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BANGALORE AIR SHOW RED CARPET FOR CORPORATE FLIERS

February 2007

Rs 60

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EDITOR-IN-CHIEF’S NOTE

Maybe, roses were inappropriate

O

NE did not expect Praful Patel to send roses, as a gesture of goodwill and camaraderie, to the embattled union chiefs on Valentine’s Day. That’s all in the private sector domain. Arun Sarin’s sending flowers to the Ruias as Vodafone buys peace with Essar is good PR stuff just as much as it is a gesture of goodwill.

And when billions of bucks are involved, roses do look good. But in the airline business that isn't the rule. While one buyout (Jet buying Sahara) is with the arbitrators in London, another piece of consolidation—the merger of Air India and Indian (Airlines)—is going through its own turbulence.

It’s anything but roses!

Maybe roses were inappropriate, but certainly Praful could have been a wee bit nicer when he met with union leaders from Air India and Indian at Rajiv Gandhi Bhawan last month. This is not to suggest that being nice to them is akin to giving up on the plans of a merger. But they are the ones with the greatest stake. They represent the employees of the two organisations, there are doubts in their minds, they want a few questions answered honestly and with a certain amount of transparency and when everything else failed, they lobbied with others in the Group of Ministers (GoM) to stymie the steamrolling of the merger. The result was that Suresh Pachauri had plenty to ask at the last meeting as did Santosh Mohan Dev, and, inevitably, the whole exercise resulted in nought.

The GoM was postponed.

It was then that Praful decided he must tackle the spin by batting on the front foot and invited the unions for a chat at Rajiv Gandhi Bhawan. Those who were present are subdued in their comments, though the unions make no bones in expressing their disappointment at the whole exercise. For starters, it was less of a dialogue and more of a monologue. Praful Patel did the talking and the invitees did the listening. The occasional question sent the Mantriji’s irritability quotient soaring and he brushed most of the queries aside, stating these were really minor in nature, beyond the scope of

CRUISING HEIGHTS February 2007

that meeting and actually day-to-day issues to be dealt with by the respective CMDs separately.

And, pray, what have the CMDs been told to do? Issue a communication to the employees at large reassuring them of their jobs and generally singing paens of the process in motion. Sure, maybe merger is the best way out for the two embattled airlines as they compete with rivals at homes and global giants, but when no one knows which way the process is moving, then there is confusion, fear and anxiety. The Accenture presentation to Mantriji and the top brass at Rajiv Gandhi Bhawan has got out in bits and pieces, but no knows the full details.

One reason for the nondisclosure is the fear and anxiety on the other side of the fence as well.

Mantriji wonders how the employees will react, what sort of spin will be put on the presentation and the consequences thereof. Fortunately, for him, he is in the pilot’s seat and can dictate the course of events. And his diktat had been a desire to be as opaque as possible.

In normal times, such a brusque treatment of employees would have seen an immediate reaction by the employees. But these are abnormal times.

The growth is not double digit; it’s an incredible 30 percent-plus. Praful is seen as a doer who wants to clean up the system for the people at large. He says he wants to unshackle the sector. The long history of losses and the slow erosion of their premier position to Johnny-come-lately private sector operators has only made the position of Air India and Indian that much more difficult. Maybe merger is the answer. Maybe it is not. Either way, it requires an honest debate, if not in the larger public domain, then in the confined space between Rajiv Gandhi Bhawan and the workforce of the two operators.

No, Mr Patel. They are not asking for roses.

There is no valuation involved. They have been here for years and perhaps will be around long after you have moved. Surely they deserve a glimpse of your charm and famed communication skills.

Don’t give them roses, at least give them the hope that you are on their side!

1

Off the cuff

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EU laws against aviation pollution Those of us who are worried about pollution—both noise and air— should take heart from the recent European Union (EU) directive introducing a carbon dioxide emissions limit for aircraft operators. The limit would come into effect from 2011 and be based on the average aviation emissions from 2004 to 2006. The current international emissions trading scheme, which was enacted to meet the demands of the Kyoto Protocol to cut air pollution, has not been extended to international aviation so far.

The proposal includes not only domestic flights within Europe but all international flights landing in and departing from the EU and would enforce emissions restrictions on foreign-based carriers which serve major routes via London, Frankfurt and Paris. In an accompanying impact study, the European Commission predicted a rise in ticket prices of E4.60 (US $6) to an average of E39.60 (US $52) if the restrictions became enforced.

The EU has also suggested other solutions to reduce carbon emissions, including a freeze on all new airport construction and the introduction of a national quota for landing slots. Giovanni Bisignani, Chief Executive of the International Air Transport Association (IATA), said that less carbon emissions would better be achieved by reorganising routes and avoiding delays and called for a generalised system of air traffic control for the whole of Europe.

The debate also affects airport operator BAA’s plans for building a third runway at London Heathrow in the UK by 2015. If BAA cannot meet the required standards for noise reduction and lower concentrations of nitrogen dioxide in the airport environment, the new runway will be moved to other London airport, Gatwick.

We wonder what our administrators would do about noise pollution in or near the metro airports? That is something to think about.

COVER: Courtesy Air India

contents

75 YEARS OF MAHARAJA

p24

It has been a see-saw 75 years for the Maharaja from being one of the world's best-known airlines to having being the first Asian airline to have an all-jet fleet. Air India has seen tough times over the last quarter of a century, but as it renews its fleet and tightens its belt, there is a sense of excitement about the future.

AIR CARGO

p32

As air transport costs go down, a perceptible shift is taking place in the kind of cargo that is being exported. The country is moving ahead to tap the potential air cargo export boom.

CRUISING HEIGHTS February 2007

NEWS DIGEST

p17

The new ground handling policy has been announced and it has caused similar repercussions that the policy announced by the previous NDA government had done.

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

CRUISING HEIGHTS K. SRINIVASAN Editor-in-Chief

TIRTHANKAR GHOSH Managing Editor

R. KRISHNAN Consulting Editor

SHIVANGI SHARMA Editorial Coordinator

PERSPECTIVE

p10 INTERVIEW

The world-famous Hampi ruins can now boast of an airport, which was inaugurated recently by civil aviation minister Praful Patel. Lending a hand is the Jindal steel factory at Bellary, which has chipped in to provide its airstrip at Bellary.

p14

There is need for separate and exclusive terminals for corporate jets and Greg Evans’ Universal Weather & Aviation has chalked out plans to boost its business in India with separate terminals at Delhi and Mumbai for corporate bigwigs flying in from abroad.

GLOBE TROTTING p22

SPOTLIGHT

p36

For five days, Bangalore’s Yelahanka air base was alive with the sweet sounds of aircraft roars, signifying the good health of Indian aviation. The occasion was Aero India 2007 and the who’s who of the world’s aircraft manufacturers were there to signal the great take-off the country is ready for.

The Airports Council International has predicted that the number of air travellers will double by 2025, rising to more than nine billion a year. The body has also predicted that airfreight will triple over the same period.

Also an unimaginable story of a scorpion stinging an air passenger twice.

BACK PAGE

p48

The country’s most recognisable figure in the aviation sector, civil aviation minister Praful Patel, was recently acknowledged as India’s No 1 aviation icon by tourism and related trade bodies.

CRUISING HEIGHTS February 2007

RUCHI SINHA PRADEEP JHA Layout Artists

BHART BHARDWAJ Art Director

H.C. TIWARI

Consulting Photographer

RAJIV SINGH

Gen. Manager (Admn.)

RENU MITTAL Executive Director

Editorial & Marketing office: Newsline Publications Pvt. Ltd. C-15, Sector-6 Noida-201301 Telfax.: +91-120-4257701-03 All information in CRUISING HEIGHTS is derived from sources we consider reliable.

It is passed on to our readers without any responsibility on our part.

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

Published by K. Srinivasan 4C Pocket-IV, Mayur Vihar Phase 1, Delhi 110091 and printed by K. Srinivasan at Nutech Photolithographers, C-74, Okhla Industrial Area, phase-I, New Delhi 110 020 Vol 1 No 9

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Flying moves

PERISCOPE

“In some ways it is easier to defend lesser number of fortresses.”

“

GoAir Managing Director JEH WADIA on reducing the fleet size during the off-season.

“It will be extremely hard, if not impossible, for airlines to secure new arrival and departure slots at Indian airports in the coming years.”

Finnair Deputy CEO HENRIK ARLE on the airline’s plans to increase the frequency of its flights to India from three per week to twelve.

By hook or by crook

LETTERS TO EDITOR

YOUR cover story (More Muscle to Backend Operations, January 2006) could not have been more timely.

Being a frequent flyer, I have been putting up with the apathy of the airlines.

Not that things have improved dramatically, but, yes, change is in the air.

The behind-the-scene look that the writer offers is laudable. I did not know that so much effort is being put in by these call centres to give out information in time.

Ashwini Kulkarni, on email

I FULLY well agree with the writer (A Cargo Village in India for the World, January 2006) that while the composite cargo and passenger hub at Nagpur will take quite a while to start operations, till then the civil aviation ministry can start planning cargo villages in Delhi or other metro cities. I am in the business of exporting flowers and, considering the perishable nature of my goods, a cargo village is more than welcome. But I am a bit sceptical that even though the infrastructure is in place, will babudom still prevail? Will we ever become Dubai?

Raman Kumar, Bangalore I REALLY like the items you compile in the Globetrotting section, as it projects the aviation industry from all possible angles — humorous, informative, thought provoking and, at times, even shocking. Is it possible for you to devote more pages to the column?

Rashmi Singhal, New Delhi

“We are using pamphlets, posters and billboards to lure railway passengers to airlines. We don't know how effective this marketing strategy will be, but there is a conscious attempt to attract upper class rail passengers.”

IndiGo President & CEO BRUCE ASHBY on stepping up efforts to woo rail passengers.

Foggy woes “The passenger handling mechanism this year has been extremely poor.”

CAPA CEO KAPIL KAUL on fog-related delays and cancellations.

Spruce up “There is a way that tax can be aimed at aviation. You should penalise old aircraft, you should penalise business class, you should penalise connecting travellers.”

Ryanair Chief Executive MICHAEL O' LEARY urging Britain to adopt a fresh approach to taxing air travel, which would target fuel-guzzling old planes and business class travellers.

THE new president of the FHRAI, Rajesh Mishra, has his work cut out (Hospitality sector seeks Infrastructure status, December 2006). If India has to make a mark in tourism, the time has come to take some bold steps, as he pointed out.

Roshini Dadlani, Kolkata All correspondence may be addressed to Editor, Cruising Heights,C-15, Sector-6, Noida-201301 OR mail to newslinepublications@rediffmail.com

4

No place to fly

CRUISING HEIGHTS February 2007

Why...

“If congestion is mainly in these two places [Delhi and Mumbai], why are airlines levying the charge on all sectors? This is just a way of boosting their revenue. Traffic congestion in Delhi has improved now and Mumbai is using both runways simultaneously.”

Aviation minister PRAFUL PATEL lashing out at airlines levying congestion charge on all sectors.

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OFF THE RECORD

Verma’s through MEANWHILE AI’s Executive Director (commercial) V.K. Verma can now rightly claim his position as AI’s Director (commercial), with the marathon battle to have his appointment cleared finally seeing its end. The Prime Minister has cleared the file and the notification is just a matter of weeks, if not days.

With his elevation, the entire status of seniority on the AI board could now undergo a transformation, with Verma now sitting right at the head of the table next to V. Thulasidas, followed by Punhani and Amod Sharma. But those who talk about an imminent exit for the AI CMD may be well off the mark. The AI top boss is the head of the Federation of Indian Aviation Companies (FICA), he heads the CII committee on aviation and was recently elected to be the President of the Aeronautical Society of India. It looks unlikely that in the circumstances he would like to move out of this job. But there are whispers in Delhi that the 1972 batch Tripura cadre officer could be the country’s next Defence or Home Secretary. But these are only whispers as yet.

Gujarat fables W hat happens when you put Gujarat Chief Minister Narendra Modi and his archrival and Union Minister for Textiles, Shankar Singh Vaghela, in the same room? Well, sparks will obviously fly and there will be an ‘electric undercurrent’ in the atmosphere. No surprise, then, that it was indeed electric when the duo arrived for the foundation stone laying ceremony of the new international terminal building at the Ahmedabad airport. Modi is a past master in the sarcasm business. He can tweak your ears and make you weep with comments that are silken smooth, but cut in Mach 3 fashion. But it took another Gujarati from Napean Sea Road, Praful Patel, to add some wit to the proceedings and pull in a few laughs. If this were a boxing bout, then one would have to grant PP the match — not a knockout, but most certainly on points.

Modi hit the opening strokes when he dug into Vaghela and Minister of State for Petroleum and Natural Gas, Dinshaw Patel, by stating that they had said “a lot”, but he would not retort because of the solemnity of the occasion. Now one didn’t know if it was the comments at the function that drew Modi’s ire or was it an episode in the continuing BJP versus Vaghela saga.

This actually looks more plausible,

considering that messers Vaghela and Dinshaw Patel had spoken only about the poor connectivity to the city and the harassment of passengers at the airport.

Praful Patel was next in the line of fire: Modi wanted to know why free land was being allotted for the setting up of airports when it was a commercial activity, and quickly added that he would still make sure they were not disappointed. And finally he spoke of an incentive for the contractors if they completed the job in 18 months.

While Vaghela could only fret and fume and had no way to react to Modi's remarks, Praful Patel had all the time in the world to have his say, as he was the last speaker. Referring to Modi's remark about free land, he pointed out that the centre had nothing to do with financing of civil aviation activities through Budget. And so, free lands cut down the cost of airport development and help him promote civil aviation.

The piece de resistance was reserved for the end: talking about the

Bzzz.zzz.zzzz THERE are many who believe SpiceJet is losing its cold, mean competitive streak that had seen it make a steady mark for itself in the cutthroat low-cost aviation business. Or else how else would it have allowed a key player like Sanjay Kumar to move over to rival IndiGo. Insiders say, it is one sure sign that things are in a churn and the airline will be in the news this year. Would that also mean Namaste Ajay? Many say that Sanjay’s saying ‘namaste’ had much to do with Ajay's reported desire to exit.

THE Nashik versus Ban-

galore debate seems to have been settled almost unani-

6

mously in favour of Bangalore by the Airbus management on its proposed MRO in the country. Praful Patel had wanted the engineering venture to be located at the HAL complex in Nashik, but those in the know state that Bengaluru (to use the new name for Bangalore) won because HAL preferred that site and two of Airbus’ biggest customers are based in the city and the swanking new airport is the icing on the cake.

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First impressions?

incentive for contractors, Patel said that the work would be completed on time since he wanted to cut the ribbon of all projects he had laid the foundation stone for. “I am sure to cut the ribbon of this project next year with my cabinet colleagues. And I am sure the UPA government will survive till then. But I am not sure about you since elections are scheduled in Gujarat this year,” he said, to peals of all-round laughter.

Finally, a word for Airport Authori-

ty of India chairman, K. Ramalingam, and his whole team. They have been keeping pace with the tearing pace of the minister and trying to have at least two foundation stone laying ceremonies each month. Now, if only they would be left in one piece to deliver.

Sometimes the situation between the two wings of Rajiv Gandhi Bhawan, which houses the Civil Aviation Ministry and AAI, looks like a battle between Vaghela and Modi.

