Ch july 2005 by Newsline

July 2005 Vol II No.3

Rs 60

After five successful years, Sunil Arora hands over the baton to Sushma Chawla at Indian Airlines.

PUBLISHER’S NOTE

Not exactly triple A

n assessment at the end of a year in office is nothing new. It’s a ritual that most dailies follow with monotonous regularity. It was no different this year. And it wasn’t surprising that most of the assessments had Civil Aviation Minister Praful Patel in the top three. And that’s where I have a difference of opinion. No this is not to suggest in any way that Praful hasn’t done well. Compared to his predecessors, he has actually been like a breath of fresh air. Articulate, approachable, polished and lucid, he presents a modern face to a Ministry that has for long needed a chief executive who looks a doer. If at all he has achieved anything it is in his push push push policy to open the doors to more flights to the West and the East. But frankly barring the paradigm shift that he has brought forth in bilaterals with the UK and with the USA (who is now really open skies) where has Praful really shifted gears and accelerated the process of making India a truly world class aviation hub. Take for example low cost airlines or no frills flying. Air Deccan hit the air before Praful took over and the rest were all ready to get into the act. It isin’t that the Civil Aviation ministry had to move heaven and earth to get to takeoff and were just waiting for their planes to arrive. The real areas where there is need to move forward are areas where Mr. Patel is going around in circles. IA and AI have still to place orders for aircrafts, 365 days is a long time to move the process forward. It hasn’t and Praful has to take the flak for not fulfilling a promise he made when he was sworn: fleet acquisition is my number one priority. Similarly in the aircraft privatization process there has been a lot of loud noises but no real meaningful movement forward. If anything there have been extension galore at every stage. There is no point in

CRUISING HEIGHTS July 2005

saying the bureaucracy is to blame. If anything officers can be accused at most timer of toeing Mantriji’s line to the T.And if the delays are happening, they look to be happening be design. Praful Patel is an honourable man. He only needs to implement all that he said for the aviation industry to stand up and clap. Newspaper feel good comes from the public at large which may want to applaud Spicejet or Air Deccan for cheap fares but view Praful Patel as the visible face of a changing industry. There has also been too much of ambiguity about foreign routes and who can or cannot fly. Off the record there are stories galore about why the state owned IA and AI have been off the radar on several requests. What is particularly galling is that IA didn't get to fly to London and wasn't offered a slot. Not only was Jet offered prime slots, but its New York operations were announced on the day the their IPO opened for the public. All this and more was raised at the Consultative Committee meetings by MPs.But a consultative committee is a committee without any powers. They come, they speak and they disperse. Like it or not even the best of his admirers acknowledge that Praful has a slight image problem of being pro-Jet. Only he can correct his image and a few sturdy blows in favour of the others will help dispel this notion. Why, even his best pal and Rajya Sabha colleague, Vijay Malaya believes that Praful is less than impartial. So why blame others for this image distortion? Nonetheless, Praful Patel is an honourable man. He only needs to implement all that he said for the aviation industry to stand up and clap. Newspaper feel good comes from the public at large which may want to applaud Spicejet or Air Deccan for cheap fares but view Praful Patel as the visible face of a changing industry. Changing, albeit very slowly.

Off the cuff It was one of the most low-key ‘handover-takeover’ functions in the annals of Indian Airlines. In many ways, one must say: ‘thank God for these small mercies’ Considering the almost graceless way in which many of IA’s past CEOs had to depart, this one was short but it was undoubtedly sweet: a chief executive was leaving after five full years and his senior most deputy was taking over. The letter appointing Sushma Chawla as the first woman CMD of IA, albeit temporarily, arrived late on Saturday, June 11 and Arora decided to hand over charge early next morning. One reason for the delay, according to the grapevine is that there was every chance that Arora would get an extension on his term and the PMO was looking at the pros and cons till the very last moment. But that seems way off the mark, considering Civil Aviation Minister Praful Patel’s short meeting with Arora a few days before he demitted office. It was a somber farewell meeting during the course of which Mantriji told the CMD that he appreciated his stint as the head of IA and regretted that they wouldn't be able to work together any more. So it was clear the he wasn’t going to get an extension. So why then the delay? Another story in the grapevine is that Rajiv Gandhi Bhawan wasn’t sure if it should be Sushma Chawla who should take over from Sunil Arora or should it be Sanjay Narayan, Joint Secretary in the Ministry and the point’s person for IA issues. Anyway to cut a long story short, the fax arrived asking Sushma to take charge. The good lady has now been in the saddle for a four weeks and there is still no news on who will be the full time CEO at IA. Will it be Chawla or will it be another civil servant. With Parliament scheduled to being in Monsoon session this month end, it looks like the waiting game will continue for some more time. Watch out for an update

contents

THE NUMBERS LOOK GOOD

p14

Indian Airlines got a new CMD when incumbent Sunil Arora handed over to Sushma Chawla on June 12. He leaves an airline where the numbers are improving each quarter. As the Director (Finance), Chawla gets much credit for working in tandem with her boss to create a healthy balance sheet.

FLYING FOR THE MAHARAJA

p10

With his New York dreams grounded for the moment, Jet Airways Naresh Goyal found an ingenious way of riding piggyback on Air India to reduce some of his burden by leasing his aircraft to them. An in-depth look at the deal and the many unanswered questions that it has raised CRUISING HEIGHTS July 2005

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

DIRECTORS WOES

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The PESB has short listed whole time director for AI and IA.They are yet to be appointed. Meanwhile several new tricky questions have been raised. An update on the PESB tangle.

CRUISING HEIGHTS RENU MITTAL Editor

R. KRISHNAN Cunsulting Editor

DUSHYANT PARASHAR Creative Director

TOURISM BOOMING

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India is likely to cross the four million mark in tourist arrivals in 2005. It is a landmark achievement. But is our infrastructure geared to meet the increasing flow expected in the next two years?

NEW SNIPPETS

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Sheila Dixit dances at Trafalgar Square !

Tourism Digest

BHART BHARDWAJ Art Director

RAJIV K. SINGH Gen. Manager (Admn)

THE LONDON ROULETTE p20 Flying to London is no longer a big deal. There are scores of flights that you can choose from and the prices are tumbling each day. An exclusive report on traveling to Europe's number on gateway.

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Off the record

Praful's woes in Amsterdam

Aviation Digest

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LAST PAGE John, Johny, Janardhan CRUISING HEIGHTS July 2005

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Editorial & Marketing office: D-11, Nizamuddin (East), New Delhi-110 014 Tel: 51825251/50, Fax: 51825250 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 parts without prior permission. the publisher assumes no responsibilty for material lost or damaged in transit. The publisher reserves the right to refuse, withdraw or otherwise deal with all advertisements without explanation. All advertisements must comply with the Indian Advertisements Code. the publisher will not be liable for any loss caused by any delay in publication, error or failure of advertisement to appear. Published and edited by Renu Mittal for and on behalf of Newsline Publications Pvt Ltd. D-11 (basement), Nizamuddin East, New Delhi-110014 and printed by Bhart Bhardwaj at Kaveri print process, 114 Patparganj Industrial Area, Delhi.

PERISCOPE

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Hello India “It will be a 24-hours-a-day seven-days-aweek facility and will employ at least a 100 people. The facility will become operational by August and will offer a toll-free number for callers from the UK, parts of Europe and the US.” MR. PETER LUETHI Jet Airways CEO Officer

LETTERS TO EDITOR

The cover story on Air India is illuminating indeed. It is entirely appropriate that AI Chairman V Thulisidas believes that the Maharaja cannot go forward unless there is a perspective plan in place and AI can think of what it hopes to achieve in the next five to seven years. For too long AI has been caught in the quagmire of ad hokism that has brought a great airline to the brink of bankruptcy. If only the Air India could be left free by the babus in Delhi and run as a professional institution that is allowed to take its own decisions it can blossom once again into a great airline that can give the best a run for their money. V Sudarshan Via email June 2005 Vol II No.3

Win-win deal

Rs 60

CMD V Thulasidas explains the exciting road map for Air India

PLUS I Jet’s alleged underworld links Whole time directors for IA and AI

The Chickens are finally coming home to roost for Naresh Goyal.For too long there has been talk of the Jet Airways Chairman and has alleged links with dubious characters. While it may all be untrue, he has come to this sorry pass thanks to a lack of transparency in the Indian system that gives clean chits to everyone without getting to the bottom of an issue. It has taken the Americans to stop him in his tracks. He would be making a grave mistake by going for Nancy Tuckerman. She is insignificant. What he needs to do is go transparent on his source of funds and his business relationships.Evertything else will automatically fall into place. Dhruv Doha

MR VIJAY MALLYA Kingfisher Airways Chairman

Ready for take off?

