “There is a strong demand in aircargo from India and Middle East.” He has his reasons: in 2007, the growth was 20 per cent. There will be a growth in exports from the country, say many industry watchers; hence the need for more cargo carriers. Qatar Airways touches nine destinations presently and operates five A300-600 freighter flights per week to Chennai, with two of them returning through Bengaluru. The airline has plans to expand its network in India and recently started flights from Doha to Kozhikode. Incidentally, Qatar also sends its MD11 freighter to Shanghai through Kolkata. The growth experienced by the Middle Eastern airlines has not touched the European and Asian carriers. Once well-known for their wide-body freighter flights to India, Air France and KLM, for example, have stopped their once-a-week flights to Bengaluru, Chennai and Mumbai and twice-a-week to Delhi. On the other hand, the Air France-KLM combine has increased passenger flights, thereby increasing belly cargo capacity. There is, however, one European airline that is bullish about its belly capacity: SAS Scandinavian Airlines. It recently restarted its flights from Delhi to Copenhagen after a long hiatus, primarily because there was a demand, as Lars Sandahl Sorensen, CEO, SAS International, said. His optimism notwithstanding, a cautious Pers Vranso, Director Cargo Asia & Pacific, SAS, told Cruising Heights that until now, there was great expansion of airfreight volumes and constantly growing

“India is an enormously important market for Etihad and one that we are very keen to expand further” — James Hogan Chief Executive, Etihad Airways

Freight traffic down but not out Asia Pacific international growth and freight capacity growth: November ’07 to October ’08

Centre for Asia Pacific Aviation 8.0 6.0 4.0 2.0 0.0 2.0 4.0 6.0 8.0 10.0

Available Freight Tonne Kilom etres

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12.0

Freight Tonne Kilom etres

Asian air freight traffic has declined sharply in the peak period for shippers. The Association of Asia Pacific Airlines (AAPA) reported an 11.0 per cent decline in cargo traffic (FTKs) in October ’08 year-on-year. AAPA international Aircargo traffic registered a 2.9 per cent decline in FTK terms for the first ten months of the year. Source: Centre for Asia Pacific Aviation & AAPA

CRUISING HEIGHTS December 2008

demand for cargo capacity offered out from India. “We have observed an increase in the number of airlines operating between India and Europe, and these offer cargo capacity on passenger and all cargo airplanes.” However, he said, “the situation changed from summer this year. We observed a sharp downturn in the aircargo growth. We can only hope this downturn will not stay forever and we will again experience a positive development of airfreight volumes carried to and from Asia, and the Indian subcontinent, shortly.” Even so, Vranso maintained that India was a strategic and very important market for SAS Cargo, and the carrier was even planning for freighter operations in the future. Nothing, however, would happen immediately since the market had changed. “For the moment,” said Vranso, “we are very happy to start our passenger flights by A340 and that will position us in this important and growing market”. SAS ferries around 16 tonnes of cargo per flight, and since the day the DelhiCopenhagen flights have started, cargo

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GOING STRONG: (extreme left) Etihad’s carriers do not want to ingnore the important Indian market; and, (left) Qatar’s passenger planes are cashing in on the strong demand in aircargo from India and Middle East.

uplift has maintained a steady course. With three return flights per week, it means SAS offers approximately 100 tonnes cargo capacity each week to customers in Scandinavia and India. One of the major European cargo carriers, German carrier Lufthansa, has not yet discontinued its freighters services although volumes are down. Yet, Lufthansa’s regional cargo head in India, Carsten Hernig is optimistic because India “contributes to a significant share of our global business and in consequence, we consider India as one of our key markets.” The carrier flies to seven destinations in the country. Of these, five see Lufthansa freighters. A cautious Hernig said that the carrier would do whatever was needed to strengthen Lufthansa’s market position. Expansion, he pointed out, was not limited to network or tonnage growth but also meant “increased customer satisfaction”. Hernig believes that India has a steady import market brought about by its domestic growth. That is perhaps why the downturn has not upset him. He believes that

Qatar Airways believes that its A300-600 freighters are most suitable for the Indian market. In 2007, for example, the growth in aircargo that the carrier witnessed was 20 per cent CRUISING HEIGHTS December 2008

