Ch july 2008 by Newsline

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Whatâ&#x20AC;&#x2122;s Up, Docs? The aviation sector is bleeding and the losses are mounting by the day. The time has come for determined stakeholders to battle it out and keep their heads above the water

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EDITOR-IN-CHIEF’S NOTE

Hyderabad Blues

ast week, I travelled on one of the LCCs from Hyderabad to Delhi. It was my first experience on board this airline — and I must say, I was disappointed. No, not with the flight. The crusty British veteran in command seemed the only cheerful person on board. He had a freebie for the ladies (a free drink and sandwich) because it was international women’s day and didn’t have the monochrome tone and tenor that most commanders have when broadcasting on the public address system at 32000 feet. And I must confess, it was an uneventful comfortable flight that landed before time in Delhi because there was no traffic over the national capital! The cabin crew looked like they were strolling at MG Road and giggling and laughing while they made up their minds on which movie to take in at the multiplex and where to jive once that was over. They were amateurish and downright tacky. I wouldn’t blame them for their demeanour. After all, what are you doing distributing sandwiches and litchi juice in your early twenties. It’s time to salsa and burn the floor and here they were working the aisles. But the point is, most of them chose the aisle over the dance floor. The attractions of a glamorous job, zipping off to new cities each day and a comfortable pay packet has been too alluring and like Twenty20 cricket every young man (and woman) wants to have a taste of the magic. The consequences are there for everyone to see. Poor training and even poorer accent and pronunciation cause a huge mismatch between the travelling public and the people who are supposed to be their interface while on board. What makes it worse is the changing demographics of those on board. Many of them are shy, unsure and hesitant to reach out for help. It happened on the way out to Hyderabad, again, on an LCC, departing bang on time. While it’s good to leave on time,

CRUISING HEIGHTS July 2008

some allowance has to be made to get passengers seated. So, here we had the spectacle of a big jamboree from Andhra Pradesh (looked like a marriage party on its first trip by plane) desperately trying to find their seat numbers. One of them shyly asked the passenger in front of my seat if he could take the middle seat in their row since that seemed his number. Clearly, this gent, a seasoned traveller, had no desire to spend an hour and thirty minutes with a rustic next to him. He pointed towards the airhostess and fobbed him off. By this time the aircraft had started taxiing and there were still a good twenty odd people on the aisles searching desperately for their seats. Not wanting to compound the problem, the airhostess asked them to sit wherever they could. So, there you were. Completely new in an alien atmosphere, sandwiched between strangers, not understanding the language or the signs above your head. Finally, when we were airborne and the seat belt signs were off, one of them gently got up and that was the sign for the rest to scamper around and try and place themselves with familiar faces. Anyway, to come back to the return flight. My colleague, a diabetic, would have preferred a low sugar drink to the syrupy Litchi mixture. But that wasn’t available. Neither were there any hot beverages on board. “While I was willing to pass the absence of hot beverages, I think its unpardonable to not account for diabetics,” he said. “Why don’t you give us your feedback,” drawled the steward. But the form never came and there was no feedback. As we were getting down in Delhi, I asked him about the form. “We ran out of stock,” he informed me cheerily and added, “We look forward to welcoming you again.”

Off the cuff

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NextGen to save fuel

In these days of high fuel prices, carriers and pilots are trying their utmost to save fuel. A recent article in the US News and World Report mentions that pilots flying UPS’ freighters to land at their Louisville transport hub use the latest in GPS tracking technology. The planes glide toward their destination in a maneuvre called a “continuous

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A Different Approach The conventional stair-stepped approach used by pilots today involves descending in steps, using engine thrust to level off. In a continous descent approach or CDA, a pilot keeps the plane at cruising altitude until it’s near the airport. Then, depending on the airport, the pilot, with engines idling, descends straight to the runway, or near the runway, where he completes the landing in the traditional manner. With CDA, planes burn less fuel and reduce emission and noise.

Sources: Air Transport Association/ European Air Traffic Management Courtesy: US News & World Report

descent,” which brings the planes to the ground on a direct line, rather than through a gradual approach. The new technique being tested by UPS could reduce congestion in the skies, noise and pollution and even jet fuel costs. A recent test at Hartsfield International Airport in Atlanta found that each continuousdescent landing saved 1300 pounds of carbon dioxide. In a traditional landing, pilots glide the plane through a series of predetermined elevations in their approach to the runway. This practice makes noise and uses more fuel as planes speed their engines to level off at each of the elevation intervals. It is like moving down a series of steps. With continuous descent, the airplane relies on GPS guidance to essentially coast on idle in a direct line from its cruising elevation to the tarmac. It is more like sliding down a ski slope. The GPS system that makes continuous descent possible is part of the FAA’s Next Generation Air Transportation System, nicknamed NextGen, which also enables planes to fly in straight lines — thereby saving fuel — rather than following the twisting paths of the current radar-based system.

IN SEARCH OF A MIRACLE CURE p22 The aviation industry around the world is going through one of its biggest upheavals. Carriers were losing money by the day and with the recent Air Turbine Fuel hike, losses are moving heavenwards. A close look at the situation in the country and elsewhere.

PERISCOPE

In these days of rising fuel prices, running an airline is tough. But there is one carrier — Palmair — with just one plane, which not only runs a smooth operation but does so with élan. Airline staff bids each passenger a safe flight and even takes care to allot them seats of their choice. Plus what do airline honchos have to say about the present situation that Indian carriers find themselves in.

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NEWS DIGEST

KPMG believes India’s air traffic by 2012 will be in the range of 313.72 million people: up from the present recorded level of passenger travel of 116 million. Is that going to happen? Plus Civil Aviation Secretary Ashok Chawla’s warning that no one should expect 35 to 40 per cent growth in the aviation sector to continue.

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

CRUISING HEIGHTS Editor-in-Chief

K SRINIVASAN Managing Editor

TIRTHANKAR GHOSH Consulting Editor

CHOCKS OFF CARGO

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The rise in the price of ATF has sent the express and courier industry into a tizzy. The EICI has gone to the extent of stating that small courier organisations will not be able to withstand the pressure and ultimately close down business.

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Mallya's hatred for low-cost airlines doesn't make any sense now that he owns the low-cost Deccan. What is strange is that the liquor baron is using his position in the Federation of Indian Airlines to air his theme dislike for LCCs.

R KRISHNAN Copy Editor

AALOK SRIVASTAV Copy Desk

BIRENDRA KUMAR Layout Artists

RUCHI SINHA PRADEEP JHA RAVINDER GUSAIN Art Director

BHART BHARDWAJ Co-ordinating Photo Editor

H C TIWARI Subscription

JAYA SINGH Sr Manager (Marketing)

SPECIAL REPORT SNIPPETS

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Jet Airways has been honoured at the annual Civil Aviation Authority of Singapore (CAAS) awards for the growth of its passenger and cargo carriage through Changi Airport, a report on this year’s CNBC AWAAZ Travel Awards 2008, a lot more.

In a landmark judgment that will have far-reaching consequences for private enterprise, judges of the Mumbai High Court have said that the Mumbai International Airport Ltd is a state.

BACK PAGE GLOBETROTTING

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Francie Rehwald’s dream of living in an old, recycled 747 aircraft is nearing fruition. She recently got the wings of an old 747 brought to her mountainside plot to start building her home.

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Nearly 60 years after Chiang Kai-shek and his troops fled the Chinese mainland to Taiwan, a large number of Taiwanese packed the first direct tourist flight from Taipei to Beijing. CRUISING HEIGHTS July 2008

NEETI SRIVASTAVA Chief Manager

NAVNEET SINGH Gen Manager

RAJIV SINGH Executive Director

RENU MITTAL Editorial & Marketing office: Newsline Publications Pvt. Ltd. C-15, Sector 6, Noida 201 301 Tele: +91-120-4145555 All information in CRUISING HEIGHTS is derived from sources we consider reliable. It is passed on to our readers without any responsibility on our part. Opinions/views expressed by third parties in abstract or in interviews are not necessarily shared by us. Material appearing in the magazine cannot be reproduced in whole or in part(s) without prior permission. The publisher assumes no responsibility for material lost or damaged in transit. The publisher reserves the right to refuse, withdraw or otherwise deal with all advertisements without explanation. All advertisements must comply with the Indian Advertisements Code. The publisher will not be liable for any loss caused by any delay in publication, error or failure of advertisement to appear. Owned and published by K Srinivasan 4C Pocket-IV, Mayur Vihar Phase-I, Delhi-110091 and printed by him at Nutech Photolithographers, B-240, Okhla Industrial Area, Phase-I, New Delhi 110020 Vol III No 3

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Gasping for breath

PERISCOPE

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“Today we are all living on oxygen. Everyone is now realising that everyone will go bust if we cannot make our ends meet.” Jet Airways Chairman NARESH GOYAL on the crisis afflicting the airline industry.

LETTERS TO EDITOR

Here’s my prediction “Aggressive consolidation is inevitable. There will be exits, strategic alliances, airlines will have to work out how to share resources and rationalise route networks so carriers complement each other rather than compete.”

CAPA India CEO KAPIL KAUL on what happens next in the aviation business.

Fiery ordeal (Cover Story, June ‘08) gave a bird’s eye view of the ATF fiasco. As a matter of fact, the rise in the price of ATF will spell doomsday for the airline industry in the future. Global oil prices have escalated like never before. Keeping in mind the present situation, if FIREWALKERS INC the prices of ATF are not controlled by the government, the day is not far when travelling in an airplane would become a “luxury” once again. The government should take immediate steps to control ATF prices so that air travellers can heave a sigh of relief. Also, this is an impending crisis and the whole world should stand up to fight the situation. Geet Singh, Meerut June 2008

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As fuel prices touch the stratosphere, airlines owners get edgy. It’s like walking on hot coals: they are cutting costs, dropping routes and wondering what to do next

Changing the blueprint “We are working on delivery schedules to better suit market conditions. There is overcapacity on some sectors in India while some still remain underserved. There is no cancellation so far as aviation is a long-term business and we can slow down deliveries. Some airlines have asked for this and we are working with them.” Airbus Executive VP (market and contracts) KIRAN RAO on how the crisis affects Airbus.

Illustrations: Rajeev Kumar

The story, Welcome to the brave new world of ET (Focus, June ’08) aptly exemplified the pros and cons of the e-ticketing business in India. The airline industry in the world is going through a rough patch precisely because the industry has not taken innovative measures when it comes to gratifying air passengers. I believe that e-ticketing would, to a great extent, give air passengers a chance to have a safe and sound journey without creating any unnecessary problems for air passengers. I hope tour and travel companies would provide air passengers relief by implementing the e-ticketing process. Ravi Bansal, Faridabad

The column, Mishandling ground handling (June ‘08), rightly enumerated the steps That should be taken by the government to make the new ground handling policy practically viable as well as feasible in the light of the impending oil crisis that the airline industry is facing. India, in particular, should intensify its efforts to improve ground handling operations. I know the infrastructure that most of our airports have is not adequate for this purpose. But, I hope that at least, the BIAL and GHIAL airports should set the benchmark in ground handling operations for other airports to emulate. Ketan Dalal, Indore All correspondence may be addressed to Editor, Cruising Heights, C-15, Sector 6, Noida 201 301 OR mail to cruisingheights@newsline.in

No problem “Whether it's a question of buying new aircraft or anything else, the decision is taken at the government level and there are various ministries involved. So you cannot blame me as I left office in March 2008, barely six months after Air India and Indian Airlines merged.” Former AI CMD V Thulasidas on allegations levelled by unions against him.

Being inventive “We are a purely commercial airline and not subsidised by our government, so we face the same situations as the others, but effective cost management is what we will be doing. People will not stop travelling and we will have to work around ways to face the situation.” Emirates Vice President ORHAN ABBAS on how they will face the challenge.

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Only one plane but world-class service

Palmair employs 25 cabin crew and 25 back office staff. Until 2006, Peter Bath, the founder of Palmair, was always in the

departure lounge for each flight to greet the passengers. Later, he used to stand on the tarmac at Bournemouth airport in Dorset where the airline is based and waved off every single flight. After Bath’s death, the carrier’s airport representative Teresia Rossello has taken over and she ensures that each customer can have their chosen seat. Fresh flowers are placed on the plane, including the toilets, everyday. A row of seats has been taken out to provide passengers more leg room.

COLD STATS

The aviation industry around the world is going through turbulent times. Despite the high prices and pruning of flights, airlines around the world try their utmost to please the customer. One such carrier is Palmair. The airline flies its single 34-year-old Boeing 737 no more than twice-a-day, yet it has beaten multi-national rivals like Virgin Atlantic and British Airways in a recent poll by consumer magazine Which? Around 70000 passengers were asked to vote the best overall experience and value for money of 70 worldwide airlines. Palmair, came in joint third position with Air New Zealand and behind Jet Airways and survey winner Singapore Airlines.

LOOKING GLASS

“It is going to be a long wait before he finishes filling up all the planes”

Full steam ahead “We are in talks with corporate players here and few deals have already been sealed. I can't divulge names at this stage, but the groups and high net individuals will get our services soon in India.” BJETS CEO MARK BAIER on their plan of action for India.

What’s the fuss about? “Even the city's business community too wanted a separate airport with better facilities for commercial operations and when such an airport is ready, they want the old one to be retained.” BIAL CEO ALBERT BRUNNER on the two-airport controversy in Bengaluru.

CRUISING HEIGHTS July 2008

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Where is the

Photo: H C Tiwari

fleet expansion?

