Ch june 2005

June 2005 Vol II No.3

Rs 60

CMD V Thulasidas explains the exciting road map for Air India

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

PUBLISHER’S NOTE

Why are so coy, Mr. Minister?

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The Ministry of Civil Aviation has decided to appoint a search committee to find a new Chairman and Managing Director for Indian Airlines. The search committee is yet to be formalized. It is just that the Ministry has written to the Cabinet Secretary informing him of IA CMD Sunil Arora's eminent departure on June 11 and the need to find a successor.

The decision took for a successor a mere 15 days before the end of a CEO's tenure is patently against the Prime Minister's argument that public sector companies must be not only be efficient and profitable but must provide direction and good governance. Surely looking for someone to succeed Mr. Arora just weeks before he returns to his home cadre of Rajasthan isn't the best example of this philosophy. It's also against the laid down diktat of the PESB that a search committee, if indeed it has to be appointed, must come well in advance of an incumbent's date of departure.

So what was the reason for the delay? Some believe that the Civil Aviation Minister was unable to make up his mind on a replacement till the last minute. Another reason could be to have someone from the Ministry or IA takeover from Mr. Arora before Mr. Patel and his team can make up their mind on who should be the long term successor to the present CMD. Either way it reflects poorly on those who run Rajiv Gandhi Bhawan.It is well known that Praful Patel's unquestioned passion for the business of flying includes a pivotal role for IA.Infact he has said it time and again that IA and AI will continue to be integral to the aviation scene in

CRUISING HEIGHTS June 2005

this country for a long long time to come. He has also mentioned ad nauseum that divesting a portion of its equity through an IPO would do the airline a world of good. He has also said that IA's subsidiary, Alliance Air, needs to be beefed up and has been in the forefront of pushing IA's acquisition plans. No how does he expect to achieve all this without firm leadership at the top.

There are many who believe that the Minister is uneasy with the present incumbent at IA because he has a mind of his own. Perhaps he wants someone who will listen to him a little more. Perhaps someone who will understand his perspective. As the Minister in charge he is in the driver's seat and has the option of saying what he wants a change. If he wants a change he can at least be honest about it. Why beat around the bush and why mumble jumble your way through the issue? And he should have made his intent clear a good three months back. At least that would have helped get a search committee in position, pick a successor and ensure a seamless transfer of power.

At the moment there is uncertainty all around.

No one knows at IA on what happens in two weeks time. At the Civil Aviation Ministry it's a similar situation. There are stories galore in the newspaper on the likely list of successors. It's all a bit of speculation and a bit of gossip. All this could have easily been avoided. If only Mr Patel hadn't been so coy.

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Off the cuff There is something about the St James Court that makes our politicians swoon with delight.

If they are in London, they ought to be at St James.

Nothing else will ever satisfy them. So it was with Praful Patel. The Civil Aviation Minister prefers this London W1 address and fells most at home here.

So do others, Mr. Patel. Now take, for example, former External Affairs Minister Jaswant Singh. The good man was also at St James around the last week of May. His wife wasan't well and she was undergoing treatment in the city. The BJP heavyweight looked completely at ease and at home in this most wonderful heritage property.

This landmark Tata property in London is almost completely run by East Europeans who's English is a complete giveaway. You can make out they aren't from Italy or Spain or Portugal but come from across the iron curtainliberated and enjoying every moment of it. According to one insider they are ``1 hard working, industrious and pretty thrifty.`` Very Indian qualities.

And its here that one met Mr. Thulasidas.The AI Chief Executive was staying in of the suites and what a relaxed chat one had with him-minus the cellphone menace and incessant ring of the telephone.

contents

Dreaming Big

P20

The Maharaja is undergoing a trasnsformation.

Spearheading the change is Air India Chairman and Managing Director V Thulasidas who has just finalized an ambitious acquisition plan for the country's international carrier. Next in line is a complete transformation of the company's corporate culture. An exclusive interview.

Caught in a storm

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Jet Airways is caught in an embarrassing slew of allegations. Its accused of association with Osama bin Laden and Dawood Ibrahim.What are the consequences for Naresh Goyal? A special report.

CRUISING HEIGHTS June 2005

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

Off the record

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Sahara looks at a Varig option

Waltzing to London

CRUISING HEIGHTS Kiran Rao replies P34

P28

On board AI's inaugural flight to London-a tour diary by K Srinivasan

Finally Airbus has decided to undertake a damage control exercise. Kiran Rao, its senior Vice President writes to Air India.R Krishnan reports on the communication and what the CVC is likely to say.

RENU MITTAL Editor

RITU BARARIA Co-ordinating Editor

DUSHYANT PARASHAR Creative Director

BHART BHARDWAJ Art Director

RAJIV K. SINGH Gen. Manager (Admn)

Opening a Pandora's box

Aviation Digest

Tourism Digest P38

P36

P10

The PESB decision to appoint whole time directors in IA and AI is not without controversy.

R Krishnan reports.