SO WHAT are the first impressions of Ashok Chawla, the new Civil Aviation Secretary, who has come in place of Ajay Prasad? That he is soft spoken, comes prepared to meetings, is to the point and extremely gentle with his persuasion. So far, this 1973 Gujarat cadre officer has been busy going through presentations from different wings of the Civil Aviation Ministry. But these presentations are being held in the conference room at Rajiv Gandhi Bhawan, rather than in the respective offices of the departments. So Indian (Airlines) made its presentation, as has DGCA and Airports Authority of India. The presentations have gone off well and those who have been at the meetings say that this veteran civil servant is sharp and well briefed when he comes to meetings. At the Indian meeting, for example, he wanted to know about the losses and finally buttonholed retiring director Bala on the extent of the losses, this financial year. There was some sharp questioning at the DGCA meeting as well and, all in all, the general feeling is that Chawla is a smart cookie who is also a soft cookie and prefers a low profile if you please.

VIJAY MALLYA has been off the radar for sometime now. No surprise, considering he was busy acquiring a brewery in Scotland and had sundry other issues to decide upon. But the big party he is planning is onboard the Kingfisher — on the Airbus business jet that he was recently presented

by Airbus for being one of its bigticket customers. Technically, Veejay paid for it, but those in the know state that the discounts matched up to it. The big party in the offing is the one in the West Indies to see the men in blue play and cavort on the azure sands of the Caribbean.

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Tata’s move into SpiceJet

Woman power at its best

WHEN the Tatas move into a company, the general presumption is that they will slowly take over the business. It is the same story as far as speculation on SpiceJet is concerned.

Their picking up equity has lead to wild speculation that it is the beginning of the re-launch of the aviation ambitions of the house of Tatas. Would that be true?

Is that going to happen? Those in the know believe that the Tatas will slowly move into the successful low cost carrier and amongst those most likely to exit will be Ajay Singh and later Bulu Kansagra. Praful Patel, according to insiders, is delighted at the development and has informally told fellow Mumbaikar Ratan that he would welcome the Tatas entering the business. Watch this space for an update.

TRULY, it was a celebration of the Indian woman. Yes, we are speaking about the recently-concluded 15-daylong 21st Surajkund Crafts Mela near Delhi. Congress President Sonia Gandhi inaugurated the show and even participated in a tribal dance. Along with her was the Haryana Tourism Minister Kiran Chowdhury. Andhra Pradesh, which was the theme state of this year’s Mela, was ably represented

by Tourism Minister Dr Geetha Reddy and her secretary, Chitra Ramachandran. Wait, the list of women did not end there.

There was Haryana's Tourism Secretary Keshri Anand and Tourism Managing Director Satyawati Ahlawat.

As for Sonia Gandhi, she did not disappoint the Mela organisers. In addition to the inauguration of the Mela, she made it a point to put her arms around the shoulders of Kiran Chowdhury and a young tribal woman dancer to take a few steps to the beat of tribal drums.

Playing cricket MEANWHILE Indian that has been buoyed by the record numbers that it has carried in the recent past to reclaim its number two spot decided to celebrate in a variety of ways. But the most relaxed was a cricket match where the CMD Vishwapati Trivedi swung his bat a few times. Now, no one knows who won the match but the atmosphere was relaxed and everyone soaked in the spirit of the moment. The airline also launched its calendar from Jatin Das’ paintings with a function attended by Praful Patel in Mumbai. And the farwell party for Ajay Prasad, attended by Civil Aviation Minister Praful Patel, was a relaxed evening. Mantriji as usual had plenty to say and ended by saying that CMD Vishwapati Trivedi had plenty to thank the outgoing Civil Avation secretary. May we also add that the airline's Director (finance) S Balakrishnan is superannuating this monthend. And the new incumbent, the airline’s Regional Director (south) S Chandrashekar, seems all set to take over. His file has been approved and if reports are to be believed waiting for clearance in the Minister's office.

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PERSPECTIVE

The licensing of the Jindal airport at Bellary has seen private airstrips all across the country vying to get themselves into the connectivity mode. Don't be surprised if more airports are given the green signal this year.

F

inally, it was the lure of the worldfamous Hampi ruins and a visit to the Jindal steel factory at Bellary in the company of pal and fellow YPO (Young Presidents’ Organisation) Sajjan Jindal that convinced Praful Patel it was time to use the Jindal’s Vijaynagar airstrip at Bellary to good use with commercial flights from Bangalore and elsewhere.

In early December, he finally inaugurated the Vijaynagar airport, which has got a 1600-metre runway and a functional departure and arrival lounge as the designated airport for the region. A month earlier, Air Deccan began flights into the region with a blockbuster, BangaloreBellary-Goa, that connects the World Heritage Hampi site with the IT city and the tourist paradise.

Characteristically, Captain Gopinath wasn’t at a loss for words when the flight was launched: “Someone once said, ‘If dreams were made out of stone, it would be Hampi.’ We have been working for the last two years to give wings and open up the gateways to this magical city. We will use the Jindal Vijaynagar township airfield, which is equidistant from both Hampi and Bellary, roughly at a distance of 45 minutes. The new flights will attract good number of tourists and also travellers to the industrial town of Bellary. It takes approximately six hours to reach Bellary from Bangalore by road and ten hours by train and the new flight will greatly reduce the travel time.

“Hampi attracts a lot of tourists, both

10

Oh, the ruins of

Hampi!

Civil Aviation Ministry is planning to set up an aviation grid with the cooperation of the states to improve the airport infrastructure.

CRUISING HEIGHTS February 2007

domestic as well as international, and connectivity from Goa to Hampi is sure to boost tourism in the region. There is no direct connectivity between Goa and Hampi and one has to travel to Hospet to catch a bus or train to Hampi, which is time consuming, especially for tourists.

The last flight to Bellary was a Tata mail flight that landed way back in 1932.

Although there are three airstrips in Bellary, none is being used and we hope that with our foray into Hampi, aviation will pick up in this region.”

Interestingly, this last flight by JRD was used as a pretext by many in Bellary to make sure the Jindal airstrip remained a private airstrip for the rich and famous.

The objections came, of all people, from the Bellary District Railway Action Committee. The committee said that the

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proposed airport at Toranagal was about 30 km away from Bellary city. It urged the government to develop the existing airport at Bellary. The committee pointed out that the existing airport had been idle since the Vayudoot services were withdrawn. Thankfully, the state government chose to ignore the objections of the committee, which clearly didn’t know what it was taking about, and decided to go ahead with giving the necessary clearances for the JVSP (Jindal Vijaynagar Steel Plant) airstrip to be licensed by the DGCA for commercial flights.

Patel wants to go one step further with the Bellary Lighting the lamp: experiment. He told Praful Patel dedicates the journalists, after Vijaynagar airport inaugurating the airto the nation as port nearly a month Sajjan Jindal (L) after the first Air looks on Deccan flight, that the Civil Aviation Ministry is planning to set up an aviation grid with the cooperation of the states to improve the airport infrastructure and give a boost to economy. He said, “We are working with a vision of setting up an aviation grid by making all these airports functional with the help of the state governments.” Praful said work had started in Mysore and Hubli and Belgaum airport would also become operational with fullfledged passenger capability and night landing capability. As for the proposals for airports at Gulbarga and Hassan, they were awaiting a memorandum of understanding (MoU) with the state government.

There are reports that private airstrips in other states are keen to emulate the Bellary model and get themselves licensed. It’s a good move and is sure to improve connectivity. But are these business barons members of the YPO. Or else it could be some time before Praful Patel comes calling to cut the ribbon. His minders tell us his appointment book is choc-a-bloc with Airport Authority projects, which he hopes to fast track this year.

Page 13

Wanted an alliance?

What were Jeanwas really a subterfuge. The fact is that Louis Pinson such alliance would have given the (Senior VP, Air country’s public sector carriers a huge F r a n c e ) , advantage in the global marketplace Dominique Patry and there was too much pressure on (SkyTeam Steerthem to go slow or take a U turn on the ing Committee deal.

Chairman and Senior ViceWith Jet Airways now announcing its President of International Affairs and flights to the US and several destinaAlliances, Air France) and Pierre-Henri tions in Europe, it is equally well Gourgeon (President and COO, Air poised to take on the role of an alliance France) doing at Indian (Airlines) headpartner. One key ingredient of the Star quarters last month? With the Star Alliance mandate has been to pull in Alliance, which was almost a done deal partners with national and international with Indian and Air India, unravelling set of footprints. Jet Airways will now unexpectedly, Air France, The driving fulfil that position. force behind the Sky Star Alliance, the first such Alliance, decided it was airline grouping, was launched time to get cracking and in 1997. Star heralded airline sent its top brass to woo the cooperation and took it to country’s oldest domestic unprecedented levels. One airline to tie up with Sky striking example is the inteand reap the benefits of a gration of frequent-flyer proglobal alliance. gramme that allows airline Not surprisingly, IA offimiles to be earned and cials are tightlipped and not redeemed by all members of too keen to the groupPierre-Henri Gourgeon discuss ing.

The what hapalliance also pened at enables prethe meetmium cusing, but tomers to those in the get access to know state all airport it was more lounges of ‘exploratomembers. ry’ in Another nature and m a j o r that there advantage is were really that flight no nutsschedules and-bolts are well A Sky Alliance departure counter issues discoordinated cussed at the meeting. “How can anybetween the alliance members. This thing really fructify unless one is clear means only minimum time is wasted on on the status of the merger. One doesn’t airport lounges and connection flights. know if we will be two different airBut the grouping also led to suspilines or just one consolidated entity. cions of anti-competitive policies. The Frankly, any global tie up will have to European Union even probed what it depend on that,” said one director. thought was a camouflaging of a virtual The Sky visit to Delhi only confirms merger. Star’s creation eventually led to what we had reported last month—the formation of similar alliances, such as Star Allianc IA-AI deal was in tatters.

Oneworld and Skyteam. Star Alliance Those in the know state that the sudden serves over 790 airports in 139 coununilateral pullout by Star Alliance from tries. It developed the ‘regional’ conthe negotiations citing premature cept in 2004. This was aimed at peneannouncements by some airline offitrating individual markets through cials in its internal debate on the issue regional carriers.

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PERSPECTIVE

Get

the slots filled

DGCA will be the key as the civil aviation sector expands rapidly in the coming years. But there aren't enough experienced hands on board. What happens when Kanu Gohain retires this year?

O

ne of the great downsides—if indeed one calls it a downsidefor the public sector institutions has been the relentless poaching by the growing private sector.

No surprise, indeed, that’s the law of nature everywhere. Look at the Delhi Metro. It is losing its best men (and women) to the new Metro in Dubai and Greenfield projects in Bangalore and Hyderabad. Replacements have to be found soon to take over the vacant jobs.

The problem, though, is slightly different in aviation. After a dozen years of relentless poaching and several years of 25-per-cent-plus growth, the airline business is attracting the best brains and talent, primarily in the private sector. At the cutting edge level, management schools send more candidates into the financial services sector than into aviation, aviation engineers are making a beeline either for Dubai or Singapore or settle for the private sector.

The Directorate General of Civil Aviation has a different sort of problem. Its DG, Kanu Gohain, will retire in the middle

12

At the cutting edge level, management schools send more candidates into the financial services sector than into aviation, aviation engineers are making a beeline either for Dubai or Singapore or settle for the private sector.

CRUISING HEIGHTS February 2007

of 2007 and there is no one senior enough to take over from him. So what it means is that the Ministry of Civil Aviation will have to look outside the ambit of the DGCA for its DG on the exit of Gohain.

Frankly, that would mean another IAS officer stepping into the job, as was the case some years back. He will take several months to get a hang of the job that is hugely technical in nature. This was one reason why the permanent cadre at the DGCA managed to get back on track during the period when H.S. Kola was the DG. He was followed by Satinder Singh and now Gohain.

There are reports Gohain will more than likely get an extension as a special case. The argument is that aviation is growing at such a speed that the ministry will need seasoned experts like Gohain on board. Gohain himself is noncommittal and says he hasn’t even thought about retirement. Praful Patel, too, is noncommittal and only says, “Good people must be rewarded.” So now it all boils down to the Prime Minister. Will he say

‘yes’ or ‘no’?

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Corporate flyers all set

FOR RED-CARPET TREATMENT

With more international businesses coming to India, need has arisen for separate and exclusive terminals for corporate jets. Greg Evans’ Universal Weather & Aviation has chalked out a plan, writes Tirthankar Ghosh, to enhance its business and even set up separate terminals at Delhi and Mumbai for corporate bigwigs flying in from abroad.

L

ast year, Universal Weather & Aviation, a Houston, USAbased support service provider for corporate bigwigs and celebrities, handled 700-plus flights in India. This year, the number is all set to go up to nine hundred. And in three years, it will be around 2000.

Those numbers should make C. Gregory Evans, chief executive officer, Universal Weather & Aviation Inc, a happy man. But, as he mentioned to Cruising Heights during his recent visit to Delhi and Mumbai, there continues to be huge gaps in the infrastructure at the major international airports of Mumbai and Del-

14

Greg Evans

CRUISING HEIGHTS February 2007

hi—the two most-coveted business destinations in the country. Even so, India looms big on Evans’ mind. “Our clients to India represent the Fortune 500 companies. We have been helping to organise their flights all these years,” he said.

While he did not wish to disclose the names of those his company had flown in, “because of business and other reasons”, Evans’ client list reads like a who’s who, ranging from Hollywood stars to corporate chiefs and even the odd prince and princess.

“Our traffic,” said Evans, “has been seeing an increase of 25-30 per cent a year and we plan to raise that.” He should know: Universal maintains that its order

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books comprise 80 per cent of the 500 Fortune companies and the healthy trend of growth even prompted him to mention that India would be the business destination of the future. The country, he stated, had been on the top of the list of some of the senior-most executives of a number of multinational corporations, like the petroleum sector. “Business opportunities are opening up. India,” according to the CEO, “is at a take-off stage and in the next few years could certainly overtake China.” The exponential increase in the number of business flights is certainly gratifying, but there are a number of factors that need looking into. Presently, all private aircraft, whether domestic or foreign, along with their passengers, are handled like any other commercial flight arriving at an international terminal. That means delays of up to an hour or more; something that busy executives and presidents of multinational corporations cannot afford. With globalisation taking place, Evans pointed out, such a situation cannot exist. Presidents and chairpersons of companies flying into Delhi or Mumbai in a business jet do not have time to waste, least of all the hour-plus that is needed for check-out (including immigration and customs). “An executive should be out of the terminal in half an hour and on his way to his meetings,” said Evans.

“Time has come when, Indian airports must put in place world-class facilities,” he said, “to handle corporate aircraft.”

Such moves would help the economy no end because speed and the time saved would mean decisions worth millions of dollars. “Just imagine,” he said, “the kind of money and time that will be saved. A group of senior executives, for example, can utilise the company jet to make a number of stopovers in a day in cities like Singapore, Delhi, Dubai and London. The time saved would outweigh the actual costs if these executives came on commercial flights.”

Evans was on a single-point mission to India: to enhance business. He held a

Managing Director Brendan O’Grady handles Universal’s Ireland business.

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India Inc flies high

I

f low cost air carriers are making the most of the boom in civil aviation in the country, can the high-flyers be left behind? With the economy booming, the corporate jet market has finally taken off in India. The recent Bangalore air show saw some of the world’s top private jet manufacturers, aircraft maintenance setups, airport operators and others wooing potential aircraft buyers and users. For the first time in the country, these organisations have chalked out plans to put up Fixed Base Operations (FBOs). At the air show, Indian buyers were able to not only see but also compare the different brands of aircraft on display. Among them were the Canada-based Bombardier’s Learjet, super-luxury jets from France’s Dassault in addition to the whole range of the Beechcrafts from US’ Raytheon and even some from Brazil’s Embraer. Helicopter maker Textron Bell from the UK, too, was also there.