Ashok Chawla

CRUISING HEIGHTS July 2008

n an interview to a Mumbai daily, Secretary, Civil Aviation, Ashok Chawla has blamed airlines for excess capacity. He said airlines should have studied global trends before creating capacities. To justify his point Chawla said none should have expected the 35 to 40 per cent growth to continue for long and nowhere in the world has the aviation grown by more than twice the respective nations’ GDP. Well, this was a point he had also made at a recent seminar on airports organised by FICCI (Federation of Indian Chambers of Commerce and Industry). Yet another point he made was that the growth was also largely triggered by low fares or undercutting of fares to unrealistic levels resulting in losses. Obviously, the government cannot have it both ways. When the industry was growing at 35 per cent, there was not one international invitation to authorities which was rejected lest it resulted in losing an opportunity to broadcast India’s Aviation success story. There were GoI representatives claiming the arrival of India on the international aviation scene. Well, nothing wrong with that as these babus were also joined by the newfound home-grown aviation leaders from India. When the airlines, including LCCs, were talking of losses in 2005-06 and 2006-07, the talk widely was: “If only our yields go up by say eight US dollars we will all be in the black.” But this refused to happen as competition worked against it. Obviously, in a market economy you cannot have the cake and eat it too as in any old traditional economy. So, increasing competition led to all the existing airlines ordering for more aircraft as passenger growth of 35 per cent was unparalleled across the world. It is a different story that the same Ministry of Civil Aviation that is blaming the airlines for creating excess

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capacity had asked the wait-listed applicants to come up with a business plan. Is it not then a fact that the Ministry and its Aircraft Acquisition Committee also seriously erred by granting wholesale clearances to existing airlines while barring new entrants by doling out sundry excuses? We may also point out here that Air India which is a hand-maiden of the Ministry of Civil Aviation was encouraged to go in for the second round of aircraft acquisition. A full-fledged committee was set up and the two manufacturers even made serious presentation. This time the talk was to buy nearly 169 aircraft — both narrow and widebody aircraft. Lobbyists from both Boeing and Airbus were often seen pushing their case. This 169 were to come on top of the 111 new aircraft ordered by the merged Air India. It was a providential escape that due to political reasons the new acquisition plan was dropped. In any case rising fuel prices would have led to its scrapping and Chawla would have had a different take on it. Yet another question the newspaper asked the Secretary was the liberal grant of overseas bilaterals. His response was that the growth in international traffic was not unrealistic (15 per cent for ex-India) and as such the bilateral rights granted was not done unnecessarily. Yes, he is right and this has enabled a great choice to Indians to reach any part of the world from any part in India. But liberal it indeed was particularly in certain directions. For instance, what foxes anyone is the very liberal grant of bilaterals to airlines from the Gulf in order to accommodate new airlines from India. What is the point in granting 152 flights per week frequency to Emirates and increase frequencies to Etihad, Gulf Air, Air Arabia, Kuwait, etc? Of late, there has been a liberal dole out to Cathay and its sister airline, Dragon Air, and also to other LCCs in addition to full service carriers of the East. Perhaps, we need to tell the authorities that in a way, it was right to increase bilaterals as that was the only way it would have been possible to accommodate the newlyacquired rights of Jet Airways. Now that Kingfisher is also waiting in the queue to take off, will the Ministry accommodate it by increasing the rights which would ultimately help the Gulf-based carriers not for ferrying Indians to the Gulf but beyond to Europe and the US? All that we are saying is: don’t just blame the airlines but also the Ministry for adventuring boldly in a foolhardy sort of way.

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Planes on the tarmac

KPMG study: A different viewpoint!

ndian carriers made a loss of over Rs 4,000 crore in fiscal 2007-08. They are now likely to make an even higher loss of nearly Rs 9,000 crore in the current fiscal 2008-09, ending March 2009. Everyone in the industry and also those in the nodal Ministry of Civil Aviation have blamed the sky-rocketing ATF prices for the painful losses. Industry estimates suggest that fuel costs account for nearly 50 per cent of the overall cost of airlines depending upon the kind of carrier one is talking about. And there are no signs of the pressures easing. It is against this background that a recent study by KPMG holds out great optimism for the Indian aviation industry. It is a different matter as to how many would remain alive in the next two years. According to the KPMG report, Indian Aviation: Flying Through Turbulence, Indian carriers can turn profitable by focusing more on improving efficiency, processes and shifting to a leaner business model. But some of the assumptions KPMG has made as per industry estimates is totally out of line with reality. For instance, the report says that “between 2003 and 2006, world airline fuel expenses including India, grew from 15 per cent to more than 25 per cent of airline operating costs. These levels currently range between 30 per cent for airlines operating new aircrafts and roughly 35 per cent for fleets that are gradually ageing.” The Indian reality is that for domestic carriers the fuel cost is not less than 45 per cent after one averages the entire price to the ATF (Air Turbine Fuel) basket in each city they operate in, depending upon the sales tax prevalent in those city-states. CRUISING HEIGHTS July 2008

However, most interesting of all is the fact that as the main monopoly fuel supplier Indian Oil Corporation hikes the ATF base price and along with it the Central Government levies, the application of, should we say, the imposition of the same percentage point of sales tax on ATF before it is retailed to the domestic carriers, there is a further escalation of the end ATF price. So, for the study to average Indian conditions with the prevalent world airline fuel expenses may not reflect the true picture. At the same time, it must also be stated that the KPMG study is not wrong in concluding that ATF cost for an airline has impact only on direct operating costs, which account for 30 per cent of total airline expenses (we may disagree as we feel it is not less than 40 to 45 per cent at present in India) leaving the rest 70 per cent to be trimmed down. It is also true that airline finances also largely depend on airline efficiency, its market strategy and route planning. For whatever optimistic reasons, KPMG says India’s air traffic by 2012 or four years from now, to be in the range of 313.72 million people: up from the present recorded level of passenger travel of 116 million. Our disagreement also stems from the fact that the KPMG study refers to new aircraft and gradually ageing aircraft. But look at Jet Airways, Kingfisher, Deccan, SpiceJet, IndiGo, GoAir and Paramount. They all have new aircraft with average age not more than four years and in some cases as old as the airline themselves. The only exception being JetLite and aircraft in the fleet of Air India-Indian that are being progressively renewed.

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The

ATF saga of sorrow T

A plane being refuelled

INFRASTRUCTURE NEWS

he ATF (Air Turbine Fuel) story refuses to go away. Fuel prices in India are about 65 per cent higher than in Singapore. Against Rs 70,000 per kilolitre in New Delhi, it is Rs 42,000 per kilolitre in Singapore. Thus, on this score alone, Indian carriers can burn themselves out. There are other costs like airport levies, hotel charges, manpower costs, etc. According to an IATA (International Air Transport Association) study, the aeronautical charges in Indian airports were prohibitively high compared to airports in the South East Asia and the Gulf. Usually, it is the nonaeronautical revenues that subsidise the aeronautical revenues. In India, it is the other way round and thus pushes up the cost of

airlines. Just recall the incident soon after the new Hyderabad International Airports Limited opened to commercial traffic in March 2008. The two licensed GH (Ground Handling) agents, Air India-SATS and Menezies-Bobba, had put high rates as they had to share revenue with the airport operator GMR. Ultimately it had to be reduced to enable the LCCs to land at the new airport. But this is just the preface. Perhaps, the Ministry of Civil Aviation should do a serious study of the facilities being offered by airports to airlines to arrive at realistic figure both in terms of aeronautical and non-aeronautical charges. Historically, it was believed that high tariffs

Karnataka to lobby for HAL airport The ‘Keep HAL Airport’ brigade is excited. Chief Minister B S Yeddyurappa is scheduled to discuss HAL’s reopening during a meeting with Civil Aviation Minister, Praful Patel this B S Yeddyurappa month. Some ministerial colleagues and select industry representatives are also expected to join him at the New Delhi meeting. State IT Minister, Katta Subramanya Naidu told a news daily: “The state needs both airports. We’re going to request the Central government to keep HAL airport open, at least till a second runway is built at BIA.” A second runway is expected to come up in the next three-four years. The BJP made a pre-election promise that if voted to power it would lobby to keep the HAL airport open. Earlier, at the fourth edition of CII’s India Innovation Summit, Naidu said the government wanted to retain HAL airport for short-haul flights. “Retention of HAL airport would be a great help for people flying to Chennai, Hyderabad and Thiruvananthapuram and back. We have several examples of cities where two or three airports are functioning,” said Naidu. When asked whether it wasn’t too late to take up the issue with the Centre, he said the state government has taken over only recently, but there was always scope for a dialogue. “There is no bar for holding a dialogue, espe-

were necessary as only five of AAI airports had to subsidise the remaining airports. All that has changed with progressive private participation. But the aeronautical charges have not. Thus, on top of all this comes the fuel price escalation with its devastating effect on airline economics. Rising air fares has affected budget travel and, of late, is also taking its toll on business class travel. Fast-rising business class fares have forced many companies to instruct their employees to fly economy and that too, if possible, in an LCC and for short hauls take the night train instead. The average load factor for all airlines has dropped sharply and particularly for

cially when it comes to infrastructure development issues,” he said.

US, British firms bid for MIAL GH deal US-based Worldwide Flight Services, Swissport International of Spain and UK’s Menzies Bobba Ground Handling Services are among seven bidders vying for the Mumbai International Airport’s Rs 700 crore yearly ground handling contract. While Swissport, a European infrastructure and service corporation providing value-added airport services at 187 airports across 43 countries, is going with India’s Punj Lloyd group, Menzies is partnering Cambata Aviation for the bid. Cambata has been providing airport services at the Mumbai airport since 1967. Turkey’s Celebi Ground Handling is reportedly teaming up with Spencer Travels as overseas bidders. Spencers has a presence as an agency representing Cathay Pacific for passenger and cargo in southern and eastern parts of India and is also an agency for KLM Royal Dutch Airlines. The new policy comes into effect from January 1 next year. MIAL(Mumbai International Airport Ltd) had invited bids in January last for the contract. “We have received applications from specialised agencies and will soon shortlist names,” said GV Sanjay Reddy, Managing Direc-

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business class — the drop has been from say 75 per cent to 45 per cent. It is a well understood phenomenon in the airline industry particularly for international routes — you should have the first class and business class full and then even a half empty economy section does not matter as the airline has made its money. In India, and that too on the domestic sector, this phenomenon worked for some time. But with rising business class fares even the pin-striped suitwalas will not mind sitting next some people who may be travelling for the first time by economy, particularly in an LCC. As per an internal circular of Jet Airways, the current situation is very grave in terms of the magnitude of losses that the airline is incurring. Jet’s current losses total $ 2 million per day divided between Jet, JetLite, and its international operations. Executives have been told that they need to fill the economy section vigorously as every airline seat will now count. May be, it is the right strategy because every airline, whether full service or LCC has hiked fares on major metro routes virtually at a similar rate. But what needs to be watched now is the response of the Competition Commission of India which feels there is a price fixing in the airline industry. The latest fuel price hike of 4.3 per cent has revealed it all. Carriers like Spice and IndiGo have refused to hike fares along with Air India fearing further loss of loads.

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An aircraft engine being overhauled

M MRO rethink

RO (Maintenance, Repair and Overhaul) major Lufthansa Technik has decided to withdraw from its JV with GMR for a fullfledged MRO at the new Hyderabad International Airport Limited. Lufthansa Technik was holding 74 per cent equity in

tor, MIAL. The ground-handling contract at Mumbai airport is for 10 years. Atul Punj, Chairman, Punj Llyod group, said: “We have bid for the ground handling contract for the Mumbai airport with international group Swissport. We are the investors and the local partners in the tieup.” Punj Llyod has recently become active in the Indian aviation space. Atul Punj What makes the bid for Mumbai airport lucrative is the sheer number of the air traffic movements at the airport — 00-735 per day — making it the busiest airport with an estimated annual business size of Rs 650-700 crore pegged conservatively. Currently, there are 40-odd local agencies involved in ground-handling besides the airlines. Usually, 15 per cent of the contract value is the revenue share between the operator and the contracting parties.

DGCA to BIAL: Don’t be partial For all those harassed by the inadequacies of the new Bengaluru International Airport (BIA), here’s some good news. There could soon be fewer delays on the ground. The Directorate General of Civil Aviation (DGCA) has directed BIA to allow airlines to operate ground-handling facilities and services (both at the check-in and apron areas). Airlines no longer have to necessarily outsource their ground handling to

the Air India-SATS combine or Globe Ground India, the two third-party ground-handlers at the airport. This means that airlines would now save 30-40 per cent of their expenditure at the airport and is expected to improve passenger service quality. These events follow a complaint made by a leading low-cost airline to the DGCA about BIAL’s partial attitude towards airlines handling their own ground operations. According to DGCA and airline sources, BIAL had previously agreed, “those airlines which enjoy a market share of over 25 per cent would be allowed to conduct their own ground handling at the airport.” This meant that only the three merged airline entities—Jet Airways-Jet Check-in counters at Bengaluru Lite, Kingfisher-Deccan International Airport and Air India (Air India-Indian Airlines) would be allowed to do their own ground handling. All other airlines had to choose either one of the two-third party ground handlers. Following the complaint, DGCA told BIAL that it would cancel their licence to operate, as no partiality will be welcomed. BIAL said, “We have always maintained that having at least two professional ground handlers ensures not only a competitive environment in terms of service, quality and price but also has a direct impact on the safety and security on the airside. This set-up is, therefore, the most economical and safe approach

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the JV (balance 26 per cent with the airport promoter GMR) and the recent downturn in the Indian aviation triggered its action to withdraw from India. This was after all the fanfare with which it announced how great the Indian aviation market was. As part of its MRO, it was decided that there would be two assembly lines for narrow body aircraft — Boeing 737 family and Airbus A320 family — which will be provided with all facilities needed for airframe work, including the complicated C and D checks. Will the withdrawal of Lufthansa Technik from the MRO business signal the slow down indeed for other potential players in the MRO sector. Earlier last month, Air India referred to the Ministry of Civil Aviation, its proposal for the MRO-JV with Boeing being established at Nagpur, being developed as India’s multi-modal airport hub. The reference was made with regard to equity structure that may have to be ultimately finalised with the induction of one more partner besides Boeing and Air India. This $100 million dollar facility was part of the buy-back and other commitment Boeing made when get-

ting the Air India order for 68 aircraft comprising 18 Boeing 737-800s, seven Boeing 777-200 LRs, 15 Boeing 777-300 ERs and 28 Boeing 787s or the dreamliners. Air India has already received 12 Boeing 737s and seven wide bodied 777s, so far. Meanwhile, Air India also entered into a JV agreement with EADS and Jupiter Aviation for another airframe MRO. The equity structure of it will be also sent to the Ministry once the business plan of this MRO is finalised. With the current aviation scene and most airlines wanting to either cancel their orders or delay them indefinitely, MRO companies feel the critical mass in terms of at least 250 narrow body aircraft per MRO may be difficult to come by. We now will have to wait and watch if EADS-Jupiter blinks first or Air India says bye-bye. Or could it be that Air India may let off Boeing from its MRO commitment as part of its overall MRO plans. In any case, the bleak aviation scenario has already put in the cold storage, the MRO plans of other private players like Jet and Kingfisher. Like in the business of flying, India’s loss will be Dubai’s gain, followed by Malaysia and Singapore.