Last page

P48

Nandini decides to return home Cover Illustration: R Prasad

CRUISING HEIGHTS June 2005

Editorial & Marketing office: D-11, Nizamuddin (East), New Delhi-110 014 Tel: 51825251/50, Fax: 51825250 All information in CRUISING HEIGHTS is derived from sources we consider reliable. It is passed on to our readers without any responsibility on our part.

Opinions/views expressed by third parties in abstract or in interviews are not necessarily shared by us.

Material appearing in the magazine cannot be reproduced in whole or in parts without prior permission. the publisher assumes no responsibilty for material lost or damaged in transit. The publisher reserves the right to refuse, withdraw or otherwise deal with all advertisements without explanation. All advertisements must comply with the Indian Advertisements Code. the publisher will not be liable for any loss caused by any delay in publication, error or failure of advertisement to appear.

Published and edited by Renu Mittal for and on behalf of Newsline Publications Pvt Ltd. D-11 (basement), Nizamuddin East, New Delhi-110014 and printed by Bhart Bhardwaj at Kaveri print process, 114 Patparganj Industrial Area, Delhi.

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PERISCOPE

“ EVOLUTION

“The empowered group of ministers has decided that the joint venture company developing the two airports will be required to absorb a minimum of net 40 percent of the existing employees at these airports.

“There is a vast scope for expansion of civil aviation in the country in which low cost carriers will play an important role.

PRAFUL

LETTERS TO EDITOR

After reading your cover story on poaching, it is difficult to imagine that till just a decade ago, pilots in this country had to go jobless because so were so few planes and so few vacancies. But it is so different now. Pilots are being courted like bridegrooms and they are being offered all sorts of inducements to behave like mercenaries. It’s a pity. One always thought that pilots, like doctors, were a special breed.Sadly,they too have exhibited that they have feet of clay.

Ayush Garg Delhi

Bird Group on signing a contarct with Berlin Tourism

May 2005 Vol II No.2

Rs 60

PLUS

Airbus Vs Boeing, The Minneta visit and WTTC jamboree

It is all very well for tourism officials to wine and dine and fete each other. But one fails to understand how it is going to improve the standards and the facilities for tourists in this land. We have one of the worst tourism infrastructure that one can possibly think of. And the WTTC jamboree will make no difference to improving it.

Mridula (received by email) How many times have you used the lonely planet in your travels? Well, I have used it several times and each time I have blessed Tony and his wife for putting together a magical piece of work. Perhaps the best part about their books is their details and the complete honesty with which they approach a city. You can’t do it unless you are in love with traveling as Maureen and Tony Wheeler are. God bless them.

“Kingfisher Airlines is India's first private airline to commence operations with a brand new fleet of aircraft and boasts the youngest fleet. Kingfisher Airlines is the first to offer the tele-check-in facility for all its guests, free individual in-flight entertainment on every seat through FUN TV (five video channels) and Kingfisher Radio (ten audio channels) at no extra cost” ALEX WILCOX CEO Kingfisher Airlines

Hilton Hotels in India on their latest plans

Off the record is lovely. It’s spicy, chatty and gossipy.

But give us more. Also could you mix the illustrations with some pictures? Sometimes it gets a bit monotonous.

Vishal Mumbai

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RADHA BHATIA Chairperson

What makes their airline unique

Sucheta Bhillai

All the correspondence may kindly be addressed to Editor, D-11, Nizamuddin East (basement) New Delhi - 110014 OR mail at newslinepublications@rediffmail.com

“With both the leisure and corporate travel in India poised for a 7-10% growth rate by 2007 and India being the 3rd fastest growing travel economy of the world, we are confident that this contract will translate into a mutually beneficial association for both the Bird Group and Berlin Tourism Marketing.”

PAUL SIMMONS Senior Vice President, Sales & Marketing

CRUISING HEIGHTS June 2005

“The Indian Family traveller is looking for a relaxing holiday where children enjoy themselves with other children of similar ages. We are now bringing to the discerning Indian traveller internationally recognised and appreciated programmes like the Hilton Breakfast and the Kids Club.”

“We would like to keep a portion of the IPO for the employees. We want them to be involved in their future. We want to dilute the equity without diluting the public sector character of the two airlines. The proposed initial public offers (IPO) by AI and IA.”

“It wouldn't be inappropriate for me to say that IA and AI would remain the primary airlines, the mainstay of Indian aviation for many more years to come and it is the government's responsibility to ascertain this."

“My stated position is that IA and AI be given the opportunities to fly abroad and they will be.

There is no question of waiting for the acquired aircraft, they can make do with the leased ones." On acquisition of new aircraft by the two airlines”

DR DINESH KESKAR

Preparations for Commonwealth Games in 2010 “Based on the projected route pattern and aircraft utilisation for Air India, the operating profit per year of 27 787-8s is US$81 million higher than that of the A330-200s, the eight 777-200LRs have an advantage over A340-500s by US$44 million, and the 15 777-300Ers generate US$60 million greater annual profit than the A340-600s.”