“We will be airborne in the next six to nine months. The aircraft will arrive in batches and we plan to get between 15 and 19 aircraft in the first batch. The aircraft will be a mix of Airbus A-319 and A-320. The aircraft are being custom-built for the airline.” RAKESH GANGWAL Promoting Indigo with Rahul Bhatia

The PESB tangle on appointing whole time directors to IA makes great reading. It also shows the large number of questions that still need to be resolved by the Ministry of Civil Aviation before these appointments can really go through. It would have been much better if these questions had been resolved before the exercise to appoint whole time directors had been undertaken. Prabhat Dehradun All the correspondence may kindly be addressed to Editor, D-11, Nizamuddin East (basement) New Delhi - 110014 OR mail at newslinepublications@rediffmail.com

“The total package that we have with Indian Airlines is worth about Rs 120 crore annually to them. I thought that in this day and age of outsourcing it was a good idea to have such an agreement with IA. The agreement, valid for two years, is a win-win situation for both the airlines.”

Where is my plane ? “The State Government will hold a 26 per cent stake in the venture, while the public, particularly non-resident Keralites, will hold the remaining shares. The proposed airline, which is expected to require an investment of approximately Rs 300 crore, will use leased aircraft.” OMAN CHANDY Kerala Chief Minister

CRUISING HEIGHTS July 2005

COLD STATS “India would require 570 aircraft valued at over $ 55 billion by 2023. Airbus expects to win at least half of this market. Airbus had earlier predicted that India would require about 400 aircraft by that year. India will require at least 20 Airbus A-380 size aircraft.” NIGEL HARWOOD, VP Airbus Who has since moved to Kingfisher..

“To achieve a break even, Spicejet had calculated that its cost per available seat km should be Rs 2 per km and revenue per available seat km between Rs 2.2 and Rs 2.3 per km Typically, an aircraft flies for about eight hours every day, but Spicejet is able to keep it in air for 11-12 hours .We expected to break even by the end of the six months of launching the airline.” MARK WINDERS, Spicejet CEO Winders on the success of the latest no frills airline.

“We have a Catch-22 situation. On the one hand, we have had no recruitment except in the operational categories for more than a decade. On the other hand, the total number of our employees from 1999-2000 have come down by 16 per cent till 2004-05. The departures have gone up by 35 per cent, passengers by 14 per cent to touch 8.6 million from 6.2 million.” SUNIL ARORA, IA's former CMD on the Airline's growth.

LOOKING GLASS

A for Aviation “With the aviation industry facing a shortage of skilled workers for various positions such as pilots, engineers and cabin crew, Air India (AI) is planning to open training schools for pilots and aeronautical engineers. The schools may be set up by us on our own or in joint venture with another company.” V. THULASIDAS AI CMD

CRUISING HEIGHTS July 2005

OFF THE RECORD

Bored at Amsterdam N

ow we all know that Praful Patel is a great party animal and has a large number of friends in Bollywood.Now Shahrukh Khan is one of his personal friends and a great common link between him and Rajiv Shukla.But all that couldn't save Mantriji from getting bored at Amsterdam where he was the guest of honour at the annual IFFA jamboree. Increasingly the iffa awards are getting longer and longer and more boring by the year. Amsterdam took the cake. So the poor man had to wait and wait and watch the inane show till it was time for him to make a presentation say and few words and get out. As someone with Praful later remarked: â&#x20AC;&#x153;jitni der mumbai se Amsterdam aane mein llaga utna hi iffa mein laga.â&#x20AC;? Sure it was a long haul boring dose of entertainment for PP!

What's up Rudy?

Vasundara's Dilli Haat

hose early days of offering unsolicited advise to his successor is now over for Rajiv Pratap Rudy. No he doesn't have much to tell Praful Patel these days. After all, Mantriji has learnt the ropes and can probably tell Rudy a thing or two. The days of appearing on chat show giving the NDA perspective on matters aviation are also apparently over. After all for how long can you keep repeating that the NDA is at the fulcrum of all aviation reforms in the country. So what is Mr. Rajiv Pratap Rudy upto? If reports are to be believed the man is focusing on reviving his contacts, reparing some of his lost friendships and getting back to being the Rudy of old. If that's true it is great news. The old Rudy was as impressive as he was humble. And, yes, he should ask his wife to stick to golf and not poke her nose in his affairs. It did him great damage last time around.

o impressed is Rajasthan Chief Minister Vasandhuraraje Scindia with the concept of Dilli Haat that she has decided to have on in Jaipur.Of course this one can't be called Dilli Haat for obvious reasons. Neither can it be called Jaipur Haat for this centre is going to be showpiece for artists and artisans from around the state. Conceptualising and putting this project together is that old friend Rajiv Sethi.Sethi is delighted at the commission and promises to deliver a knockout punch with his creativity. Like it or lump it, Vasundhara's blunt straightforward approach is a refreshing breath of fresh air compared to the stuffed netas who usually preside over tourism. At least she is straightforward and wants to leave something that everyone can be proud of. So watch out for the Haat that is soon coming up in the heart of Jaipur.

OFF THE RECORD

Hello Paaji

wo of the big daddies of the tourism business in this country are awfully busy these days. No it isin't that business has suddenly skyrocketed. They always had a thriving enterprise that was ably looked after by their family. Both are savvy publicmen with high profile position at the head of two different travel organization--They are at the fag end of the terms at the head of their respective organizations. Subhash Goyal is the head of IATO (Indian Association of Tour Operators) and Balbir Mayal is the head of TAAI (Travel Agents Association of India). Last year, Goyal held a muchpublicized session at Agra and Mayal had a highly successful meet at Kolkata where Vijay Malaya and Praful Patel both made a big splash. This year Goyal has moved to the south

(his event is at Cochin) and Mayal has moved even further to Sri Lanka.There is so much competition to lure these events their way that both organizations now ask for presentations. Infact Mayal cockily announced that after many presentation that had decided on Colombo because they came up with the best deal.

Battle Royale

ho did Renuka Chowdhary suddenly cancel her trip to attend the Dilli Haat show at Trafalgar square. After all the Tourism Ministry had put in huge funds and it was part of the Incredible India campaign that such shows are held abroad. Apparantly External Affairs Minister Natwar Singh was already scheduled to be there and so was Delhi Chief Minister Sheila Dixit and Renuka

decided that two were enough why make it three. The uncharitable said that she had been asked not go. But that seems a little removed from the truth for just a few days later she flew to the US for the World Telegu Conference. â&#x20AC;&#x153;Who will stop me,â&#x20AC;?quizzed Renuka.She is right. But it would have been interesting if both she and Sheila had been together at London. They would made a great show together.

Long hours

ou got to him credit for running one of the most easy going and relaxed ministries in the capital. And all because he is himself such an easy fellow top get along with. Civil Aviation Secretary Ajay Prasad enjoys perhaps the best equation that any Minister Secretary can have in Delhi and that helps as well. He spends almost an hour each day confabulating with Praful and as someone said the other day `` the magic ability to translate the Minister's thoughts into action`` But some of the babus in the mantralaya are feeling lefty out because of this bonhomie at the top. It is not that they don't have enough to do, it is just that everything is sewed up before it comes to them

Brand new Kamra

he new member (planning) has taken over at the Airport Authority of India (AAI). The good man has moved to the same floor as the Chairman and we are relieved to inform you that all the din and dust of his room getting ready is finally over. Now why do people blame Ministers for renovating their offices when everyone wants to do the same when they get a position of power? No we haven't seen Mr. Mishra's room as yet so we really can't tell how good or bad it looks after the renovation. But one thing we can tell you for sure. Wooden flooring is the order of the day. Carpets are out and lovely Mahoney finish is in. Makes sense too considering carpets get musty and need to be replaced every alternative year. Here at least it stays for a few years.

SPECIAL REPORT

NARESH GOYAL: The lack of permission to fly to the US is a big blow to the jet airways chairman .The aircrafts are in Mumbai, the rental is piling and he has to find ways to use them.

Ripples in

aviation

circles Air India's decision to fly on jet Airways colours for a fortnight during the peak rush season has created ripples in aviation circles. Was it the right decision? Was it advisable for the Maharaja to fly on Jet colours? Is it just a short gap arrangement or a precursor for a long term relationship? Most important, how is the whole deal useful to Naresh Goyal.An exclusive report. 10

CRUISING HEIGHTS July 2005

he decision of the Ministry of Civil Aviation to allow Air India to take on wet lease Jet Airways grounded Airbus A 340-300 is a classic case of rescuing the competitor. What is even more startling is the fact that it is not for the first time that Air India has not been able to fully utilize its rights. In the past it would go in for dry lease or simply code share with carriers that were already operating on the route. By agreeing to take on wet lease the aircraft of Jet Airways, India's flag carrier has decided to rewrite rules of competition. It will no longer mean garnering a higher market share for itself but surrender whatever is left of it to competition. Otherwise why should Air India take on wet lease the services of Jet Airways aircraft, pilots and cabin staff! Jet Airways was to originally launch its Mumbai-Newark-Mumbai service via London from June 23, 2005. But after another Jet Airways Inc (a Minneapolis based shell airline) filed objections with the US Depart-

JET'S BOEING: The present Jet fleet cannot fly to Europe. They are aircraft just right for Singapore and Kuala Lumpur. That's why the Airbus 340s were leased from South African Airways.