Like the Houston-based Universal Weather and Aviation, Inc, FBOs offer a wide range of services, from flight planning, repairs and maintenance to refuelling, security and flight clearances. In addition, the value-added services these FBOs offer are car rentals, private lounges and gourmet meals.

The major reason for FBOs to enhance their services in the country is, of course, bigger business prospects. There is also the fact that the private corporate aircraft user has also enlarged his vision. While earlier he used to fly in his small turbo-prop plane to remote factory sites, today the Indian businessman flies abroad to destinations in the Middle East, Southeast Asia and even Europe.

Over the last few years, the number of corporate houses that have ordered corporate jets include companies like Reliance, UB Group, DLF, GMR, Suzlon, Videocon, TVS Motor, DS Construction and Raymond. According to industry sources, around 150 private corporate jets were ordered in 2006, with most of the share being taken away by Raytheon Aircraft Company. The company has estimated that the demand for private jets will go up by at least 25 per cent over the next three years: there are around 150-odd private planes in the country now and by the end of this year the number would double to cross the 300-mark. The maker of Hawker and Beechcraft planes, Raytheon, is seriously considering to start a Hawker maintenance facility in the country with a person responsible for sorting out technical problems faced by its Indian clients.

The business opportunities arising out of the private corporate jets has also egged private airport operators, like the Mumbai International Airport Limited (MIAL) and the Delhi International Airport Limited (DIAL) and the ones at Bangalore and Hyderabad, to open the gates for services to private aircraft owners. These airport owners would like the government to make infrastructure available keeping in view the huge market.

As for aircraft manufacturers, the going could not be better because Indian corporate captains have been showing interest in ordering mid-haul jets. These jets would offer non-stop flights to Europe, Southeast Asia and the Middle East.

CRUISING HEIGHTS February 2007

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INTERVIEW

UVglobal Network provides ground service in more than 50 countries, with locations covering almost every region of the globe.

UVavemex® is headquartered in Toluca and offers full executive ground handling, a bilingual staff, and a facility with 50,000 square feet of covered hangar space, six independent VIP lounges, a crew lounge and more.

series of talks with Indian airport authorities to ensure that Universal’s concerns, like immigration and customs clearances and parking slots, were made known.

These concerns, he pointed out, need to be highlighted before the master plans for the Delhi and Mumbai airports are finally readied. In fact, in his talks with Delhi International Airport Limited (DIAL), Evans suggested that a terminal dedicated to non-commercial travel in Delhi be established. The terminal would have a separate parking lot and hangar, as well as a business centre for corporate executives to hold meetings. Universal also held meetings with the civil aviation ministry officials to find out their views on independent handling of private aircraft. “The response has been heartening,” he said, “India is open to the concept of change and over a period of time, things will be

A busy day at Universal’s Dublin facility.

16

Universal Weather and Aviation India Pvt Ltd will work with licensed operators to perform what, in aviation terminology, would be “meet-andgreet services” for its international customers at various airports across the country.

CRUISING HEIGHTS February 2007

different.” Growth in corporate air travel could lead Universal to establish corporate terminals in Indian airports in much the same way as it has done to establish special facilities in places like Mexico City, Aruba, Singapore, Paris and London. In these airports, Universal operates separate terminals, hangars and infrastructure for corporate flights. “Internationally,” said Evans, “Universal works with airport operators to set up separate terminals for private aircraft.”

When such terminals are set up in Delhi and Mumbai, they would facilitate executives coming from abroad as well as Indian corporate bigwigs, who have been using corporate jets. “We have been working with a number of Indian corporates that own private planes and travel abroad frequently,” said Evans. He mentioned that his Indian arm planned to pick up more business as traffic from India goes up. Universal has, in fact, started an Indian company—Universal Weather and Aviation India Pvt Ltd—that will work with licensed operators to perform what, in aviation terminology, would be “meetand-greet services” for its international customers at various airports across the country. If trends in the industry are any indication, in 2006 alone, India Inc placed orders for around 150 private corporate jets meant for official as well as personal use.

Universal Weather & Aviation was formed by Greg’s US Air force officerfather, Tom Evans, in 1959. Since then, the company has completed an estimated 25,000 successful trips around the world for more than four thousand clients annually. The company is lean on assets: it does not lease or sell business aircraft, but provides its clients with the entire gamut of support services, such as flight planning, refuelling of aircraft, visa/passport and customs formalities, ground transportation, hotel coordination and a lot more. Evans put it more succinctly, “If corporate entities buy a plane, we can find the pilots and everything that goes

with them.”

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NEWS DIGEST

The numbers game IT is a strange world. For years the debate was whether the government would allow a hike in FDI into the core civil aviation business of operating airlines from the existing 49 per cent to beyond 51 per cent or a majority equity and that, too, by foreign airlines. And all along it was barred, stating it had serious security implications and that foreign airlines, with their muscle, would gobble up Indian carriers. Therefore, it was a 'No-No'. But lo and behold! The government now says it is ready to allow a hike in FDI in the civil aviation sector except in the operation of the airline business domestically. A cabinet note has been prepared suggesting a hike in FDI to up to 74 per cent in helicopter and seaplane operations, MROs, charters, air cargo and non-schedule operations. In fact, Civil Aviation Minister Praful Patel said, “We have moved a cabinet note proposing hiking FDI cap in different areas of the aviation sector to expand air connectivity across the country.”

This move is even stranger than fiction as it seeks to address everything but the core issue. In the past year, almost all the airlines operating in the domestic skies sustained serious financial injuries because of sharp increase in fuel prices, falling yields, rising costs, etc. Every private airline sought every available financier—be it banks, investment banks, etc—to shore up its capital base, primarily so that the financier would help it lease/buy new aircraft. So, now we have a government that wants to direct funds, including foreign funds to areas where there is minimal need and squeeze areas where everyone is gasping for breath.

How is it that the government has decided to allow even foreign players into the ground handling business, which was so far a 'No Go' area because of serious security implications. Do you know that Brazilian pilots who suddenly lost their job after Varig Airlines went out of business will operate Air India Express’ entire fleet of Boeing 737-800s?

Engineering a non-merger

AIR INDIA’s engineering department does not see anything in common with the engineering business of Indian. This is after all the talk and endless discussion of why the two parent airlines—Air India and Indian—are being merged. While the palpable reason is that the two will gain a lot from

the synergy their businesses will bring, but it will also help them build one big airline leading to economies of scale. Additionally, it will make the long-talked concept of hub-and-spoke a reality. However, the engineering departments have different views. Perhaps, the Air Indians are right considering their long history of offering engineering services, particularly those coming under the MRO umbrella, to even foreign clients. There is certainly a difference in the CFM engines, to start with, which are going to power the Boeing 737CRUISING HEIGHTS February 2007

800s and the Airbus family of narrow body aircraft that are going to Indian. While Air India is using CFM-56-7 engines, Indian is using CFM-56-5 engines. With its huge facility in Mumbai and another one coming up at Thiruvananthapuram, Air India thinks it can do the job better. Besides, it also needs its own engineering facilities to maintain and overhaul the bigger PW engines and GE engines that will power its new generation 777s and 787s. Air India’s engineering department also overhauls all APUs that are on the tail of aircraft.

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Ground handling's twists and turns

T

HE UPA GOVERNMENT has finally announced a new policy to offer ground handling services at various airports in India.

However, the move has caused a similar disquiet among private domestic airlines as it did when the previous NDA government announced its own version of the policy.

In mid-2003, the then NDA government ruled that only Airports Authority of India, Air India and Indian (then Indian Airlines) would be allowed to form joint ventures with or without foreign nonairline partners subject to the state-owned

18

companies holding a minimum of 51 per cent either directly or through their respective Special Purpose Vehicles. It also sought to bar private domestic carriers from doing even self-handling. After protests from Jet and Sahara, which were the only two private carriers then, the policy was kept in cold storage.

The successive UPA government after dilly-dallying for nearly two-and-a-half years, has finally announced its version of the ground handling policy earlier this month. According to this policy, ground handling can be offered only by three categories: AAI in the airports it is operat-

CRUISING HEIGHTS February 2007

ing, Air India, Indian; secondly, by the new airport developers in Delhi, Mumbai, Hyderabad, Bangalore and, perhaps, Chennai and Kolkata as and when they are privatised; and, thirdly, by inviting foreign parties, based on a tendering process. The UPA government, too, has barred private airlines from self-handling.

This has set off huge protests by Jet and Air Sahara, which claim that the new policy, if implemented, will render 5,000 employees of Jet and 2,000 workers of Sahara unemployed. The new policy of allowing only three ground handlers at Indian airports has been described as

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Jeh Wadia and his money games

restrictive by Jet and Air Sahara. But there has been no protest from other private carriers, like Kingfisher, Spice, Air Deccan, Go, etc, as they have already largely outsourced their ground; handling business. However, the Ministry of Civil Aviation has reportedly suggested that if Jet and Air Sahara indeed want to remain in the ground handling space, then they should hive of that part off their airline business and bid for ground-handling contracts. It is not known how they will react, but at least Air Sahara has conveyed its reluctance to go in for this suggestion.

JEH WADIA'S GoAir is restless. He wants to increase the number of aircraft in his fleet so that he can make Go faster to other unconnected destinations. But then there is a problem.

He does not have the ready liquid cash, which he had before starting the venture. If the grapevine is to be believed, Jeh's dad, Nusli Wadia, does not think it is a good idea to throw good money after bad. Notwithstanding the sevenaircraft fleet he currently has, Jeh needs money to acquire the remaining 23 as part of his original fleet plan of 30 aircraft. But then soon after he launched his airline, he suffered like the rest of his industry colleagues.

Although Air Deccan and Spice have reportedly flown into the cash profit zone, it is still cloudy days for Go. Sometime back, Go Air announced with much fanfare its JV with Singapore Airlines Engineering Company (SIAEC) for setting up an MRO. Since then, many more such announcements have been made by even more powerful combines. Apart from Boeing’s MRO, we now have one more from former BPL Mobile chief Rajeev Chandrashekar, who is now a BJPsponsored independent Rajya Sabha member from Karnataka.

Rajeev has told the press that he intends to join hands with Airbus Industrie for an MRO, besides acquiring business jets, and offer it on a timeshare basis. Incidentally, Rajeev also tried to forge an alliance with Boeing, which refused to accept any partner in its MRO venture without the technical skills required to run the operations.

For instance, Boeing is already engaged in talks with Air India and may co-opt ST Aerospace of Singapore, though it is not final.

CRUISING HEIGHTS February 2007

So, where does this leave Jeh Wadia and Go? Perhaps, nowhere. But this does not reduce his need for more money, which, in any case, he must mobilise should he desire to fund his grand A320 aircraft acquisition plan.

Industry sources state that Airbus is not averse to taking advance booking token money of just US $50,000 per aircraft, which it charged from IndiGo and Air Asia, of Malaysia. GoAir, as per Jeh’s own admission, plans to sell up to 25 per cent of its stake to a group of strategic and financial investors.

Raising money is now becoming a necessity with other airlines as well.

For instance, SpiceJet, after raising money from Tatas by selling 7.5 per cent equity based on an expanded capital base, is now planning to place equity and also raise debt totalling $100 million from two American investors, one of which could be Texas Pacific Investment. It, too, needs this money to fund the acquisition of more 737-800s. Besides the 20 it has already decided to buy, Spice wants this money to convert options to firm purchase for 10 more 737-800s. What remains to be seen is when its own promoter Ajay Singh will quit. Already reports are circulating to the effect that he is planning to shift gears midair and follow the small-car route to make money. He has reportedly joined hands with former Huyndai CEO B.V.R. Subbu to bid for the now-defunct Daewoo’s plant in Surajpur, near Delhi. Should this materialise, then it will be an interesting case of the Tatas buying stake in an airline in which one of its original promoters makes money to compete with the Tatas in the smallcar segment. That is why he is known as AJAY!

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Jet flies out of the red and into ...

A

FTER FLYING in the red zone for some time, Jet Airways India bounced back to close the third quarter (Oct-Dec) of 2006 with net profit of Rs 40 crore, which was, however, 34 per cent lower than net profit of Rs 61 crore registered in OctDec 2005. The factors that led to the improvement in performance in the third quarter included the continued expansion of the industry’s capacity and growth in demand, increase in fuel costs and increase in other operating costs and international operations. International operations accounted for 22 per cent of total revenues, as against 14 per cent in the third quarter of 2005. Jet Airways (India) expects the fourth quarter to reflect some elements of seasonality, which is natural to airline business. In the next 12 months Jet expects to add daily flights to North America, East and South Africa and additional points in the Far East.

Total income during Oct-Dec 2006 was Rs 2,030 crore, compared with Rs 1,499 crore in the same quarter of previous year, representing an increase of 35.42 per cent. Total expenses were Rs 1,795 crore, representing a rise of 45.13 per cent over Rs 1,237 crore, registered in the same quarter of 2005. The domestic operations accounted for 78 per cent of revenues, compared with 86 per cent in the third quarter of last year. On the other hand, international operations accounted for 22 per cent of the total revenues, as compared with 14 per cent in the third quarter of 2005. The improved performance was also due to better yield management, the company has claimed.

Jet has also decided to acquire 10 Boeing 787-8 series aircraft, also known as the Dreamliner. The list price of these aircraft is US $1.5 billion and their deliveries are scheduled between July 2011 and December 2012 subject to government clearances.

Jet is now aiming at 50 per cent revenue from its international operations in the next three years. As per firmed-up plans, Jet will fly to New York from August this year followed by those to San Francisco and Toronto. The flight to San Francisco, via Shanghai, is likely to be introduced in October. With the airline expecting to have 22 widebodied aircraft in 2008-09, it hopes to fly to the Gulf from 2008. Jet had already placed orders earlier for taking delivery of 10 Boeing 777-300ERs and another 10 Airbus A330200s. These aircraft were

expected to arrive from March 2007 and would have replaced the three leased Airbus A 340-300 from South African Airlines.

However, for Jet Airways it has been an unfortunate season and the lessor, South African Airlines, has refused to either renew the lease or even extend it by few months, as it wants the three planes back so that it can undertake fresh painting and deploy it on its service routes. As the international civil aviation market and industry are booming, no one wants to lease aircraft. For Jet, the story does not end there. Unfortunately, for Jet neither the first of its Boeing 777-300ER nor the Airbus A 330-200 is likely to be available before the beginning of May 2007. This means there will be a gap of at least six to eight weeks when Jet may not have any wide-bodied aircraft to fly passengers to Europe from India. The reason is not the failure of delivery schedule of either Boeing or Airbus. Rather it is the failure of German seat maker Ricardo to instal the seats on the new planes.

Normally, both FAA and EASA are very strict about seating arrangement, seats and the in-flight entertainment equipment hosted on the seats. With massive increase in aircraft sale and hence the need for more new aircraft and seats, earlier committed delivery schedules have gone haywire. For instance, if the seat is to have high resolution LCD flat TV behind each seat, with the width ranging from 25 inches in first class to 15 inches in business class and 10 inches in economy class, they have to be approved

by FAA and EASA. But if even one seat fails, then the overall connectivity among the seats comes under question, which sort of happened with the Jet Airways’ new seats. This means you come back to the regulatory agencies, like FAA and EASA, again. With so many airlines waiting to get their type of seating approved, it is impossible to jump the queue. This means Jet will get its turn again only by late April or early May 2007. With no leased aircraft available beyond March 2007 and no new seats becoming available before end April-May, there may be a few weeks in March-April-May 2007 when Jet may not have any wide -bodied aircraft. It is only in this context, Jet is desparately trying to lease wide-bodied aircraft from even Beirut in Lebanon.