CRUISING HEIGHTS June 2005

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OFF THE RECORD

With Mallaya at Monte Carlo N

ow Vijay Mallaya may be deeply upset with friend Praful Patel but that doesn't stop the two from having a good time together.

Soon after his trip to London, Praful hoped across to Paris and onto Monte Carlo to catch up with friend Vijay Mallaya and watch the grand prix in the principality. Now everyone knows that Vijay is a great sports buff and loves racing and Monte Carlo is the perfect venue to watch messers Schumacher and Karthikeyan zoom across the tracks. So off Praful went after the inaugural flight from Amritsar to London, spent a few days sweating the pounds off at St James Court and then hopped across the English Cannel to Paris and Monte Carlo. Now were there other issues that they discussed? Well that's something we'll tell you next time.

Pow wow in London So what was Praful Patel doing in London this month? Well this was the second trip within a fortnight for Mantriji to his favourite city in the world. And it was a quite two-day weekend foray. The reason was simple: he was there to catch up and strategise with saheb. Well, saheb if you don't know is Nationalist Congress Party President Sharad Pawar.The Union Agriculture Minister was also in London on work and for his regular check up and the two decided that it would be best to exchange notes far away from the madding crowd. For those of you who are not in the loop, Sharadrao is a great friend of Naresh Goyal (now who isn't Naresh friendly with?).Perhaps a bigger friend of his than Praful Patel. The two go back a long time and Pawar is the single biggest votary of the open skies policy that will give his friend rights from Timbuktu to Jumaritaliya! Now we don't know what the agenda was at that that meeting but it was matters concerning civil aviation were discussed, we are told.

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CRUISING HEIGHTS June 2005

OFF THE RECORD take into account the Foreign Secretary. His job is to travel and travel.

Back to Jaipur There is still two weeks to go, but the odds against Indian Airlines CMD Sunil Arora continuing at the end of his five-year term are getting shorter and shorter. That there are still plenty of ifs and buts about the whole situation shows how formidable Arora's tenure has been and how well supported he is in the corridors of power. But it is evident that the chips are loaded against him. Those in the know state that the Ministry found him a tough nut to crack on several issues and on each occasion that there was a difference of perception, Arora told Rajiv Gandhi Bhawan that he would prefer to go to the IA Board for advice. This was simply not appreciated. Perhaps the biggest case is the joint venture that Indian Airlines desires to put up with Singapore Airlines. It has been a contentious issue with several people opposed to this hugely exciting joint venture. But there were other issues as well.

Maybe this isn't the best time to talk about all that. But as time goes by they are bound to tumble out bit by bit.

Back and forth Civil Aviation Secretary Ajay Prasad is one of the most peripatic civil servants that you can find this side of the Suez. This unusually energetic Himacal Pradesh cadre officer flew to London and on to Amsterdam for the bilateral talks earlier this month and just a week later he was scheduled to take off again for an ICAO conference in Montreal.Inbetween there was a visit to China that he cancelled at the last moment not because he was tired or wanted to rest his feet but because of the PESB interviews for the top jobs in IA and AI.Of course there are several domestic trips in-between that Prasad routinely undertakes. This is in sharp contrast to some of his predecessors who preferred fewer trips overseas and more time in the capital. But there was their personal choice. There are two jobs in the government of India that cannot stop you from keeping your bags perpetually ready. One is the top job at Civil Aviation, the other, of course, is the Tourism Secretary. Of course, one doesn't

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CRUISING HEIGHTS June 2005

The Varig Connection It's going to be July and there is still no sight of Air Sahara's connection to London. The reason simply is the shortage of aircrafts in the market. There are so few planes available and so many buyers that it is impossible to get an aircraft of choice. But finally Sahara is believed to have ailing Varig Airways-the Brazilian national carrier to bail it out of trouble. The plane in question is the tested warhorse-the triple seven-that is now in use with Air India on its long haul L o n d o n - To r o n t o and KolkataLondon sectors. But it will be at least four weeks before the aircraft is available to Sahara and they should manage to start their London operations by the end of July.

Seemanto's in command Seemanto Roy, Subrata Roy's younger son is in charge of the airline's operations along with Rono Dutta.Insiders state that Roy Jr has started taking as serious interest in the business and is attempting to understand the ropes of this complex industry right from block one.

So how does he do that? Simple.

By interacting in depth with colleagues and picking up the tricks of the trade. Seemanto's entry means Sahara receiving its third boss in close to a year.

The first to exit was Uttam Kumar Bose who was there at the helm of the business from day one.

He has since moved as head of corporate affairs. He was replaced by Rono Dutta who continues to be Air Sahara's CEO.Now Seemanto Roy is incharge and insiders are categorical that he is `` a serious young man with a mature head on his shoulders. Looks like Sahara has finally got someone they needed for a long timer-to help Rono Dutta and his team lift Air Sahara from the slump into which they have fallen.