First round to pilots, second to

Kanu W

e don’t know what happened to the official committee comprising Director-General Civil Aviation (DGCA) Kanu Gohain, Joint Secretary Civil Aviation Arun Mishra and former DGCA Satinder Singh who were supposed to decide finally on the modalities of finalising the new Flight Duty Time Limit (FDTL) rules that were reportedly brought into effect through a DGCA circular. Its announcement requiring pilots to fly more each day, each week and each month drew lots of flak from the Indian pilot community, especially domestic pilots. They wrote to all, including ICAO (International Civil Aviation Organisa-

for the airlines. The airlines also agreed that this policy improves ramp safety and security since fewer parties would operate on the ramp.” But airline officials at the new airport have a different story. “The constant delays in turning our aircraft around were caused due to the poor ground handling services provided by BIAL. Doing our own ground handling will benefit greatly in terms of customer experience and savings on cost,” said an official of a leading airline.

Open Technology across 150 check-in counters at the airport and 50 CUSS (common-use self-service) check-in kiosks that will include 20 located in prominent Mumbai hotels. Airport Connect Open is SITA’s next generation passenger processing solution that enables airports and airlines to access their proprietary and CUTE (common-use terminal equipment) applications on the same platform in a shared, totally secure environment. Multiple airlines can share the same facility allowing maximum use of gate and counter resources.

Headway on the runway

AAI puts a damper on hospitality project

Mumbai International Airport (MIAL), will be included in SITA’s annual Passenger Self-Service Survey for tracking customer satisfaction with the efforts of the world’s leading airports to exploit IT to process more passengers, eliminate congestion and maximise limited resources. Mumbai is just one of seven airports worldwide, which will feature in the survey. The inclusion of India’s largest airport — over 25 million passengers last year — was made possible by the introduction of the country’s first modern Airport Management System (AMS) last year, followed this year by significant new investment in the airport’s check-in platform and the decision to introduce self-service kiosks. In agreement with the 45 airlines based at MIAL, SITA is deploying its Airport Connect

Delhi International Airport Limited’s (DIAL) plans to develop a 45-acre hospitality district in the capital has hit an airpocket. Airports Authority of India (AAI), which owns 26 per cent in DIAL, is unwilling to raise the required fund of Rs 1,000 crore for the proposed real estate development. It was decided that all the stakeholders in DIAL would bring in funds in proportion to their equity holding in the company to part finance the project. This arrangement was opted after AAI raised its objection to GMR’s plan to collect security deposits from realty developers. DIAL is a joint venture between GMR (50.1 per cent), AAI (26 per cent), Fraport and Malaysian Airports (10 per cent each) and IDFC (3.9 per cent). “AAI has said it would not pump in Rs 1,000 crore for the proposed real estate project. This would further hold the hospitality project at the airport,” a government official said. The dispute between AAI and GMR began last year when the former floated a subsidiary — Delhi Aerotropolis (DAPL) for the

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tion), IATA (International Air Transport Association), international body of pilots etc. Just after that protest, the Ministry of Civil Aviation set up the three member committee to look at the issue. Meanwhile, the matter also reached Bombay High Court. Early July

Pilots in a cockpit

Kanu Gohain

2008, the High court stayed the DGCA (Directorate General of Civil Aviation) circular on FDTL. A two judge bench reportedly observed that it was apparent that even larger public interest and safety of flights was literally thrown to winds for protecting the financial and other interests of few airline operators. The Joint Action Committee of Airline Pilots had moved the court against the DGCA alleging that the authority had suspended the new scientifically charted regula-

hospitality district. As per the plans, DAPL was to receive deposits of about Rs 2,835 crore in lieu of leasing land to developers. The agreement stipulates that AAI will receive 45.9 per cent of the revenue collected by DIAL. DIAL had earlier planned to build a 3000-room hotel complex at the capital’s Indira Gandhi International (IGI) airport before the Commonwealth Games in 2010.

tions of 2007 in favour of older regulations of 1992, under pressure from private airlines which wished to reduce their operational cost in the wake of steep increase in ATF prices. DGCA had on July 27, 2007 revised the 1992 CAR (Civil Aviation Requirements) as the old rules meant longer duty hours for pilots and could result in pilot fatigue and could risk the lives of passengers. But on May 29, 2008 the same rules were put in abeyance. Continued on page 12

Indira Gandhi International Airport

GMR gives Delhi its first terminal for private jets Within the next two years, the Indira Gandhi International Airport will add to its terminals the country’s first terminal, which would be specifically for the use of chartered flights as well as private jets. The terminal is being added to provide a muchneeded service aiding business passengers who use India’s larger airports, for example Delhi or Mumbai, travel with ease. The operator of Indira Gandhi International, DIAL, has attempted to attract interest from fixed base operators to create the facilities. A DIAL representative commented, “This would help in providing exclusive services to users of private and charter aircraft at IGI.” The new terminal is expected to be developed close to the current domestic airport or closer to the international terminal two. Once G M Rao

built, the airport operator is looking to the fixed base operator to provide various services to the new terminals. DIAL commented, “Services provided in the terminal would include special lounges and conferencing facilities apart from the other amenities like rental cars, charters, catering, hotel reservations, etc.” In addition to maintaining the terminal needs, the fixed base operator that is hired would also take care of the needs of the aircraft including fuelling, hangar services and handling services. The move to create the new terminal specific for private jets and business charters is a need that general aviation traffic statistics have shown. The aviation market in India has shown a growth of 22 per cent in the 2007 and 2008 years, involving almost 10000 airplanes.

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NEWS DIGEST On June 2, 2008 another circular was issued which reverted to the 1992 rules which challenged by the pilots in the High Court. Now the Supreme Court has allowed national airlines to revert for the time being to a 1992 rule that places additional workload on pilots.The 1992 circular of the Directorate-General of Civil Aviation (DGCA) requires pilots to put in a minimum of nine hours' flight time within which they can be asked to carry out a maximum of three landings. The 2007 circular limmited the maximum number

of landings to two. “Till the matter will be heard (in Bombay), the existing flight schedule will operate,” a Supreme Court bench said. It also directed the High Court to hear the case in the week commencing July 21 and dispose of the petition as soon as possible. Pilots are categorical that the workload — reduced last year after accounting for factors such as air safety and fatigue — was putting a discount on air safety. Jet Airways, one of the appellants said that taking in view the latest technology, stress could not be the ground to reduce the number of landings for

pilots. One wonders what the technological revolution brought about in the last 12 months could make flights even more safer! The original guidelines had been restored as a consequence of constant lobbying by Jet Airways and other airlines struggling with pilot shortage. They claimed that the twolanding guideline pushed up demand for pilots by 35 per cent. That was in May. To be fair to the airlines, though, it must be mentioned that Indian pilots fly between 45 and 70 hours a month. Their overseas counterparts, on the other hand, fly around 80 to 90 hours.

A committee to wipe your tears K M Chandrashekar Cabinet Secretary

he government has set up a high- powered panel to examine the difficulties faced by airlines in the country and recommended measures. The new committee, formed after the withdrawal of the Left from the UPA government, will comprise the following members: The Cabinet Secretary, Chairperson Secretary, Finance Secretary, Ministry of Civil Aviation Secretary, Department of Revenue Secretary, Ministry of Petrole-

D Subbarao Finance Secretary

M S Srinivasan Petroleum Secretary

um & Natural Gas Secretary, Planning Commission Dr. Deepak Parekh, Chairman, HDFC Dr. Raghuram, Professor, IIM, Ahmedabad.

The terms of reference of the committee are as follows: (a) Examine and assess the financial difficulties being faced by airline operators in India. (b) Consider international scenario/practices followed by other countries/airlines. (c) In the light of (a) & (b) above,

CRUISING HEIGHTS July 2008

P V Bhide Revenue Secretary

Deepak Parekh Chairman, HDFC

make appropriate short term, as well as long-term, recommendations for the sustained growth and health of the aviation industry. The committee has been asked to submit its recommendations at the earliest possible. The names on the committee are no surprise. Deepak Parekh, the private sector elder statesman is a close friend of Naresh Goyal and a former board member on Indian Airlines. He is expected to drive the discussions, according to an insider. Hopefully the committee will recommend well and the recommendations will be accepted.

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Farnborough International Air Show

Flying high amidst the encircling gloom

he recent airshow at Farnborough lacked the hype and the gloss of previous airshows around the world, but what was on display brought home, the fact that though the aviation industry was down for the moment, it was not out. Top airshows provide indications of the popularity of an aircraft — and by, proxy an aircraft manufacturer — enjoys around the world. The recent Farnborough International Air Show is no exception. The show, which alternates between Britain and Le Bourget in France, usually sees a battle royale between Boeing and Airbus, but this year, questions were focussed on how many orders, the pair may see cancelled later this year. Airbus has booked 487 net orders for aircraft so far this year, besting Boeing’s total by 12 aircraft, but both expect their 2008 order totals to fall far short of their record in the year 2007 totalling 2,754 orders. This time, however, both Boeing and Airbus took the backseat and let the lesser-known Bombardier take its bows in the spotlight. The show was held in the backdrop

of the acute crisis that is facing the aviation industry around the world. The only ray of hope was from the oil-producing Gulf nations and Russia with their loads of cash from the soaring crude prices. It was believed at the beginning of the show that Etihad Airways, the national carrier of the United Arab Emirates, would announce orders of between 50

and 100 aircraft at Farnborough. Other than these orders, according to industrywatchers, Farnborough was a low-key affair. Behind the spotlight, of course, there was the move by airlines to fast-track their investments for more fuel-efficient planes, like the Airbus A380 and A350, as well as Boeing’s Dreamliner. The need

(Top and above) File photos of the earlier Farnborough Air Show

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One of the helicopters from US Air Force on display at the last show

The A 380 made an acrobatic appearance this year

for such planes has never been so acute: 25 airlines went bust or stopped operations in the first six months of this year and more could fold up. The list included airlines big and small from all regions, such as Cameroon Airlines, Denverbased Frontier Airlines and British-based business class airline Silverjet. In comparison, in the six months following the attacks in New York and Washington on September 11, 2001, only eight airlines folded, including Swissair, Belgian flagship carrier Sabena and Australia’s Ansett. Among those that were scheduled to order aircraft were Qatar Airways and Etihad Airways, both from the Gulf. Etihad, for example, was likely to order between 50 and 100 aircraft during the show from Boeing and Airbus. Despite the gloomy outlook, the show’s organisers lined up dazzling displays. The US Air Force’s top-of-the-line CRUISING HEIGHTS July 2008

F-22 Raptor jet fighter made its debut aerial display while an Airbus A380 superjumbo airliner performed flying stunts, it would never attempt with passengers aboard. Challenging the big two, Canada’s Bombardier was hyping a new narrow-body jet - the CSeries — the size of a 737 with an innovative Pratt & Whitney engine and carbonfiber plastic-composite wings. Indeed, it could be a resurgence of the narrow-body planes. The world’s two largest aircraftleasing companies, ILFC and GECAS, are expected to place large orders for narrow-body jets. Bombardier took the decision to showcase the long-awaited CSeries because it had no choice. There were fears that if Bombardier did not launch the plane at Farnborough, Mitsubishi Corporation’s new regional jet — which uses the same engine technology as the CSeries — would steal the show.

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GLOBETROTTING

AT A GLANCE

That’s my 747 over there FRANCIE REHWALD’S dream of living in an old, recycled 747 aircraft has finally taken flight. The first major phase of the home’s construction, in the picturesque rolling hills overlooking Malibu, began when a giant red-and-white, double-rotored helicopter brought in the old plane's wings. Rehwald, surrounded by three dozen friends and relatives, let out a

Sleep it out delighted whoop. The house should be completed in about a year. The cost is expected to be about $2 million, including the $40,000 Rehwald paid for the junk 747. The plane’s wings will serve as an overhanging roof, the nose as a meditation pavilion, the tail for a viewing platform, the first-class cabin for part of the guesthouse, and the plane's roof as an art studio.

Honest pilot refuses to fly

NITED had to cancel a flight from Salt Lake City after the pilot announced to passengers that he was too upset to fly, according to one passenger on board. The pilot, who may have been involved in a labour-related dispute with colleagues, said that he didn’t feel he could fly safely. The airline re-accommodated its customers on other flights and would give them “goodwill gestures,” which may include miles and travel certificates, she said. The Federal Aviation Administration, on its part, said it was up to the airlines to determine when and how pilots could walk away from the cockpit if they felt unfit to fly. The pilot made his announce-

ment, after the passengers were seated, “I’m roughly paraphrasing here, but the pilot came on the PA and said, ’some of you may have witnessed an incident I was involved in at the gate. I’m not going to go into the details, but it was an interpersonal confrontation that upset me significantly to the point where I’m not focused enough to fly you to Denver. I feel like I may not be calmed and focused enough to fly to Denver for another hour',” said one passenger. The passengers reacted to the pilot’s announcement with a collective groan. “I’m going to give him credit for standing in front of people and saying that,” Jacobson added. “Still it was a very unusual situation.” CRUISING HEIGHTS July 2008

FIFTY-TWO passengers on a Chinese airliner whose flight was cancelled due to bad weather refused to disembark and instead spent the night onboard before finally leaving to their destination. The passengers boarded for their flight from Beijing at 8 pm to the eastern coastal city of Yantai, but after more than three hours of sitting on the tarmac, the airline cancelled the flight, the Beijing Morning Post said. “Most of the about 200 passengers disembarked to

Hey, that was my laptop! MORE THAN 10000 laptops are lost or stolen each week at US airports, says security industry executive Richard Stiennon in a blog for NetworkWorld.com. About 65 per cent of them are not reclaimed, and half the laptops contain confidential corporate information, says the survey, which was sponsored by Dell. The data results were released last month as Dell introduced its new laptop data protection services for business travellers. Stiennon suggests a few tips. Place your laptop in the first bin at the checkpoint, and put your laptop bag in front of it. Place a second bin with your shoes, belt, purse, wallet, etc. behind your laptop. Your carryon bag should go last. The second bin and the carry-on separate the laptop from the person behind you. The first thing you should do on the other side is claim your laptop and put it away in the briefcase. He also suggests marking your laptop with a sticker, so that others don’t pick it up by mistake.