In the past it would go in for dry lease or simply code share with carriers that were already operating on the route. By agreeing to take on wet lease the aircraft of Jet Airways, India's flag carrier has decided to rewrite rules of competition ment of Transport that the Indian private carrier had alleged links with underworld which bordered on laundered money it would be improper for US authorities to give Jet Airways India a go ahead permission. Thus pending a complete investigation of the allegations, Jet Airways permission should be on hold. Following this, FAA, Department of Homeland Security and DoT got into the act and accordingly decided to delay the permission till July 23, 2005. While there is no indication of an early approval to Jet's flight to the US, the consequent grounding of its aircraft at Mumbai airport caused it a huge financial loss. Jet Airways had taken on dry lease three Airbus A 340-300 from South African Airways. These aircraft were to be used on its

Mumbai-London-Mumbai leg and another for extension up to Newark in the US. But when the Americans decided that Jet Airways should not fly into the US till its investigations were over, one of the Airbus A 340-300 had to be grounded at Mumbai airport parking bay. According to aviation industry sources, the aircraft which Jet had taken on lease (with lease rentals speculated to be nearly a million plus US dollar per month per aircraft) were also the same which Air Sahara had sought to lease. But after Jet offered unbeatable lease rentals, Air Sahara failed to acquire them. However, after acquiring them Jet Airways found that it was not in a position to utilize them as the US authorities barred its entry into the Big Apple. As a result of the CRUISING HEIGHTS July 2005

forced grounding of one of its three A 340300, the losses mounted and Jet Airways managed what most managements are euphemistically describing as a ``win-win`` deal for both. But many believe that Jet's paralleled network and cozy relationship in the corridors of power, particularly in the Ministry of Civil Aviation forced the Maharaja to acquiesce to the deal and use Jet's aircraft along with its cabin and cockpit crew on wet lease. It costs about Rs 5 crore (or say1.2 million US dollars) a month for each aircraft A340-300 taken on lease from South Africa Airways. Thus three such aircraft cost his Rs 15 crores a month. This is only the lease rental and add to it the crew, fuel and other costs of operations. When the US authorities refused him permission, he had to ground one of that aircraft. In fact even his Mumbai London aircraft was to fly further to Newark on a rotational basis to make the dry lease from South African airways profitable. Since that did not happen, all his three leased aircraft are proving to be very costly for Jet Airways Naresh Goyal and actually causing a huge loss. Hence he decided to at least place on wet lease one aircraft with Air India. According to informed sources, naresh will charge US $ 4300 from Air India for each flying hour by his leased A 340300.Since the Mumbai-London route is about 8.45 hours to 9hours and the return 8 hours because of favorabletail winds Air India is expected to pay $4300 multiplied by the number of hours the aircraft actually flies. In any case the aircraft cannot land in London and comes back immediately, as part of the deal, AI has to pay for only the flying time irrespective of the crew cost, fuel cost, lease rental etc. and no money to jet airways when the aircraft is on ground It will be Jet Airways whichwill have to bear the cost be it crew, fuel or maintenance. The deal, therefore, seems good for Air India but the issue is of accommodating a com-

PRAFUL PATEL: Civil Aviation Minister Praful Patel has been known to be friendly with Jet. But he says that he is freindly with â&#x20AC;&#x153;everyoneâ&#x20AC;?

The AI CMD is categorical that he is doing what is best for the Maharaja. He needs capacity in the peak season and that's what drove him say sources. CRUISING HEIGHTS February 2005

petitor and subsidising his operations which is the core question apart from the issue of CVC guidelines on leasing. According to Air India sources there was nothing wrong in wet leasing the aircraft for just two weeks till July 27 to meet the traffic rush as it will benefit both Jet and Air India. It has also been stated by the Maharaja that since one of its own Boeing 747-400 will be on Prime Minister's duty and with another to be on stand by it will impact Air India's commercial operations. It is because of this it became necessary to wet lease Jet Airways A 340-300. To justify the lease, Air India also argued that it did look for a similar arrangement with others and on failing to firm up a deal, it opted for Jet! Its not just passengers but even airlines look for convenient flights. Obviously there is nothing one can argue about a win win situation. But what is really funny is the decision of Air India to operate the flights under Jet Airways logo, emblem, colours and staff except for the food which will be from Air India's own contracted caterers. Jet Airways has already acquired the number one slot in the domestic sector garnering the maximum market share. It is now on its way at least on qualitative terms to displace Air India as well. Can you imagine Air India flights landing in Heathrow (incidentally these are also the slots which Air India failed to get for years and which Jet managed easily within two months of official decision to allow private carriers to go international) in Jet Airways colours. It is not for the first time that the Prime Minister or any Indian VIP is flying abroad. In fact each year the Prime Minister goes to US in September to attend the UN General Assembly. He is out of India for nearly 10 days. Besides he and the President of India also visit other countries. But never has Air India deployed any wet lease aircraft for such a short period as it is doing now. By stating that it looked for but did not obtain any aircraft, Air India management has cleverly circumvented the CVC's tender regulations. There are at least two incidents of wet lease one by Indian Airlines in early 199293 and another by Air India in 1994. Both ended in a disaster. The Indian Airlines wet leased a TU-154 from Uzbekistan when IA's own pilots had gone on work to rule. Unfortunately, that aircraft crashed in Delhi and fortunately there were no casualties. IA's then CEO Mr. L Vasudev his job and late Madhavrao Scindia resigned as Minister. As for Air India's Lockheed 1011 wet leased from Caribjet, the deal ended with the lessor filing successfully damages worth Rs 140 crore in the arbitration court in London. In the case of Caribjet the aircraft were painted in Air India colours Q which is not the case now.

When will the directors be appointed? Will they be appointed at all? An assessement. PESB update

Director's woes: part II

o we now have a situation where the Ministry of Civil Aviation hasdecided to go ahead full steam with the appointment of whole time directors on board IA and AI.There was some murmurs in between that Rajiv Gandhi Bhawan was reconsidering the issue and it is possiblethat the entire concept of having board appointees could be shelved. “No we will go ahead with the PESB recommendations and the appointmentswill be made as soon as all the formalities are fulfilled,” saidCivil Aviation Minister Praful Patel. That would mean four appointments each at IA and AI.The only appointment that went through a bit of rough weather was for the position of Director (engineering) which IA had decided to a readvertise for. The engineering units in Kolkata got into the act and choose to go to court to stop the process. Their fear, of course, was that an outsider may not get the top job in this crucial department. Well as it happened Babu Peter of Air India is the short listed candidate for the job. In the normal course Babu perhaps would be as loath to make the move from the Maharaja (where he has spent a lifetime) to Indian Airlines. But having been nosed out for the engineering job in AI where Chairman V Thulasidas plumped for V K Mehra, Peter had no option but to grab the IA offer when it came. Should these departments that handle crucial elements of operation be headed by an in house candidate or a competent outsider is a question that’s difficult to answer. There is little doubt that Babu Peter is a fine professional but the culture and climate in the two airlines are so unbelievably different that it is easy to fathom why there is so much resistance. Anyway, to cut a long story short, Peter is the short listed candidate though it is still possible that there may be

There was some murmurs in between that Rajiv Gandhi Bhawan was reconsidering the issue and it is possible that the entire concept of having board appointees could be shelved. CRUISING HEIGHTS July 2005

surprises before he ACC clears his nomination and he takes his seat on the board. There were also some tremors with respect to the Finance portfolio. One of the potential directors is believed to have gone to the SC/ST commission crying foul at the procedure that kept him out of the reckoning. Of course, he is believed to have vociferously denied that he did anything of that. It was later learnt that the Commission too took no cognizance of the complaint whosoever may have made it and the appointment of Balakrishnan has gone through. So what happens to the two Deputy Managing Directors –Manet Paes and Sushma Chawla –at IA.Both are not in the list of four short listed candidates.Sushma, infact, is now the acting CMD and it is inconceivable that she will not be on the board as and when IA gets back to full strength. In one of the last chores that he performed as CMD, Sunil Arora is believed to have written to the Ministry asking that both the DMDs be nominated as whole time directors of the board to rectify the situation. Indications are the Ministry has decided to accept the proposal and appoint the two DMDs on the board. But this move is likely to happen only after the whole time directors are cleared and a full time CMD appointed. And that still seems a long way off—at the very minimum anywhere between six weeks to twelve weeks. At Air India there is considerable froth on at least two appointments and insiders are outraged that the candidates chosen could “even be considered’.But then as one of them succinctly summed it up: “appointments are games played in the mind, not on the boardroom.” It is rather strange that a Ministry on the overdrive on most matters wants to go at bullock cart speed in an issue that actually requiredit to react at jet speed. Q Politics Eh?