“any kind of panic would be absolutely contra-productive.” Lufthansa was using both, freighters as well as passenger aircraft, to take care of the cargo growth. Boosting Lufthansa’s efforts is the home-grown Paramount Airways. With its fleet of seven planes, its CEO M Thiagarajan wants to take a bite out of the cargo pie. The seven Embraers have a capacity of ferrying 100 tonnes of cargo a day. With his blueprint for domestic cargo operations ready, the young CEO has started talks with big foreign carriers like Lufthansa and Singapore Airlines. His aim: to provide the carriers with feeder services for last-mile connectivity across the country. He has apportioned Rs 40 crore for the aircargo business. Among the others who have been watching the rise of belly cargo capacity is British Airways World Cargo. The carrier has 747-400 freighters and makes 10 stops a week (five to Delhi, three to Chennai and two to Mumbai). Incidentally, BAWC utilises its Fifth Freedom rights between China and India. That essentially means that around 30 per cent of the freighters can be filled up on its outbound flights from China with India-bound cargo. BAWC continues with its freighters but one of the major Asian players in the business, Cathay Pacific is having a difficult time around the world. It has already decided to park two of its Boeing 747400BCF freighters at Victorville, California, for a year with effect from January 2009, and even requested a deferment on the construction of the Cathay Pacific Cargo Terminal. But the India story continues to fascinate the carrier. For it, “India plays a significant role in cargo operations for Cathay Pacific Airways, accelerated by the strong Indian economy over the past few years. India has emerged as one of the strong contenders in the global arena for aircargo, placing itself on a focal spot on the world cargo map”, according to Ashish Kapoor, Cathay Pacific’s Cargo Manager, India. India, he said, is one of the very few countries which has demand in both import as well as export. As for capacity, Cathay Pacific was the biggest international cargo carrier in terms of capacity in India. The last few months have been crucial for the aircargo sector. With markets looking down in the US, export volumes have been low. However, the Indian market has weathered the storm and the aircargo sector can breathe easy, thanks to the Gulf carriers.

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CARGO JOTTING Emirates brings business rewards DHL partners with UNICEF IN ITS EFFORT to better the living conditions of the people it serves, express and logistics major DHL recently announced a partnership with UNICEF and the Government of India. DHL will support efforts to reduce malnutrition and infant mortality in one of the districts of Maharashtra in the country. The grant from DHL of $650,000 will fund a three-year UNICEF project which will empower communities to improve child survival rates in 1,000 villages in the district. The programme is an extension of DHL’s global partnership with UNICEF. Globally, DHL’s parent company Deutsche Post World Net (DPWN) supports UNICEF projects in

EMIRATES AIRLINE’S Business Rewards, its innovative online-based reward programme tailor-made for Small and Medium Enterprises (SMEs), is now available in 55 countries across Europe, Asia Pacific, the Middle East and Africa, and the Americas. An online-based programme, Business Rewards offers SMEs the opportunity to benefit from employee flights. Each time a registered employee books their Emirates flight through Business Rewards, the business earns Business Rewards Miles, while the individual traveller continues to earn their Miles from Skywards, Emirates’ frequent flyer programme. The company can then redeem accumulated Business Rewards Miles against future flights. Keith Longstaff, Emirates’ Divisional Senior Vice President, Commercial Operations Worldwide, said: “Since its launch, more than 2,000 small and medium sized businesses have signed on and benefitted from Emirates’ Business Rewards… small and medium-sized businesses represent a large and growing segment of the market, particularly here in the Gulf. Despite the challenging economic environment, or perhaps because of it, Business Rewards continues to grow from strength to strength because of the broad range of benefits the programme brings to SMEs. Moving ahead, we intend to introduce promotions and enhance the current functions, so that we can meet the fast-changing market requirements and our customers’ travel needs.”

Aeroflot Cargo selects new generation systems

Amadou Diallo, CEO, South Asia Pacific, DHL Global Forwarding, hands over a model of a DHL truck, symbolising the grant to UNICEF’s India representative Karin Hulshof.

three regions around the world to reduce child mortality. In India, funding by DHL will help accelerate UNICEF’s work with the government to achieve the Millennium Development Goals to reduce the district’s under-five mortality rate to 41 per 1000 live births by 2015. According to Amadou Diallo, CEO, South Asia Pacific, DHL Global Forwarding, DHL’s partnership with UNICEF aims to reduce child mortality by using the potential of its 500,000 employees worldwide and the provision of its logistical core competencies in developing countries. The UNICEF representative in India, Karin Hulshof, welcomed the support provided by DHL and said that community involvement was the key to sustainable development. “If we are serious about improving child survival and reducing maternal mortality, we must give youth and their families the tools that will enable them to survive and lead healthy lives,” she said, and added that the grant from DHL would allow UNICEF and its partners to address the most pressing needs of children in this district.

AEROFLOT CARGO Airlines recently announced a five-year deal with CHAMP Cargosystems that will see the airline migrate to the new generation Cargospot system. The new technology will deliver complete end-to-end control over the sale and management of cargo by integrating the processes of all the airline’s cargo-related business activities. This comes at a time when Aeroflot Cargo is undergoing a fleet renewal programme, planning to increase its fleet to six MD-11Fs in 2009 and maximising belly cargo service. The system migration will be managed by CHAMP to provide a seamless transition between the current and new applications, involving the extraction and transfer of data with minimal impact on the airline’s operation. According to Alexey Sumchenko, Commercial Director of Aeroflot Cargo Airlines, “Cargospot will enable us to efficiently manage our full network of multiple destinations, routes and connections. We expect that the implementation of Cargospot, and the efficiencies it will bring, will deliver a five per cent increase in our load factor within the first year of operation.”