Interestingly, should Jet indeed manage to get these aircraft for five to seven weeks, there will be no change in colours. So it will be Jet inside and Middle East outside.

God bless Naresh!

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GLOBE TROTTING

Ryanair head wants old aircraft, business class taxed

Wailing toddler, parents offloaded

MICHAEL O’LEARY, Chief Executive of Ryanair, Europe’s biggest budget airline, has asked Britain to adopt a fresh approach to taxing air travel. He suggests penalising old aircraft, business class and connecting travellers. He says business class travellers pay only a fraction of the cost of their expensive tickets, compared with UK’s plans to charge 10 pounds ($19.38) on Ryanair flights where the average fare is 28 pounds.

O’Leary acknowledges that global warming was an issue, but underscores that the industry contributes less than two per cent of global carbon dioxide emissions. He added that Ryanair flew the newest, most fuel efficient planes as its part to fly cleaner.

All this comes in the wake of an announcement by British finance minister Gordon Brown that the UK, from February, would double taxes on airfares.

JULIE AND GERRY KULESZA, who were headed home to Boston from Fort Myers, were having a tough time calming their three-year-old daughter Elly. She was bawling her head off, hitting her parents and simply refusing to take her seat before take-off. As per Federal Aviation Administration (FAA) rules, children aged two and above must have their own seat and be wearing a seat belt upon take-off. So when the Kuleszas asked a flight attendant whether she could sit in her mother’s lap, the request was denied.

The AirTran flight, on which the Massachusetts family was booked, was already delayed 15 minutes, and looked poised for further delay. Therefore, in fairness to the other 112 passengers on the plane, the crew made an operational decision to remove the family from the aircraft.

The Orlando-based carrier reimbursed the family $595.80, the cost of the three tickets, and the Kuleszas flew home the next day. The carrier also offered them three roundtrip tickets anywhere the airline flies, but said his family would never fly AirTran again.

22

CRUISING HEIGHTS February 2007

IN A BID to promote tourism in the Himalayan kingdom, Royal Nepal Airlines committed a faux pas when it used a photo of Peru’s tourism icon, the Inca ruins of Machu Picchu, on a poster under a slogan “Have you seen Nepal?” The blunder was noticed by Peruvian mountaineer Ernesto Malaga when he recently visited the airline’s office in New Delhi and saw the poster hanging on a wall in the airline’s office. Peruvian authorities requested explanations from the airline via the embassy.

The airline has offered apologies to Peru for using the picture and assured that the lamentable error has been corrected. As a consequence, the Nepalese airline fired an employee in the rank of a manager.

Horny ad turns off Kiwi airport authorities

THE AIRPORT AUTHORITIES of New Zealand’s Auckland Airport did not like a billboard lingerie advertisement featuring former Miss Universe Jennifer Hawkins clad in a lacy bra and holding a stuffed rhino with a cut line ‘Feeling Horny’.

They banned it from being displayed, citing that the airport has a vast array of people of different nationalities, different ages, and that the ad was just not in keeping with general airport image and brand.

Earlier, too, the airport had turned down only billboards that they thought were ‘inappropriate’. Moreover, the lingerie advertisement is not the first commercial in New Zealand to create a furore.

Racist remarks cost airline

Passengers expected to double by 2025 AIRPORTS COUNCIL INTERNATIONAL (ACI), Geneva, a body representing the world’s airports, predicts the number of air travellers to double by 2025, rising to more than nine billion a year. The body also predicts airfreight to triple over the same period. In its Global Traffic Forecast 2006-2025, ACI said passengers passing through the 1,650 domestic and international airports its 567 members operate would grow an average four per cent annually over the period.

Presently, the air travellers number

Royal faux pas

around 4.2 billion a year.

ACI goes on to say that Asian air travel is set to increase nine percent annually, led by India (10.4 per cent) and China (8.1 per cent).

Further, by 2025, Asia will be challenging North America, which has so far held the top spot as the busiest global air passenger region.

ACI further predicts that by 2025, Asia is expected to be the world’s largest freight market. Last year, Asian freight volume was 26 million tonnes, just five million behind North America’s.

IN NOVEMBER 1999, Nikhil and Hina Parikh, both doctors, had gone on a holiday tour to the Far East, along with their son Kaushal. While booking their holiday they had been specifically assured by the local travel agency that they would get vegetarian food throughout the journey.

But to the horror of the family from Surat, Denmark-based SAS Scandinavian Airlines served him beef during a flight from Bangkok to Singapore. When Nikhil realised, after tasting, it was non-vegetarian fare, he asked them to at least provide bread and butter for his son. In turn, the crew members started making racist remarks like ‘you poor Indians’ and ‘funny Indians’.

Hurt by their insulting behaviour, Nikhil lodged a complaint with a district consumer forum in Surat in 2001. The court took the decision in favour of the Parikhs and slapped a fine of Rs 1 lakh on the airline for racial remarks, misbehaviour and mental torture.

Of scorpions and honeybees THE LAST THING that David Sullivan could expect in a flight was a sting from a scorpion; and that, too, not once but twice.

The 46-year-old builder from Stowe was napping aboard a United Airlines flight, from Chicago to Vermont, on the second leg of his trip home from San Francisco, where he and his wife Helena had been visiting their sons. He awoke from his nap shortly before landing and noticed that his right leg felt like it was asleep, but that was isolated to one spot, and it felt like it was being jabbed with a sharp piece of plastic or something. A scorpion had stung him on the back of his right leg, just below the knee.

The second sting came after the plane had landed and he and his wife were waiting to collect their bags. Sullivan rolled up his cuff to investigate, and the scorpion fell out. After the first sting, the scorpion had continued up that leg and down the other, he believes, before getting him again in the shin. The airline has offered to reimburse Sullivan’s medical expenses.

In another incident, several passengers were stung by honeybees while waiting for their flights at Lal Bahadur Shastri Airport, at Babatpur, in Varanasi district. The honeybees released their wrath on the passengers after, reportedly, a local resident threw a stone on their hive hanging by a tree stem in the airport premises.

Stranded deer finds messiah in TV helicopter pilot IN OKLAHOMA, a deer lost its footing on the shore of frozen Thunderbird lake and despited repeated attempts, could not get a foothold. As it lay on the ice, Mason Dunn, the pilot of a TV news helicopter used the wind from the aircraft’s rotor to push the poor creature to safety. He lowered the helicopter and the wind sent the deer sliding on its belly across the ice until it reached shore and scampered into a nearby wooded area.

CRUISING HEIGHTS February 2007

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GLOBE TROTTING

Ryanair head wants old aircraft, business class taxed

Wailing toddler, parents offloaded

MICHAEL O’LEARY, Chief Executive of Ryanair, Europe’s biggest budget airline, has asked Britain to adopt a fresh approach to taxing air travel. He suggests penalising old aircraft, business class and connecting travellers. He says business class travellers pay only a fraction of the cost of their expensive tickets, compared with UK’s plans to charge 10 pounds ($19.38) on Ryanair flights where the average fare is 28 pounds.

O’Leary acknowledges that global warming was an issue, but underscores that the industry contributes less than two per cent of global carbon dioxide emissions. He added that Ryanair flew the newest, most fuel efficient planes as its part to fly cleaner.

All this comes in the wake of an announcement by British finance minister Gordon Brown that the UK, from February, would double taxes on airfares.

JULIE AND GERRY KULESZA, who were headed home to Boston from Fort Myers, were having a tough time calming their three-year-old daughter Elly. She was bawling her head off, hitting her parents and simply refusing to take her seat before take-off. As per Federal Aviation Administration (FAA) rules, children aged two and above must have their own seat and be wearing a seat belt upon take-off. So when the Kuleszas asked a flight attendant whether she could sit in her mother’s lap, the request was denied.

The AirTran flight, on which the Massachusetts family was booked, was already delayed 15 minutes, and looked poised for further delay. Therefore, in fairness to the other 112 passengers on the plane, the crew made an operational decision to remove the family from the aircraft.

The Orlando-based carrier reimbursed the family $595.80, the cost of the three tickets, and the Kuleszas flew home the next day. The carrier also offered them three roundtrip tickets anywhere the airline flies, but said his family would never fly AirTran again.

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IN A BID to promote tourism in the Himalayan kingdom, Royal Nepal Airlines committed a faux pas when it used a photo of Peru’s tourism icon, the Inca ruins of Machu Picchu, on a poster under a slogan “Have you seen Nepal?” The blunder was noticed by Peruvian mountaineer Ernesto Malaga when he recently visited the airline’s office in New Delhi and saw the poster hanging on a wall in the airline’s office. Peruvian authorities requested explanations from the airline via the embassy.

The airline has offered apologies to Peru for using the picture and assured that the lamentable error has been corrected. As a consequence, the Nepalese airline fired an employee in the rank of a manager.

Horny ad turns off Kiwi airport authorities

THE AIRPORT AUTHORITIES of New Zealand’s Auckland Airport did not like a billboard lingerie advertisement featuring former Miss Universe Jennifer Hawkins clad in a lacy bra and holding a stuffed rhino with a cut line ‘Feeling Horny’.

They banned it from being displayed, citing that the airport has a vast array of people of different nationalities, different ages, and that the ad was just not in keeping with general airport image and brand.

Earlier, too, the airport had turned down only billboards that they thought were ‘inappropriate’. Moreover, the lingerie advertisement is not the first commercial in New Zealand to create a furore.

Racist remarks cost airline

Passengers expected to double by 2025 AIRPORTS COUNCIL INTERNATIONAL (ACI), Geneva, a body representing the world’s airports, predicts the number of air travellers to double by 2025, rising to more than nine billion a year. The body also predicts airfreight to triple over the same period. In its Global Traffic Forecast 2006-2025, ACI said passengers passing through the 1,650 domestic and international airports its 567 members operate would grow an average four per cent annually over the period.

Presently, the air travellers number

Royal faux pas

around 4.2 billion a year.

ACI goes on to say that Asian air travel is set to increase nine percent annually, led by India (10.4 per cent) and China (8.1 per cent).

Further, by 2025, Asia will be challenging North America, which has so far held the top spot as the busiest global air passenger region.

ACI further predicts that by 2025, Asia is expected to be the world’s largest freight market. Last year, Asian freight volume was 26 million tonnes, just five million behind North America’s.

IN NOVEMBER 1999, Nikhil and Hina Parikh, both doctors, had gone on a holiday tour to the Far East, along with their son Kaushal. While booking their holiday they had been specifically assured by the local travel agency that they would get vegetarian food throughout the journey.

But to the horror of the family from Surat, Denmark-based SAS Scandinavian Airlines served him beef during a flight from Bangkok to Singapore. When Nikhil realised, after tasting, it was non-vegetarian fare, he asked them to at least provide bread and butter for his son. In turn, the crew members started making racist remarks like ‘you poor Indians’ and ‘funny Indians’.

Hurt by their insulting behaviour, Nikhil lodged a complaint with a district consumer forum in Surat in 2001. The court took the decision in favour of the Parikhs and slapped a fine of Rs 1 lakh on the airline for racial remarks, misbehaviour and mental torture.

Of scorpions and honeybees THE LAST THING that David Sullivan could expect in a flight was a sting from a scorpion; and that, too, not once but twice.

The 46-year-old builder from Stowe was napping aboard a United Airlines flight, from Chicago to Vermont, on the second leg of his trip home from San Francisco, where he and his wife Helena had been visiting their sons. He awoke from his nap shortly before landing and noticed that his right leg felt like it was asleep, but that was isolated to one spot, and it felt like it was being jabbed with a sharp piece of plastic or something. A scorpion had stung him on the back of his right leg, just below the knee.

The second sting came after the plane had landed and he and his wife were waiting to collect their bags. Sullivan rolled up his cuff to investigate, and the scorpion fell out. After the first sting, the scorpion had continued up that leg and down the other, he believes, before getting him again in the shin. The airline has offered to reimburse Sullivan’s medical expenses.

In another incident, several passengers were stung by honeybees while waiting for their flights at Lal Bahadur Shastri Airport, at Babatpur, in Varanasi district. The honeybees released their wrath on the passengers after, reportedly, a local resident threw a stone on their hive hanging by a tree stem in the airport premises.

Stranded deer finds messiah in TV helicopter pilot IN OKLAHOMA, a deer lost its footing on the shore of frozen Thunderbird lake and despited repeated attempts, could not get a foothold. As it lay on the ice, Mason Dunn, the pilot of a TV news helicopter used the wind from the aircraft’s rotor to push the poor creature to safety. He lowered the helicopter and the wind sent the deer sliding on its belly across the ice until it reached shore and scampered into a nearby wooded area.

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A MAHARAJA’S

CHEQUERED ODYSSEY At 75, Air India is preparing to reinvent itself – to conquer the world and regain its lost glory.

R. Krishnan reports.

O

CTOBER 2006 marked the beginning of 75 years of Air India’s coming into being after its illustrious founder, J.R.D. Tata, piloted, for the first time, a Puss Moth from Karachi to Bombay (now Mumbai) cruising at a dazzling speed of a hundred miles an hour carrying precious load of mail. The success of this maiden flight set the foundation of Air India, which emotionally started in October 1932, but became a legal entity after Independent India’s Parliament enacted the Air Corporation Act in August 1953 for establishing Air India and Indian Airlines. The Mumbai event marking the 75th year of Air India in October last was hence more an emotional celebration than a de jure beginning of 75 years, which, in normal course, will happen only in 2029, or 22 years from now. It is in this futuristic context, the arrival of brand new 50 wide-bodied aircraft, comprising Boeing 777s and 787s and 18 B737-800s (few have already come) assumes new significance.

Will the induction of Dreamliner 787 translate the dreams of the great dreamer JRD seventy-five years ago of putting India firmly on the international civil aviation map? Will the Worldliner 777-200 LR spread Air India’s brand equity in distant lands? In the last 15 years, Indians have become an important source of airline passengers, both from within and those settled in over a hundred countries around the world. In the absence of a strong Indian owned/operated international carrier, foreign airlines are having a field day in Bharat. Will this equation change? Will Air India come back to life and increase its market share? Perhaps, Yes. If Air India makes the right move, is present at the right place, makes the right choice (besides acquiring brand new state-of-the-art Boeing 777/787s) and offers the right product.

It may be recalled that when inaugurating the 75 years’ function, Union Civil Aviation Minister Praful Patel said, “This is a crowning moment for Indian aviation. However, the scenario has changed since JRD’s historic flight. In today’s free-market economy, people cannot be deprived of choice of travel. Please do everything possible to see that Air India becomes one of the finest airlines in the world as it was in the past.”

Praful used the occasion to harp on merger and remarked it will enable the airline to become strong and face competition. Air India’s CMD, V. Thulasidas, described the journey of Air India over the last 74

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A premium of Rs 200!

D

uring World War II (1939 to 1945) Government of India under the British often exercised the first right of usage on even privately owned civilian aircraft. It was only towards the end of the war that Tata Airlines, started by JRD, actually became an airline. It was registered as a company and the name was changed from Tata Airlines to Air India. JRD bought a large number of Dakotas as the traffic boomed. In his words, “Who does not remember those days when we woke each morning with joy-with the Air India share at a premium of two hundred rupees?”

Political disturbances and Partition, in the aftermath of Independence, threw up their own challenges. Tata Airlines, or Air India, operated five flights a day between Bombay (presently known as Mumbai) and Karachi, and this figure could have been doubled if more aircraft were available, said JRD. “Business was so good that the management decided to cut fares at a time when passengers were turned away.” In 1948, JRD inducted the first Constellation, which he described as “My Moghul Princess”.