COVER STORY

AN IMPROVING SET OF

NUMBERS

CRUISING HEIGHTS July 2005

Indian Airlines has gone through a turbulent period thanks to a debilitating financial crunch. In the past two years the numbers have imroved vastly. Last year, former CMD Sunil Arora had announced a small profit for the airline. This year, Sushma Chawla (who was Arora's key financial points person as Director (finance) is the CQMD herself and has announced a profit for the first quarter, R. Krishnan discusses in depth the improving numbers at IA THE BRAINâ&#x20AC;&#x2122;S TRUST: Sunil Arora on the day he handed over charge with the brain trust (left to right): Sishma Chawla (Director Finance) and now Acting CMD, Deputy Managing Director Manet Paes and Director (commercial) Anil Goel.

CRUISING HEIGHTS July 2005

espite severe constraints, cut throat competition from private airlines, rising fuel cost and pressure from the unions, state owned Indian Airlines has managed to show a substantial improvement. On some occasion, Oil Companies and Foreign Store Suppliers even sent reminders to Indian Airlines to pay up their outstanding credit. Public Sector Banks showed reluctance to give additional credit facilities in view of the company's deteriorating financial position. Such a financial health or should we say ill-health called for taking stringent steps on an emergency basis for not only meeting external competition but also internal cost control to keep the airline airborne. Had there been no cost control, the airline would surely have made no net profit albeit small. A special drive was undertaken in fiscal 2004-05 to introduce comprehensive budgetary control and a special emphasis was laid on undertaking a serious cost-benefit analysis before undertaking any major project or committing investment. The company management took a conscious decision to reduce overtime, late sitting including work on holidays. Staff facilities like canteen, uniform, transport etc were drastically rationalized to reduce expenditure and subsidy. Besides streamlining of material consumption, stores and spares, expenses on SOD travel, training, temporary postings crew layover etc was reduced. All these helped in effecting cost saving of Rs 148 crore in fiscal 2004-05 compared to Rs 190 crore in 2003-04 and Rs

COVER STORY 102 crore in 2002-03. However, the cost control of Rs 148 crore has come on top of the reductions realized in the previous years. One may ask as to how come cost reduction was less in 2004-05 as compared to the previous fiscal. The answer lay in the skyrocketing ATF prices and competitive pressure on reducing airfare resulting in dilution of yields. The critical issues in this context included high ATF prices, additional tax liability, socio-economic obligations etc. Let us look at the ATF prices first which constitute about 35 per cent of operating cost and any increase in it is bound to add to the already financially burdened IA. During fiscal 2004-05, the ATF prices rose by 30 per cent to an average Rs 27,500 per kilolitre as against Rs 21,000 in 2003-04. As compared to the average price in 2004-05, the ATF price further rose by 27 per cent in May 2005 to Rs 34,800 per kilolitre. Therefore, the frequent rise in ATF prices was the single largest factor for increase in operating cost that adversely affected the profitability of Indian Airlines. Fuel cost of Indian Airlines including Alliance Air rose from Rs 866 crore in 1999-2000 to Rs 2750 crore in the current fiscal 2005-06 based on May

A special drive was undertaken in fiscal 2004-05 to introduce comprehensive budgetary control and a special emphasis was laid on undertaking a serious costbenefit analysis

PACKED FLIGHTS: A slew of innovative packages has ensured that the airline is flying more and more passengers

CRUISING HEIGHTS July 2005

2005 prices. The estimated fuel cost Rs 2750 crore in 2005-06 is about Rs 600 crore higher than IA's budget estimate for 200506 made earlier. Despite a cost of Rs 102 crore in 2002-03, the airline made a net loss of Rs 196.56 crore. In the next year 2003-04, the cost cut was Rs 190 crore and the airline made a net profit after a long gap of Rs 44.17 crore. In fiscal 2004-05, Indian Airlines made a lower net profit of Rs 17.50 crore despite cost cutting of Rs 148 crore. Obviously the zooming ATF prices had its impact on the airlines bottom line. For instance in November 2004, ATF prices touched an all time high of Rs 33,600 per kilolitre as against the average price of Rs 21,000 per kilolitre in the whole of previous fiscal 2003-04. During 2004-05 alone ATF prices or fuel cost rose by Rs 450 crore over 2003-04 and which is now expected to rise by another Rs 600 crore against the budget estimate for 2005-06. It is once again precisely here the cost control by IA management has come to its rescue. IA's operating profit during AprilMay 2005 rose to Rs 22.80 crore as against Rs 10.95 crore in the corresponding period

Will she get it?

ill Sushma Chawla get the top job at IA.Will Praful Patel say yes? An assessment.

Will Sushma Chawla be confirmed in her position as the first Chairman and Managing Director of Indian Airlines? It's a question that being asked by the media, civil aviation observers and the senior management at IA.There is only one man who can answer that question and he isn't saying anything as yet. Civil Aviation Minister Praful Patel offers an enigmatic smile each time he is asked this question: `` we will let you know in good time, `` he says candidly. Unfortunately there are several issues that have been left unresolved thanks to this ad hocism. Foremost, of course, is the fact that IA will be unable to have a Board meeting for a good three months or at least till the time the issue of IA's Chief Executive is settled. After all if Sushma is the acting CMD but not on the board how can she conduct the meeting or even be present at one excepting as an official of IA available to assist the board. So what happens to crucial issues that would require immediate attention of the board? Would they be approved by circulation by the rest of the board? And in case of an emergency who would chair the board? `` There would have been no harm if Sushma had been appointed to the Board along with her appointment as a stop gap CMD, `` said one former IA CMD and added, `` at worst if someone else had replaced her later she could have been asked to resign. At best as Deputy Manag-

At the moment the Ministry of Civil Aviation has written to the government asking for permission to set up a search committee that will â&#x20AC;&#x2DC;unearthâ&#x20AC;&#x2122; the next IA CMD. CRUISING HEIGHTS July 2005

ing Director she could have been confirmed as a Director on the board. `` Infact tone of the last acts of the outgoing Chairman and Managing Director Sunil Arora (see PESB update: Director's woes: part II) was to write to the Ministry of Civil Aviation recommending that both Manet Paes and Sushma Chawla, the two Deputy Managing Directors be brought on the board of IA because of their seniority. That letter is still pending with Rajiv Gandhi Bhawan and no decision has apparently been taken. At the moment the Ministry of Civil Aviation has written to the government asking for permission to set up a search committee that will ` unearth` the next IA CMD.Several names, including Sushma's have been doing the rounds as the possible successor to Sunil Arora.But the Cabinet Secretariat-clearly reflecting the Prime Minister's perspective-has shot down the search committee proposal. Infact the PMO seems to be dismayed that things were left pending till the last moment even though it was well known that Sunil Arora's term was ending on June 11,2005.So at the moment the only thing that is clear is that Sushma will continue in the saddle, albeit as a acting CMD while the government resolves how to go about picking a successor and deciding who it should be. The several advantages in Sushma's favour is that she is already in the saddle, she is the first woman to head IA and she is the senior most amongst the director. Will all that be enough to carry the day? Praful Patel Patel's enigmatic smile isn't Q saying anything.

COVER STORY

LEASED FLEET: IA has survived and prospered thanks to Aroraâ&#x20AC;&#x2122;s bold gamble to lease aircraft. But their real salvation is in acquiring new aircraft.

of 2004. Net profit during this period was Rs 18.50 crore compared to Rs 5.10 crore in the same period of 2004. Apart from cost control, the increase in passenger carriage by 12.9 per cent, capacity produced (ATKM) by 8.1 per cent and capacity utilization (RTKM) by 17.4 per cent over the same period of 2004 helped in keeping IA's flag high. The impact of ATF price hike announced in May 2005 to Rs 34,800 per kilolitre (27 per cent rise against the previous levels) will have an effect on the airlines bottom line in the coming months unless the cost control measures are not eased. This is notwithstanding the decision of the government to waive sales tax payment on ATF used for international flights by designated carriers that now includes among others Indian Airlines. Even as Indian Airlines fights back, its compulsion to fly more than any of the competitor on loss making routes (read North East) has actually restricted the space for it to cut costs further. Against a mandatory Category II routes flying of 10 per cent of Cat I, Indian Airlines deployed 18.5 per cent in 2004-05 and 70.6 per cent on Cat III as against the mandated 50 per cent of Cat II. The disproportionate route dispersal resulted in an additional annual financial loss of Rs 40 crore due to excess Cat II operations and Rs 150 crore due to excess Cat III operations. For example, IA operated to 11 stations, 26 city pairs and 126 flights per week in North East against Jet Airways 4, 9, 31; Air Sahara's 2, 4, 14 and Air Deccan's 2, 5, 14

If the government which owns 100 per cent of Indian Airlines were to relent on mandating the airline to fly only upto what is prescribed for Cat II and Cat III routes, Indian Airlines will certainly rake in for more moollah than what it has done till now. CRUISING HEIGHTS July 2005

under the same heads. Despite all odds, Indian Airlines operating revenue rose to Rs 5246 crore in 2004-05 compared to Rs 4649 crore in 2003-04, Rs 4101 crore in 2002-03. Their operating expense for the three years was Rs 5193 crore, Rs 4524 crore and Rs 4236 crore respectively. IA's total revenue for the three years was Rs 5252 crore, Rs 4725 crore and Rs 4173 crore as compared to a total expense of Rs 5233 crore, Rs 4677 crore and Rs 4370 crore respectively. The net profit after tax in 2004-05 was Rs 17.50 crore, Rs 44.17 crore in 2003-04 and a net loss of Rs 196.56 crore in 2002-03. As per IMRB survey ratings, (survey round No: 18) Indian Airlines was rated as the most preferred carrier by corporate and at par with Jet Airways when compared with all the passengers. The advertising awareness of Indian Airlines is significantly higher at 81 per cent for all mediums and at an unprecedented 92 per cent for television. Similarly awareness of IA schemes is also high at over 80 per cent for most schemes. All these factors resulted into an increase in carriage of passengers of Indian Airlines in comparison to the previous year. If the government which owns 100 per cent of Indian Airlines were to relent on mandating the airline to fly only upto what is prescribed for Cat II and Cat III routes, Indian Airlines will certainly rake in for more moollah than what it has done till now. Combined with cost control measures, it will become a real win for Indian Airlines. What the government Q needs to do is to give a chance to IA.