SPECIAL REPORT

Cutting the Knots Finally the government has woken up the fact that Air India and Indian Airlines are two different companies with completely different cultures and road maps. The recent appointment of whole-time directors on the board of the two public sector carriers is the first step towards making them completely independent board run entities. R.Krishnan reports on the implications

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HE MINISTRY of Civil Aviation is keen to separate the boards of Air India and Indian Airlines to ensure that there is no cross-representation from the two airlines in each others board. While it is early to take the move forward, it will acquire a concrete shape once the two stateowned carriers finalise their IPOs. Civil Aviation Minister Praful Patel is of the opinion that such a `cross pollination is hardly helpful in either synergy or better communication` Top airline sources argued that as competition in the airline market becomes fierce with private airlines flying international routes, Indian Airlines getting ready to fly far west and far east and Air India rediscovering new routes, no public listed company would like to have a full time member of another listed company engaged in the same line of business to occupy position in each other's board. It will not only lead to conflict of interest but also ensure such members getting to know each other's commercial secrets.

It is also evident that there is a strong feeling in government circles that the large number of leaks in the media during the past several months, particularly in respect of acquisition, is a consequence of this

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PLUMPING FOR CHANGE: Both Civil Aviation Minister Praful Patel and Secretary Ajay Prasad have decided to take the issue to its logical conclusion. cross pollination.`` While I do not want to blame any one source, it is clear that there have been leaks. These could only come from those who have the documents. So why not make it more fool proof, `` said one top official close to the Minister.

What the official was referring to was the spate of stories in the media prior to and

‘Cross pollination is hardly helpful in either synergy or better communication’ CRUISING HEIGHTS June 2005

The choices: An inside look

after the Air India Board meeting to finalize its acquisition plans. The stories created such a splash in the media that Airbus used it to make an outrageous complaint against AI. It caused all round embarrassment.

As a first step in the delinking of the two boards, the Public Enterprises Selection Board (PESB) completed its three day long interview process in late May for the whole time director's position in the boards of both Air India and Indian Airlines. The positions include that of Director Finance, Director

Sushma Chawla is the senior most IA officer. But she didn't apply for the job. A place has to be found for her in the Board room.

As a first step in the delinking of the two boards, the Public Enterprises Selection Board (PESB) completed its three day long interview process in late May CRUISING HEIGHTS June 2005

FRANKLY AMOD Sharma walking away with the IR job at AI was a jackpot that perhaps even Sharma didn't expect would come his way. He has to thank Praful Patel and his boss V Tulisadas for having pushed his case hard, very hard. At present the Director (in-flight and corporate affairs), Amod's case was promoted aggressively by the AI CMD who told the PESB board that he wanted only Amod Sharma for the job.

The other inside contender was AI's Director (PR) Jitendra Bharagava.A tough no nonsense man, Bharagava has dealt with the unions and taken a tough stance against them on several occasions in the past. He was the last person that they wanted to deal with thanks to his this much and no more attitude. It was a point that Tulisidas told the interview board as it was deliberating on the pros and cons. `` I have to get work. How can I do that if they do not have confidence in him? `` he is believed to have told them. He was also reluctant to consider the two other outside choices for the job and wanted an insider who could understand the intricacies of the airline business. It was clear that he heart was set on Amod.The man at the heart of the matter is, of course, delighted.

As he told a friend: `` what a privilege to sit next to Narain Vaghul on the board. `` There were no other surprises in the AI list. All those selected for the jobs were expected to get it.

According to insiders on the board K Verma's nearly hour long interaction with the board was `outstanding` with several of the PESB members rating his performance at nine on a scale of ten.`` Let me put it this way. V K Verma was flawless. His interview justifies why he is such a star at AI, `` said one board member.

While the selection of P K Punhani as the Director (Finance) at AI was a foregone conclusion, Tulsidas plumped for V K Mehra instead of Babu Peter when it came the choice of Direc-

Anil Goel lost out in the race for DMD, but he is now cleared the hurdle for CD

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SPECIAL REPORT

ON BOARD: V K Verma (left) and Jetendra Bharagava on the inaugural flight to Birmingham.Verma was confirmed as CD while Bharagava lost out.

Commercial, Director Engineering and Director Human Resources.

Shortlisted for the four top jobs in AI are: V.K.Verma as Director (Commercial), P K Punhani as Director (Finance), V.K.Mehra as Director (Engineering), and Amod Sharma as Director (personnel). In Indian Airlines Anil Goyal the present CD has been chosen for the same board level job, P K Balakrishnan as Director (Finance) and Anoop Shrivastava as Director (Personnel).

The PESB has agreed with IA's desire to readvertise for the position of Director Engineering.

However there is a ticklish issue that is yet to be resolved. The PESB marathon has actually brought this issue to the fore rather dramatically. While there are no Deputy Managing Directors in Air India, there are two in Indian Airlines. Sources said, with the recruitment of whole time directors, the deputy managing directors positions in Air India will be scrapped unless the management decides to redesignate any of the new board member as Deputy Managing Director. In the case of Indian Airlines, there are two DMDs Ms Sushma Chawla and Mr. Manet Paes. The issue is whether they will remain as mere invitees to the board meetings or will they also be accorded whole time positions.