FreightScan comes to India CARGO SERVICES company Concorde recently signed a strategic partnership with FreightScan, LLC, a leader in the development and deployment of innovative technology solutions for the freight and logistics industry. FreightScan India’s team of experienced sales, technical and management personnel will handle all FreightScan FS100 automated cargo scanning sales and installation activities throughout the South Asian Association for Regional Cooperation (SAARC) region. FreightScan’s FS100 is a cutting edge dimensional scanner developed FreightScan’s FS100 in action. for transport and logistics industry. The FS100 are scans and measures cargo in seconds with accuracy to 1.0 inch. This ground-breaking system scans all shipments from loose packages to fully loaded skids. It also incorporates dimensional data with waybill information, comparing gross weight to dimensional weight for billing.

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DOMESTIC AIRLINES Jet connects Bengaluru with NY, Toronto MARKING a new milestone in its journey, Jet has connected Bengaluru with New York (Newark and JFK) and Toronto, via its European hub in Brussels, with four weekly flights — on Fridays, Saturdays, Sundays and Mondays, respectively. However, from December 15, 2008 to January 15, 2009, the airline has increased its frequency on the sector to cope with the holiday season passenger traffic. Till January 15, Jet will operate daily flights between Bengaluru and Brussels. It will revert to flying four times a week on the same sector effective January 16, 2009 onwards. The launch of the inaugural service on the BengaluruBrussels sector was marked by the ceremonial lighting of the lamp by BIAL CEO Albert Brunner and Jet Chief Commercial Officer Sudheer Raghavan. Flight 9W 132 will depart the new Bengaluru International Airport at 0135 hrs, arriving at Brussels International Airport at 0755 hrs. On the return leg, Jet flight 9W 131 will depart Brussels at 1010 hrs and arrive at Bengaluru at 0005 hrs the following morning. Offers mileage bonanza to its Privileged members: There’s double bonanza for Jet’s JetPrivilege members travelling on the Mumbai/Delhi-London sectors (return). They now have the opportunity to earn Double JPMiles (mileage points) till January 15, 2009.

The double JPMiles will be eligible for flights booked in First Class, Premiere and Economy, enabling Jet Privilege members to earn over 25,000 JPMiles on a return First Class ticket booked for the London route. Jet’s special fares for holiday season: Jet introduced special attractive fares to several destinations across Europe, via its European hub in Brussels and London, over the winter holiday season. The special fares, in association with Jet’s interline partner carriers, were valid for sale till November 22, 2008 and travel by December 31, 2008. Jet Airways operates daily services to Brussels and London aboard its wide-body Airbus 330-200 and Boeing 777-300ER aircraft. The airline flies daily to Brussels from four gateway points in India — Delhi, Mumbai, Chennai and Bengaluru. These fares may also be availed of by Jet’s Delhi/Mumbai passengers travelling to London Heathrow.

Frost & Sullivan Award for SpiceJet

India gets its first airport spa

SPICEJET has notched another success with Frost & Sullivan’s prestigious “2008 Emerging Company of the Year Award for Indian Commercial Aviation”. As a low-cost carrier that commenced operations in 2005, SpiceJet built a reputation for low fares with high customer value offering, achieving a revenue growth of 121 per cent in 2007 and capturing a sizeable market share of 10.5 per cent in 2008. The award was handed over formally by Frost and Sullivan to SpiceJet Limited on November 20, 2008 in London at a special ceremony commemorating the feat. Bhulo Kansagra, Commenting on the award, Bhulo Kansagra, Director, SpiceJet Limited, said, “We are delighted to receive the “2008 Indian Commercial Aviation Emerging Company of the Year” Award. It is reflective of the consumers’ faith in our services, network and our people. It is a recognition for the 2,000 employees who have worked together to be efficient, costconscious and focused on being on the top. We are proud of our achievement and we are sure that this is the beginning of a significant journey ahead.” SpiceJet’s Children’s Day gift: As a special promotion to commemorate Children’s Day, SpiceJet allowed children under 12 years to fly free on all bookings done on November 13 and 14, 2008. The children, who had to be accompanied by an adult, were charged only the statutory PSF of Rs. 225. Talking about the scheme, Samyukth Sridharan, Chief Commercial Officer, SpiceJet, said this was “a special gift to all children on the occasion of Children’s Day. It now becomes easy for parents to take their kids for a holiday and take much needed vacations together. Happy Children’s Day.” Special goody bags were also distributed to children who flew on November 14, 2008.