SPECIAL REPORT

HELLO

LONDON,

HERE I COME

WESTMINSTER: One of londonâ&#x20AC;&#x2122;s great landmarks

Travel to England is no more a prerogative of the rich and the famous. With air fares taking a downward tumble the middle classes are queuing up to take to the skies and what better destination than London. An insight on the opening up of the skies between India and UK.Plus, what it portends for the future of air travel between India and the continent.

s civil aviation boom in India continues and tourist traffic to and from India grows at an impressive rate of 20 per cent annually, these are clearly good times for both the private and public sector airlines operating in the country. The icing on the cake is the sharp downward trend in air fares. Each week the fares dip and traveling abroad is no more a middle class dream. More and more Indians are packing their bags to travel abroad for holidays and leisure. Similarly, foreign tourist arrivals in India over the past year have crossed the 3.5 million mark though the country has the potential to attract many more foreign travellers every year. With liberal civil aviation policy in place, Praful Patel now wants to take the process one step forward. He wants to liberalise the existing bilateral agreements with a number of countries to increase the number of weekly flights and encourage designated Indian carriers to go for even code sharing arrangements. The two leading private carriers - Jet Airways and Air Sahara - have already bagged permissions to fly abroad. After launching its Kathmandu and Colombo flights last year and service to Singapore this summer, Jet has started its Mumbai-London Heathrow connection that began with an introductory return fare of Rs. 23,000 on the sector. The daily service, operated through a leased Airbus A-340 wide-bodied aircraft, has seen good load factor so far. Air Sahara too has got permission to launch daily service to London Heathrow from Delhi though it is still to do so.. Both the carriers are also keen to fly to the U.S. in near future but their plans are yet to get off the ground. Jet because off complaint against it and Sahara for lack of aircraft. According to the Chief Operating Officer, Jet Airways, Peter Luethi, no other market shows the kind of growth that is seen in India. ``In the past year, Jet Airways has seen an increase in passenger loads from 63 per cent to 71 per cent, which is significant,'' he says. With flying time anywhere between seven to nine hours, European destinations hold their own charm for travellers from

SPECIAL REPORT

HELLO

LONDON,

HERE I COME

WESTMINSTER: One of londonâ&#x20AC;&#x2122;s great landmarks

SPECIAL REPORT

BY THE LONDON BRIDGE: London has long been the gateway to Europe and the US for most Indians. It continues to be the numberone destination

A panoramic veiw of the landing strip at London! India where the emergence of a 300 million strong upper middle class with deep pockets has stirred a revolution of sorts in several consumer spheres, travel being just one key area. It was in April this year that India and the U.K. delegations finalised Memorandum of Understanding (MoU) on their Air Services Agreement (ASA), increasing the number of flights between the two countries. Winter this year will see the number of flights between India and the U.K. going up to 42 which will be increased to 49 next summer and to 56 in the winter of 2006. This clearly shows the desire of the two governments for making the move to progressively open up the growing market between the U.K and India. It will also open up more routes to competition and throw up the opportunity for greater frequencies on existing routes. India has Air Services Agreements with nearly a hundred countries till date, aimed at increasing connectivity and offering greater facilities to the people to travel to more destinations globally. As many as 52 airlines are operating flights to and from India and Indian carriers are operating to 25 countries and having code sharing arrangement with 17 other countries. That shows that a large number of ASAs are still lying unutilised or unexplored. So far as flights between India and the U.K. are concerned, apart from Air India

Winter this year will see the number of flights between India and the U.K. going up to 42 which will be increased to 49 next summer and to 56 in the winter of 2006 CRUISING HEIGHTS July 2005

and British Airways, the two major players in the sector, private carriers from U.K. like the latest BMI are making their presence felt. Virgin Atlantic which began its operations from Delhi a few years ago with just three flights to London now operates a daily service to London Heathrow from Delhi and is eyeing the market in Southern Indian cities Like Bangalore and Chennai where operations are likely to begin only in next winter. Richard Branson who was recently in Mumbai to announce the launch of thrice a week flights to London from India's commercial hub said he was interested in investing in the Indian domestic aviation sector if allowed to do so by the Indian government. He is also eyeing other Indian cities like Hyderabad, Ahmedabad, Amritsar and Bangalore for starting Virgin's operations which has already carved out a niche for its in-flight services. Andrew Fyfe who heads Virgin's operations in India obviously has three mantras: to introduce greater Indian flavour in flights, to build a strong relationship with trade and build aspirational value of Virgin brand for making it the most preferred airline for travellers flying to and from India. Be it flatbeds, masseurs, private bars or even manicurists, Virgin Atlantic is very unlikely to be even remotely associated with the recent flock of low cost carriers. Richard Branson wants to bring and retain glamour back into flying and his airline reflects it in ample measures. However, with competition in the India-UK sector, Virgin has also introduced special return fares to London pegged at Rs. 23,300 for a

Air Sahara and BritishAirways have now entered into a wide share. Thatâ&#x20AC;&#x2122;s a win-win for the British giant that gets more capacity limited period. Virgin now has 10 flights out of India - seven from Delhi and three from Mumbai. The growing Indian aviation market has caught fancy of others as well. As Nigel Turner, BMI chief executive said on IndiaUK agreement: ``India is a vibrant country with a rapidly developing economy that will benefit greatly from the injection of new genuine competition. An increase of our four-time weekly service to Mumbai to a daily service will certainly be a priority. An additional 28 services per week were agreed for airlines on each side between London Heathrow and Delhi/Mumbai phased over the next 18 months. Limits on services to

With flying time anywhere between seven to nine hours, European destinations hold their own charm for travellers from India CRUISING HEIGHTS July 2005

Chennai and Bangalore have been increased to 14 a week and there has been a limited opening up to other points in India such as Amritsar, Hyderabad and Cochin.'' BMI is the UK's second largest full service scheduled airlines, operating 1600 flights a week to a number of destinations worldwide. With an eye on tapping the large population of ethnic Indians in the U.K, estimated at 1.2 million with increasing affluence, Air India has recently introduced flights on Delhi-Dhaka-Calcutta-London and DelhiAmritsar-Birmingham sectors. Birmingham has become a second gateway for Air India from mid-May. Air India officials say that India-UK market is estimated at over 1.7 million one-way passengers per annum and till recently only around 0.9 million (53 per cent) were traveling on direct services. The remaining 0.8 million (47 per cent) were traveling on indirect services offering by airlines from the Middle East, CIS and Europe over their respective home bases. Till recently Air India mainly pursued trans-Atlantic operations through London. Due to the non-availability of commercially viable trans-Atlantic slots at London, Air India's ability to substantially expand capacity to London, by far the most attractive destination in the U.K., has been constrained. Air India has, however, recently got slots for such terminators at London. Senior officials say that Kolkata-London flights are part of Air India's broad policy decision to operate international flights from various cities in the country, instead of only Delhi and Mumbai, the traditional main gateways, as was the practice till recently. With the introduction of these flights, Air India now has a total of 24 flights per week to the UK - 21 to London and three to Birmingham, thus doubling the capacity offered by the international carrier on the India-UK route in the past seven months. Air India now flies to the U.K. from Ahmedabad, Mumbai, Kolkata, Delhi and Amritsar. All these flights are being operated with wide-bodied aircraft - Boeing 747-400s and Boeing 777-200s in the three class configurations, offering flatbeds in the first class and slumberettes in the executive class. Air India's thrice a week Kolkata-London flight is on those days of the week when British Airways does not fly to London out of Kolkata, a service which BA is keen to operate as it considers Kolkata as an important East Indian gateway. BA recently spent huge amounts in upgrading seats and inflight service in economy class of its flight from Kolkata. These developments surely augur well for the traveling public and with the competition all poised to get hotter in the coming winter, some package deals to London are Q not ruled out.

TOURISM STRIDE

The tourists are coming! 2005 is poised to be a landmark year for Indian tourism with the country breaching the four million mark in arrivals. While giving high marks to Renuka Chowdhary and Company for their effort, Rabindra Seth wonders whether we have the infrastructure and the wherewithal to cater to the growing numbers.