Realising the anomaly of the situation IA at least seems to have recommended that both the DMDs must be made members of the board of directors. It is now for the Civil Aviation Ministry to take a view on the issue. But consideration that both are indeed brought on the board, it must be mentioned that they would deal with issues that are really periphery to the airline with all major departments already reporting to I the board.

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Manet Paes has held several distinguished positions including CD and MD (Alliance Air). He is also one of the two IA Deputy MDs.How can you leave him out of the board?

CRUISING HEIGHTS June 2005

tor (engineering).There have some issues against Mehra in the past and general Peter was seen as the sort of do gooder who could keep the engineering bay abuzz. But clearly the `can do will do` buzz that Mehra generates won favour with the top bosses at Nariman Point although Babu Peter does have his backers.

The choice at Indian Airlines was really for one job: commercial directors.

Both Deputy Managing Director Manet Paes and Commercial Director Anil Goel had applied for the job and it was like that Steve Ovett-Sebastian Coe run off for the one mile title between these two.Paes as the DMD was the senior of the two, but Goel has held equally important positions and the interview was seen as crucial. Goel is believed to have got the nod because of more support amongst the interview panel.

Like Verma,PESB officials and other experts on the Panel said that IA's Director(IR),Anoop Shrivastava was brilliant in his interview.`` You need somebody at IR who has a thorough grasp of the subject and can have the confidence to dissect the most complex issues.Anoop reestablished before the interview board that he had the ability,`` said one official.

There is still some time to go before the appointments are formalized. The Ministry of Civil Aviation has to send the names to the CVC for Vigilance clearance and then they will go through for ACC (Appointment Committee of the Cabinet) clearance before the exalted men can take their place on the board. Only then will we know about Amod Sharma's excitement level and Narain Vaghual's reaction to the excitable young man next to him.

Anoop Shrivastava had an outstanding interview.

The board was thoroughly impressed with his knowledge of labour laws.

SPECIAL REPORT

After Dawood, Osama haunts Naresh Goyal

I

t required another Jet to halt the unrelenting march of the Indian Jet! A little known Delaware (US)-based company by the name of Jet Airways Inc has put a big question mark over Naresh Goyal's ambitious plans to cross the Atlantic and land in the Big Apple. What perhaps makes the allegations hugely serious is the fact that Goyal has been accused of being friends with Al Qaeda through Dawood Ibrahim, recently designated a global terrorist.

While Jet has kept a brave face and said they will take the allegations head on and sort out the `scurrilous` intent through court action, sources say that no one can now afford not to get to the bottom of the Jet Airways quagmire, its financial holdings and its front companies for the simple reason that Al Qaeda is a dreaded term in the US and anyone accused of even a remote link is put through the wringer to make doubly and trebly sure about their antecedents.

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CRUISING HEIGHTS June 2005

Naresh Goyal's dreams of being as global aviation giant have been halted for the moment by a complaint filed before the US Department of Transport alleging the Indian companies close links with Osama bin Laden and Dawopod Ibrahim. It's a charge that has been made before, but now it comes in the US where Bin Laden is enemy number one. A detailed look at the case and the implications.

Jet Airways Inc, which is yet to launch its commercial operations, in its objections (filed on May 23) before Department of Transportation claimed that any go ahead to Jet Airways (India) would threaten the US' national security as this would allegedly give Al-Qaeda “scope to fly and control aircraft” over American cities. In its objection has alleged that ever since the Jet Airways (India) was commenced operations in 1992, it has been “funded by Al-Qaeda and Specially Designated Global Terrorist Dawood Ibrahim”. It was in early May that the UN had named Dawood in the “most -wanted” list of individuals having links with the AlQaeda.

“No matter how wonderful the service and the (Jet) airline may be in India, it is still an enterprise which is used to launder money for Al-Qaeda and is still an Al-Qaeda airline,” alleged Nancy M Heckerman, Chief Executive Officer and President of the Jet Airways Inc in her interaction with journalists, notably HindustanTimes .com “The first dollar that would be made by Jet Airways (India) in the US would be criminally tainted in gross violation of the Laundering of Monetary Instruments (1956) and engaging in monetary transactions in property derived from specified unlawful activity.” Secretary Mineta, ``Tuckerman's missive indicated, `` would never welcome Jet Airways (India) if he was made aware of Naresh Goyal and Dawood Ibrahim's plan to inflict real and imminent danger on the United States.”

No one can now afford not to get to the bottom of the Jet Airways quagmire, its financial holdings and its front CRUISING HEIGHTS June 2005

It claimed that there was no confusion between Jet Airways (India) and Jet Airways Inc. While it is an established international airline that has concrete plans to operate long-haul service between India and the US, the Jet Airways Inc at present does not even has an “air carrier” permit.

Commenting on the charges of similar trade name, the Jet Airways (India) claimed this was beyond the purview of the Department of Transportation to decide. “The matter is currently being addressed before the US Patent and Trademark Office.”

“As such, in absence of any compelling information regarding actual or potential public harm or confusion, the Department of Transportation” has no basis to intervene in trade dispute.