The first flight to London from Bombay took off in June 1948.

In his words, “Air India International was not born on the day of London service. It was a child of the distant past, for its success was made of the toil, the heartbreaks, the joys and the supreme

years as memorable. However, it was difficult to agree with him when he said the tradition set by JRD has guided Air India throughout the last 74 years. As he himself remarked during the course of an exclusive interview: “Looking back and forward, I wish it were different. I wish fleet renewal had happened over a longer period and was staggered. Air India would have been a superior airline today.” As the 1971 batch Tripura cadre civil servant, who has been at the helm of AI for just over three years (his tenure finished in December and he has an open ended extension on it) said unequivocally that AI will have to be “nimble, think on its feet and prepare to meet the competition head-on”.

It was not an exaggeration that during 1991-92, Air India was making a profit of one crore rupees a day. So much so that the initial profit estimate for the year was revised up as the airline made so much money. But, then, those were the days when there were no Emirates or Etihads.

Malaysian Airlines and Thai were just beginning to take away Air India’s market share. Even as these airlines were coming up, Air India failed to do mid-course correction and began its descent. It must be

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sacrifices of all the years gone by. It was born the day a Puss Moth took off from Karachi 21 years ago (October 1932).” This JRD wrote when the sarkari Air India came into being in August 1953.

Anyone who reads may be compelled to ask two questions.

First, will Air India’s share, if listed on BSE today, be quoted at the Rs 200 premium it enjoyed nearly 58 years ago? The idea of fare cut even when the traffic was booming speaks volumes of the visionary JRD. What one needs to see is will at least JRD’s vision be allowed to lead — top-class aircraft, topclass service, top-class product and on-time service, come what may? These are laudable objectives, but the fact that competition is rattling even the most successful mega carriers cannot be lost sight off. Therefore, the generation next Air India has to be a combination of JRD’s vision with dollops of the present-day market realities, where new aircraft do not necessarily mean premium or higher fare. What JRD contemplated then is reportedly happening today. The traffic is booming, but fares are falling, not just in the domestic leg, but on international routes as well. For the Maharaja to smile it would require not just resources but great reserves of stamina, ingenuity and an ability to think on one’s feet.

It was not an exaggeration that during 1991-92, Air India was making a profit of one crore rupees a day.

CRUISING HEIGHTS February 2007

stated here that Air India considered purchase of 22 MCLRs in its board meeting of June 1995, then valued at US $2.2 billion.

The subsequent years only saw changes in the top management, but no induction of new aircraft. The previous NDA government thought of divesting or selling Air India’s controlling stake. Perhaps it was providence that saved the sale of Air India, but the same providence could not pull it out of the mess.

A new ray of hope appeared after the government Okayed the acquisition of 68 aircraft for the airline in January 2006. Once upon a time Air India enjoyed the distinction of being the first all-jet fleet in the world.

Maybe providence is offering Air India another chance to regain its past glory. The question is, will it?

In the last 53 years of its operations, Air India has been profitable in 46 years, a record of sorts. The Maharaja has never received any budgetary support from the Union Government except for the equity capital.

The airline has raised international loans without sovereign guarantee. Its record of dividend and interest payout to the Union Government has far exceeded the latter’s equity contribution. Air India has always been a foreign exchange earner. It has

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received awards from rating agencies and others like Dun & Brad Street, etc. Equally true are facts that usually cause turbulence in Air India, like failure to adhere to on-time schedule, falling service standards, poorly maintained leased aircraft, and connection to lesser number of places than it used to be 15 years ago! Notwithstanding all this, there are issues that need to be revisited.

Perhaps it would be pertinent to review Air India’s performance in the last five years, since 2001-02. The year 2001-02 has served as an international benchmark for comparisons, as the aviation industry got divided in terms of performance parameters following the 9/11 incident in 2001. Many airlines, including world-class like Swiss Air and Sabena, simply disappeared besides leaders, like United, Delta, etc., that went bankrupt. The US carriers are now literally bouncing back. At least mega carriers, like United, Delta and American, have sought from Boeing deliveries of 500 aircraft, mostly wide bodied, over the next four years, a near impossibility for Boeing.

As mentioned earlier, providence offered a new chance to Air India. Its acquisition of 68 brand new wide-body Boeings — 28 B787 (Dreamliners), seven B777-200 LRs, 15 B777-300Ers — over five years, from 2006 to 2011, despite being appeared to be bunched, is one of the best news for the Maharaja. Had orders been placed today, the waiting time would have risen to six-seven years before the first of the 50 wide-body aircraft could have been supplied. By then nothing would have been left in Air India for a merger with Indian.

Purely looking at operating revenue and expenditure, as only these relate to the airlines operating business (see box: A hard look at the numbers), the picture does not change much even if we take the total operating revenue and total operating expenses into account, except for a morethan-proportionate increase in the total revenue for 2005-06. That may be due to many non-operating reasons, including taking credit for advance ticket sales. But this does not take away the sustained efforts made by Air India in increasing its revenues, notwithstanding severe capacity constraints, including non-availability of right type of leased aircraft. This has today forced it to take on wet lease Boeing 767. Those who leased Boeing 747-400 more than three years ago are simply not keen to extend the lease and new lessors are difficult to find.

Meanwhile, lease rentals have shot through the roof causing operating expenses to jump sharply along with the skyrocketing fuel prices.

The slower rate of growth in passengers carried (see box: A hard look at the numbers) and the subsequent plateau is due

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“We are ready for competition”

Chairman Vasudevan Thulasidas spoke at length to Cruising Heights. Excerpts from the interview.

On competition Competition is not something new to Air India. It has been competing with international carriers. Since Air India has always operated in a competitive environment, these challenges will not really be new. But certain aspects are certainly new, and the airline will have to gear up to meet the challenges. It has to deliver better quality service to its customers. Without delivering on these challenges, the airline has no future. I believe that competition is good for Air India, and it should accept the challenge. Low-cost airlines will always be a threat to a regular carrier. Many international airlines have set up such low-cost operations. For Air India, reducing costs has to be a priority even in the existing situation. Without cutting costs, it will not be able to put in place its growth strategy. To make routes profitable, cost cutting is a priority. Growth is inevitable for Air India. Profitability on routes and improving revenues are essential to achieving growth. We have to improve our product by providing better services to passengers.

More services have to be provided. Without this, growth is not possible, and without growth Air India will be swept away.

On 2007 I am bullish on our prospects this year. Economic growth in the country has led to a great demand for airline seats. Volumes have increased in all categories, be it tourist traffic, business travel or visits to friends and relatives.

On the merger We found that today the two airlines — Air India and Indian — are performing an almost-similar role. There was a time when Indian was the only one to fly domestic routes. Air India was always in competition with foreign airlines. So these two airlines had clearly demarcated regions and at that point of time there was no need of a merger. With the opening up of the civil aviation sector, Indian is now free to go anywhere in the world. Similarly, Air India is free to fly within India. Two airlines owned by the same owner are doing exactly the same thing. Also these two airlines should compete with other private airlines, rather than between themselves. But there is much bigger competition in the huge international airlines market. The competition from these airlines is much greater because Air India faces it day in and day out. The local private airlines and large international airlines market has become so huge that unless you have the latest in terms of technology, networks and the clout to face the competition you won’t survive. We are small airlines and we have 40-odd aircraft, which is nothing compared to other players in the international aviation sector. There are 500-plus-aircraft airlines. We are going to become an airline of 125-150 aircraft, which is going to make us one of the biggest airlines in Asia.

On low-cost long-distance operation We are open to the idea of flying a low-cost airline to Europe and the US. Who knows, it might catch on in future and we would like to gear up to meet such a demand.

But, as of now, there are no concrete plans in this regard.

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A hard look at the numbers

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etween 2001-02 and 2005-06, AI’s performance indicators showed some disconcerting picture even as it carried more and more passengers. AI’s operating revenue rose to Rs 8,833 crore in 2005-06, a rise of 16.4 per cent over Rs 7,588 crore in 2004-05, which itself was a rise of 23 per cent over its previous year of Rs 6,146 crore in 2003-04. The operating revenue rose by 16.5 per cent in 2003-04 over the previous year 2002-03 when it stood at Rs 5,275 crore, or a rise by 11 per cent over 2001-02 benchmark year’s Rs 4,751 crore. Incidentally, over its previous year 2000-2001 when the operating revenue was Rs 4,927 crore, the 9/11-inflicted pain resulted in a fall in operating revenue by 3.5 per cent even though the revenue rose by 10 per cent, to Rs 4,927 crore, in the decade beginning 2000-01. Over the same six years, operating expenses rose by 22 per cent in 2005-06, 23.3 per cent in 2004-05, 11.8 per cent in 2003-04, 13.7 per cent in 2002-03, fell by 24 per cent in 2001-02 and rose by 12.6 per cent in 2000-01.

Operating costs: Air India’s operating cost, in terms of rupees per ATKm (Avail-

able Tonne Kilometre) has moved along a very narrow band-Rs 20.36 in 2000-01; Rs 20.09 in 2001-02; Rs 21.90 in 2002-03; Rs 25.81 in 2003-04; Rs 26.50 in 2004-05 and Rs 26.78 in 2005-06. At the same time, the yield per RTKm (Revenue Tonne Kilometre) was Rs 26.00 in 2000-01; Rs 26.38 in 2001-02; Rs 25.80 in 2002-03; Rs 25.81 in 2003-04; Rs 26.50 in 2004-05 and Rs 26.78 in 2005-06. The operating ratio (expenses to revenue) over these six years was 99.94 in 2000-01; 101.5 in 2001-02; 103.60 in 2002-03; 99.46 in 2003-04; 99.35 in 2004-05 and sharply jumping to 104.52 in 2005-06.

Passengers carried: Since 2000-01, the number of passengers carried has shown an up trend except for a fall post 9/11. Against 3.44 million passengers that the airline carried in 2000-01, the number fell to 3.2 million in 2001-02 before rising to 3.45 million in 2002-03; 3.83 million in 2003-04; 4.44 million in 2004-05; 4.43 million in 2005-06.

Load factor: Even more disconcerting has been the drop in its passenger load factor, which fell from 73.1 per cent in 2000-01 to 66.6 in 2001-02, before rising

to shortage of aircraft, which means difficulties in opening or flying to newer destinations and that, too, direct. For instance, in the last more than one year, at least two US carriers — Continental and American — have been flying non-stop to Newark and Chicago from New Delhi and recently Delta started direct non-stop services between Mumbai and New York.

Air India is still going through London and Paris. It may be mentioned here that few

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to 71.6 in 2002-03, again falling to 70.5 in 2003-04, 69.8 in 2004-05 and down to 66.2 in 2005-06. In fact, the overall load factor fell even more from 67.4 per cent in 2000-01, to 60.8 per cent in 2001-02, before rising to 64.6 in 2002-03, again falling to 61.2 in 2003-04, 61.6 in 2004-05 and further down to 56.4 per cent in 200506.

Aircraft utilisation: All the downward movement in load factor was happening when Air India’s aircraft utilisation in revenue hours per kilometre showed a smart rise. It dropped from 3,270 hours in 2000-01 to 3,234 hours in 2001-02 before rising to 3,586 hours in 2003-04, 3,846 hours in 2004-05 and to 4,103 hours in 2005-06.

Staff strength: Air India’s staff strength over the same period fell. It dropped from 17,185 in 2000-01 to 16,612 in 2001-02; 16,068 in 2002-03; 15,572 in 2003-04; 15,914 in 2004-05 and 15,884 in 2005-06. On the other hand, the ATKM per employee rose from 1,70,600 km in 200001 to 1,75,400 in 2001-02; 1,90,700 in 2002-03; 2,37,500 in 2003-04; 2,94,300 in 2004-05 and 3,39,400 in 2005-06.

months back Air India was forced to withdraw its Boeing 747-400 on the IndiaParis-US routes because the Jumbos’ lease expired. Thus, in the place of a 425passenger carrier in three-class configuration, Air India was forced to deploy Boeing 777 with just about 300 passengers on the same route. This happened when the Air India jumbo flight was going nearly full from Mumbai to Paris and choc a bloc from Paris to the US. CRUISING HEIGHTS February 2007

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In short, Air India should be making more money, which it is, but at the same time, other cost parameters, like wages, fuel bill, etc., have caused a bigger hole in its kitty. Before we get into fuel economics, let’s look at what IATA has to say about it. As per IATA statistics, world airlines paid US $44 billion for fuel in 2003, or 14 per cent of the operating cost; US $91 billion in 2004, or 22 per cent of the operating cost; US $112 billion in 2005, or 26 per cent of the operating expenses, which rose to US $115 billion in 2006. On the other hand, the international passenger traffic grew by 7.6 per cent in 2005. The aviation industry is returning to a more normal growth pattern after the shocks that began in 2001. The historical growth rate has been six per cent. The induction of more modern aircraft has also helped in containing the fuel cost, as the modern jets are far more fuel-efficient. Thus world airlines’ fuel efficiency improved 20 per cent in the last decade, nearly five per cent over the past two years. Today’s modern aircraft consume, on an average, 3.5 litres per 100 passenger kilometres, which is similar to a small compact car’s but six times the speed. The Boeing 787 and Airbus A380 are supposed to have fuel efficiency of three litres per 100 passenger kilometres.

In fuel sense, Air India has not had the benefit of either kind — in terms of lower fuel bill or more efficient aircraft consuming lesser fuel for the same payload, as established by IATA statistics. For instance, Air India’s fuel bill in 2005-06 was Rs 3,134 crore, which constituted 33 per cent of its total cost. This was way above the IATA world average. Obviously higher fuel prices charged in India for an originating flight will cause a dent. Secondly, fuel-inefficient older aircraft will further add to it. Thus again in this context, it is far better to bunch the induction than spacing it when the word spacing in the Indian context means ‘decades’, as happened with Air India and also Indian.

According to indications, the current fiscal 2006-07 is already experiencing a severe pressure on yields largely triggered by high fuel prices. If you look at destinations flown by Air India there is massive competition from airlines that pay at least 22 per cent less for the aviation turbine fuel (ATF) vis-à-vis Air India. Thus they are able to offer lower fares, which compel Air India to match them at a great disadvantage. Their aircraft are new, giving them higher fuel efficiency, which Air India is unable to match because of its Jurassic

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Today’s modern aircraft consume, on an average, 3.5 litres per 100 passenger kilometres, which is similar to a small compact car’s but six times the speed.

CRUISING HEIGHTS February 2007

Park fleet, due to older fleet.

Thus for Air India to now do a 180-degree turn and come out with a new product — as newer aircraft are inducted on these and many more newer, longer, direct routes — it will call for top-class management, instead of a firefighting management it has had all along. It will call for security of tenure and a quality team in place to oversee the vision and make the dream a possibility.

Air India, however, remains optimistic. According to S. Venkat, Executive Director Finance and also the Chief of the airline’s PR, come April 2007 most of the issues will enter the resolution phase. By December 2007, Air India would have received 17 brand new aircraft, comprising nine Boeing 737-800s, four Boeing 777-200 LRs and four Boeing 777-300 ERs. The problem faced in the last one year was mainly due to the reluctance of lessors to renew the lease of Boeing 747-400s as the much-expected A380, seen as a big-time replacement of Jumbo, failed to materialise.

Airbus A380s are expected to enter commercial service only by the end of 2007.

The arrival and successive induction of the 68 aircraft-18 B737-800s and 50 of the wide-body 777s and 787s-will free the Maharaja from the debilitating long-term use of the current mainstay Boeing 747-400.