WAITING to catch a flight need no longer be a pain for passengers at Hyderabad’s Rajiv Gandhi International Airport. On the contrary, it can now be one of the most relaxing experiences for these passengers. In line with international airports, passengers can now experience a unique and revitalising therapy, complete with a foot massage, before boarding the flight at the airport. The airport has introduced spa facilities for passengers to relax their mind, body and soul with a wide range of first-rate treatments in an elegant setting. Travellers flying from the airport can now experience India’s first Fish Reflexology Centre, along with foot massage or an instant massage or quick clean-ups, while waiting to catch a flight. With soft lightings, calming resonance of a river stream, the entire area filled with aroma and feet relaxed in a warm pool, witness a school of Turkish fish named Garra RELAXING EXPERIENCE: An international Rufa (Dr. Fish) gen- style Spa has made Hyderabad’s Rajiv Gandhi tly nibbling on your International Airport a place to chill out. feet. These adorable little fish consume only the dead skin areas, revealing your smoother and healthier skin — the perfect way to exfoliate and pamper your feet.

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SNIPPETS GoAir launches ‘Buy 5 Get 1 Free’ offer

WITH THE ONSET of the festive season, GoAir has announced a special offer — ‘Buy 5 Get 1 Free’. The offer will enable customers to get a free ticket against the base fare on booking five tickets. ‘Buy 5 Get 1 Free’ is an offer valid only on ‘Go Save’ tickets. All customers registered on the GoAir website are eligible to avail this offer. The offer, valid from September 18, 2008, will be applicable till March 31, 2009 and payments can be made via any bank credit card or by paying cash. To avail this offer, air travellers can purchase tickets from any of the three sources: GoAir website, GoAir airport ticketing counters and GoAir call centre.

Club One Air’s unique offer for business class CLUB ONE Air has introduced a Statesman Card Programme to provide a unique flying experience to the business class. The membership for Statesman Card Programme involves pre-purchase of fixed number of flying hours as per buyer's annual requirement. The card holders will have various benefits such as assured availability of aircraft, discounted rates and Club One Air special airport services. According to Club One Air Managing Director Manav Singh, “Statesmen Card will enable the client to become member of Club One Air. The benefits will be to provide a member privilege services that will not only give priority, but also be more economical than walk-in client.”

Comfort in fog at IGI Airport IGI Airport has undertaken several proactive measures for the convenience and comfort of passengers in the event of possible disruption of flights due to fog and low visibility this winter. IGI Airport, in consultation with airlines, ATC, CISF,

AI rewards its ‘loyal’ passengers

AIR INDIA has enhanced the benefits for frequent fliers to make it a vital tool for retaining loyalty of passengers. Enhanced benefits to existing members include increased accrual of mileage points, usage of mileage points for upgrading, lower threshold for redemption/renewal, besides free enrolment for new members. As per the enhanced frequent flier programme, accrual of mileage points for Executive and Economy Class has been revised

LOYALTY REWARDED : Air India’s frequent fliers are being rewarded with extra benefits.

PROACTIVE MEASURES: IGI Airport has several new provisions in place for the comfort of passengers during fog this winter.

BCAS, Met Department, Delhi Police and the Civil Aviation Ministry, has drawn up a strategy to provide additional facilities to passengers during the fog season. The temporary kerbside extension of Terminal 1B has been replaced with a permanent structure and provided with heating. Additional seating has also been provided, along with food and beverage kiosks. An extensive flight information display system is being provided in the extension area to regularly update the passengers. An additional seating area is also being provided for those seeing off their friends and family. A brand new wing in the Security Hold Area of Terminal 1B has been recently commissioned. The new seating area has 150 seats, which are sufficient to cater to the load of one complete flight. In addition, an extra bus gate is being commissioned to facilitate direct access from the extension area to the aircraft. on international sectors of AI and IC designated flights. Also, members can now redeem mileage points for upgrades to the next higher class on select AI and IC designated flights. The minimum threshold for redemption/renewal has been reduced to 10,000 mileage points (inclusive of add-on mileage points and bonus points) from 20,000 mileage points. Launches direct flights for Haj pilgrims from Aurangabad: Air India has launched special direct flights from Aurangabad to Jeddah for Haj pilgrims. The inaugural flight was flagged off recently in the presence of prominent leaders from Maharashtra. This was the first of 12 flights that Air India will operate to facilitate convenient travel of 2,200 Haj pilgrims from Aurangabad and surrounding areas of Maharashtra. The inaugural A310 flight had 200 Hajis on board. With this, Aurangabad has become the third city in Maharashtra and the 17th city in India — after Kozhikode, Guwahati, Indore, Jaipur, Kolkata, Nagpur, Patna, Srinagar, Varanasi, Ahmedabad, Bangaluru, Chennai, Delhi, Lucknow, Hyderabad and Mumbai — from where Haj flights are being operated. AI tickets get cheaper: Air India tickets have got cheaper, with Air India deciding to withdraw transaction fee for tickets sold through its booking offices, its website and its Call Centres. The transaction fee ranges from Rs 350 for domestic economy class ticket to Rs.10, 000 for first class ticket for Europe/USA.