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There goes your luggage rliner eather

HAVE YOU ever been rushing through the airport trying to catch your flight while dragging your luggage behind you? Despite how much easier rolling luggage has made our lives, it’s still no fun to lug around, which is why someone has designed a motorized bag that will help ease the hassle. This piece of luggage is rather sim-

Air rage on the rise AIRLINE CUSTOMER service staff fear that incidents of air rage could rise as carriers increase fares and introduce more fees and restrictions. A survey of airport staff by the Australian Services Union (ASU) showed that air rage — and a lack of training to cope with it — continued to be a problem. The problem became a hot issue in 2004 when a survey showed that nine out of 10 respondents had experienced air rage at work and a third experienced incidents on a daily basis. The issue was acknowledged in the 2004 Aviation Security Review, but the ASU said that some airlines had been slow to move on the issue. The latest survey showed some improvement, but suggested 81 per cent of staff had experienced some form of air rage at their airport. Respondents said the biggest issues that made passengers angry at airports were long waits in queues and a lack of understanding of ticket restrictions. Other major problems included people affected by alcohol, excess baggage control and charges as well as baggage cut-off times. Nine out of 10 workers said they had received no training on how to deal with hostile and abusive customers. The survey also found the issues and occurrences were amplified for low-cost carrier employees.

Pay for your customers HIGHER AIRFARES and trimmed flight schedules could end up raising the subsidies of American and European ski resorts that pay airlines to bring skiers to town. Nonstop flights to the mountains from big European and American cities are so important to many resorts that they offer subsidies to guarantee a minimum revenue to airlines who agree to offer the flights. If airlines sell enough seats on each flight, not all the subsidies have to be paid.

ple to operate. Simply tilt the handle so the bag is at between a 15 and 35 per cent angle, and the wheels will start turning, however, if you let go, they will stop. A combination of pancake wheel technology and an anti-gravity handle places most of the weight on the wheels, rather than at the handle.

Illustrations by Rajeev Kumar

ked to

complete flight transfer procedures, but a Mrs Shi was one of 52 passengers who refused to get off,” the newspaper said. Mrs Shi said that she and her colleagues had to get to Yantai for a meeting, they were on a very tight schedule. The passengers said that in the 12 hours or so they spent on the aircraft, the crew provided continuous service, and all along offered food and drink.

This winter, airlines faced with rising fuel costs are cutting the number of flights they offer and raising fees, making it more difficult and costly for skiers to fly to the resorts. Now some resorts are raising their potential payments to airlines to offer direct flights to mountain airports.

A two-week nose job! A TWO-WEEK nose job should reverse the damage a Concorde supersonic jet suffered when a truck rammed it. The retired Concorde is normally on display at the Intrepid Sea, Air and Space Museum in New York. It has been at a recreational facility in Brooklyn while the USS Intrepid and its home pier in Manhattan are repaired and renovated. Some weeks back, a truck hauling equipment from a Jamaican soccer-and-cricket festival bumped into the Concorde’s distinctive nose and knocked it off. Museum President Bill White says the cone is salvageable and will be reattached and repaired to original standards. White is apologising to British Airways, which owns the jet. He says the recreational facility should have provided better security for the plane.

Punching passenger A WOMAN has been accused of punching a JetBlue Airways flight attendant who tried to stop her from smoking a cigarette onboard. The lady, Szele, yelled obscenities and racial epithets at an attendant who tried to stop her from smoking on Flight 643 from New York to San Francisco. She has been accused of breaking through flex cuffs that flight attendants used to restrain her and punching an attendant in the jaw. The captain was forced to divert the flight to Denver. Authorities said Szele claimed she had been drinking and did not remember the incident.

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COLUMN/CHOCKS OFF

Mallyanomics DOESN’T MAKE ANY SENSE R Krishnan

Vijay Mallya is on an LCC-bashing spree. How reasonable is his diatribe and how economically sound is his belief?

A It is a different matter that Mallya might have also made a loss of over Rs 2000 crore in the last one year. Since Kingfisher is not quoted in the stock exchange, we only get to know about Deccan 20

FTER MEETING the Civil Aviation Minister Praful Patel in New Delhi on June 11, 2008 along with CEOs of other airlines, UB boss Vijay Mallya who runs full service carrier Kingfisher Airlines and the recently acquired Air Deccan, India’s first LCC (Low Cost Carrier), now Simplyfly Deccan, said “I have always said I don’t believe in the low fare model and I think I have been fully vindicated.” He said there was no point in selling tickets below the actual costs and it was a very simple business principle that was applicable to any business. If the people are crazy to sell below their viable cost then they have themselves to blame and “we certainly don’t do it,” Mallya thundered. Now, Mallya has also taken over the Federation of Indian Airlines (FIA) to sing his pet theme: ‘Off with LCCs first, we will discuss aviation later.’ Whether Mallya wants to portray someone as Alice or wants to take us to the wonderland is not clear. But his logic is far away from wisdom. Yes, as an entrepreneur he may fight the LCCs in the market place but for him to use his position to lobby and say that India must not have any LCCs speaks of his monopolistic mind set which is well evident in his first preferred field of whisky. Everyone knows that the Indian liquor lobby led by UB has always fought the entry of scotch into India. When it became difficult to ban its entry, the lobby ensured that it attracted such high excise and customs duties that it became next to impossible to drink scotch with one’s own money. When the centre revised the duties downwards, the states took upon themselves the role of the centre and reintroduced the levies in many different ways. The Indian liquor lobby was happy and kicking. Now, they may want to do this to Indian LCCs by painting them as demons first and then get them banished. Should any politician worth his salt or a bureaucrat worth his oath act in tandem, it would be a sad day. If the Kingfisher boss is talking of market forces, what does he have to say about the shift of business class passengers to VIJAY MALLYA: Waving his own flag

CRUISING HEIGHTS July 2008

economy? Everyone does not have the kind of money power some have! We have criticised the KPMG report elsewhere in this publication. But some of the points made in it make sense for players like Mallya and Jet’s Naresh Goyal. Naresh has already abandoned his dreams of flying JetLite to foreign destinations. JetLite CEO Rajeev Gupta said his airline did not want to start any foreign operations to the Gulf or anywhere now because it did not have the capacity to bear losses in the current scenario. Meanwhile, there are rumours that JetLite would be merged into Jet Airways and the slots the former had acquired in the busy Delhi and Mumbai airports would be taken over by Jet. What about Mallya? He has not given any indication as to whether he would merge the carriers or reverse merge one with the other or completely abolish the concept of LCC and shift fully to full service by reconfiguring the Deccan aircraft interiors by way of J-Class seats and Y-class seats. It is a different matter that Mallya might have also made a loss of over Rs 2,000 crore in the last

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one year. Since Kingfisher is not quoted in the stock exchange, we only get to know about Deccan. We get to know about Jet Airways and not JetLite, Spice and not IndiGo because they are quoted in the stock exchange. Coming back to the ‘LCC Hatao’ campaign of Mallya, should one conduct a market survey, it will clearly show that not many passengers are bothered about in-flight entertainment (IFE) on short duration flights of two to three hours. Nor are they bothered about fine cuisines like smoked prawns served in the business class. Giving them champagne-like sparkling apple juice will not decide if middle class Indians across the spectrum should fly or not. If LCCs were so bad then why take them over? Does it not make eminent business sense to start off on your own and expand? But there is a flaw in that argument to fly on your own. The flaw is the Ministry of Civil Aviation and the Airports Authority of India and even the new metro airports coming up do not act freely in allotting airport facilities like parking bays, slots, etc in the numbers you require and the cities you require them in and when you require them. To top it all, the December 2004 Cabinet resolution stipulating five years continuous flight within India by a domestic carrier before being entitled to fly foreign routes still remains in force. Well, it is a different story that even foreign-going airlines are making huge losses — Jet and Air India -- of course, for entirely different reasons. Mallya’s man Hitesh Patel — like a lover tearing the petals of a flower muttering, ‘He loves me he loves me not’, has been saying different things at different times: “We will fly abroad”, “No, we will not, no…,” “No, we are considering”. The controversy was finally laid

to rest by Mallya himself who said that he would fly. Let’s see with all his planned goodies even for economy class passengers, will he make money or blame the LCCs? I have travelled by all these airlines and have no hesitation in saying that the business class of Kingfisher is absolutely fine — that was about two years ago. I don’t know how it is now. But what none will object to is the fact that load factors in business class of full service carriers is falling sharply as more people shift to economy class. Once in the economy section, does it matter whether you see a film or if you are seated on fine upholstery reading a menu card with a choice of meals. Maybe, in these days of rising costs, the best way to cut costs is to cut on non-essentials: these could be very expensive food on board, free pouches with pens, etc. Even during the boomtime some years back, the business class of Jet or Indian never offered such fine fare. No domestic airline had in-flight entertainement (IFE). It was Mallya who introduced IFE for the first time in the domestic sector as a product differentiator. He was soon followed by Air India or Indian. If IFE was such great attraction then loads should be full. Recently, on an evening flight from Mumbai to Chennai, the Good Times carried only 11 economy passengers. How can he now say that LCCs should go as there was nothing like a low fare model? If we believe him we will all have to become believers in Mallya’s High Cost Model which can only be paid for and enjoyed by Mallya and his men. Look at IndiGo or SpiceJet. They are making losses, but not as much as the full service carriers. They are not owned by deep-pocketwalas like Mallya. Yet they are doing a great service to Indian public by widening and deepening the Indian travel market. But for him to run down LCCs is wrong and for him to say what one should charge as fare depending upon what one offered (no compromise here and it has to be Mallya standards) is anti-market. But, there is something I wish to tell Civil Aviation Minister Praful Patel— that his ministry never played by the rules. When the airline industry was booming, his men barred entry of new players. Not only that; some were even asked to explain their business plan and the source of their funds. He never asked the same questions from other existing players. Now what will he say for the collapsed business plan of all the existing players? Should Mallya slowly finish LCCs by also buying SpiceJet, Praful Patel is duty-bound to pave the way for the new LCC model-based scheduled domestic carriers to take off with panIndia presence. Things will change in the next three years. The advantage should not, therefore, be confined to one or two. (Veteran journalist and long time aviation watcher R Krishnan is Consulting Editor at CH. He can be reached at rkrishnanji@yahoo.com) CRUISING HEIGHTS July 2008

Should one conduct a market survey it will show that not many passengers are bothered about in-flight entertainment on short flights. Nor are they bothered about fine cuisines like smoked prawns served in the business class 21

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What’s Up, Docs? I

“Previous crises like SARS or September 11 were shocks. Something happened and the industry had to recover. The fuel crisis, however, has brought lasting change of unprecedented dimensions. If oil stays at current levels through 2008, we would have a fuel bill of $190 billion - 34 per cent of airline costs and an increase of $53 billion in just one year. In 2002, the total fuel bill was $40 billion, only 13 per cent of costs.” — Giovanni Bisignani Director-General of the International Air Transport Association (IATA)

T IS A reflection of the desperate state of affairs among global airlines that they are putting virtually everything under the microscope— cutlery, inflight magazines, toiletries, inflight entertainment, water for the loos and what have you. Singapore Airlines (SIA) Chief Executive Chew Choon Seng said fuel now comprised up to 50 per cent of its operating costs: “We have been assessing the weight of magazines, knives and forks as well as things like … minimizing (the weight of) water we have on board,” he said. Seng was speaking to reporters during the induction ceremony of Egypt Air into the Star Alliance fold in mid-

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COVER STORY

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UP THE DOWN STAIRCASE

Jetlite has halved manpower strength from 4500 to 2200, closed 37 offices and cut salaries 15 per cent over the past one year. By September, Jet Airways is moving out of numerous routes that will be serviced by JetLite. These include routes like the entire north-east and Jammu & Kashmir sectors and destinations like Port Blair. Meanwhile, JetLite also stopped operating flights in sectors like DelhiChandigarh, Ahmedabad-Jaipur, Mumbai-Bhuj and Hyderabad-Bangalore and will cut ten more in the next month.

Air India is seeking a Rs 2,300 crore bailout package from the government to get back to health. The airline wants Rs 1,300 crore to meet working capital requirements and another Rs 1,000 crore as soft loan. Not surprisingly, the carrier's net loss for 2007-08 is being pegged at Rs 2,144 crore and indications are that this figure could more than double in the current fiscal if things do not improve quickly.

At least eight flights have been yanked out of the Ahmedabad airport over the past two months, putting it in the league of airports squeezed hardest by the increase in the cost of ATF.

Jammu & Kashmir

New Delhi

Jet Airways and Deccan Aviation Ltd fell to record lows in the stock market. Jet Airways slumped 11.3 per cent to Rs 380.75, extending its decline for the year to 62 per cent. Deccan, the biggest low-cost carrier, declined 5.1 per cent to Rs 56.85. The carrier fell to the lowest since it sold shares at Rs 1,100 in February 2005.

Ahmedabad

Kolkata

Mumbai Hyderabad Kingfisher is said to have postponed plans for international operations and the target now is September 2008 instead of August 2008. Kingfisher has also decided to cut domestic capacity 15 to 16 per cent. Kingfisher, Jet Airways and SpiceJet are introducing sharp cutbacks in staff and salaries. Manpower typically accounts for 10-15 per cent of an airline’s total costs. Kingfisher has decided not to renew the contracts of the 50 expatriate engineers employed by Air Deccan, the low-cost carrier with which it merged last year. The merged entity has over 800 engineers. Expatriate engineers earn a monthly salary of Rs 2.5 lakh against around Rs 1.5 lakh for an Indian counterpart. Engineers account for around 15 per cent of manpower strength.