Referring to its recent successful public offering, it claimed this was a testament to the faith and confidence that global investors and the travelling public have in Jet Airways. “Such public faith and confidence have developed only after years of reputable, successful air service and prudent business decisions,” it claimed.

The company further asserted that since its inception, all equity contributions have been made through legitimate sources and with necessary approval from the Government of India.

“All aircraft acquisitions and operations have been financed through the internationally accredited multilateral institutions and banks including the Export-Import Bank of the US, the International Finance Corpora-

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SPECIAL REPORT

tion and other prominent commercial banks and financial institutions in India and abroad,” it said.

However, Jet Airways (India) has said that the allegations of it having links with global terrorist network Al-Qaeda are not only sensational, unsupported and offensive but also scurrilous. Jet, in its reply to the DOT on May 27, categorically said that nei-

BRAVE SMILE: Normally unflappable, this is the most serious challenge to Naresh Goyal.He has to come out squeaky clean.

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It must be mentioned that when Naresh Goyal was accused of similar collaborations by the Indian media, he made no attempt to clear his name through legal action.

CRUISING HEIGHTS Junel 2005

OPEN SKIES: Secretary Minneta and Civil Aviation Minister Praful Patel who signed the open skies between India and the US earlier this year. The agreement allows jet to fly to the US. ther the company nor its chairman Naresh Goyal, “has or had at any time, any association, financial or otherwise with any underworld or terrorist groups or individuals, including Al-Qaeda and Dawood Ibrahim.”

“It has falsely accused the Jet Airways of being an “Al-Qaeda airline” and has otherwise attempted to besmirch the reputation of the company and its chairman,” it claimed in its reply The company further asserted that since its inception, all equity contributions have been made through legitimate sources and with necessary approval from the Government of India.

“All aircraft acquisitions and operations have been financed through the internationally accredited multilateral institutions and banks including the Export-Import Bank of the US, the International Finance Corporation and other prominent commercial banks and financial institutions in India and abroad,” it said.

Despite Jet Airways' refutation, the fact that US security agencies are “hyper sensi-

TAKING OFF: a Jet Airways Boeing 737-800 taking off from Seattle for delivery.

INFLIGHT LUXURY: Jet claims that it has one of the best in-flight services in the world. tive” to anything even remotely related or linked to Al-Qaeda, has sent 'jitters' among the officials of this major private Indian airlines.

It is now understood that DOT has sought the view of the US Department of Homeland Security, which is believed to be thoroughly verifying the allegations, Therefore, any decision on the issuance of “foreign air carrier permit” to Jet Airways (India) has been put on hold for the time being.

“We are reviewing the application after the objections were raised and replies filed by the Indian company. It is hard to say when a decision would be taken, but we would try our best to give the decision as quickly as possible,” DOT spokesman Bill Mosley told journalists.

An American citizen on the Board of Directors of the Jet Airways (India) has claimed that the Jet Airways Inc was nothing more than a “shell company” and a lady having a “questionable background” headed it.

According to Board member, Victoriano P Dungca: “Jet Airways Inc has no asset.”

The investigations were carried out by Jet Airways (India) Referring to the investigations carried out by his company with the Maryland Department of Assessments and

We are ready to do every thing to defend ourselves from such wild allegations.

CRUISING HEIGHTS June 2005

Taxation with regard to the rival Jet Airways, he said: “It says Status: forfeited, Good Standing: No.” As a result, Jet Airways Inc can no longer do business in Maryland. “It does not appear to have done any business much less run an airline.”

Dungca said Jet would soon be initiating legal action against her and her company and a group of lawyers in Washington DC had been hired, Dungca alleged that Heckerman had two cases against her in two different courts in the US for non-payment of rentals.

“Surprisingly the very persons who were unable to pay $ 6,000 and $ 18,500 to different sets of landlords claimed in December 2004 that they own aircraft valued at over $2 billion and which range in size from Boeing 747-400 to Boeing 777-200,” he observed.

Dungca asserted that legal action against Jet Airways Inc was necessary as by levying such an allegation Heckerman has also indicted several other reputed agencies like the Director General of Civil Aviation of India Government and various countries including India, Britain, Malaysia, Sri Lanka and Belgium.

Despite Dungca's assertions and the imminent legal action, it must be mentioned that when Naresh Goyal was accused of similar collaborations by the Indian media, he made no attempt to clear his name through legal action. Rather the newspapers received bountiful advertising support from Jet and the stories died a natural death. `` The last thing Naresh wants is legal action.

That will only complicate matters, `` said one source. But he clearly has no other option in the case of the DoT complaint.

“These Government have given us permission to fly, does this mean that they have given permission to fly an Al-Qaeda airline as alleged by the Jet Airways Inc,” he claimed.

Asserting that his company was clean and was a purely professionally managed airline, he said: “We are ready to do every thing to defend ourselves from such wild allegations.”

Meanwhile, in another related development an individual with the name of Barb Sachau has written to the Department of Transportation that the Jet Airways be denied the permit. In case it is given, the Jet Airways be “allowed land at airports only where a full security customs border patrol is present,” said the objection application from Sachau, who has given his address at Florham Park in New Jersey.