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INTERNATIONAL AIRLINES Malaysia Airlines scales its Delhi operations

Air Astana goes live on cargo operations

BEGINNING October 29, 2008, Malaysia Airline has enhanced frequency on Delhi-Kuala Lumpur route with a new additional flight every Wednesday. The carrier now offers 10 weekly flights to Kuala Lumpur from Delhi. The additional flight, MH 185, operates between New Delhi and Kuala Lumpur at 1220 hrs and arrive in Malaysia at 2010 hrs local time. The return flight from Kuala Lumpur MH 184 operates every Wednesday at 0805 hrs (Malaysian local time) arriving in New Delhi at 1115 hrs. The airline will operate Airbus 330, offering a total 290-seat capacity with 42 business and 248 economy class seats. This is the carrier’s third morning flight from Delhi. With this new flight addition, Malaysia Airlines’ overall seat capacity from Delhi gateway has been enhanced to 2,900 seats per week. The airline now operates 32 weekly flights from its five gateways, which include New Delhi, Mumbai, Chennai, Bangaluru and Hyderabad. Appoints Azahar Bin Hamid as its new regional manager: An industry veteran and aviation expert, Azahar Bin Hamid will be spearheading Malaysia Airlines, South Asia region operations. With his extensive service experience of 26 years, he will be manning the markets of India, Pakistan, Sri Lanka, Bangladesh, Nepal and Maldives. He will be operating out of the New Delhi headquarters of the airline. Hamid’s professional career and association with Malaysia Airlines started in Azahar Bin Hamid 1982 as a management trainee. From here on, his career graph scaled up, enabling him to handle various departments, from Senior Executive Business Planning, to Manager Capacity Planning and later on, as AGM in Budget and Planning in the Finance Division in 2004. His key professional expertise vests as a strategic business planner, Budgeting and Management Accounting personnel. In his over two-decade association with the airline, Hamid has successfully carried out numerous innovative projects in Network and Fleet planning, Budgeting and aircraft utilisation projects.

Air Astana has successfully gone live with IBS’ iCargoNet, the ‘Software as a Service’ (SaaS) based offering of IBS’ next generation cargo management system, iCargo. Hosted out of IBS’ state-of-the-art data centre in Thiruvananthapuram, iCargoNet has provided Air Astana with automation of all its cargo business processes globally. iCargoNet will now help the airline ensure high quality and reliable cargo movement by providing an integrated, enterprise-wide automation solution for managing the cargo business functions, as well as the cargo revenue accounting functions. iCargoNet, in effect, enables the airline to use all the functionalities of a proven integrated next generation cargo management system at a much lower total cost of ownership.

Lockheed delivers 1st of four C130J airlifters LOCKHEED MARTIN delivered the first of four C-130J to the Royal Norwegian Air Force at a ceremony recently with U.S. and Norwegian officials at the company’s Marietta, Ga, facility. Other nations that are operating or have ordered the C-130J include Australia, Canada, Denmark, India, Italy, Qatar, the United Kingdom and the United States. The Norwegian Super Hercules are the longer fuselage, or “stretched,” variant of the C-130J, similar to those being delivered to the U.S. Air Force. Future C-130J deliveries to Norway will include one in 2009 and two in 2010. C-130 users discuss steps to enhance aircraft readiness: Representatives of 35 nations that fly variants of C-130 aircraft met recently in Atlanta for the 20th annual Hercules Operators Conference (HOC) hosted by Lockheed Martin. The four-day conference provided opportunities for the global C-130 Hercules community to address sustainment capabilities and concepts with the Original Equipment Manufacturer (OEM), its sub-contractors and suppliers. The purpose was to further enhance the readiness of C-130s operated worldwide.

AIR ASTANA GOES LIVE: iCargoNet has provided automation of all the airline’s cargo business processes.

Air Arabia to buy 10 additional Airbus A320s AIR ARABIA has confirmed that it has signed a contract with Airbus for 10 additional A320 aircraft. The contract follows an earlier agreement for 34 Airbus A320 aircraft signed at the end of 2007. Following Air Arabia’s expansion plans, and the new hub in Morocco expected to operate next year, expanding the fleet size is certainly a need. “The Airbus A320 aircraft has an outstanding success record throughout the world and is ideal for our needs and those of our customers,” Air Arabia Chairman Sheikh Abdullah Bin Mohammed Al Thani said. Air Arabia currently operates 16 (leased and owned) A320s and serves a network of 44 destinations across the Middle East, North Africa, the Indian subcontinent, Eastern Europe and Central Asia. Launched in October 2003 and based in Sharjah, Air Arabia has served more than 10 million passengers over the past five years. The A320 family, which includes the A318, A319, A320 and A321, is recognised as the benchmark single-aisle aircraft category. Each aircraft features fly by wire controls and all share a unique cockpit and operational commonality across the range.