US billionaire investor Wilbur Ross, who made his fortune taking over bankrupt steel, coal and textile companies, confirms he is in talks with India’s SpiceJet Ltd for a possible investment in the money-losing carrier. “We are having discussions with SpiceJet, but it is too early to know whether the negotiations will be successful,” Ross told journalists in an email. SpiceJet, which has 2400 employees, has shelved plans to employ 200 more people following its decision to cut domestic flights from 117 to 100 a day. The carrier also plans to give three of its 18 aircraft out on “wet lease”, a deal that includes pilots and cabin crew. SpiceJet is expected to lease out 18 pilots and 60 cabin crew members to other carriers. SpiceJet, which saw average load factors drop 7 to 8 per cent over last year, will cut daily flights from 117 to 100 by next month.

After Air India, Jet Airways and Kingfisher Airlines are moving towards a zero-commission structure for travel agents. These carriers are expecting to save around Rs 1000 crore as commission payments to travel agents on air ticket sales. Air India and Jet Airways are expected to net Rs 450 crore each and Kingfisher will save up to Rs 100 crore. There are more than 8000 travel agents in India, of which, around 2000 are affiliated to International Air Transport Association (IATA). Air India, whose 90 per cent tickets are sold through agents, has notified various travel agent bodies about a zerocommission deadline from October 1. Air India has cancelled around 30 flights whereas Jet Airways grounded more than 20 flights due to poor bookings. Delhi-based budget carrier SpiceJet has cancelled around 10 flights and Simplifly Deccan has done away with 50 flights. Jet Airways has combined some flights, due to poor loads, on routes like Delhi-Mumbai and Delhi-Kolkata. Simplifly Deccan is said to have carried out a similar exercise on short-haul routes.

Bangalore

CRUISING HEIGHTS July 2008

Go Air is likely to cut another 300 flights — in addition to the 300 flights already spiked — from August, thanks to the fuel hike. It now has 800 flights as compared to the earlier 1100. The airline has opted out of flying to Jaipur and plans to cut shorter-haul flights from Bangalore and Hyderabad and opt for more long-haul flights. Reportedly, over 150 employees have also been given the pink slip. CRUISING HEIGHTS July 2008

June. What Seng said is indeed a reflection of the state of the crisis in the aviation business. Singapore Airlines, the world’s second-biggest airline by market value is 55 per cent owned by state investment firm Temasek, and has been reaping bumper profits year after year. SIA has a product that scores swear by and many are willing to die for. But if Seng is worried, then things are indeed gloomier than what one originally thought. Just take a look at some of the changes: Analysts estimate that 25-30 per cent of the commercial aircraft backlog at Boeing Co and Airbus could be at risk as high fuel prices continue to batter airlines. Many undercapitalised startups in Asia and Europe have overly aggressive growth plans that could cause the airlines to cancel or defer orders. Traffic growth on Eurostar (LondonParis-Brussels) increased by 21 per cent in the first quarter, compared with the same period in 2007, and revenues are up by a quarter. These figures have only been growing quarter on quarter. On the London-Paris route, Eurostar boasted 70 per cent of traffic last year. If the distance travelled is 600 miles or less, a train travelling at 190 mph has the edge, city centre to city centre. Air France has watched over the past decade as the TGV has eroded its domestic business. Air services between Paris and Lyons and between Paris and Brussels have been suspended. The train is dominating traffic to Marseilles and Geneva and the new line east to Strasbourg will quickly extinguish air links. Based on mid-year airline announcements to reduce capacity and to park aircraft, experts have determined that total expenditure for Maintenance, Repair & Overhaul (MRO) in the commercial airline industry will be down $1.3 billion in 2009 compared to earlier estimates. In an open letter to all airline customers in the US, CEOs from 12 of the nation's airlines said lawmakers must curb excessive speculation to scale back record fuel costs. “We are urging our customers and employees to ask Congress to act quickly to curb speculation in the commodities markets. Some experts estimate that this speculation adds $20 to $60 to the price of a barrel of oil — and it is consumers who actually use the oil for a productive purpose, who pick up the tab.” There are innumerable examples of the downturn in the airline business that is forcing industry leaders to look at new ways of saving costs, trimming the red ink Continued on page 29

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UP THE DOWN STAIRCASE

At least eight flights have been yanked out of the Ahmedabad airport over the past two months, putting it in the league of airports squeezed hardest by the increase in the cost of ATF.

Jammu & Kashmir

New Delhi

Ahmedabad

Kolkata

Bangalore

CRUISING HEIGHTS July 2008

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AIR POCKETS AROUND THE WORLD

Air Canada says it is cutting up to 2000 jobs at the end of this year as it sharply reduces capacity to deal with the rising cost of fuel. It would eliminate 632 flight attendant positions. The reductions amount to nine per cent of the airlineâ&#x20AC;&#x2122;s total number of attendants. The airline said it was cutting trips by seven per cent in its autumn and winter schedule as oil prices continue to rise to record levels.

British Airways added to the turmoil by confirming that deterioration in traffic had accelerated in June. It said a 0.7 per cent dip in traffic in May had become a fall of 3.7 per cent in June, with the highly profitable business-class segment falling by 3.1 per cent - a marked deterioration on May's figures, which showed a fall of less than one per cent in premium traffic.

Air France-KLM said it is responding to its rising fuel bill by reducing planned winter capacity increases by around 3 percentage points and introducing a hiring freeze.

Chinese air travel demand is shrinking for the first time since 2003.This development carries significant ramifications for its domestic and international airlines and airports. A 10 per cent fall in Air China's international and domestic traffic in May followed reductions in April and this is playing havoc with Air China's load factors as capacity continues to grow. China's biggest domestic carrier, China Southern Airlines, reports domestic passenger numbers were down 0.1 per cent in May, its first monthly reduction since the SARS outbreak five years ago.

Thai Airways International recently said it will end its 17-hour Bangkok-New York route, launched in 2005, and reduce Bangkok-Los Angeles flights. As a result, Thai plans to sell its Airbus super-long-haul jetliners. For Thai Airways, the economics didn't add up anyway. Its nonstop flights from Bangkok to New York were 80 per cent full, on average. But fuel prices now mean the route would lose money, even with every seat sold. To cover spiralling costs the flights would need to run at an impossible 120 per cent of capacity

Malaysia Airlines (MAS) has terminated 15 unprofitable routes, mainly to China and India. Operations from Kuala Lumpur to Manchester, Vienna, Zurich, Fukuoka, Nagoya, Ahmedabad, Kolkata, Pontianak, Xian, Chengdu and Cairo would be axed.

LONDON CANADA Major US airlines, including American Airlines, Delta, United Airlines, US Airways, Continental Airlines and Northwest Airlines have asked the US Department of Transportation to let them defer service for two years on routes to China and other destinations, where they fought hard to win service rights. With the high cost of jet fuel, "all US airlines are being forced to re-evaluate the flights they offer to avert financial catastrophe", the airlines said in a letter to the DoT. United Airlines will lay off 950 pilots, or about 14 per cent of the total, while shrinking its jet fleet to save on fuel. The pilot cutbacks come on top of buyouts offered to 600 senior flight attendants and the elimination of 1600 salaried jobs as United retires 100 planes.

FRANCE UNITED STATES

CHINA

THAILAND

African airlines have continued to register a decline in traffic carried and capacity provided in the face of high and rising fuel prices. But some North African airlines are still expanding capacity as are Middle Eastern, US and some European airlines serving these markets. US Airways will stop showing in-flight movies on its domestic flights, a move that the carrier says will save it "about $10 million a year in fuel and other costs. The video systems add about 500 pounds to a plane's weight, increasing fuel use". That, coupled with a drop in the number of customers willing to pay $5 for headsets, led to the airline's decision. The movie systems will be turned off from November 1. Movies will remain for Hawaii and trans-Atlantic flights. CRUISING HEIGHTS July 2008

MALAYSIA

AFRICA

In Australia, Qantas has already announced plans to axe several Asian flights, replace others with Jetstar services and shed jobs as it deals with an expected $2 billion increase in its fuel bill next financial year. Qantas will also reduce capacity by five per cent - the equivalent of grounding six aircraft.

AUSTRALIA

Air New Zealand's mostsenior executives will not get pay increases or bonus pay as the carrier battles soaring fuel costs. The airline has frozen salaries of senior executives, halted bonus payments and is considering slashing jobs to compensate for soaring fuel costs and sliding passenger demand, according to an internal memo leaked to the media.

NEW ZEALAND

Cathay Pacific fell the most(at the HK stock exchange) in more than six years after it predicted "disappointing" earnings because of record fuel prices. The airline's shares dropped as much as 7.8 per cent: the biggest decline since October 2001 in the aftermath of the terrorist attacks in New York City. CRUISING HEIGHTS July 2008

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AIR POCKETS AROUND THE WORLD

Air France-KLM said it is responding to its rising fuel bill by reducing planned winter capacity increases by around 3 percentage points and introducing a hiring freeze.

FRANCE UNITED STATES

CHINA

THAILAND

MALAYSIA

AFRICA

AUSTRALIA

NEW ZEALAND

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“The 40-50 per cent growth recorded in past few years is unreal. Jet never added more than 8 per cent capacity annually. Unless the irrational ticket prices are stopped, the industry is in trouble… Looking at where fuel and other costs are going, these hikes have not helped. Selling tickets for Rs 199, Rs 299 or Rs 499 like Bata shoes has not helped the industry. Average fares need to go up 30 per cent and excess capacity pruned by an equal amount. Oil is killing everybody.” NARESH GOYAL

Finish “If government does not provide relief, we will be left with no option but to reduce the service and connectivity. And people will not be able to travel as seamlessly as they do today.” VIJAY MALLYA

It is a “sink or swim situation”…and the “grimmest” Air India has faced in three years. RAGHU MENON

“Yes we are downsizing the company. Since we have pulled out from some routes we need to downsize.” JEH WADIA

“True, we are all in the same boat, but my operations are better insulated than others. I am able to increase fares and yet maintain market shares and maintain high loads, which most operators are unable to. Our operations are different. We are not looking at train passengers which most airlines are looking at, and we are not into mass transportation, and since we are looking at the top end of the market, the price elasticity of our customers is better. A Rs 500 or Rs 1,000 increase in fares makes no difference for my customers.” M THIAGARAJAN Illustrations by Rajeev Kumar

Start

“Airlines globally have not been able to pass on increased costs to passengers very successfully. We may have a certain requirement but that has to be acceptable to the market or people will switch over to other modes. The fuel surcharge must be close to the actual cost of flying of each flight and I am for as many levels to do so as needed.” BRUCE ASHBY

CRUISING HEIGHTS July 2008

“The whole industry is facing huge loss due to the high ATF price and we expect our losses to be around Rs 80-100 crore in this financial year…We are reducing our total number of flights from 117 to 97 from July 1. The move would enable us improve our loadfactor by three per cent and increase revenues by five per cent.” SIDDHANT SHARMA

on the balance sheet and flying out of this turbulence. For the travelling public, the experience too is changing by the minute. They don’t want the fancy frills, but cheap fares, new planes and a safe on-time journey. For airlines used to pampering their customers, this is virtually rewriting the rules of the business. In India, the situation is as grim as the rest of the world. Every airline is in the red and some are on the verge of getting into intensive care. The combined loss of the industry this year could be close to two billion US dollars or Rs 8,000 crores—double of what it was last year. Airlines that are particularly vulnerable are Air India — already gasping for breath as a unified entity — and some of the Johnnies-come-lately LCCs like Spicejet. Jet Airways, the torch bearer of the private sector domination of the aviation industry, has reported a loss of Rs 221 crore for the fourth quarter of 2007-08, against a net profit of Rs 88 crore for the same period last year. The airline shows a consolidated loss of Rs 654 crore for the full year, including its subsidiary Jetlite: the first time that the company offers consolidated figures after acquiring Air Sahara. Air India is believed to have losses close to Rs 3,000 crore although, official figures peg it at Rs 2,144 crores. The airline has been lurching from one crisis to another and the fuel-inflicted woes are just the latest. An angry Praful Patel asked Air India employees to “perform or perish”. But Boeing’s Senior Vice President Dinesh Keskar was optimistic in one interview. He told the Business Standard: “We are not getting any indications of deferment of deliveries from our buyers. We have a disciplined selling after a thorough homework. Our deliveries are in batches and financing and deployment plans are sorted out well in advance. We have plenty of gap for our next batch of deliveries, both for Air India and Jet Airways. We have helped the low-cost carrier Spicejet in getting interested parties for sublease contracts for its immediate deliveries.” But he had one important message for all of them. “Airlines in India will have to run the business more efficiently, there is otherwise no way out.” Quite! Graphics by Ruchi Sinha

CRUISING HEIGHTS July 2008

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It is a “sink or swim situation”…and the “grimmest” Air India has faced in three years. RAGHU MENON

“Yes we are downsizing the company. Since we have pulled out from some routes we need to downsize.” JEH WADIA

Start

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SPECIAL REPORT

A state within a state! A Mumbai High Court decision about Mumbai International Airport Ltd could change many private enterprises involved in public service in the eye of the law. These enterprises would turn into instruments of the state. A detailed look at the Flemingo case

CHOICES AND OPTIONS GALORE: A duty-free store at Delhi's international airport

being awarded the concession. Meanwhile, Duty Free Shops’ legal claim that it was unfairly excluded from the duty free tender at the new Bengaluru International Airport has strengthened after a Karnataka High Court Judge drew parallels with a similar case in Mumbai. For the past two years, Flemingo has been contesting a similar case against Bangalore International Airport Limited (BIAL) and related parties, including the Union of India and Airports Authority of India. Other cited parties were the other shortlisted bidders: The Nuance Group