I

17

AIR INDIA DAIRY

Band,

bajja and

bhangra in London

I

It must the nth time that Renuka Chowdhary was visiting the Indira Gandhi international airport. Early morning, seven am to be precise, the lady, chirpy as ever was there to flag off the inaugural Amritsar-Birmingham-Toronto 777 from the Maharaja's stable. It was a low-key ceremony with the real band bajja reserved for Amritsar airport where Chief Minister Amrinder Singh was on hand to receive the VVIP toli. While the toli sweated it out in the 777,the TV crews were lucky. They got to shoot the hoopla on the ground. The bhangra, the phool malas and the badaiyis and the jhappis.

What a toli

from Amritsar the British Midlands.

It was a leisurely flight that had plenty of VVIPs on board including Civil Aviation Minister Praful Patel, AI CMD V Thulasidas, Commercial Director V K Verma and Director (PR) Jitendra Bharagava.And a huge media contingent that these days includes half a dozen news channels.

Now where on earth could you be spending time chatting with former Chief Election Commissioner M S Gill, former Union Minister Balwant Singh Ramoowalia and the Chairman of the Minorities Commission and Rajya Sabha MP Tarlochan Singh.Well, literally at 34,00 feet on way

18

CRUISING HEIGHTS June 2005

Canning the shots You have got to give it to these young energetic journos from the news channels.

They are forever looking for that elusive scoop, that unusual angle and that split second exclusive that will get them a pat in the back and a raise from their bosses. So you had them scurrying all across the aisles chatting with messers Gill, Tarlocan, Patel, Thulisadas and, thank God, a few of the paying passengers. While the VVIPs had good things to say, some of the passengers were cut up at the delay because of the inaugural and had their say. How nice of the channels to travel on an AI junket and pan them on the air waves! Jitendra Bharagava wasn't amused: `` its not done, `` he fumed.

Phoren pilots There was a pucca British sahib on board. He was the additional pilot who was flying the route along with AI's regular crew. One of the overseas pilots hired on a year old contract by the maharaja, this retired British Airways captain (BA retires its pilots at 55) said that he was enjoying his AI experience hugely. `` It's a great set up.

The conditions of work are excellent, `` he said. BA facing a number crunching shortage of top quality captains, he mentioned had decided to up the retiring age to 60 and this would hugely help the new crop of pilots. But for the likes of him there was no option but to look for employment in different parts of the globe. `` Our boys will be landing at Manchester for the first time. I am just around, being familiar with the airport, to tell about the approach and the

facilities, `` he said.

Slumber away Chat over the pilot pulled the screen in the first class section and went off to sleep.

The AI 777 has been leased from the United stable and still carries the configuration of that company. In other words a big first class, a huge business class and a reasonable economy section. AI hopes to reduce the numbers (you don't need so many on the Toronto route) once the planes go for the major checks. But the first class is a fully operational bed on which you can really go to sleep in peace. Chief Minister Amrinder Singh who got a sample demonstration from Praful was so thoroughly impressed that he promised to fly AI on his trip to Canada this month.

The wine list, the food the service must be consistent and uniform throughout CRUISING HEIGHTS June 2005

Mere liye The service was top class on this one.

Praful wasn't surprised. `` When I fly it is always good. Mere liya karte hain. `` he said and added, `` but I tell them that they must do it all the time. The wine list, the food the service must be consistent and uniform throughout. ``Well said Mantrijji.And we hope one of your favourite persons, Director (in-flight) Amod Sharma is listening.

I — K. Srinivasan

19

INTERVIEW

‘ I want a world class product’ Air India Chairman and Managing Director V Thulasidas isn't bothered about the controversy swirling around him. He enjoys the confidence of the Minister, is brilliantly networked in the capital and knows that he will be able to get his point of view across to those who matter. The fact that AI is slowly but surely getting out of a slump only helps his cause. The Chairman spoke exclusively to K Srinivasan and R Krishnan at the St James Court, London during a brief visit to the city.

WELL DONE: Civil Aviation Minister Praful Patel shakes hands with AI CMD V Thulasidas at Birmingham airport soon after the first 777 rolled into the British city from Amritsar.

20

“

We also felt that AI at this stage needed a larger number of aircraft, not just a large aircraft and few numbers but medium capacity aircraft in larger numbers. It was a question of adding more numbers to the fleet. That's how we finalised our requirement and issued the tender.

CRUISING HEIGHTS June 2005

Q All the dust storm that was going on for the past 2-3 weeks appears to have settled down. How are you feeling at the end of the whole thing?

A I think it was rather unfortunate that a simple aircraft acquisition decision has been dragged into controversy partially by the Airbus people and partially by others. Had they paused to think what and why we had decided a particular thing, they would have understood themselves. Perhaps they have realised it now.