GETTING A FACELIFT: The ITDC's Hotel Kanishka getting a facelift as the Shangri La.The hotel is expected to be operational by the year end. It is now with the private sector

GLOBAL MEETS: If India wants to host big conferences like the WTTC then we need more hotels.

he civil aviation ministry has been hogging headlines for its policy initiatives in liberalizing bilateral air into virtual open skies. The emergence of a dozen of so new domestic airlines, most of them in the budget category, and at long last some movement in the process for airport moderation is winning it plenty of applause. The tourism ministry is now poised to get a bit of the media attention for significant progress in international tourist arrivals promising to make 2005 also a landmark year. It can also take some credit for the quickening pace of the growth of the accommodation sector; more new rooms are being added then ever before, although still not as many as would reasonably close the gap between demand and supply. Starting with a count of 16,000 overseas visitors in the 50s, India had to wait a good quarter of a century before it clocked a million arrivals in a year. This landmark was created in 1987. The two million mark took another seven years and the honour went to 1994. In spite of the boom years of 1995 and 1996, the third million took an entire decade thanks to international calamities like SARS, tsunami, 9/11, Afghan and Iraq wars and tensions on India's own borders. So, in the 12 months of 2004, the country hosted 3.37 million foreign tourists, an increase of 23.5 percent over the previous year. Foreign exchange earning did even at Rs. 21,828 crore, up by 32.9 percent. In dol-

On accommodation though there has been some spurt in additional rooms, the pace is not fast enough to reach anywhere near the demand

CRUISING HEIGHTS July 2005

lar terms the earning were 4.8 billion and 36.1 percent more than in 2003. Since 2004 was largely considered a 'recovery' year there was speculation about prospects in 2005. The tourism ministry seems to have luck on its side. The growth momentum has spilled into this year, though not of the same level as in 2004, still significantly high to make 2005 another landmark year. Figures available with the tourism ministry for the first six months, that is upto the end of June, show that 1.8 million holiday makers have already visited India, an increase of 18.6 percent. Analysts are confident that with the peak season (September to December) still to come this year's growth might will go above 20 per cent. Which , they say, will translate into four million arrivals for 2005. This optimism leads one to the prospect of the target laid down in the Tenth Plan for tourism arrivals being within reach. The plan does not talk of numbers but of raising India's share of the world market from the present 0.38 per cent 0.62 per cent. Converted in to arrivals it would mean a little over five million visitors in 2007. Attracting another million in two years seems feasible. All this is encouraging and fine is it offers the tourism ministry its share of accolades. But the question that industries observers are asking is whether the country will have the infra-structure to host that many tourists by the end of 2007. let us take only two of the major inadequacies - aviation and accommodation. On aviation, the only daunting challenge left is the upgrade

and expansion of airport. The aviation ministry keeps assuring the nation that the challenge will be met. On accommodation though there has been some spurt in additional rooms, the pace is not fast enough to reach anywhere near the demand. With less than a 100,000 rooms in the kitty, the country needs a minimum of 30,000 to 50,000 more rooms to service 5 million guests. It will be recalled that the late Madhavrao Scindia in his National Action Plan for Tourism presented to Parliament in May 1992 had promised to double the accommodation (then at 44,000 rooms) in five years that is by 1997. it took us many more years to reach the target because the average addition of rooms in a year was around 3,000 until the turn of the century. The good news is that 2005 may register another feather in its cap, of crossing the 100,000 room count. The total number of rooms until the end of March 2004 was a little over 91,000 but in the remaining the nine months of the years as many as six thousand rooms were added (twice the earlier average) taking the total of 97,770. The increased tempo is due to the entry of

Figures available with the tourism ministry for the first six months, that is upto the end of June, show that 1.8 million holiday makers have already visited India, an increase of 18.6 percent. CRUISING HEIGHTS July 2005

builders, big business houses (the latest to announce its foray is Reliance which wants to build small hotels around its petrol stations.) An interesting data in the latest FHRAI magazine of projects approved by the tourism ministry shows that as many 90 hotels are in various stages of construction with a total of nearly 5,250 rooms. Spread over the entire country the largest number is in Kerala which should add 26 new hotels (1162 rooms) followed by Maharashtra with 18 hotels (1345 rooms). A welcome shifts in the new projects is that three star category dominate the scene with a count of 48. the rest include 16 five stars and 8 four stars. Land being a state subjects where ownership goes down to the level of Panchayats, the tourism ministry can do little to issue directives. Then there are archaic land laws and building bye-laws, not to speak of the myriad clearances required before a hotels can be built. On top of all this is the high cost of land. Only a national effort through bodies like the National Development Council can get the states to address the issue that will make available the rooms we Q need to welcome the five million.

TRAFALGAR SQUARE HAD SEEN NOTHING EVER LIKE IT AND IT WAS PACKED TO THE RAFTERS: ONLOOKERS, PASSERBY'S CURIOUS SHOPPERS, YOU NAME THEM AND THEY WERE THERE. IT WAS THE DILLI HAAT AT LONDON, ORGANIZED AS PART OF THE TWIN CITY PACK BETWEEN DELHI AND LONDON

hen Prince Charles visited Dilli Haat in New Delhi two year ago, he was so fascinated by it that he wanted to take back the experience to London. And finally after three years, on June 18 and 19, Trafalgar Square, in the heart of London was transported into a Dilli Haat. The event was a result of a twin-city pact, signed by Delhi’s Chief Minister Sheila Dikshit and the Mayor of London, Ken Livingstone. There were stalls, artisans, and handicrafts, giving Londoners a glimpse of India. The event that cost Rs. 1.4 Crore was such a huge hit that “there were nearly 20,000 footfalls each day,” says Sanjeev Bhargava, of Seher, a Delhi-based NGO, and also the man who organized the entire show. A total of sixty people traveled to London for this two-day cultural extravaganza. “We showcased art forms that were hitherto not seen by Londoners,” says Bhargava. In fact, one of India’s best rock and fusion bands, Indian Ocean, performed one evening, giving a glimpse of a young and vibrant India. Two of India’s best classical dancers-Madhavi Mudgal, a renowned Odissi exponent and Priti Patel, professional in Manipuri dancegave performance at he square. Says Mudgal: “The overall experience was interesting. It was different to dance in the open air and sunlight. The response was positive. Lots of people came.” After such immense success, the London Dilli Haat will be an annual event. A perfect platform to promote Indian culture, handicrafts, traditions and tourism.

London into Dilli Haat. DANCING WITH JOY: SCENES FROM THE DILLI HAAT IN LONDON INAUGURATED BY SHEILA DIXIT AND MS TESSA JOULES, UK'S SECRETARY (CULTURE)

CRUISING HEIGHTS July 2005

SNAPPY INTERVIEW ARJUN SHARMA, Chairman and MD, Le Passage

â&#x20AC;&#x153;Poaching news resulted in decline of wild life safarisâ&#x20AC;?

rjun Sharma took over as Chairman and Managing Director of Le Passage to India in May this year. He began his career as a management trainee with SITA World Travel (India) Pvt Ltd two decades ago and rose to become the Joint Managing Director of the company, as well, as the Managing Director of Sita Holiday Resorts. During the course of his career at SITA. He spearheaded the setting up of India's first all-inclusive boutique holiday resort at Goa and a palatial retreat at Manesar in Haryana. Q How has your business benefited after tie up with TUI? Any other tie-ups in pipeline? A Currently there are no other tie-ups in the offing but strategic alliances and channels are being set up in various parts of the to ensure continued growth and momentum. Q Plans for 2005? A We expect to consolidate the World of TUI business in an SBU titled 'TUI Incoming" where the world of TUI business will be handled by a separate team of people, a Chinese Wall will separate it from the rest of the Le Passage business. Q Explain your wildlife packages. A We package all parts of the country including wild life. However, it is a shame to learn and hear about wide scale poaching of wild life in India specially the tiger. This news has filtered overseas and we are seeing a slight decline in demand of

wild life safaris as people are appalled with this news. Hopefully with the Prime Minister's personal intervention things will change for the better. Q What is the concept of 'create your own package'? A Create your own packages is basically well suited for FIT's and individual travelers. We are all seeing a growing trend globally of low cost airlines and people making their own tailor made programmes around these.

We expect to consolidate the World of TUI business in an SBU titled 'TUI Incoming" where the world of TUI business will be handled by a separate team of people, a Chinese Wall will separate it from the rest of the Le Passage business CRUISING HEIGHTS July 2005

Q Any thought about starting outbound? A TUI and Le Passage will certainly enter this arena in the near future - hopefully summer of 2006 will see a forceful entry of Le Passage in the outbound market. Q Q: Which is the most popular indigenous sector for traveling, especially for foreigners? A The Golden Triangle and Goa continue to be the two most popular destinations for foreign tourists. However, Rajasthan, Tamil Nadu and Uttar Pradesh are also strong favourites of the tourists. Q: Any new plans for the coming times? Any packages to be offered? A We are constantly innovating new packages. We have looked at some new areas in Madhya Pradesh, Gujarat and the North East. These are areas of the future and I am sure tourism will flourish there as well.. Q At what rate do you feel Indian inbound tourism is growing every year? A For several years we suffered with no growth or a very less rate of growth, but the country can now see a compound I growth of 15-16 percent per year.