Courtesy:moodiereport.com

IAL IS A STATE. Will it mean soon GMR and other private airport developers will also come under the ambit or be described as State? If one were to go by the recent decision of the Mumbai High Court that is what it would mean. The landmark judgment has far-reaching consequences for private enterprise. The honourable judges ruled that MIAL, though registered as a private company, performs a public function and is therefore a ‘state’ as defined by the Constitution. “Even though it (MIAL) is registered under the Companies Act, its functions in operating, managing and developing the Mumbai International Airport cannot be characterised as ‘purely private’,” Justice DK Deshmukh and Justice ND Deshpande held. Flemingo Director Atul Ahuja who was driving the case said that the key issue, which was addressed at length in the court judgment, was whether the newly-privatised airport authorities in India should be considered instruments of the state, or as private companies. MIAL’s core argument was that it was a private commercial organisation, and was not bound by rules governing the public sector — particularly on tender issues. But the court disagreed, saying that MIAL, as “a lessee” of the Airports Authority of India, was “an instrument of the state” and was “performing a public duty” in allotting the management of duty free shops. Ahuja told the influential Moodiereport: “That was fundamental. The new airport authorities have had substantial state support but they have been operating as private entities since winning their contracts. We questioned that status, and the court has backed us.” MIAL had initially awarded the contract to a partnership between Aldeasa of Spain and India Tourism Development Corp (ITDC). But in late November, that partnership broke on disagreement over terms resulting in second bidder DFS Group

CRUISING HEIGHTS July 2008

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(which, together with India partner Shoppers’ Stop, was ultimately awarded the contract), Gebr Heinemann, Dufry, DFS Group and Alpha Airports Group. Last month Flemingo’s counsel had filed the Bombay High Court decision over MIAL as evidence after arguments had been completed from both sides. In response, the Karnataka High Court said: “Since the question of law involved in this case and the case before the Bombay High Court are identical we deem it proper and necessary to give an opportunity to the learned counsel for the respondents to make their submissions with regard to the views expressed by the Bombay High Court and as to why this Court should not follow the judgment of the Bombay High Court on the identical issues raised in this writ petition.” As a result the case has been adjourned to give the respondents the opportunity to defend themselves — effectively, against the findings of the Bombay High Court. No date has been given for the next hearing. Meanwhile, the Airports Authority of India (AAI) has issued tender documents for duty free shops at five Indian regional

Going by the book

f MIAL is a ‘state’, then what it means is that DIAL, BIAL and HIAL are all states within states. In other words, everyone of the public-private partnership in the country will be automatically deemed to be an institution of the state since they are fulfilling obligations of the state. Would that mean bringing them under the scanner as far as the CVC, CBI and sundry other government committees and organisations? Would they have to go through the same tortuous route that afflicts the Indian Public Sector where they have no option but to follow the L1 formulae of awarding the bid to the lowest bidder, irrespective of other considerations? According to one veteran public

The Airports Authority of India (AAI) has issued tender documents for duty free shops at five Indian regional airports: Thiruvanathapuram, Jaipur, Lucknow, Srinagar and Coimbatore. The contract is for three years, but could be even shorter if the airports are leased out under the government’s Public-PrivatePartnership Act CRUISING HEIGHTS July 2008

sector official, the rule of thumb in most joint sector projects is for the private partner to — by and large — go by the diktats that PSUs follow and avoid the ‘liberalism’ of the private sector. In other words, what he meant was, for the PPP venture to be run strictly on the lines of the PSU, would be to follow L1 norms or government guidelines. But this official did accept that in the strictest sense, ‘state’ meant carrying out functions on behalf of the Union of India as a sovereign republic. Can a PPP be covered under this definition? If indeed it were, it would be the first time that an enterprise with less than 50 per cent holding would still be deemed to be an enterprise of the state. airports: Thiruvanathapuram, Jaipur, Lucknow, Srinagar and Coimbatore. The contract is for three years, but could be even shorter if the airports are leased out under the government’s Public-Private-Partnership Act before the concessions have run their course. The spaces on offer are small, ranging from just nine sq m at Coimbatore to 123 sq m at Srinagar, with around 42-43 sq m on offer at Jaipur and Thiruvanathapuram and 34 sq m at Lucknow. Apart from Coimbatore, all of these spaces are split further into Arrivals and Departures. The deadline for the receipt of documents is 23 July. Technical bids will be opened that day, while financial offers will be opened at an unspecified later date. The successful bidder will be required to take possession of the spaces and begin operations within 90 days of the contract award. Licence fees are US $69 per square metre per month at Thiruvananthapuram and US $44 at the other airports. This is subject to an annual +10% compound rise each year, after year one. There is a minimum guaranteed royalty at each airport and tenderers should indicate their offer over and above these amounts. The minimum is US $11,000 per square metre per year at Thiruvanathapuram, US $3,147 at Coimbatore and US $ 7,607 at the other three locations. The airports currently handle small numbers of international passengers. In 2006-07 Thiruvananthapuram had 1186 160 international travellers, Jaipur handled 195711, Lucknow 130002, Srinagar 17519 and Coimbatore 14730.

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AIR CARGO/SNIPPETS Deccan cargo gets its Nagpur hub THE ONE WORD that Capt G R Gopinath has on his lips is: “Connect”. Connectivity, he pointed out recently during the signing of a Memorandum of Understanding for a state-of-the-art cargo hub in Nagpur, was an important phenomenon that was taking the world by storm. “The essence of ‘Connect’ is to provide connectivity in all forms to not Captain G R Gopinath (front, left) holds up the he has signed on behalf of Deccan Cargo only the metro MoU with MADC (Maharashtra Airports Development cities but also the Company) Managing Director R C Sinha. smaller cities and Watching the two (standing on the dais, second left) are Minister of New and Renewable towns of India,” from Energy, Vilas Muttemwar, Maharashtra Chief he emphasized. Minister Vilasrao Deshmukh (centre) and Civil In what can Aviation Minister Praful Patel (fourth from left) only be referred to as visionary, the champion of LCC said, “By providing connectivity to smaller cities and towns, we will indeed create wealth, not only for the nation but also for the common man based in these places…This does looks like a dream, which, if fulfilled, will make India a seamless nation, where people, products and

proceeds travel freely and efficiently so that all of us can empower people in India to focus on what they do best.” Present on the occasion was the Chief Minister of Maharashtra Vilasrao Deshmukh and the Civil Aviation Minster Praful Patel. Capt Gopinath also spoke about how he wanted to make Deccan Cargo the country’s top air and ground distribution network with the widest delivery network in the country. The core of this network would be the state-of-the-art Cargo Hub spread across 48 acres, strategically located at Nagpur’s B R Ambedkar Airport. The Nagpur Airport will handle a majority of the cargo moving on the Deccan Cargo network, thereby controlling the distribution of shipments across the country. The Nagpur Hub will also be an international hub connecting the major economies of Asia Pacific, Middle East and Europe via India.

Airbus selects DHL as lead transport provider DHL recently announced a new five-year agreement with Airbus. Under this agreement, DHL becomes the lead transport provider and a tier-one partner of the plane manufacturer. DHL will implement its full transportation system, 4PL control tower and optimisation programme to streamline the flow of materials to Airbus manufacturing plants. The control tower will manage a significant part of inbound transportation, including air and ocean freight, road freight, customs and value added services. The implementation of the new transportation concept will start from September 1 this year.

Air India cargo flies high WITH THE FORMATION of CARGO-SBU, Air India, which was considered a passenger-centric carrier, established itself also as a premier cargo airline. After the merger of cargo units in September 2007, renewed focus on promoting sales on our flights/freighter services commenced. Efforts to increase cargo carriage on AI’s services and retain customers were taken on all fronts. The initiatives included: Making joint-sales calls to agents/ forwarders and shippers; Pricing support by offering competitive rates in the market and spot rate approvals; and, Concentrated efforts to improve loads on AI’s freighter flights. Additionally, a major Cargo Incentive Scheme was launched — first time in the history of Air India — for cargo agents of Air India/ Indian on the entire Amit Gulati of Mudita Pvt Ltd receives the award as top domestic agent of North India from Dr S network titled ‘Singapore Star Cruise’. The Jaishankar, Indian High Commissioner to scheme entitled the top cargo agents of each Singapore region to become eligible for an incentive trip four position in January 2008 and to No one on Star Cruise at Singapore. position in March 2008. The scheme generated response among AI has become the market leader (with a air cargo agents’ worldwide. AI’s revenue earnings have gone up by market share of seven per cent) in terms of Rs 13.1 crore during Jan 08-Mar ‘08 visexport cargo carried ex-Delhi during the Pandey, AI's Regional Manager à-vis the same period (Jan ‘07-Mar ‘07) Harsh month of March 2008, as per data released (Asia Pacific) and Chitra Sarkar, last year: a growth of 12 per cent. by AAI. Executive Director (Sales & Mktg) Cargo, addressing the agents at Singapore The average monthly revenue during the The Air India Cargo Awards function scheme period (Jan ‘08-Mar ‘08) was Rs and the Star Cruise tour programme was 41.6 crore/month as against Rs 36.7 crore/month during the conducted between June 22-26, 2008 at Singapore. The awards non-scheme period Apr ’07-Dec ’07, amounting to an function, held at Hotel Hilton saw Dr S Jaishankar, Indian High increase of Rs 4.9 crore per month and a growth of 13.3 per Commissioner at Singapore, as the chief guest. The awards were cent. given away by the High Commissioner and by Chitra Sarkar, ED In September 2007, AI was in the ninth position. It rose to No Cargo (S&M).

CRUISING HEIGHTS July 2008

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AIR CARGO

Express majors

FEEL THE ATF HEAT The ripple effects of the ATF hike are being felt in the air cargo sector. Courier and express companies have hiked rates and small courier companies could even be forced to close shop. The situation is grave, as Tirthankar Ghosh found out, and could even take a turn for the worse in the days to come.

he Air Turbine Fuel price hike shock might have taken a while to register but now that it has taken hold, the ripple effects are being felt by all. One of the most affected is the express industry and major players in India have started looking at ways to prop up their bottomlines. Add to that the growing airport charges and you have the perfect recipe for the slow death of an industry. The murmurs that are being heard in the air

TROUBLED TIMES: (Above) A freighter takes off from Delhi’s international airport

CRUISING HEIGHTS July 2008

cargo agents fraternity these days, state that cargo tonnage growth, which stood at 10.5 per cent last year, could slow down to below 10 per cent this year. According to Subhasish Chakraborty, Secretary of the Express Industry Council of India — the apex body of the 20-odd leading express trade companies in the country — the ATF price rise could force a number of small courier organisations to close shop. The big ones, like his DTDC for example, has to be content with half the profit margins.

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AIR CARGO

Wait for the next big shock

ith express rates moving up, the next few years could well see upheavals in the air cargo sector in the country. This, despite the fact that during the last five years, from 2001 to 2005, domestic cargo increased with a Compound Annual Growth Rate (CAGR) of 16.3 per cent, while international cargo registered CAGR of 12.2 per cent, according to figures from the Director General Civil Aviation (DGCA). The Federation of Indian Airlines (FIA), the apex industry body which has been formed by scheduled carriers in India, has projected air cargo growths using the above CAGRs registered over the last five years. The FIA projections for domestic and international cargo could reach 838156.5 MT and 1567543 MT, respectively, by 2012. Would shippers still find it worthwhile to send cargo by air at that time?

Year 2006-07 2007-08 2006-09 2007-10 2006-11 2007-12

Domestic Cargo

Intl. Cargo

(in metric tonnes )

394134.8 458332.7 532987.4 619802.0 720757.3 838156.5

883326.9 990697.4 1111119.0 1246178.0 1397654.0 1567543.0

EXPRESS DELIVERY: Blue Dart and Air India freighters at Delhi airport

“We are compelled to step up our tariff to mitigate the impacts... As a responsible partner to our clients, we are also looking at various measures to increase our operational efficiencies to remain our customers’ first choice” — Ketan Kulkarni, Blue Dart

CRUISING HEIGHTS July 2008

Talking to the press, Chakraborty pointed out that even a small hike of Rs five per kg added to anywhere between 15 and 25 per cent to the costs. There was, he said, no other alternative but to ask the consumers to pay the extra costs. It is no wonder then that domestic air carriers across the board have started charging an extra five rupees a kilo for cargo. Blue Dart, which operates to seven airports, New Delhi, Mumbai, Chennai, Kolkata, Bangalore, Hyderabad and Ahmedabad, has not only got to worry about ATF, but also take care of lease rentals for warehouses and other expenses. According to a senior executive, these costs have increased from anywhere between 7.5 per cent to as much as 450 per cent, during the last year. The express major has seen a rise in its freighter charges by around 20 per cent. Unable to withstand the pressure, Blue Dart Express recently raised its rates for its air as well as ground services. While the on-air cost has risen by 15-20 per cent, the ground services will rise by 10-15 per cent. According to Ketan Kulkarni, Blue Dart’s Head of Marketing, Corporate Communications & Sustainability, “We are compelled to step up our tariff to mitigate the impacts.” He also expressed his worries about the cost of ATF. “As a responsible partner to our clients, we are

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The ATF price rise could force a number of small courier organisations to close shop. As for DTDC, it has to be content with half the profit margins, according to Subhasish Chakraborty, Secretary of the Express Industry Council of India

H.C.Tiwari

also looking at various measures to increase our operational efficiencies to remain our customers’ first choice, despite the high costs,” said Kulkarni. Fuel prices in Indian airports are much higher than Singapore prices. According to figures from Indian Oil Corporation Limited (IOCL), ATF in Mumbai costs Rs 71,759.06 per kilolitre, up from Rs 60,468.28, in New Delhi, Rs 69,227.08 against Rs 58,387.92. ATF constitutes

around 40 per cent of an airline’s operating cost and Air India, for example, has hiked airfreight rates. For Air India cargo, ATF costs, as a percentage of total costs, have gone up from 25 to 50 per cent during this year. A company source informed that the carrier had been forced to levy a fuel surcharge of Rs 5,000/tonne for its domestic operations. The ATF price hike bite has started taking its toll. Air India’s domestic freighter service project has been postponed indefinitely — for the third time. The freighter service was initially planned for a March 2007 launch. It was postponed to November 2007, by which time it was expected that the new passenger planes which had been ordered would be put into service, thereby releasing some of the old ones that could be used for cargo. When that did not happen, the launch was scheduled for July 1, 2008. This time, however, it is the ATF crisis and the mounting losses. With the indefinite postponement, the hype that had been created about Nagpur’s Dr Ambedkar International Airport becoming first, a domestic hub and later an international one, has vanished. The Air India cargo project had the potential to place Nagpur on the global aviation map much ahead of the time that Multimodal International Hub Airport at Nagpur (MIHAN) started operations. Dismissing reports that there would be delays in the conversion of four B-737s sent by Air India as one of the reasons for the postponement of the services, sources at the Mumbai headquarters pointed out that the carrier had in fact completed the conversion process. As for the delay in the project, AI officials at Nagpur airport said