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British Airways launches direct Hyderabad-London flights British Airways has launched a fiveweekly service from Hyderabad, which adds a sixth route from India to British Airways’ new home in London Heathrow, Terminal 5, for the winter 2008 schedule. The new route provides a direct flight from the Rajiv Gandhi International Airport in Hyderabad to London’s Heathrow Airport, and convenient connections to 22 destinations in North America. British Airways is the only airline to offer direct flights between Hyderabad and the UK capital, saving time for both business and leisure travellers from the city. The newest addition to the airline’s Indian network will operate directly from Terminal 5, British Airways’ exclusive new home in Heathrow, London. Built at as cost of £4.3 billion, Terminal 5, UK’s largest freestanding building, has welcomed more than 12 million

customers and handled roughly 80,000 flights since it opened on March 27, 2008.

Axel Hilgers is new Lufthansa country head

Security boost for JFK Airport

LUFTHANSA has announced the appointment of Axel Hilgers as Director South Asia. Hilgers takes over from Werner Heesen, who has completed over 37 years with Lufthansa, of which 13 were spent in growing Lufthansa to its current position as the leading European airline in India. In his new assignment, Hilgers will be responsible for overseeing Lufthansa’s passenger sales and marketing activities in South Asia, covering Nepal, Bhutan, Bangladesh, Sri Lanka and Maldives. Axel Hilgers joined Lufthansa in 1986 at the check-in desk and has been associated Axel Hilgers with Lufthansa for about 22 years. He has grown within the organisation across various assignments and prior to moving to India, Hilgers was General Manager, Lufthansa, France.

SITA, the specialist provider of IT solutions to the air transport industry, recently announced that its Bag Manager system is now being used by 44 international and domestic airlines at Terminal 4, John F. Kennedy International Airport, providing tracking and reconciliation for over five million checked bags each year. Baggage reconciliation is an automated system providing a positive match between passengers and their bags, which ensures that both travel together on the same aircraft. This reduces the number of mishandled bags and increases the level of security.

Eurocopter delivers 1st EC135 chopper to Spain Lutz Bertling, President and CEO of Eurocopter, and Juan Carlos Martinez Saiz, CEO of Eurocopter in Spain, has handed over the first EC135 manufactured in Albacete to the Ministry of Defence for the operations of the UME (Spanish Army Response Unit). The EC135 assembly line in Albacete is one of Eurocopter’s two final assembly lines for this light twin-engine helicopter, the other being in Donauworth (Germany). The EC135 is a multi-purpose helicopter, renowned worldwide for emergency medical services and law enforcement missions. More than 700 units have been delivered to 160 clients in 40 countries. Over 40 EC135s are currently operated in Spain. In 2009, Eurocopter aims to deliver over a dozen EC135s from its Spanish facility. The production of these aircraft, in addition to the manufacturing of the fuselage rear sections of the Tiger and the fuselage forward sections of the NH90, consolidates the role of Albacete as Eurocopter’s third pillar.

Emirates foundation launches floating hospital THE EMIRATES Friendship Hospital Ship, a charity venture run by registered NGO, Friendship, and funded by the Emirates Airline Foundation, has been officially inaugurated in Dhaka, Bangladesh. The well-appointed mobile hospital ship is equipped with chambers for doctors, primary health care facilities, two operating theatres, two eight-bed wards, paediatric and gynaecology units, a dental room, a pathological laboratory, an X-ray room and an ophthalmic room. A dispensary on board will distribute free medicine and the registration room can accommodate up to 24 staff and eight visiting doctors. The deck of the ship can house 30 to 40 patients in an emergency.

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TRAVEL & TOURISM New VP Operations for Sarovar Chennai ABHI THAKUR has been promoted as Vice President Operations at Radha Regent Chennai — a Sarovar Portico Hotel. Abhi had earlier been Regional Director & General Manager with Sarovar Hotels since 2000.

2,000 properties. The customers need to pay a token amount of 10 per cent while making the online booking. Since its inception, Yatra.com has always kept up with its innovative fibre by providing one-of-its-kind services to its customers. Yatra.com was the first online travel company to offer services such as cash-on-delivery of domestic and international flight tickets, compensation to the customers on flight delay, flight cancellation or baggage loss.

Amadeus to the aid of ‘impaired’ travellers

Abhi Thakur

Prior to Chennai, he was Rooms Division and Marketing head at Parkroyal New Delhi. Before that he spent 12 years with the Taj Group of Hotels in New Delhi and in the Middle East, heading the sales & marketing departments. An English Honours graduate from Hindu College, Delhi University, he also has a communications diploma from UCLA, USA.

DK guides now for Indian monuments DORLING KINDERSLEY (INDIA), in collaboration with Penguin, recently released the first six titles in a new series of monument guides. DK is world-renowned for producing its Eyewitness Travel Guides, which are packed with authentic information and vibrant pictures. The launch coincided with DK’s tenth anniversary in India. The first six guides focus on the Qutab Minar, Red Fort, Taj Mahal, Fatehpur Sikri, Humayun’s Tomb and Amber Fort. The guides are currently available in English, and there are plans to follow with German, French, and Japanese versions. Other guides in the pipeline will highlight select important historical and archaeological sites: Sanchi Stupa, Khajuraho, Konark, Ajanta and Ellora Caves, Hampi and Mahabalipuram.