SNAPPY INTERVIEW

NISHITH SAXENA , Head InterGlobe Cruises

â&#x20AC;&#x153;Our focus is to establish a product based distributionâ&#x20AC;?

ishith is heading the newly formed business division of Inter Globe Enterprises, one of the largest and the most professionally managed travel companies in India. Prior to this he was with Cruise Division, P&O Travel India Limited where he was the Country Head, with primary responsibilities of building an effective team of professionals to establish the cruise brands in the India market. His spoke with Ritu Bararia Q Explain Interglobe Cruises. A InterGlobe Cruises has been appointed as Indian representative for six premium cruise brands owned by world's largest cruise company, Carnival Corporation & Plc. It is India's largest cruise representation company with its large portfolio of cruise brands represented namely Princess Cruises, P&O Cruises, Cunard, Seabourn Cruise Line, Ocean Village and Swan Hellenic. We have been here for the last six months and currently focusing on establishing a product based distribution within the country. Q What destinations you would undertake? A With six brands under our banner, we will have a whole range of product offers for Indian clients. While Princess Cruises is strongest in Alaska & Mediterranean, we would like passengers to experience Princess in Tahiti and Mexican Riviera. Cunard's Queen Mary-2 has numerous Transatlantic Voyages to offer; P&O Cruises has some exotic Canary Islands and Fjords itineraries on offer. Q What are the hottest cruise destinations as far as Indians are concerned? A Alaska & Europe. They have seasonality from May to September, coinciding with the summer vacations in India. We would like to

capitalize on this. Q Your comments on India's potential to become a favored cruise destination. A India has been on the Cruise Map for decades for various cruise lines, mainly because of its strategic geographical location. India as a cruise destination is something that would be a natural fall-out of India being a preferred destination for foreign tourist.

We have adopted a multi level marketing strategy for establishing all the six cruise brands in the Indian market. Our constant innovations in terms of "Personal Choice Cruising", Art Auctions and endless activities for children attract a lot of families to our ships. CRUISING HEIGHTS July 2005

Q Q: What kind of packages you would offer? A So far we have been offering Cruise Only packages on various cruise lines. Most popular of them are 7 days itineraries in Alaska, 10 & 12 days itinerary in Europe and Mediterranean. We have received very encouraging response for our Caribbean itineraries as we had introduced a new concept of "Movies under the Skies", which is a great hit. Our constant innovations in terms of "Personal Choice Cruising", Art Auctions and endless activities for children attract a lot of families to our ships. Q At what rate is cruises market growing every year? A Outbound cruise sales are slated to grow at 20-25 percent each year in India compared to approximately 8 percent global growth. Q Any new plans for the current year that you would like to unfold? A "One-Stop-Cruise-Shop" is the message we have for the trade partners, industry and the end consumer. Q How are you promoting yourself in India? A We have adopted a multi level marketing strategy for establishing all the six cruise brands in the Indian market. We have also undertaken other brand building activities like advertising, e-mailers, direct mailers, training programmes, joint promotions and showcasing of the ships touching Indian port I to the travel trade & consumers.

TOURISM DIGEST

The first Tibetan tourism master plan

he first Tibetan tourism master plan, jointly developed by the China National Tourism Administration and the Tibet Autonomous Region was recently with detail mapping of Tibetan tourism resources as well as concrete setting of targets for Tibetan tourism development in the next 15 years. According to the master plan, during the period of the Eleventh Five-Year Plan, Tibet will use Lhasa as the focal point to build four major rings, two tourism corridors and the

Hong Kong launches new campaign

HONG KONG achieved spectacular growth in 2004 and the visitor arrivals reached a record high of 21.8 million. The numbers are expected to increase to 23.4 million this year with a tourist expenditure of about 97.8 billion Hong Kong dollars. The World Tourism Organization named Hong Kong, for the first time, one of the top ten tourist destinations in 2004. It is expected the opening of Hong Kong Disneyland and other new attractions such as Asia`s largest wetland park will be the incentive to boost the industry further. According to the chief of Hong Kong Tourism Board , Selina Chow, the board will invest 470 million Hong Kong dollars to start its marketing program with the major event of "2006 Discover Hong Kong Year" that started in May.

Sichuan-Yunnan-Tibet Shangri-la wildlife habitat tourism district, its coverage radiating to include Nyingchi, Shannan, Xigaze, Na-chu and Ch`ang-tu, all five regions with the most concentrated Tibetan tourism resources.

Myanmar to host Asian Tourism summit MYANMAR WILL host its first Tourism Forum of the Association of Southeast Asian Nations (ASEAN) in mid-January next year . The nine-day forum, which will take place on January 13 to 21. In June last year, the regional tourism task force met in Taunggyi, eastern Myanmar`s Shan state, in a drive for the progress of publishing ASEAN map in Chinese language for market promotion of the regional tourism industry, maintenance of ASEAN tourism website, information program for third phase of ASEAN tourism movement and implementation of regional tourism agreement. Meanwhile, Myanmar has carried out contests for domestic hotels in the designation of ASEANlevel status for providing better hotel services to visitors from the region. CRUISING HEIGHTS July 2005

Singapore hosts 117th IOC session SINGAPORE IS hosting up to 5,000 delegates including David Beckham and Prime Minister Tony Blair for the 117th International Olympic Committee (IOC) Session from 2 - 9 July 2005 . IOC delegates, sports leaders, future Games Organising Committees, officials and supporters from each of the bidding cities, including London, Paris and New York, as well as international media, will come together at the Raffles City Convention Centre to witness the announcement of the host city for the 2012 Summer Olympic Games. The announcement will be beamed live via satellite to 1 billion people worldwide, allowing Singapore to showcase itself as a premier business and leisure destination. "This IOC Session will show the world Singapore`s finesse in effectively managing mega events, and underscores Singapore`s reputation as a premier meeting destination in Asia" says Singapore Tourism Board`s (STB) Aloysius Arlando, Acting Assistant Chief Executive for Business Travel, Meetings, Incentive, Conventions and Exhibitions. The STB has estimated that the IOC session will give a £13 million (S$40-million) boost to Singapore`s economy. By 2015, the STB aims to double tourist arrivals to 17 million and triple visitor spending to

India gets its first Westin STARWOOD HOTELS & Resorts Worldwide, Inc and Vatika Group, real estate and hospitality player in India, announced an agreement to build The Westin New Delhi Hotel & Residences in Gurgaon, India. Scheduled to open in 2007, and managed by Starwood, the hotel marks the entry of the Westin brand into India and its continued expansion in Asia. The Westin New Delhi Hotel will feature 300 rooms, five restaurants, 17,500 square feet of meeting space, a 16,000 square-foot health and spa center, as well as upscale retail outlets. Located strategically in Gurgaon, the hotel will provide travelers easy access to key convention and commercial offices. Vatika Group is also developing a major residential complex in Vatika City, a five minute drive from the hotel.

£10 billion (approx. S$30 billion). In preparation for the arrival of the IOC delegates, the STB has arranged an enriching experience which goes beyond what might usually be expected when attending an international meeting: The 117th IOC Session ranks among the top three in Singapore`s calendar of events this year. The other top conventions in terms of size and/or prestige this year include the 3rd World Congress of Nephrology from 26-30 June 2005, which brings together some 5,000 foreign delegates, as well as the World Economic Forum`s Asia Roundtable held from 28-29 April 2005 which grouped more than 170 foreign government and business leaders in discussions on key strategic issues on Asia`s future growth and integration. Singapore will next year host its biggest ever event, with 16,000 delegates from more than 180 countries expected to attend the International Monetary Fund and World Bank Group Board of Governors annual meeting. The event is expected to add at least £15 million (S$44 million) to the economy, the Organising Committee of Singapore 2006 said.

Nakheel’s new deal Nakheel, a property developer in the Middle East has announced that it will offer local and international investors development land for sale on the Dubai Waterfront project, the world`s largest waterfront offering. The Dubai Waterfront project, encompassing over 250 best of breed master planned communities, is being developed as a new gateway to the Emirate of Dubai. Sultan Ahmad Bin Sulayem, Executive

Online leaders launch Bezurk SENIOR EXECUTIVES from top internet travel and lifestyle companies - Expedia, Priceline.com, chinadotcom, Fairfax Digital and Yahoo South East Asia have banded together to launch Bezurk in the Asia Pacific Region. Bezurk is a travel "Search Engine" which is the next generation application for the online travel industry. Bezurk gathers travel data from the broadest range of internet sources and delivers side-by-side comparative search results showing price, details and ratings, and then allows users to book directly with suppliers. CRUISING HEIGHTS July 2005

Chairman of Nakheel and Dubai Waterfront Company (DWC) said "With such a path-breaking and visionary project, this offers great potential for investors to create innovative developments on the world`s largest Waterfront offering. Dubai Waterfront will form a self-contained city within a city and gateway to Dubai."