By 2011, when last of the 787s arrive, the 747-400s would have become, on average, at least 18 years old and fit for replacement or conversion as freighters, which Air India intends to do. In addition, it has also begun to convert its other workhorse, Airbus A310, into freighters and already two are on way to being converted. The remaining six owned A310s will move into the freighter zone. In the future, Air India hopes to have a big presence in the freighter market, with at least six A310s, six 747-400s and as for the smaller version, the Boeing 737-200 freighters for short haul, which will come in dowry with the Indian and Alliance Air on merger.

However, in the interregnum, the government feels Air India should continue to protect the Gulf and ASEAN routes and not go in for open skies. After all, it is not for nothing that British Airways has managed to hold on to 40 per cent market share over the British skies as against a mere 18 per cent by Air India over the Indian skies. While India offers multiple gateways to foreign carriers and the likes of British, Lufthansa, Emirates have greatly benefitted from it, the favour has not been returned to Air India.

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Burning a hole in the pocket

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ack to fuel. The average price paid by Air India for fuel in fiscal 2006-07 has been 240 US cents per US gallon, as compared with 180 cents in 2005 and 115 cents in 200405. Every additional cent to fuel bill impacts Air India’s bottom line by Rs 7 crore. Around three years ago, in 2003-04 and 200203, the fuel bill accounted for 18 per cent of Air India’s operating cost. But is fuel price hike not applicable to all airlines? Why is only Air India making noise?

True. It is applicable to all airlines. But Air India pays more for fuel uplift from India. During mid-December 2006 the cost of fuel uptake for Air India in India was 230 cents per gallon compared with 199 cents in London, 193 cents in New York, 185 cents in Jakarta and 182 cents in Malaysia. An Air India spokesperson said, oil companies in India were charging more.

To Air India in-plane fuel cost was the highest. But foreign oil companies are also providing in-plane fuel to various airlines, including Air India aircraft in foreign stations, like London or New York.

Whenever Air India is flying the domestic leg, it also pays excise and customs duties. Strangely, till sometime ago, if an Air India aircraft carried fuel, say, on return flight from Dubai or other foreign station, the fuel so carried in the tank on return was assessed for customs duty. In January 2007, Air India’s average fuel price was 252 cents against 212 cents abroad. Thus there has always been a fuel price differential of 24 per cent. With high

For instance, whenever Air India has desired a close departure time to its arrival (a two-hour difference between arrival into London Heathrow and departure by an Air India aircraft) neither British Airways nor the BAA have been kind. The slot offered is 10 hours apart between arrival and departure time. It is very expensive for an airline to let a hugely costly aircraft to remain on ground, leading to cascading effect on other destinations to be served by that aircraft. What a strange behaviour? The Ministry of Civil Aviation has been overenthusiastic in offering to accommodate the requests of Emirates, BA, Etihad, Lufthansa in the name of providing connections to passengers ex-India and vice versa. However, when it comes to protecting the interest of Air India, not so much in preventing others from coming in but more in terms of seeking slots for it in, say, Paris, London, Frankfurt, etc., the same enthusiasm is missing. Does it know the dangers of pursuing such a ‘game theory’ that will make it excruciatingly painful for Air India to pay for its very, very expensive new planes over time. Thank god, the parent Ministry of Civil Aviation opposed any immediate conclusion of open sky agreement with ASEAN. But our illustrious Prime Minister did exactly the opposite. He offered to ASEAN, at the recent summit meeting, an early conclusion of open sky.

Why blame others?

fuel price, old and tired product, absence of direct flights, Air India can only make more losses as it flies more.

Is it not strange that top-class airlines, like Singapore Airlines and Cathay Pacific, charge premium fares despite high fuel prices, fierce competition and rising pressure on yields? It means people are ready to pay more for top-class product. So the way out for Air India is to substantially upgrade its product and not just depend on ethnic passengers. Its new aircraft, like Boeing 777-200 LRs, can fly non-stop from Mumbai to San Francisco.

The 787s, when they come in, will offer new flying experience.

On the government side, it will make more sense to underwrite the fuel cost, as public sector oil companies are virtually profiteering on ATF sales. As per petroleum ministry, oil companies are allowed a 15 per cent margin. It depends on them how much they would like to charge. But they make the most of it.

Air India’s problems will further compound in the near future.

According to a recent change in FAA rules, Air India will not be able to fly its two Boeing 747-300 Combos into the US after 2007.

CRUISING HEIGHTS February 2007

Air India’s problems will further compound in the near future. According to a recent change in FAA rules, Air India will not be able to fly its two Boeing 747-300 Combos into the US after 2007. Hence they will have to be converted into freighters.

But it costs US $8 million to convert. Air India is thinking of doing that by deploying them on the Gulf route, from where it virtually withdrew freighter services and even belly cargo after launching its LCC Air India Express, which uses B737-800 with hardly any cargo space. Should Air India delay the conversion, the freighter market share between the Gulf and India will be taken over by any of the Gulf-based carriers. Already Etihad and Emirates are considering serious moves to fill in this gap.

“We have identified air cargo business as a major revenue stream for us going forward,” said Thulasidas and added that the freighters will help AI enormously in further leveraging its assets. Add to this the joint venture with the Singapore Air Transport Services (SATS) that has just taken off in Bangalore. As part of this joint venture, AI SATS aims to bring in the necessary professional expertise to build, operate and maintain the cargo facility, thereby achieving excellent domestic and international cargo operations. Both the entities will jointly invest more than Rs 80 crore in the development of this project.

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AIR CARGO INFRASTRUCTURE

Cashing in on the wings of

INDIAN FREIGHTERS As air transport costs go down, there is a perceptible shift in the kind of cargo that is being exported. Today, it is more of highvalue, low-bulk stuff. The country is moving ahead to tap the potential air cargo export boom, reports Tirthankar Ghosh.

First, the facts: The growth in air cargo has been faster than the growth in passenger traffic in the past few years.

According to Airports Authority of India (AAI) forecasts, while passenger traffic is likely to increase by 18.8 per cent per annum during the Eleventh Five Year Plan (2007 to 2012), cargo traffic is likely to grow only by 11.4 per cent. According to data posted on the AAI website, international cargo handled by the four metro airports (Mumbai, New Delhi, Chennai and Kolkata) grew by 10.79 per cent in 2005-2006 to 7,62,387 tonnes from 6,88,160 tonnes in 2004-2005. Over the last five years, it has surged 56 per cent.

International cargo traffic is likely to

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CRUISING HEIGHTS February 2007

grow at the rate of 9.8 per cent, while domestic cargo traffic is expected to increase by 8.4 per cent.

The Rs 22 billion courier industry and the Rs 40 billion express segment are expected to grow 20-25 per cent a year, according to a research report by Edelweiss Securities.

The country witnessed almost 20 per cent growth in airfreight in 2005-06.

As globalisation gains pace and India readies to claw at the heels of China in its quest to become a global economic power, the air cargo sector will be poised for significant growth in 2006-07.

According to the goal set by the Finance Minister P. Chidambaram, Indian exports will reach US $150 billion by 2008-2009.

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I

t is no wonder today that Praful Patel, Minister of Civil Aviation, has often been quoted as saying that air cargo has been neglected in the country. Indeed it has. Notwithstanding the high growth, little attention has been paid to improve the infrastructure bottlenecks.

How, then, did this growth happen?

Industry sources point out the reason: exports have undergone a makeover unlike imports, which have remained limited to largely petroleum and crude: both have been growing by more than 40 per cent year-on-year. Other imports, incidentally, have not grown as much in volume or value. Exports, on the other hand, have seen a steady rise as tariffs have tumbled; today’s exports are highvalue, low-bulk commodities like gems and jewellery, which have shifted from the ocean lanes to air.

The spanner in the boom is posed by infrastructure — or rather the lack of it.

On the ground, we still do not have ideal storage or handling facilities. As for the air, we do not possess a large number of aircraft to feed the demand. But the situation is moving for the better with the handing over of the Delhi and Mumbai airports to private operators. The two airports handle more than half of the total exports from the country and with volumes going up, the two airport operators could well charge a fee to provide better services to exporters and freight forwarders.

On its part, the government, too, has been proactive. It has been considering allowing foreign airlines to pick up a minority stake in domestic air cargo services. However, despite the pressures of liberalisation, the government has put its foot down on foreign airlines, holding a stake in Indian aviation companies. Praful Patel recently pointed out that his ministry had proposed to allow 100 per cent FDI in seaplane, helicopter operations and setting up of Maintenance, Repair and Overhaul (MRO) facilities. Besides, he said, the government was considering whether to allow foreign airlines to pick up a stake of up to 49 per cent in cargo airlines.

It is widely believed that the government has planned to enhance the 49 per cent limit to 74 per cent, with foreign airlines picking up 49 per cent of the stake under the overall 74 per cent ceiling. Patel mentioned that the government was keen to attract FDI and was even looking to open the market. “While we have an overall FDI cap of 49 per cent in the aviation sector, we have to liberalise areas such as air cargo, helicopters and seaplanes,” he said. Emphasising that the air cargo indus-

The plans of the government, in general, and the civil aviation ministry, in particular, are to position the country as a global hub for air cargo.

CRUISING HEIGHTS February 2007

try had not seen the type of growth, that had been noticed in the passenger airline sector, the minister said that something needed to be done to open up the sector further by raising the FDI. Hand in hand would be the move to set up second airports at non-metro cities.

This would be in keeping with the enhancement of infrastructure. The move for second airports has been prompted by the fact that most existing airports do not have any place to carry out extension work, like secondary runways.

T

he plans of the government, in general, and the civil aviation ministry, in particular, are to position the country as a global hub for air cargo. It is not merely Praful Patel or the captains of the freight-forwarding sector who keep on harping on this grand vision. Not too long ago, Hwang Teng Aun, President of Singapore Airlines Cargo Pte Ltd, while speaking at the India Cargo Summit, emphasised that the country could indeed become an air cargo hub provided it improves its infrastructure and cost effi-

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AIR CARGO INFRASTRUCTURE

ciency. Considering its geographical location, India, especially Delhi, had the potential to become a global hub for air cargo, Aun pointed out. However, geographical location alone would not give India its global-hub status but also the amount of international trade that the country would engage in. Giving the instance of Dubai, where there is not much of manufacturing or exports, Aun said there was no reason why India, with all its growth in manufacturing sector and exports and imports, could not become another global hub.

That there are prospects of high growth in the air cargo sector can be witnessed from the fact that private operators are virtually growing by the day. Recently, for example, Allcargo Global, hitherto only engaged in sea freight, acquired an airfreight company. Shashi Kiran Shetty, the CMD of Allcargo, believed that the acquisition of Hindustan Cargo had given it dominance in the industry.

Multinationals like FedEx Corporation, too, have shown that the India growth story

34

That there are prospects of high growth in the air cargo sector can be witnessed from the fact that private operators are virtually growing by the day CRUISING HEIGHTS February 2007

cannot be ignored any more. The company recently announced that its express unit had acquired its Indian service provider, Prakash Air Freight Pvt. Ltd. (PAFEX).

PAFEX was one of the largest domestic express companies, with more than 384 offices and depots serving nearly 4,400 destinations. The acquisition had come about, according to Robert W. Elliott, FedEx Express president, Europe, Middle East, Indian Subcontinent and Africa, because the continued growth and improvement of express services would serve to strengthen the country's infrastructure. Additionally, it would enhance the competitiveness of Indian businesses and their access to global markets. Jacques Creeten, FedEx Express vice president — India, put it rather succinctly when he mentioned that as a fast-growing, market-driven economy that recorded 8.4 per cent growth between 2005 and 2006, India was poised to take a leading role on the world’s stage as an economic superpower, and FedEx wanted to be partners in making it happen.

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ICAO REGIONAL FORECAST OF AIR CARGO FOR 2010 (Freight Tonne-Km in millions)

Africa Asia-Pacific Europe Latin America North America

Low-cost airlines have chalked out plans to carry express cargo as alternative revenue streams, which could boost their bottom lines amidst evertumbling passenger fares

1989

1999

2010

1,176 15,634 19,246 2,626 15,962

19,693 37,564 31,193 4,221 29,028

3,440 83,000 52,120 6,950 51,000

While on one hand, the growth in exports has stirred the industry to action, the country’s low-cost carriers, hitherto in the background as far as domestic airfreight was concerned, have also got into the act.

Earlier, solely full-service carriers, like Indian and Jet Airways, handled airfreight.

These low-cost airlines have chalked out plans to carry express cargo as alternative revenue streams, which could boost their bottom lines amidst ever-tumbling passenger fares. Air Deccan, SpiceJet and GoAir, for example, believe that packages and document shipments would make up around 10 per cent of their revenues in the first full year of cargo operations. GoAir has already launched its cargo operations and SpiceJet would be starting airfreight in the second half of 2007. As for the pioneer of low-cost carriers, Air Deccan will have on-board couriers in a few months, time.

The LCCs could have good business since they fly to sectors untouched by the fullservice carriers and the market is indeed huge.

It is not merely the LCCs that are getting into the act. Indian (Airlines), which has been in the cargo business for a long time, has planned out dedicated freighter services from July. According to Indian Chairman and Managing Director, Dr V. Trivedi, the new services would be called Indian cargo. He was also quick to point out that the launch of the new service would not affect the Air India-Indian merger process. When the merger takes place, Indian cargo could be merged with the new entity, he said.

To boost its freighter capacity, Indian would be using five converted Boeing 737200 freighters. In fact, the carrier would also be converting some of the Airbus A300 in the present fleet. The new freighter airline would possibly have a tie-up for bulk handling with Indian Post, among others.

T

he air cargo sector is flying on the same flight path that the passenger sector did. According to industry

CRUISING HEIGHTS February 2007

Growth Rate (%) 1999-2010 5.0 7.5 4.5 4.5 5.0

pundits, with capacities rising by the day, the situation today is one where demand is more than supply. As a result, those in the industry will enhance volumes to enable them to tide over operating costs.

While Praful Patel's announcement that foreign investors could be allowed to invest and own 74 per cent in Indian cargo airlines should be viewed in the right perspective, it is generally felt that there could be few takers for the invitation. UTi India, the subsidiary of UTi Worldwide Inc, has been toying with starting its own freighter services for a long time. It has been operating as a forwarding agent and its growth has been good. However, it is hesitant to bring in its own freighters simply because it feels that there is plenty of capacity in India.

UTi, which operates around 200 chartered freighters in Hong Kong and China, feels that, with domestic airlines adding new aircraft to their fleet and foreign carriers increasing frequencies to India, belly capacity has been on the rise. To add to that is the government's view that the number of passenger aircraft will rise from the present 200-odd to between 600 and 800 in the next five years. In such a scenario, capacity expansion will certainly take place, forcing many in the business to boost operations merely to sustain the current levels of yield.

On the other hand, the ambitious retail plans drawn up by Bharti Enterprises with international retail major, Wal-Mart, Reliance Industries Ltd and others will also boost demand in the domestic air cargo sector.

Already the indications that cargo transportation is moving from surface to air are there. Why else would the low-cost carriers go for cargo? The country till recently had only one domestic cargo airline — Blue Dart Express Ltd — but now more are joining the wave like the Hyderabad-based Flyington Freighters. Even the express service provider First Flight, which has two eight-tonne ATPF aircraft, is planning to acquire a Boeing, which it would utilise on

trunk routes.

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THE LARGEST AIR SHOW IN SOUTH ASIA, AERO

FABULOUS

SHOW The air was alive with the sweet sounds of aircraft roars, signifying the good health of Indian aviation. The occasion was Aero India 2007 at Bangalore, and the who’s who of the world’s aircraft manufacturers were there to signal the great take-off the country is ready for.