Air cargo fleet in India Company

Name

No of planes

Type

Model

Blue Dart

B737, B757

Owned

First Flight Couriers*

First Flight

ATR-8

Owned

Gati

Gati Skyways

B737

Leased

Flyington Freighters

A330-200F

Leased

AFL

QuikJet

B757

Leased

Crescent Air

Crescent Air Cargo

Fokker F50

Owned

Source: Company reports, logbizindia.blogspot.com * First Flight has discontinued flight operations since November 2007 CRUISING HEIGHTS July 2008

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AIR CARGO

The same story the world over

he last two months have been bad for the air cargo industry, according to an IATA release at the beginning of this month. The report states: “At 1.3 per cent, cargo demand is considerably down from the 4.3 per cent recorded for the full year 2007. For the first five months of 2008, airfreight volumes were up 2.8 per cent. The biggest cause of the slow growth came from a 0.5 per cent contraction in Asian carrier traffic. This resulted from the impact of the earthquake in China and weakness in the Japanese economy. Asian carriers also saw weakness in transpacific markets with increased competition from US carriers taking advantage of the weak US dollar.” The report goes on to list the cargo demand region-wise: that it could be due to the high ATF prices and operating cargo-only flights could mean adding more losses. The silver lining to the dark skies is that the courier business has not yet seen shippers resorting to other forms of transport. The business runs on very narrow margins — as low as ten per cent — and with this hike, that is going to come down by half in the current financial year, said Chakraborty. Applying some balm to soothe the shipping community, the Airports Authority of India (AAI) which incidentally handles a majority of the airports in the country, recently announced that it would freeze all fees it levies on passengers and airlines. The relief announced by AAI has been welcomed by most airlines since the charges levied constitute the third largest component in their total costs. Services provided by AAI constitute 15 per cent of the total operating costs of airlines, ranking third after the fuel and wage bills. These problems notwithstanding, there seems to be no shortage of takers for new cargo carriers. The latest entrant is Abhay Lodha’s Topworth Group. With interests in steel, aluminium foil and power sector, the group wants to enhance its presence in major domestic markets with its air cargo business, which it proposes to launch with US-based Avicore LLC, early next year. The company plans to invest around $100 million. Topworth has been granted a no-objection certificate from the aviation ministry. Speaking to the press, Topworth Chairman Abhay Lodha pointed out that the air cargo venture would start

ALL IN A ROW: Fedex planes at its Memphis, USA base

North American cargo traffic grew 4.6 per cent as US carriers shifted capacity from domestic to international routes. In addition to expanded transpacific opportunities, the US-EU Open Skies agreement created new opportunities in Europe.

The ATF price hike bite has started taking its toll. Air India’s domestic freighter service project has been postponed indefinitely... With the indefinite postponement, the hype that had been created about Nagpur’s Dr Ambedkar International Airport becoming a domestic hub has vanished CRUISING HEIGHTS July 2008

Europe recorded a sluggish 1.4 per cent increase. The strong Euro was damaging competitiveness for both European exports and the European air cargo business. Latin America freight volumes contracted 13.2 per cent. Industry restructuring saw the replacement of retiring wide-body aircraft with narrow-bodies with limited cargo capacity. Africa recorded its 11th month of airfreight contraction out of the past 12 months with a fall of 6.5 per cent during May as industry restructuring removes freight capacity. The lone bright spot was the Middle East where volumes rose 10.7 per cent on the back of oil-based economic growth.

by March next year with two leased Boeing 737 aircraft with its hub at Nagpur. By July 2009, the company plans to lease three more B-737s. Avicore LLC is promoted by three NRIs and the Topworth Group has a 51 per cent stake in the new aircargo business. The plan is to fly to domestic destinations in the beginning and Lodha hoped to fly overseas by the end of next year. Lodha was optimistic about the venture. He told the presspersons that there is a great scope for air cargo business in the country and the need for dedicated cargo airlines is going up each passing day with the boom, particularly in the retail sector. Since the number of service providers was limited, the Topworth venture would be able “to cash in on escalating demand”. The company chose Nagpur as its hub because the city would be able to connect with other major cities in under two-hour flying distance. “All other airlines can bring in cargo from all over the world and distribute them through us to the respective locations,” according to Avicore Aviation Chief Executive, Shankar Devarajan. The last word — and this one is one of optimism — has come from a recent KPMG study titled, Indian Aviation: Flying Through Turbulence, which maintains that India’s airlines can achieve break even and become profitable despite rising fuel, as long as they focus on improving airline efficiencies, improve processes, switch to leaner business models and cost optimise their business operations. Whether all this will be possible in the long run, only time will tell.

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DOMESTIC AIRLINES Jet goes to Devasthanam JET has introduced two new flights in the south, in June 2008. The first one is between Tirupathi and Rajahmundry. These new flights are being operated by ATR 72-500 aircraft. The second service is started between the two southern sister cities of Chennai and Hyderabad. Changi Airline Awards: Jet Airways has been honoured at the annual Civil Aviation Authority of Singapore (CAAS) awards for the growth of its passenger and cargo carriage through Changi Airport.The third annual Changi Airline Awards, held in Singapore on 12 June 2008, recognised airlines that have achieved the highest year-on-year growth in passengers and cargo, as well as airlines that have carried the most passengers and cargo through Singapore’s Changi Airport. Jet Airways received awards for being one of the ‘Top five Airlines by Growth in Passenger Carriage’ and one of ‘Top five Airlines by Growth in Cargo Carriage’. The awards were contested by the 78 airlines that operate 4400 weekly scheduled flights at Changi Airport. Codeshare with Etihad: Etihad Airways has signed a new codeshare agreement with Jet Airways. Under the deal, which is already in effect since July 1, 2008, the Abu Dhabi-based airline will place its two-letter ‘EY’ code on all of Jet Airways’ daily services between the Indian carrier’s two hub airports, Delhi and Mumbai, and Etihad’s own home base. In turn, Jet Airways will place its ‘9W’ code on the daily services operated by Etihad on the same routes. James Hogan, Etihad Airways’ Chief Executive, said: “As well as providing air travellers with a greater choice of flights between the UAE capital and these two popular Indian cities, this new codeshare agreement will also provide customers of both our airlines with greater access to each other’s expanding global networks.” In the case of Etihad, the new codeshare arrangements between Abu Dhabi and the Indian cities of Delhi and Mumbai will provide additional connection opportunities for its cus-

SIGNED AND SEALED: (Left to right) Naresh Goyal, Chairman, Jet Airways shaking hands with James Hogan, Chief Executive Officer, Etihad Airways, after signing the Codeshare and Frequent Flyer Partnership Agreement at a Joint Press Conference held in Mumbai on June 10, 2008

tomers wishing to travel to India from key destinations on the Abu Dhabi-based airline’s network, including Kuwait, Beirut and Jeddah in the Middle East as well as Geneva, Munich, Manchester, New York and Toronto. The new codeshare agreement will also see Jet Airways place its code on Etihad’s daily service between Abu Dhabi and Kochi (Cochin) and Thiruvananthapuram (Trivandrum), to provide the Indian airline’s Kerala-based customers with convenient access to Abu Dhabi and the rest of Etihad’s global network.

Hyderabad sees Gulf Air arrivals

GULF AIR, the sole national carrier of the Kingdom of Bahrain, began its services to Hyderabad from July 1, 2008 with its inaugural flight taking off from Bahrain International Airport. “Hyderabad has been one of our favourite destinations in our expansion plans for quite sometime and I am glad we were able to link Hyderabad — the emerging IT and bio-tech hub with ‘Business Friendly’ Bahrain,” said Gulf Air Chief Executive Officer Mr Björn Näf, on the eve of the launch. An Airbus A320-200 will serve the daily non-stop service between Bahrain and Hyderabad with business and economy class providing two-way connectivity to many other major markets within the region.

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AIRPORT NEWS 100 days at Rajiv Gandhi International Airport RAJIV GANDHI International Airport's first 100 days has been a challenging and learning experience. Despite the recent ATF price increase and rationalising of routes and frequencies by airlines, the airport has accomplished the following in the last 100 days since being commissioned on March 23, 2008. Two new international airlines commenced operations from Hyderabad. Gulf Air, with an A320 aircraft, has started daily flights to Bahrain from Tuesday, July 1, 2008. Air India Express also started their daily flight to Dubai last month. Jet Airways too, started two new destinations to cater to the growing demand of passengers from Tirupati and Rajahmundry. The fuel off-take at the airport has registered significant growth since commissioning and is now averaging approximately 1000 KL per day. The incentives from the State government on sales tax and the unique Open Access system introduced for the first time in the country have contributed to this growth. The airport, which has been designed to be environment friendly, has achieved savings in energy consumption (20 per cent) and water consumption (25 per cent).

WORLD CLASS FACILITIES: Inside the new Rajiv Gandhi International Airport at Hyderabad

Rajiv Gandhi International Airport (RGIA) will be the second airport in the world to be LEED (Leadership in Energy and Environment Design) certified, once we get the official certificate for the same.

INDIAâ&#x20AC;&#x2122;S FACE TO THE WORLD: The newly-renovated Indira Gandhi International Airport at Delhi

gers with their luggage and guide them to their respective entry gates. The numbers of entry gates into the terminal have been increased from four to eight. For arriving passengers: For arriving passengers, immigration will be smooth with the addition of 10 new immigration counters, taking the number up to 38. Ten more immigration desks will be added in the coming weeks. The baggage reclaim belts have been modernised and the length of four has been increased to enable processing a larger number of baggage per hour. Additionally, customs control is also being enhanced with the addition of more desks. Other facilities at the terminal have also been upgraded. The rest room facilities for passengers have been enhanced and modernised. They have been fitted with modern contact free fittings, and dedicated staff has been deployed for their maintenance and upkeep. Arrival terminal: The terminal interiors and exteriors have undergone a major facelift, and it presents a whole new look and feel. New ergonomic seating systems have been installed, designed by Vitra, a Swiss firm counted amongst global leaders for seating systems design for public facilities.

Bengaluru receives Dragonairâ&#x20AC;&#x2122;s maiden flight DRAGONAIR, a full service carrier based in Hong Kong, has commenced operations with non-stop daily flights between Hong Kong

New facilities at IGI TRAVELLERS AT THE international terminal of Indira Gandhi International Airport (IGIA) can now look forward to improved facilities with the completion of the renovation and modernisation. Delhi International Airport (P) Limited (DIAL), the GMRled joint venture consortium tasked with the modernisation of the IGIA has carried out an extensive renovation programme to enhance the efficiency of the terminal and also to improve its aesthetics and functionality. In order to reduce congestion at the international terminal, a number of steps have been taken. Departing passengers: The departure ramp on the city side has been widened to accommodate more vehicles. Delhi International Airport (P) Limited (DIAL) has deployed a large number of traffic marshals, free luggage porters and customer care executives on the city side, who guide passenger vehicles, help passen-

and Bengaluru. Its maiden flight landed on July 2. Dragonair is a Cathy Pacific subsidary; they together operate 35 flights from India. Cathay Pacific has recently added 20 new flights a week including new services from Chennai, making a total of 28 flights a week from India to Hong Kong

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INTERNATIONAL BA launches major project at JFK BRITISH AIRWAYS has announced that it would undertake a $30 million, 18-month-long project to enhance its premium ground facilities at its terminal building at JFK International Airport, New York. The project launched this month will encompass three main areas: Creating a new premium check-in

pavilion with a dedicated curb side drop off for First and Executive Club Gold customers; Building an enhanced and dedicated check-in area for Club World and Executive Club Silver customers, and; Renovation of terraces, first class and Concorde lounges to the new galleries specification as now operating in the airline’s new London Heathrow Terminal Five facility.

The tarmac at JFK International Airport, New York

Deccan Skylimo takes off from BIAL

DECCAN AVIATION has announced the launch of helicopter charter service from BIAL (Bengaluru International Airport Limited) to select locations in the Karnataka capital. A Bell 206 Jet Ranger will be deployed for the service. The helicopter charter service called “Deccan Skylimo” began operations from BIAL to Electronic City, Whitefield and HAL in Bangalore on July 2. The charter service offers convenient timings and regular frequency; the first service will start at 0630 hours and the last drop to BIAL will be at 1800 hours daily. The Deccan Skylimo is a unique helicopter charter facility offered by Deccan Aviation, India’s first helicopter charter company. The helicopter service will address the issue of airport connec-

A HOP AND SKIP TO THE CITY: Karnataka Chief Minister (third from left) with Capt. Gopinath (extreme right) at the inauguration of the Deccan Skylimo service in Bengaluru

tivity for business travellers to the city and provide a convenient alternative to road travel.

Sri Lankan’s ground handling in India SRILANKAN Airlines now does its own ground handling at four airports in India, which significantly increases the visibility of the airline’s branding in India. The familiar colours and logo of Sri Lanka’s National Carrier are now regular features on vehicles and ground service equipment at airports in Chennai, Trichy, Coimbatore, and Goa. Sri Lankan Airlines’ Chief Executive Officer, Manoj Gunawardena, said: “Benefits from this initiative are two fold: it increases our level of customer service and it also brings in significant cost savings to the operation. It is an excellent example of how significant quality and cost benefits can be achieved by challenging the established practices.”