AMADEUS has launched a new version of its self-booking tool for corporations, which includes a feature enabling users with mobility impairments to request special assistance at airports at the time of booking their trip. Visually impaired travellers or those with reduced mobility will be able to easily request assistance, such as a wheelchair or a guide, in advance of travel, for every necessary stage of their flight. Additionally, the latest release of Amadeus e-Travel Management version 12.0 offers business travellers more choice of hotels and air fares, aimed at ultimately making booking more efficient and improving the travel experience for business travellers. For travel managers and corporations, the self-booking tool enables cost-effectiveness and staff productivity.

Sakura opens its doors in Gurgaon SAKURA, the restaurant at The Metropolitan Hotel, New Delhi and pioneer in introducing authentic Japanese cuisine to India, has opened its doors as a standalone restaurant in Gurgaon. Located on the first floor of the Time Tower building on the main Mehrauli Gurgaon Road, it will offer the enlightened diners of Gurgaon another choice, as well as add to their repertoire of preferences and meet the needs of guests who have

Book hotel now, pay later, with Yatra.com YATRA.COM recently launched a new service of booking hotels online without charging upfront payment from the customers. Currently, customers have to make 100 per cent advance payment to book any hotel in India. The new service will increase comfort and convenience for travellers, especially those looking forward to booking budget hotels, as they will now pay only after reviewing the hotel themselves while checking in. Currently, the service is being offered in 300 budget hotels across India, and by March 2009, it will be extended to over

GRAND OPENING: Sakura’s standalone restaurant at Gurgaon has brought a new dining experience to the city.

to drive a long way to reach Sakura at The Metropolitan Hotel. Conceptualised along the same lines as the flagship Sakura restaurant at The Metropolitan Hotel, this standalone restaurant, with its chic yet simple décor, mirrors a contemporary dining experience where the focus remains on the food and everything else adds to the overall experience.

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Sea-walking for non-divers

THERE IS HOPE yet for non-divers who are afraid to take the plunge, yet can’t resist the call of the sea. Try the unique undersea experience of sea-walking at the Tunku Abdul Rahman Park at Kota Kinabalu in Sabah, Malaysia. The activity, an innovative concept in Malaysia, is an appealing option for those who are not ready to go diving. With sea-walking, non-divers and non-swimmers can experience the marine world safely without fear. Anyone from age seven can do it without any danger or risk. Those who have tried it say that it is better than snorkeling and not as scary as deepsea diving. The equipment for sea-walking is fairly basic, consisting of a 35kg bubble UNIQUE UNDERSEA EXPERIENCE: Malaysia helmet with a hose has introduced sea-walking for non-divers. attached to the top, through which oxygen is pumped. Worn over the head, the helmet rests on the shoulders. Due to the science of pressure, it keeps water out, so the sea-walkers’ head and hair remain dry and they can breathe normally. Although it is heavy, sea-walkers only don the helmet once they are about to enter the water, after which it feels weightless. Sea-walkers are also required to wear special shoes (which are provided) to protect their soles.

Meletiou is Sun’s new Group Sommelier SUN INTERNATIONAL has appointed Georgio Meletiou as Group Sommelier. Before taking over this coveted position, Meletiou was sommelier at The Palace of the Lost City at Sun City. A core achievement whilst at Sun City was being head of the tasting panel of Sun International’s first group wide Banqueting/ Restaurant/ Connoisseurs wine list, and winning the top wine accolade from Diners Club Wine Awards in 2007 — a first for Sun International. Meletiou studied his craft at the Cape Wine Academy, completing courses in cultivars and South Georgio Meletiou African wines, in-depth wine tasting, wine regions, viticulture, oenology, pairing of food and wine and learning about different global wine regions. He also spent time on an Estate in Tuscany under an Italian master.

Cairo’s Jazz Factory celebration CAIRO RECENTLY hosted, for the first time, a unique celebration of European and Arabic music. The Jazz Factory was an initiative by the European Commission’s Delegation to Egypt, together with the embassies of Spain, Norway, The Netherlands, Germany, Slovakia, Austria, Hungary, The Czech Republic, Italy, The United Kingdom and France, in cooperation with the Egyptian Tourist Authority and The Egyptian Ministry of Culture. The Jazz Factory included highly accomplished music groups and musicians from 11 European countries, as well as groups from Egypt, Syria, Jordan, Lebanon, Tunisia, Morocco and

Palestine. The concerts were spread over diverse venues in Cairo, including Manial Palace, Manesterly Palace, Amir Taz Palace, El Genaina Theatre, The Arab Music Institute, and Savvy Cultural Wheel.