Visa by internet KEEPING INDIAN market in mind, Tourism Malaysia has announced the introduction of new concept of Internet (I) Visa. The system is meant to be initially accessible only to the travel agents. The new system would reduce the time of visa procedure by 48 hours. First of all, a travel agent would have to register themselves on a special website, www.imi.gov.my to get the registration number specific to the agency. This needs to be followed by submission of travel agent profile at the Immigration Department of the Malaysian High Commission.

AVIATION DIGEST

Live TV on board

bmi announces new business

Emirates gets into sports big time

mi the second-largest airline at Heathrow has launched Europe's first modular airline service , following a six-month study surveying the views of 10,000 air travellers.This service will see bmi switch to a single class service, with paid-for catering on board and faster e-enabled services for customers on the ground. Also, customers are being given three fare types to choose from-- according to the level of service and flexibility they want with their ticket. bmibaby`s `tiny` fares available on bmi flights. These low-cost fares will be available at Heathrow for the first time ever. Fares will start from ÂŁ25 one-way. For travellers wanting some flexibility and service, bmi standard fares will be available.

Cathay Pacific wins again CATHAY PACIFIC has scooped the prestigious Airline of the Year title for 2005, in the latest World Airline Awards announced by Skytrax Research of London. The 2005 World Airline Awards are based on the annual Airline Survey conducted by Skytrax - carried out between June 2004 and May 2005. The survey measures over 35 different aspects of passenger satisfaction for each airline`s product and service standards, evaluating the `typical` travel experience. This independent survey is regarded as a primary benchmarking tool for Passenger Satisfaction levels of airlines throughout the world.

QATAR AIRWAYS is set to become the first international airline to install live onboard satellite television as part of a US$100 million agreement with German company Lufthansa Technik. The award-winning airline plans to introduce the new feature on its long-haul fleet of Airbus A330s by the end of the year. The US$100 million agreement also includes engine maintenance and overhaul of the airline's Airbus A320 family of short-haul aircraft over the next 10 years. Qatar Airways Chief Executive Officer Akbar Al Baker announced the agreements following the signing of both MoU's (Memorandum of Understanding) with supplier Lufthansa Technik at the Paris Air Show in the French capital. Lufthansa Technik will install Rockwell Collins' Tailwind 560 product for onboard live satellite television on the airline's fleet of 15 A330s. Passengers will be able to watch live TV from selected networks, further enhancing their inflight entertainment options.

FROM INTERNATIONAL sailing and football, to rugby, horse racing, cricket and golf, Emirates has a hand in each one of them. In addition to the sporting events that Emirates has already been associated with this year, including the Group 1 Dubai World Cup, the Dubai Desert Classic, the Holden New Zealand Open and the Dubai Rugby Sevens, Emirates is involved in a large number of major global sporting events this summer, starting with football where the airline was the Official Partner of the 2005 FIFA Confederations Cup in Germany. When the FA cup returns to action in August, football fans around the world will see some of the most famous names in the game being refereed by match officials sporting the Fly Emirates logo. Also, Emirates Stadium, the new home of Arsenal Football Club, will be ready for the 2006/2007 season when Emirates will take over as the club's sponsor for eight years.

IATA looks at Africa ROBERT MILTON, Chairman of Air Canada has taken over as Chairman of the International Air Transport Association's (IATA) Board of Governors for 20052006.Milton succeeds Jean-Cyril Spinetta, Chairman and CEO of Air France, who ended his term as Chairman with the closing of the 61st Annual General Meeting (AGM) of IATA in Tokyo. The Annual General meeting was attended by over 600 delegates representing airlines from around the world. This was the first AGM and World Air Transport Summit to be held in Tokyo since 1959. The IATA AGM will next meet 4-6 June 2006 in Paris, France. At the meeting, Giovanni Bisignani, Director General and CEO of the International Air Transport Association (IATA) announced two major initiatives on safety with specific reference to Africa.

CRUISING HEIGHTS July 2005

SkyTeam celebrates fifth anniversary IN CELEBRATION of its fifth anniversary, the SkyTeam alliance reflected on accomplishments to-date and outlined strategic focus areas for its next five years and beyond. Members Aeromexico, Air France, Alitalia, Continental Airlines, CSA Czech Airlines, Delta Air Lines, KLM Royal Dutch Airlines, Korean Air and Northwest Airlines pledged to work together on key initiatives, including customer service enhancements, development of the alliance network to accommodate anticipated passenger growth and implementation of technology and e-Services alliance-wide. On June 22, 2000, Aerom?xico, Air France, Delta Air Lines, Korean Air launched the SkyTeam alliance. "Five years ago, four carriers outlined a goal of providing more choices, better service and expanding offerings," said Jean-Cyril Spinetta, chairman and CEO, Air France-KLM.

Virgin Atlantic is 21 According to a survey commissioned by Virgin Atlantic, Britons are now paying less for phones, PCs, TVs and bikes than they were 21 years ago , even though the cost of living has more than doubled in that time. According to the British government's own inflation figures, a typical basket of goods has gone up by 109 per cent since 1984 but the statistics hide massive reductions in some of most must-have consumer items. Virgin Atlantic commissioned the research into prices to celebrate its own 21st birthday after it realised that fares it charges on flights to New York are nearly the same price as they were in 1984 when Richard Branson started the airline. Sir Richard Branson, Chairman of Virgin Atlantic said:" It is eye-opening to see how the prices of goods have changed in the past 21 years since we first started flying. We noticed that our own fares to New York have changed little in price from when we launched on June 22, 1984 and wanted to see how some other prices had altered.

Terminal number one! BEST MARKS for comfort, friendliness and services offered: Terminal 2 ranks right at the top in terms of popularity with the passengers . That was the result of the "World Airport Award" in which Munich Airport was elected as Europe`s best airport in 2005. Now the detailed results of the survey are available, in which Terminal 2 was awarded excellent values. On the criterion "terminal comfort", Munich got the same excellent mark as the world`s best airport Hong Kong. Munich is also ranked along with the leader Hong Kong in the categories of "friendliness of the personnel", "transfer quality", "convenience for the disabled", "services for business travellers" and "orientation". The fact that Terminal 2 is so popular with the passengers is also confirmed by internal surveys.

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John, Johny, Janardhan REMEMBER THE famous 80s film of that name. Well we were reminded of that potboiler when these three Airbus luminaries got together for a news conference at the Intercontinental last month.Kiran Rao and David Velupillai (centre and extreme right) are of course well known in India having traversed the turf for years.Rao as the VP (sales) for the region and David as the Toulouse giant's omnipresent spokesperson. But it's the man on the left (Nigel Harwood) that everyone was waiting to hear. He spoke and, boy, he spoke at length about the great future that the Airbus aircraft had in the country and how it would surpass all expectations in the coming years. And no there were no uncomfortable questions about the CVC or the AI deal. The same evening Harwood quit to announce that he was joining Kingfisher Airlines as the Chief Operating Officer. This gentleman sure knows how to remain in the news.

Sriji is all pervasive Maharana Arvind Singhji of Mewar is the name by which he best known both in India and abroad. But Sriji as many of his admirers and friends address him is well known for the marvelous hotels he runs in Udaipur and the almost unabashed willingness to promote anything that will give a flip to tourism in India. From polo to monsoon tourism to atithi devo bhava, Sriji has promoted everything. He is as incredible as incredible Indiaan enduring personality who has managed to connect the past and the present and promises a delightful future. That's Sriji!

No Comments Ambassador David Mulford, if reports are to be believed, has been approached for comments on the Boeing deal and the Jet Airways squabble that prevents Naresh Goyal from flying to the US. On both issues Ambassador Mulford is keeping a stiff upper lip. No comment seems to be the answer of the season. With so much of speculation floating around in the newspapers, its best that there be no addition to the dissemination of information. Brave heart! It must require a huge amount of spunk and fortitude to look at one's name in the newspapers every morning and still keep smiling. That's what happened to Renuka Chowdhary whom every commentator described as one of those meant for the chopping block in the eminent cabinet reshuffle that's still to happen. But the lady kept her cool and continued with her chores as if nothing's happened. Without a doubt the right attitude indeed. No wonder her admirers call her brave heart! CRUISING HEIGHTS July 2005

Ali Baker comes to Delhi Ali Baker the highly rated head of Qatar Airways has finally got what he wanted-a direct connection to Delhi. The flight commenced operations in the middle of July and if reports are to be believed it has been a resounding success. But this is the holiday season, so one will know the real load factors only when we move into the winter months. But with India-Qatar business growing by leaps and bounds and the Asiad scheduled for 2006 in Doha, the flight is sure to have high occupancy. Baker, a suave and sophisticated Qatari who has created an world class airline from scratch is at present putting together a brand new airport in Doha that will commence operations in 2008 when the first A 380 joins the Qatar Airfleet!