A report.

A Russia-made MiG-35 at the Aero India 2007 at the Yelahanka Air Force Station in Bangalore

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INDIA HAS BECOME AN IDEAL AVIATION SHOWCASE

I

T was the show the whole country was looking forward to and it afforded no cause for disappointment. The Bangalore Air Show, better known as Aero India 2007, witnessed more than its share of those magnificent flying machines. Around 500 aircraft companies from around the world—almost a 100 per cent rise since the last show—took part in the five-day event at the Yelahanka air base for a peek at a wide range of new civilian and military aircraft.

Billed as the largest air show in South Asia, the event has, over the years, become the prime showcase for global airplane manufacturers. So, there were not only the big names but also smaller ones in addition, of course, to the giants, Boeing and Airbus. The reward: a piece of the large and growing civil and military aviation cake in the country. Industry sources maintain that deals worth as much as $10 billion each for the global aerospace majors and Indian industry were clinched.

Inaugurated by Defence Minister A.K. Antony along with his two state ministers, Inderjit Singh and Pallam Raju, the international defence exposition-cum-seminar was attended by delegations from 15 countries and air chiefs of 28 nations. Welcoming the hundreds of delegates, participants, exhibitors and other stakeholders, Antony pointed out that Aero India provided an ideal platform to the Indian aerospace industry to showcase its capabilities to the global audience. It was also an excellent forum to explore business

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SPOTLIGHT

It was Hardware Deluge!

The spotlight was on Defence purchases W

ith over $10-billion worth of purchases to be made over the next five years towards military modernisation in the aerospace sector alone, it was no surprise that the sixth edition of Aero India expo's prime focus was on defence hardware. The big question of the day, each day at the show was almost the same-who will walk off with the order for the 126 multi-role fighters worth $7 billion.

Jostling for the contract were the world’s heavyweights: the American F-16 Fighting Falcon and F/A-18 Super Hornet, the Swedish JAS-39 Gripen, the Russian MiG-35, the EU Eurofighter Typhoon and France’s Dassault Rafale. Defence Minister A.K. Antony, who declared the five-day show open, said, “We do not want to continue as buyer and seller and want to establish new relationship with other countries. We want to be involved in transfer of technology, design and development of weapon systems and this air show will help us to achieve our objective.’’Apart from 126 fighters, India was actively in the aerospace market for 80 medium-lift helicopters for the IAF, 197 light high-altitude multi-role helicopters for the army, 12 maritime multi-mission helicopters for the navy, 40 attack helicopters, 45 heavy-lift helicopters, 12 special forces transporters, an unspecified number of strategic lift transport aircraft and UAVs, anti-ship missiles, 12 carrier trainer aircraft and air defence missiles.

The country’s thirst for aerospace equipment couldn’t

have been manifested better at Aero India 2007. More than five hundred aerospace and defence firms put on display their equipment over five days. Business was brisk, and the show saw, among others, strategic partnerships being forged between American contractors Northrop Grumman and Raytheon with Bharat Electronics and Tata Power, respectively. A consortium of French defence and aerospace companies, led by Thales, put in a formal bid for upgrading the Mirage 2000 fighters of the Indian Air Force (IAF). The Thales team met defence ministry officials to discuss the finer points of the proposed upgrade and also submitted a formal proposal to increase the life of the aircraft, inducted by the IAF in the 1980s, by around 20-25 years. The IAF has 52 Mirage 2000s in three squadrons.

Why does India need so many new fighter planes?

To this Air Chief Marshal S.P. Tyagi replied, “If India has to grow economically, there has to be peace and stability around us. And history tells us that peace and stability is not possible without a certain amount of military muscle. In terms of Air Force acquisition, it is not that we will have to pay billions of dollars on Day One. This is something that is spread out over many, many years. One hundred and twenty-six fighter jets will take a decade or more to produce. I would like to believe that we have worked out what we need and what is necessary.’’

The Boeing Globemaster had a flock of visitors throughout the show.

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opportunities and facilitate joint ventures and collaborations for mutual benefit.

Antony mentioned that the motto for such partnerships would be “share technology, gains, risks and the work structure”. He went on to state that the Indo-US nuclear deal and agreement with Russia on access to navigation signals of the Russian Global Navigation Satellite System for peaceful purposes had signaeled the government’s commitment to engage global partners in aerospace power and space. It was evidence enough that India was willing to partner global leaders in the field in its efforts to optimise the advantages of aerospace power. Calling on international aviation stakeholders, Antony said that India’s initiative would help smaller players upgrade engineering and manufacturing skills to compete with the best in the world. Besides, global firms could outsource services of Indian engineers and space scientists.

This year’s air show marked a distinct change from the past: no longer was it a mere showcase for state-of-the-art aircraft and aviation equipment but it turned into, what a news report described as a busy bazaar, with top international firms and local companies doing serious business. It was not without reason that Orville Prins, vice-president, Business Development India of Lockheed Martin, referred to Aero India 2007 as a “historic occasion as companies from around the world try for collaborations with the Indian industry. The Indian budget

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A young fan and his father in front of a hoarding of the Sweden made Gripen

Defence Minister A.K. Antony pointed out that Aero India provided an ideal platform to the Indian aerospace industry to showcase its capabilities to the global audience.

CRUISING HEIGHTS February 2007

for military acquisition will jump substantially over the next five years and we hope to pitch for a market of $10 billion over the next 10 years. We will also explore the civilian aerospace and related markets, too”.

Like Prins and Lockheed, there was Boeing, Northrop Grumman Corporation and Bombardier Inc also looking for a chunk of the action. Dr Dinesh A. Keskar, senior vice-president for sales for Boeing Commercial Airplanes, maintained that the air show had been good with high quality companies and visitors. With an eye on the booming economy, Boeing, revealed Dr Keskar, had revised its market projections, which had been made in 2005 for India, from $35 billion over the next 20 years to $72 billion.

In fact, civil aviation has been witnessing a stronger growth–and consequently larger spending–than military aviation. Last year’s Paris airshow saw India hogging the limelight with big orders: there was Air India’s $11 bn order for 68 Boeings, Indian Airlines' purchase of 43 Airbus aircraft for $2.2 billion, and similar purchases by Kingfisher and GoAir. Continuing that trend, EADS (Airbus’ parent company) was at Aero India to woo the country’s airlines, which have a whopping demand for more than 1,000 aircraft, worth $105 billion, over the next 20 years. Apparently, these 1,000odd planes are just one part of the story; they will cover only the metro and inter-city

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SPOTLIGHT

shuttles between 61 airports presently connected by scheduled airlines. There are still a number of airports, from the 450 that the country has, that are still not connected. It is in this segment that low-cost carriers like Air Deccan are building on. Regional jets, like the ones that Russia’s Sukhoi Aviation manufactures, would connect these airports.

Sukhoi was keen to market its 95-seater Superjet 100, developed in Russia as the Russia Regional Jet (RRJ).

The air show also saw aviation equipment manufacturers, like the French defence, electronics and aerospace major Thales, displaying their wares. Thales, for example, signed a major deal with a Chennai-based pilot training academy to supply four advanced flight simulators worth $60 million. Two of these flight simulators would be configured for the European Airbus family (A320 and A330-200), while two others were for the Boeing 727-800 and the 777-300ER. While the biggies remained in focus through the five days of the show, there were others, too, intent on catching the fancy of aviation buffs. On display were aircraft as cheap as luxury cars with a price tag of around Rs 10 lakh. Germany’s light aircraft maker Ikarus brought these two-seater light planes. The microlight aircraft C42B, priced at Rs 25 lakh, in fact, not only received a flood of inquiries from CEOs and pilots but also

40

Visitors walk past a display model of the France-made Rafale fighter plane

Civil aviation has been witnessing a strong growth.

Continuing that trend, EADS was at Aero India to woo the country’s airlines, which have a whopping demand for more than 1,000 aircraft, worth $105 billion.

CRUISING HEIGHTS February 2007

sold a few.

Other than the microlights, what interested corporate high-fliers were business jets. After all, by the end of calendar year 2006, India Inc had bought at least 122 business aircraft, of which at least 15 were sold in 2006, according to market estimates.

And, this air show was no dampener. In the first three days, for example, Raytheon Aircraft, the maker of Hawker and Beechcraft, sold five business jets: a Hawker 850XP, three Beechcraft King Airs and a Beechcraft Premier IA. For five days, the Yelahanka Air Base virtually became a pilgrimage for aviation buffs of all ages,except children below the age of 15 years, who were not allowed to the show. They came walking, in cars and in buses to see those magnificent flying machines. And, the Indian Air Force’s hotshot pilots did not disappoint them. The morning aerial displays by the Surya Kiran aerobatics team charging up the sky in aerial loops and forming cupid smoke lines brought nothing but wows from the thousands gathered there.

The icing on the cake, however, came from the Sarang aerobatic team of the Indian Air Force (IAF), which performed breathtaking manoeuvres with the Advanced Light Helicopters (ALS) despite the death of one of its pilots in a crash during a rehearsal before the show.

Not to be outdone, fighter pilots of the Indian Air Force flew combat aircraft in reverse gear. From daredevil formations by the Jaguars and Sukhois to aerial ballet by the Surya Kiran aerobatics team, those who came to watch had a treat. The highlight of the show were the smoke-emitting Surya Kirans, which painted a heart, pierced by Cupid’s arrow, in an exciting dance in the sky. The aerial displays also featured formations, like Dhruv, Small Boy, Albatross and Stallion, with aircraft, including the IJTs, TU-142 Tanker, IL-78 and the Mirage 2000.

Among those seen at the Aero Show were Kingfisher chairman Vijay Mallya and Tata Sons chairman Ratan Tata, who set the sky ablaze with his daring flight in an F-16 and an F-18 combat aircraft.

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SNIPPETS

NATIONAL Air Sahara launches new fare scheme AIR SAHARA has launched a new concept of fares based on per kilometre basis, under which passengers can avail of substantial saving on select flights on the airline’s network. Passengers can

service will be extended to other fares and international sectors in a phased manner and will also allow ticket delivery on cash payment in the future. As part of another e-ticketing initiative, the carrier has also introduced an innovative ‘Pay Online’ service, whereby the service allows the passengers to pay for and issue eticket against an already created booking.

IndiGo gets new CCO THE low-fare domestic carrier has appointed Sanjay Kumar as Chief Commercial Officer. Sanjay has over 16 years of airline management experience across domestic airlines in India, and his new role at the airline will embrace all aspects of network planning, pricing, revenue management, aircraft scheduling, distribution and pricing. He holds a master's degree in Economics, a postgraduate diploma in Business Administration and Bachelor of Law from Meerut University. Prior to joining IndiGo, he has held various positions in the airline industry, primarily in the areas of marketing, sales and airport services.

The carrier recently took delivery of its seventh brand new A320 aircraft from Airbus in Toulouse, France. It will operate this aircraft to service an additional daily service from Delhi to Kolkata and back, and daily services from Kolkata to Chennai and back and from Chennai to Mumbai. now travel on Air Sahara flights at the cost of Rs 2.40 per kilometre. The traffic on each flight determines the availability of seats under the new scheme. The advantage with the new scheme is that these fares can be purchased anytime, unlike the advance purchase fares (i.e., Steal-a-Seat Scheme) where passengers have to purchase the ticket in advance. Passengers will have the option to avail of the new fare scheme, based on per kilometre basis, in addition to the existent schemes, namely, Steal-a-Seat and Solar Fares as well as Air Sahara Unlimited (which is based on per-day concept) and Sixer (which is based on per coupon concept).

M & C Saatchi bags Jet ad contract AFTER an extensive and exhaustive selection process, the airline has awarded its global advertising business to M & C Saatchi’s India operations. The airline is expected to invest heavily in the media to support its domestic marketing as well as the current and new international routes planned for 2007.

M & C Saatchi has already started work with the airline and a new brand campaign is expected to break later in the year.

The carrier has also launched an Interactive Voice Response (IVR) based payment and ticketing service. This service has been launched through the carrier's 24 x 7 call centres, wherein customers can now book and pay for their e-tickets over an exclusively customised and secure IVR system. This latest service will allow customers to complete their reservation with their credit cards. Owing to its self-driven features, the IVR system is capable of handling customers’ credit card details and processing independently. In the first phase, INR or USD-equivalent INR fares can be booked and ticketed through the IVR system and will be available for all e-ticket eligible sectors within India. This

42

Kingfisher spreads wings THE airline has recently inaugurated a City Ticketing Office at Wallace House in the heart of Kolkata. Personalised attention, warm and friendly service and fast responses form the key features of this new initiative.

The carrier has been bestowed the 2006 Customer Responsiveness Award by Avaya Global Connect, a leading converged

Indian introduces on-line check-in THE national carrier has recently launched on-line check-in for its passengers. Called i-Check-in, the system has been developed by Bird Information Systems, and is at present available to passengers holding e-tickets, Dial-a-Ticket, Net Ticket and Bid-and-Fly tickets for travel on domestic sectors only. A unique feature of this facility is that as many as nine passengers can check-in through a single PNR. Meanwhile, Indian has broken all its previous records of passenger carriage in the month of December 2006. It carried a total of 8.37 lakh passengers, representing a growth of 6.5 per cent over the same month in the previous year. The airline's international carriage has also broken all-time records. It carried a total of 2.11 lakh passengers in December 2006, a growth of 20 per cent over December 2005. Nearly 45 per cent of the carrier's capacity is deployed on the international network. In the months of December and January, Indian supplemented its international capacity by operating flights to carry Haj pilgrims from India to Jeddah and also carried pilgrims to various upliftment points in India. The record increase in traffic is the result of concerted action to improve on-time performance, the quality of product and services on board, and the many marketing initiatives that have been launched by the airline in the recent past.

Ankur Bhatia, Executive Director, The Bird Group, Dr Vishvapati Trivedi, CMD, Indian, and Anita Khurana, Commercial Director, Indian, on the occasion of the launch

CRUISING HEIGHTS February 2007

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communication solutions provider in India. The awards are based on evaluations of customer responsiveness policies and practices of Indian organisations.

Business intelligence firms, such as Ernst & Young and AC Nielsen, are backing the endeavour as process advisors and research partners, respectively. The organisations that have made it to the final awards listing are the ones that have built awareness about customer responsiveness within their set-up and delivered an enhanced customer experience in a consistent manner.

Kingfisher has announced that it has inked a multi-year partnership deal with Toyota Motorsport GmbH to be an official partner of the Toyota F1 Racing team. With the signing of this deal, the airline enters the high-profile Formula One circuit and will be designated as official partner for the Toyota Racing Team of the Kรถln-based Toyota Motorsport GmbH. Rated as one of corporate India's biggest overseas brand partnerships, the deal will initially be for a period of two years, commencing with the 2007 racing season. This partnership also marks the first time ever that an airline based out of India has partnered on this scale with anyone on the F1 circuit worldwide.

Starting from the next Grand Prix, the Fly Kingfisher insignia will feature prominently on the TF107 Formula One racing cars at race events across the globe. The insignia will also appear on the drivers' helmets and overalls, as well as on all corporate branding platforms.

The airline has recently launched direct flights from Bangalore to Tiruchirappally. With the launch of this new route, the airline will be operating more than 146 flights across 25 cities.

The carrier has announced the induction of the world's first and only ATR 72-500 aircraft facilitating in-flight entertainment system (IFE). The aircraft is the sixth ATR 72-500 to be delivered to the airline. All ATR aircraft delivered to the airline hereon will be equipped with in-flight entertainment system.