‘Business travel to get costlier’ AMERICAN EXPRESS Business Travel announced its Business Travel Forecast and Trends report for Japan, Asia Pacific and Australia from its annual China Business Travel Forum in Shanghai. According to the forecast, airfares are predicted to increase throughout the course of 2009 and there will be no repeat of the excesses of 2008, and buyers may even see short-term fare reductions from airlines struggling to balance the impacts of the economic slowdown and rising operational costs. For hotels, double-digit rate increases are predicted for most Asia Pacific countries, with the exception of Australia and Japan, as demand continues to outstrip supply and the regional economy holds fast against the global storm

David V Jones is new Amadeus IT Group CEO AMADEUS RECENTLY announced that David V Jones has been appointed to take over as President & CEO of Amadeus IT Group from January 1, 2009. David Jones has headed Amadeus global commercial operations since 1992 and has a deep knowledge and experience of the travel industry and Amadeus’ business. He has worked side by side with José Antonio, overseeing the evolution of the company from the newest and smallest GDS competitor to its current position as the world’s leading supplier of travel distribution David V Jones and IT solutions for the global travel industry. José Antonio Tazón will become Chairman of the Amadeus Board of Directors from January 2009. Furthermore, Luis Maroto, Chief Financial Officer for Amadeus IT Group, has been appointed to the additional role of Deputy CEO from January 1, 2009.

Travel Turkey Izmir 2008 comes to a grand close TRAVEL TURKEY Izmir Tourism Fair and Conference, which grows every year in terms of the number of participants and visitors, concluded in grand style. Travel Turkey Izmir was held from November 27 to 30, 2008 at the Izmir International Fair Centre with the support of Ministry of Culture and Tourism and several chambers and organisations. The exhibition and conference was organised with the aim of achieving an effective communication platform between the purchasers, who come from diverse countries throughout the world and mainly from Eurasia and the Turkish Tourism Industry.

Free holiday for kids this X’mas in Singapore! TO BRING cheer to holidaymakers amid the economic slowdown, Singapore has come out with a surprise package this Christmas for kids! Starting November 15, 2008 to January 2, 2009, kids below the age of 12 years will get free accommodation along with complimentary breakfast at select hotels in Singapore! Fee admissions and complimentary rides, as well as plenty of surprises at more than 30 participating attractions and restaurants are other exciting elements of the package. The “kids free” offer is valid on every two full paying adults. With this offer the entire family can explore attractions like the Cable Car Ride, The Singapore Zoo, Night Safari, the new Singapore Flyer etc.

CRUISING HEIGHTS December 2008

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Do I need my

eard of Mark Webber? Formula One aficionados will know. He is a driver for Red Bull, popular around the circuit, and writes a hugely popular blog on the motor sport. Some weeks back, he had plenty to say about flying and Formula One. Here is a slice of his life from the pit lane: There are 18 races (19 next year), tests between most of them, PR appearances — and it can grind you down. You probably think Formula One drivers fly everywhere in private jets, but that is not quite true. Although I use Red Bull’s plane to get to most of the European races, I still fly commercially about 60 per cent of the time. Most of the F1 drivers do pretty much the same, although some do like to go on private jets more — and some even have their own planes. But I have always struggled to get my head around the idea of sitting on a plane on my own. I think that when I am 60, I would look back at the £5,000 an hour and think:

Unlike Michael Schumacher, Formula One driver Mark Webber does not find merit in using a private jet, but feels budget airlines are the best way to get around.

“That was a little bit over the top.” In Turkey this year, some of the other drivers tried to get me to go in with them on a private flight back to Nice after the race. We had testing on Tuesday, and Turkey is always a horrible place to get out of on commercial flights because the main airport is on the other side of the Bosphorus, and the traffic on the bridges back over to the European side of the city is a joke. By the time you have done that, it is more efficient to stay the night and fly out on Monday but, when you have to be back in the car again on Tuesday, that isn’t the best kind of preparation. So they had this direct flight back to Nice, but originally, it was going to cost something like £13,000 or £14,000 a head. They got the numbers down a bit in the end, but even so... It’s a nice luxury, but the best thing you can do in that situation is tell the team you are not driving until the second day of the test! I do, though, see why Michael Schumacher used to use a private jet. For a start,

he was on massive money, but it is more than that. If you have his profile, it is a problem because you cannot travel around normally. He was always playing that role. Imagine, everywhere he goes — check-in, baggage, security — everyone was asking for something. That is a bit of a bugbear. It wears you down. Avoiding that is what you pay for with a private plane. It is less demanding of your time. There are no drivers at the moment who have the kind of profile Michael had — not even Lewis Hamilton, Fernando Alonso and Kimi Raikkonen. We do something like 100 flights a year and sometimes, budget airlines are the best way to get to certain locations. The whole experience can be a bit of a pain but there are things you can do to smooth it out a bit. Because we travel so much in F1, and have such a full schedule, with pretty random hours, we have to be hyper-efficient with our travelling. Or else, opt for private jets, like Schumacher and Trump.

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