Sri Lankan, which last November became the first foreign carrier to operate 100 flights per week to India, has 33 flights to these four destinations — 15 to Chennai, 11 to Trichy, four to Coimbatore, and three to Goa. Chennai is one of Sri Lankan’s busiest destinations in the airline’s route network. SriLankan increases flights to woo Middle Eastern tourists: SriLankan Airlines is closely supporting initiatives by the Government of Sri Lanka to spark a boom in Middle Eastern tourism to the country, by adding more weekly flights to the region. With this initiative, SriLankan will have 37 weekly connections to nine cities in the Middle East — Abu Dhabi, Dubai, Bahrain, Doha, Muscat, Dammam, Riyadh, Jeddah and Kuwait. Additional flights are to three cities — Doha, which increases from the present four flights, up to six; Bahrain which goes from five to seven; and Dammam which will have three flights, up from the present two. The government has identified the Middle East as one of four major thrust markets to Sri Lanka, and has launched a series of marketing campaigns to raise awareness of the island’s attractions. There has been an 80 per cent increase in Middle Eastern tourist arrivals during the first quarter of 2008. The airline’s new packages include ‘Kids Go Free’ which encouraged family vacations by offering free packages to children under 12 when their parents bought packages; and ‘Island Breaks’ which promoted short stopover holidays in Sri Lanka among travellers transiting Colombo to other leisure destinations. New Airport Manager for New Delhi: Continuing to build a strong team for its ever-expanding Indian operations, Emirates has announced the appointment of Sulaiman Sultan as its Airport Station Manager (ASM) for New Delhi. Sultan was previously the Airport Station Manager for Emirates’ Sanaa (Yemen) operations. As the ASM, New Delhi, Sultan will be responsible for the smooth running of Emirates’ airport operations, focussing on ontime performance of Emirate flights, and Sulaiman Sultan overseeing the safety, security, service and quality aspects of the aircraft. Orhan Abbas, Emirates’ Vice President, India and Nepal said: “Sultan has proven capabilities and experience and I believe he is the right candidate for this position, especially at this crucial juncture as the airport undergoes a complete revamp.” Sultan joined Emirates in 2000 and subsequently held various positions across the airline. In 2006, he was recognised for his hard work and capabilities, and given charge of Emirates’ Airport operations in Sanaa.

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Thai Airways raises online bookings by 200 per cent

THAI AIRWAYS has launched eMerchandise in five major markets, with more on the way. By adopting e-Merchandise solution to provide advanced shopping capabilities on their website, Thai Airways has increased online domestic bookings by 200 per cent over three months and furthermore has set a target to quadruple online bookings by year end 2009,

according to Amadeus who supplied the software. Amadeus e-Merchandise provides a full calendar display and a variety of up-sell capabilities on the Thai Airways website. Integrated with the Amadeus e-Retail booking engine, Thai Airways now provides a superior online shopping and booking experience proven to drive yield and profitability.

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Emirates’ first commercial A380 to US AIR TRAVELLERS will be able to experience Emirates Airline’s state-of-the-art A380 aircraft for the first time on August 1, when the airline launches its first A380 commercial service from Dubai to New York JFK. The 14-hour non-stop flight will also be the first-ever commercial A380 service to the Americas. Chairman and Chief Executive, Emirates, Sheikh Ahmed bin Saeed Al-Maktoum, Airline & Group said: “The Americas represent a key focus area in Emirates’ route development plans, and we are delighted to be the first airline to

launch commercial A380 services to the continent. We are confident that Emirates’ customers travelling to and from North America will welcome the A380’s additional space and capacity, as well as our luxurious onboard amenities which will provide a very high quality travel experience, previously associated only with private jets.” Emirates’ A380 interiors and onboard product, which have been kept under wraps thus far, will be revealed for the first time when the airline receives its first A380 from Airbus’ Hamburg facility on July 28. On August 1 and 3, Emirates will operate its brand-new A380 aircraft between Dubai and New York JFK on a commercial basis. These will be additional flights to its existing twice-a-day, non-stop service. Subsequently, Emirates will deploy the A380 between Dubai and New York, on one of its scheduled twice-daily flights.

Bahrain Air lands in Cochin BAHRAIN AIR, the first and only Premium Low Price Carrier (PLPC) in the Kingdom of Bahrain, recently started its first non-stop flight to Cochin International Airport. Flight 2B 321 was greeted at Cochin International Airport with a water cannon salute followed by a welcome ceremony for the arriving delegation. Kochi is the carrier's first destination in the Indian subcontinent. Bahrain Air flies three times weekly and plans to commence daily flights from October 2008. Bahrain Air now serves, in total, eight destinations across the Middle East, North Africa and Indian subcontinent. After a long market research, the schedule was finalised that the passengers will find it very convenient — both business travellers and regular passengers. Monday flights will depart Bahrain International Airport at 10:40am and arrives at Cochin International Airport at 5:30 pm, local time LAUNCH PARTY AT COCHIN: (L-R) Soha Al Borshaid, Asst Manager,Corporate Communications; Renuka Ganesh, Manager Sales, Kochi, Bahrain Air; Nora Pradhan, Asst Manager, Marketing, InterGlobe Air Transport; Aparupa Ray Ganguly, Head - Marketing, InterGlobe Air Transport

CRUISING HEIGHTS July 2008

The welcome to Bahrain Air saw a display of bonhomie at the cake cutting ceremony in Kochi International Airport

on the same day. The other two flights will operate on Tuesdays and Fridays, departing Bahrain at seven pm and arriving at Kochi in the early hours of Wednesdays and Saturdays at 02:30am. This service will operate three times a week for the entire summer season, and will become a daily service from October 2008.

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TRAVEL & TOURISM CNBC awards achievers in travel and tourism industry UNION MINISTER for Tourism and Culture Ambika Soni felicitated the winners of this year’s CNBC AWAAZ Travel Awards 2008 for their outstanding contribution towards the Indian travel and tourism industry. The Awards focused on honouring some of the people and companies behind the year’s best travel products and services. The CNBC Travel Awards 2008 announced the results of the country’s most comprehensive travel trade poll to celebrate the achievements of the travel and tourism industry. The awards also

ing busy hours, the Sarovar Portico is located on a main road with easy access to the National Highway NH, connecting the rest of the North East and Upper Assam, giving it a distinct edge. … and in Badrinath: For those who want to combine pilgrimage with fun and enjoy the scenic view of snow capped mountains, Sarovar Hotels have introduced luxurious tented accommodation, an extension of Sarovar Portico Badrinath. The luxurious tented accommodation is now available at Ghangharia for the convenience of travellers heading for Shri Hemkunt Sahib and the Valley of Flowers.

Accor’s Mercure arrives in India ACCOR HAS recently signed a management agreement with Brigade Enterprises for the management and operation of a serviced residences project in Bangalore, to be called Mercure Homestead Residences. Mercure Homestead Residences is located in the up-market Koramangala area of Bangalore, India’s IT hub and nicknamed India’s “Silicon Valley”. The complex will feature 129 studio, one bedroom and two-bedroom apartments, an all-day dining restaurant, health club, swimming pool and spa. The apartments display an innovative and edgy interior design style. Targeted to open by end 2008, this serviced residence will cater to the business traveller market, particularly people from the IT and biotechnology industries.

Aurangabad says hello to ‘VITS’ Anil Kumar, Resort Manager, Club Mahindra, Munnar Resort, receives the CNBC AWAAZ Travel Award ‘08, for Best Resort for Health & Rejuvenation from Ambika Soni, Union Minister for Tourism. Club Mahindra won the award for the Club Mahindra LakeView Resort in Munnar

hosted representatives from the travel trade bodies, various state tourism boards, as well as domestic and international airlines. CNBC AWAAZ along with The Nielson Company conducted a thorough research and selected categories depending on the various services available and provided to the discerning traveller. This year’s Travel Awards 2008 included three new categories: Best Weekend Getaways, Airline with Best Business Class and Best International Airline.

A 100-ROOM VITS property, part of a new chain of luxury business hotels from Kamat Hotels India Limited (KHIL), opened recently in Aurangabad. Located near the railway station, the new hotel offers contemporary luxury business accommodation for discerning business class travellers from across India. The launch of VITS Aurangabad was a gala affair, with eminent faces of Aurangabad society attending the function. Corporate heads and renowned personalities from diverse fields graced the evening. With world-class services and unique dining options, VITS Aurangabad will be a prominent landmark of the city. The majestic exterior of the property is well matched by its plush interiors. The

Sarovar Hotels in Guwahati, East Delhi… SAROVAR HOTELS and Resorts enhanced its portfolio by signing on two more hotels: Sarovar Portico in Guwahati and Park Inn at Delhi. Anil Madhok, Managing Director Sarovar Hotels said: “Though Guwahati has close to 25 high capacity flights coming to the city — all major airlines such as Jet, Kingfisher. Air India, Air Deccan, Jetlite etc, especially from main metros of Delhi, Mumbai and Kolkata — the city lacks quality accommodation. With the opening of Sarovar Portico, Guwahati will soon have a good quality hotel offering superior accommodation and services to discerning travellers.” The Park Inn, Delhi will be located in the central business district of Shahadra in East Delhi. According to Madhok, “With the coming up of the infrastructure related to the Commonwealth Games in East Delhi, the area’s importance has gained significance. The hotel is being planned as a good quality three star, full service hotel. It is scheduled to open before the Commonwealth Games in 2010.” The opening of Sarovar Portico will come as welcome relief for those travelling to Guwahati. The hotel will be located within close proximity to the State Secretariat, the most up-market and largest hospital in the North East and the VIP area of Dispur (the state capital). Unlike other existing hotels, mostly located in the congested part of the city with inadequate parking and inconvenient access dur-

The VITS property recently inaugurated at Aurangabad by Kamat Hotels

hotel is ideally suited for business class travellers visiting Aurangabad, the tourist spots of Ajanta and Ellora and nearby places like Jalna, Jalgaon, Nashik and Paithan.

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Stay at the best hotel in the world REVEL in the magic of the monsoon with a luxurious stay at the world’s best hotel and indulge in soothing spa treatments, revitalising yoga and uplifting meditation sessions. Ranked the best hotel in the world by the readers of Travel+Leisure magazine, in what is acknowledged as the most revered ranking in the international travel industry, The Oberoi Udaivilas, Udaipur, designed as a splendid Indian palace, magnificently recreates the romance of the past and yet, is completely in keeping with the 21st century — The hotel offers richly appointed guestrooms and suites with private terraces and pools, bathrooms that overlook private walled courtyards, restaurants that serve traditional Rajasthani, Indian and

International cuisine, a magnificent outdoor swimming pool and a luxurious Oberoi Spa, with its own swimming pool. With the ‘Oberoi Exotic Vacations’ package of exceptional value you can enjoy an eight-night stay at Rs 140,000. This includes accommodation for two persons, round-trip transfers from the nearest airport and all applicable taxes. If you book a 13night stay or more, you can avail of a complimentary upgrade to a suite, subject to availability. Booked independently of the offer, the tariff for a double room at the hotel is Rs 29,500* for a night’s stay. (*tax extra)

The Oberoi Udaivilas, Udaipur

Kerala introduces path breaking initiatives in tourism KERALA REGISTERED a remarkable increase in domestic and international tourists during 2007. While international arrivals recorded a significant 20.37 per cent increase over the previous year’s figures, the domestic tourist arrivals marked a 5.92 per cent increase. Foreign exchange earnings for the year 2007 was Rs 2,640.94 crore, a record growth of 32.82 per cent over the previous year, while the total revenue from tourism during 2007 was Rs 11,433 crore — an increase of 25.28 per cent over the last year’s figure. To sustain this momentum, several innovative programmes have been introduced by Kerala Tourism for the first time in the country. One such is Dream Season. Launched in April 2007, Dream Season,

11 ocean legs, eight inshore races and shorter stopovers in a ninemonth odyssey where the fastest mono-hulled yachts race at speeds never seen before in the oceans. There is also the Kerala Travel Mart, the biennial event that showcases the best of the state. Today, the mart is the largest gathering designed, planned and scheduled to facilitate meetings involving buyers, sellers, media and government agencies in the country. The 2008 edition of KTM will be hosted in Kochi from September 20 to 23. In addition, there is the Grand Kerala Shopping Festival 2008-2009, which will be held from December 1-15, 2008. One of the major objectives of this festival is to create a second shopping season and to transform the state into an international shopping destination.

ScottAsia & ICON to PR for ITB Asia

KERALA PUTS ITS BEST FOOT FORWARD: A dance performance put up by the state’s tourism department at one of the road shows among the many planned

targeted at domestic holidaymakers, is rapidly converting the traditional off-season (April-September) into a season of opportunity for travellers. The initiative offers a host of packages at never-before rates which are featured in an exclusive website, www.keralatourism.org/ dreamseason. Other than Dream Season, there is the Volvo Ocean Race. Kochi has joined the big league as a stopover port for the world’s premier offshore yacht race following the signing of the Kochi Stopover Port Agreement. Referred to as the ‘Everest of Sailing’, the 2008 edition of the Volvo Ocean Race is coming to Asia for the very first time. The round-the-world yacht race starting from Alicante in Spain will feature

BANGKOK-BASED ScottAsia Communications and Singapore’s ICON Communications have won the PR contract for the inaugural ITB Asia 2008 which takes place in Singapore, October 22-24. The annual ITB Berlin is the largest travel trade show in the world. ITB Asia is parent company, Messe Berlin’s, initiative to diversify the brand to Asia. The Asian event, which is supported by Singapore Tourism Board, has been designed to serve the global travel needs of the increasingly important Asian traveller. ScottAsia is a specialist travel communications company founded in 2006 by leading travel industry PR specialist Ken Scott, who has represented other high profile trade shows and events in Asia over the past six years. ScottAsia will service the ITB Asia account with ICON, which will supply on the ground PR support services in Singapore.

Tanzania seeks India’s Cooperation THE MINISTER of Natural Resources and Tourism of Tanzania, Shamsa S Mwangunga called on the Minister of Tourism and Culture, Ambika Soni. During their 45-minutes meeting here, both the leaders discussed matters related to the tourism sector. Expressing concern over the rising prices of petroleum products the world over, the two leaders felt that steps are required to arrest its impact on the tourism sector. The visiting dignitary sought India’s help in developing hospitality sector in Tanzania and also training of manpower. She said Tanzania enjoys a rich cultural bondage with India and this bonding will go further if we exchange ideas and policies to promote tourism in each other’s country.

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