CRUISING HEIGHTS February 2007

GVHL inducts three new helicopters AS PARTof its expansion plans, Global Vectra Helicorp Limited (GVHL), part of the UK-based Vectra group, and the country's leading offshore air logistics helicopter company has inducted three brand new Bell 412 helicopters to its current fleet of 15 helicopters. Two out of these three new acquisitions will be deployed to serve Reliance Industries Ltd on the east coast as well as the west coast, and the third will be used for another company for their west coast operations.

GVHL has invested USD 22.5 million to acquire the three offshore-configured aircraft, which have been funded through equity and lease finance. These new Bell 412 helicopters can seat two pilots and 13 passengers and are similar to the 15 Bell 412s that the company already has.

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INTERNATIONAL Lufthansa excels, offers attractive entertainment options Qatar Airways Adds Dar Es Salaam THE airline is celebrating the tenth anniversary of its relaunch in 1997 with nine new destinations planned during the year. Dar es Salaam, the commercial and financial centre of Tanzania, becomes the newest addition to the airline's network, with direct, non-stop services to the city.

Qatar Airways will operate four flights a week between

Doha International Airport and Mwalimu Julius Kambarage Nyerere International Airport, in Dar es Salaam.

The route will be operated with a A319 in a two-class configuration of eight seats in Business and 102 in Economy.

LUFTHANSA turned in another record year in 2006. The number of passengers and of operated flights, as well as capacity and sales, all ended the year at an all-time high. In 2006, the airlines in the group carried 53.4 million passengers, an increase on the year-earlier level of 4.2 per cent. Sales rose by two per cent on an increase of 1.8 per cent in capacity.

The passenger load factor was up accordingly by 0.2 percentage points, to 75.2 per cent. Passenger numbers in December climbed year-on-year in the month by 6.9 per cent. The number of flights operated by the airline also reached a new peak in 2006. During the year, aircraft bearing the crane emblem took off and landed safely 6,64,382 times at one or other of the 200-or-so destinations in the Lufthansa route network.

The number of flights operated by Lufthansa Private Jet, the exclusive top-end service for individual and flexible air travel, rose by 13 per cent last year. Up to ten private aircraft were booked daily during the year.

The airline was ranked first in several categories and received five Business Traveller Awards from the readers of the German magazine Business Traveller Deutschland. For the first time Lufthansa was named the overall “best airline on routes to North and South America”. It received a further Business Traveller Award as the best airline in the category “Inflight Food and Drink” on flights to North and South America. The readers also attested to Lufthansa’s expertise in the “Safety” category in two areas — domestic German and European flights and flights to North and South America — Lufthansa secured first place. The survey of readers of Business Traveller Deutschland is conducted annually by an independent market research institute. Respondents evaluated numerous companies in various areas of the tourism sector.

The German carrier is offering two new, attractive services. With the 'betterFly' podcasts — entertaining, informative items in a digital audio format — passengers can quickly and easily download important information about attractive destinations onto their own mp3 player. 'Fanflug' sports portal contains a wealth of fascinating background information about sports highlights worldwide. The most important sports events are also integrated into the fan calendar.

Etihad: new flight to KL, confirms flights to Australia THE national airline of the UAE has completed its maiden flight from Abu Dhabi to Kuala Lumpur, the first of a six times a week, non-stop, service between the two capitals. Following an official ceremony at Abu Dhabi International Airport, guests of flight EY 405, which included the airline's CEO James Hogan and Malaysian Ambassador to the UAE, H.E. Dato' Mubin Razali, departed for KL. Kuala Lumpur is the carrier's fourth destination in the Asia Pacific region, after Bangkok, Jakarta and Manila. The city will join other recently launched routes, including Tehran, New York, Brussels,

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Casablanca, Dhaka and Johannesburg. The airline will operate one of its three-zone A340300 aircraft between Abu Dhabi and Kuala Lumpur, which is configured to carry 10 guests in Diamond zone, 30 guests in Pearl zone and 225 in Coral zone.

The carrier has confirmed it will begin flights to Australia within the next few months from its base in Abu Dhabi. This follows the conclusion of an extended aviation bilateral agreement between the governments of the United Arab Emirates and Australia.

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DAUniversity woos Indian students

Singapore Airlines offers e-ticketing SINGAPORE Airlines has announced the availability of e-ticketing services across all its flights ex India, departing from any of its gateways, namely, Delhi, Mumbai, Chennai, Bangalore, Hyderabad, Kolkata, Ahmedabad, and Amritsar. The airline is also encouraging its passengers to use the Internet check-in facility. This service is available from two to 48 hours before departure time.

Emirates' New Toys THE airline has a surprise for children travelling on board its long-haul flights-a brand new bumper bag of goodies to make flying fun, in addition to the airline's extensive in-flight entertainment package. The new toys come in one of two must-have bags: a colorful rucksack (presented on flights outbound from Dubai) and a cool bag (presented on inbound flights). Each one comes in five different colour combinations. Among them is a new soft toy, called Querk, exclusive to the airline.

Design your own labels while flying KLM INDIAN visitors of klm.com can now design their own luggage labels with incorporating a selected image or their own photographs. The photo could be of the kids, the dog, a holiday or party picture, anything! Alternatively a KLM image can be selected from a gallery of five categories. After ordering, the labels are sent to the chosen address of the customer. Available free of cost for anyone who visits www.klm.com, the limited-period offer lasts as long as there are tags in stock.

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DUBAI Aerospace University, the education and training arm of Dubai Aerospace Enterprise, is all set to offer its aviation education programmes to schools and companies in India. The university’s administrators are to visit the country on a tour to enlighten students interested in pursuing or developing their career in the aerospace and aviation sector, which has a growing demand for a highly-qualified workforce in India.

The university is targeting students whose ambitions are careers — from technicians and pilots to supervisors and managers — in airlines, airports, aircraft and aviation services businesses and aerospace design, engineering and manufacturing.

DAUniversity, which opened its doors last October, is the first of its kind in the Middle East region to offer masters and doctoral programmes in aerospacefocused business and engineering, through its partnership agreement with Londonbased Cranfield University.

The initial curriculum consists of four courses leading to MSc degrees in: Aerospace Vehicle Design, Airport Planning & Management, Air Transport Management and Logistics & Supply Chain Management. For undergraduates, the university offers a BSc programme in Flight and Aviation Management and a DAUniversity five-year joint BSc/MBA degree. The students will also have the opportunity of intern placements and employment in the other five divisions of DAE — DAE Airports, DAE Engineering, DAE Manufacturing, DAE Services and DAE Capital.

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TRAVEL & TOURISM Kolkata provides opportunities for hospitality KOLKATA is witnessing an increasing corporate presence that is triggering growth for the hospitality, retail and residential properties. According to a report, “Emerging City Winners Profiles: Kolkata”, released recently by Jones Lang LaSalle, one of the world’s leading real estate services firm, the city’s real estate market is set for a high growth phase fuelled by the IT/ITES sector.

Kolkata boasts of a highly literate and well-equipped workforce, lower land acquisition costs (when compared with Mumbai and Delhi) and attractive government initiatives, which make it a compelling destination for corporates and developers alike, according to Mr Vincent Lottefier, Country Head, Jones Lang LaSalle India.

The report states that increasing corporate presence is stimulating growth in per capita income and encouraging consumption in the city. Overall, the city provides a positive environment for new corporate entrants, as well as existing corporates eying expansion. Kolkata’s real estate market is set for transformation, and property will play a pivotal role in the city’s continued renaissance. The residential market of the city is expanding on the back of a growing IT/ITES workforce and hotel demand is being boosted by corporate business and tourism. The Kolkata real estate market is now on the radar of leading national and international developers, all keen to participate in the city increasingly dynamic real estate market.

ITC’s Fortune Park at Jammu ITC'S wholly owned hotel chain, Fortune Park Hotels, recently announced the opening of its 29th property — Fortune Inn Riviera — at Jammu. Owned by Chander P. Gupta, Managing Director of JK Heritage Resorts Pvt Limited, the new property has been built on three levels and offers 29 rooms, including 21 standard rooms and eight suites. The name, Fortune Inn Riviera, is completely in

Welcomheritage to Manage Noor-Us-Sabah Palace THE WelcomHeritage Noor-Us-Sabah Palace is known for offering the best view of a setting sun over the Bhopal Lake.

Last year, too, the sunset on December 31 was just as spectacular for the delight of all those who had chosen to stay at the Palace over the New Year's Eve weekend. However, there was one change that was so seamless that no one was aware of it.

By an agreement signed a couple of months ago, the property

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keeping with its location. Built on the banks of the river Tawi, it has been designed by Jammu-based architect Rakesh Gupta and the interiors designed by Anil Badan, who operates out of Jammu and Delhi.

Ezeego1.com goes live with many firsts EZEEGO1.COM is liv and is offering comprehensive features with many unique firsts' not seen before in the online travel market in India. The portal offers a real-time web-based booking engine that is seamlessly integrated to the mid and back office.

Some of the unique features of the site are as follows: Ezeego1.com has an exclusive tie-up with Rail Europe and it enables passengers to book rail tickets anywhere in Europe where Rail Europe has a network. It is a seamless interface and a first for any website in India. Visitors do not have to make separate payments for multiple services bought on the site. A single payment can be made for one or more services availed off on the site. The website is the only one in India to have car transfer facility from airport to the place or residence, office and vice versa. The company has a tie-up with major car rental companies in the world to provide transfers in most places in the world. In order to facilitate offline payments, the company has tied up with EasyBill, which has 2,200 outlets across India.

TRAC to represent Spain Tourist Office SPAIN Tourist Office has appointed TRAC Representations as its representative for the Indian subcontinent. TRAC would be the local PR company of Spain Tourism Office and would be responsible for tourist promotion activities, including travel trade servicing, marketing services and public relations. Spain is second world tourist destination in terms of the number of tourists — 56.6 million — as well as revenue — Euro 46,000 million in 2005. The Indian representation would be handled out of the New Delhi office of TRAC Representations.

will now be managed by WelcomHeritage. This may be considered a first for the WelcomHeritage chain, the joint venture between ITC and Marudhar Hotels. Earlier as and when required, the chain had only lent need-based support to the owners of its 50 properties.

The Noor-Us-Sabah Palace, located on a hillock above the Bhopal Lake, was created in the 1920s by Nawab Hamid Ulah Khan as a residence for his eldest daughter. It offers interesting architecture, a pillared façade, turrets and rooms with arched windows — all adding to its distinctly old-world charm.

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Visit Malaysia Year 2007 campaign launched

Burj Dubai joins super-tall league DUBAI Burj Dubai has joined the league of six super-tall buildings in the world that are 100 or more levels high, including Sears Tower in Chicago (110 floors) and Empire State Building, New York (102 floors). At 347.3 metres, Burj Dubai is one of only 38 structures in the world that are 300 metres or more high. It is now higher than three other super-tall structures in the region, including the Burj Al Arab (321 metres).

To date, 2,42,000 cubic metres of reinforced concrete and 46,000 tonnes of reinforcing steel have been used. The construction of 100 levels was completed in 1,093 days since excavation work started in January 2004.

Burj Dubai is part of the AED 73 billion (US $20 billion) Downtown Burj Dubai mixed-use project, and will have residences, commercial spaces and recreational facilities.

Gold Coast has a presence in Mumbai TO introduce its new office in Mumbai, the Australian Gold Coast Tourism GCT hosted a formal cocktail and dinner party recently.

The evening saw dignitaries like Honourable Margaret Keech (Queensland Minister for Tourism, Fair Trading & Wine Industry Development) and Pavan Bhatia (CEO, GCT) and Sharon Harvey (Associate Director, GCT) raise a toast to their formal arrival in India. The evening was celebrated in Margaret Keech, QLD Minister of Tourism, Sharon true Australian style with a Harvey, Associate Director, GCT, and Pavan Bhatia, spectacular and live per- CEO, GCT saise a toast formance inspired by Conrad Jupiter’s current stage show The Spectacular, Tempo Rouge Show — with an Indian twist ,choreographed by Toby, while Australian-based singer Megan belted out some popular foot tapping chart numbers.

A live band and some fun-filled leisure moments promised not only a truly magical and fascinating experience of what the Gold Coast has to offer but also of the world class entertainment and corporate opportunities that await there. Gold Coast is Australia’s sixth largest city and with a stretch of 70 kilometres of a pristine-white sandy coastline; it’s a place of breathtaking diversity. Filled with the colours of Australian life, Gold Coast houses a strong multi-cultural and cosmopolitan population with a successful multi-faceted economy. What makes Gold Coast really stand out from other destinations, though, is the wonderful range of natural landscapes, entertainment, tours, unique experiences and world-class events.

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MALAYSIA has launched Visit Malaysia Year 2007 to commemorate the country’s fiftieth Independence year. Based on the theme of Golden Malaysia Where Dreams Come True, Malaysia is all set to welcome global tourists with its myriad 240 exciting events and attractions throughout the year. The build-up to the fiftieth Independence Day event started with the official inauguration of ‘Eye on Malaysia’ Ferris wheel, the foremost attraction erected at Taman Tasik Titiwangsa, which is similar to London Eye. The structure is 60-metre high providing 20 km panoramic view of Kuala Lumpur skyline.

Prime Minister Datuk Seri Abdullah Ahmad Badawi was the first to enjoy the 45-minute ride on this newly constructed attraction.

Tourism Malaysia, the nodal agency to promote Malaysia as a preferred tourist destination, kicked off the event by announcing its 7-day-6-night beginning year promotional package for Rs 18,999, jointly promoted with Star Cruise Virgo and Singapore Tourism Board. The package is part of the series of various marketing initiatives that Tourism Malaysia would undertake as part of the Visit Malaysia Year 2007 campaign. Travellers are offered accommodation in star category hotel on twin sharing basis, with breakfast, and airport transfers on SIC basis. The package would provide travellers a two-day excursion each in the City of EntertainmentGenting Highlands in Malaysia and Lion City Singapore, together with two days onboard Super Star Virgo. The package, valid ex-Singapore till 17th March 2007 for travel on allIndia basis, can be booked from leading outbound tour operators of India and does not include airfare.

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Indian Aviation’s icon of the year

IS it any surprise that each year Praful Patel is the Man of the Year? With aviation zooming at a breathless 35-per-cent-plus growth curve, airports being modernised, MROs and cargo hubs being finalised, where on earth does Praful have the time to say thank you and accept yet another pat on the back. But he did find time for T3 and the industry associations — TAAI, TAFI and IATO and HRFI — which feted him for a job well done.

Boy, I loved it

Right hand exits

“IT was exciting... an exhilarating experience. I flew at heights suited for supersonic speed and came down to as low as 500 feet above ground level. Given a chance I would love to fly again,” said 69-year-old Ratan Tata, Chairman, Tata Sons, and an aviation freak, who has often been at the controls of his company's planes. It is one thing, though, to fly a Cessna and entirely another to cross the sound barrier and fly on fighter aircraft, like the F16 and the F18. After President Kalam’s sortie on a Sukhoi last year, this highprofile spin over Bangalore only goes to prove that aviation has that something magical that one can feel only when on wings!

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QUITE simply, Mohan Kumar has been Captain Gopinath’s right-hand man for years. As Gopi candidly admits, the adventure wouldn’t have been possible but for Mohan’s number-crunching brilliance. Beginning with common sense advice from the company’s inception days as helicopter charters, Mohan, who joined whole-time as Finance Director some years back, returns to his practice as a chartered accountant.

But he will still consult with Air Deccan and don’t be surprised to see Gopi in animated conversation with his ‘right hand’ if you ever step into their Cunningham Road office in Bangalore. That’s the esteem in which they hold him and that's how important he is to them.

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