As a public sector we can't go beyond certain norms in product evaluation, comparison of the two equipment. We can't ignore the facts and figures that are presented to us, they can be ignored only at our peril because it's not just the Board of Directors of Air India, a whole lot of people are involved in it. There is the Government of India, the Planning Commission, Ministry of Civil Aviation, Finance Ministry, the PIB and ultimately the Cabinet. All of these various organisations are going to look at this, audit is there, CVC will be there, all of them are going to be a part of this.

We can't afford to take any decision at our own sweet will.

It is now said that Air India is not wrong but it is something that India has done out of political or geopolitical considerations. How can a company like Air India do that? I have made it very clear that no one from the government has spoken to me or to Air India to say that out of any considerations, political or geopolitical, you are supposed to do X or Y. We took a pure and simple business decision, which made commercial sense to us and thereafter we sent a proposal to government.

I think it was inappropriate to make such allegations and we have brought it to the notice of the Airbus Industrie Corporate office. I personally feel that it was a statement made perhaps by their representative in India and it doesn't reflect their corporate office's philosophy.

We have made it very clear that with Airbus Air India has an extremely close and important relationship which we wish to continue in the future.

CRUISING HEIGHTS June 2005

21

INTERVIEW

‘ I want a world class product’ Air India Chairman and Managing Director V Thulasidas isn't bothered about the controversy swirling around him. He enjoys the confidence of the Minister, is brilliantly networked in the capital and knows that he will be able to get his point of view across to those who matter. The fact that AI is slowly but surely getting out of a slump only helps his cause. The Chairman spoke exclusively to K Srinivasan and R Krishnan at the St James Court, London during a brief visit to the city.

WELL DONE: Civil Aviation Minister Praful Patel shakes hands with AI CMD V Thulasidas at Birmingham airport soon after the first 777 rolled into the British city from Amritsar.

20

“

We also felt that AI at this stage needed a larger number of aircraft, not just a large aircraft and few numbers but medium capacity aircraft in larger numbers. It was a question of adding more numbers to the fleet. That's how we finalised our requirement and issued the tender.

CRUISING HEIGHTS June 2005

Q All the dust storm that was going on for the past 2-3 weeks appears to have settled down. How are you feeling at the end of the whole thing?

A I think it was rather unfortunate that a simple aircraft acquisition decision has been dragged into controversy partially by the Airbus people and partially by others. Had they paused to think what and why we had decided a particular thing, they would have understood themselves. Perhaps they have realised it now.

As a public sector we can't go beyond certain norms in product evaluation, comparison of the two equipment. We can't ignore the facts and figures that are presented to us, they can be ignored only at our peril because it's not just the Board of Directors of Air India, a whole lot of people are involved in it. There is the Government of India, the Planning Commission, Ministry of Civil Aviation, Finance Ministry, the PIB and ultimately the Cabinet. All of these various organisations are going to look at this, audit is there, CVC will be there, all of them are going to be a part of this.

We can't afford to take any decision at our own sweet will.

It is now said that Air India is not wrong but it is something that India has done out of political or geopolitical considerations. How can a company like Air India do that? I have made it very clear that no one from the government has spoken to me or to Air India to say that out of any considerations, political or geopolitical, you are supposed to do X or Y. We took a pure and simple business decision, which made commercial sense to us and thereafter we sent a proposal to government.

I think it was inappropriate to make such allegations and we have brought it to the notice of the Airbus Industrie Corporate office. I personally feel that it was a statement made perhaps by their representative in India and it doesn't reflect their corporate office's philosophy.

We have made it very clear that with Airbus Air India has an extremely close and important relationship which we wish to continue in the future.

CRUISING HEIGHTS June 2005

21

INTERVIEW Q Why did you have to revisit your earlier decision when the new government came?

A Air India did not intend to revisit the decision. The decision was taken before I came in and the proposal was sent to the government after I took over charge in January 2004 and we have been pursuing it with the government. I think the decision got delayed because of elections and other things. When the new government came, there were discussions on this. We have furnished our views that we would be happy to go ahead with this project. In the meantime we have had extensive discussions within our company on what our future should be.

I personally feel AI has to grow much more than what had been planned earlier.

The earlier growth that was envisaged was just 20 wide bodied aircraft and 18 short range aircraft. We had a brainstorming within the company when the management of all levels, and unions everyone participated in the discussions. We all reached the conclusion that AI's survival as an entity called for much more than what was planned with the 38 aircraft. We decided that first of all we should have a budget airline so the 18 small aircraft went there.

In the ever increasing competitive environment we felt it was not sufficient for AI to just grow, but it has to grow in a different fashion. For instance, ultra long range aircraft to fly non-stop to the US was necessary now. During discussions with the ministry we said that the project that we had finalised had to proceed further so that there is no delay. However at the same time we put forward our desire to have more aircraft and different types of aircraft.

There was a feeling that A 340 series aircraft were getting outdated. The government told us to chalk out a list of how many total aircraft we require and then send a formal proposal to them. That was the reason for this revisit. The 18 aircraft were delinked and the balance 10 became 50.

Q Was there any protest or questioning from Airbus as to why were you were revisiting your proposal?

A I don't remember any such reservations from their side. I believe they would have also been happy to see that instead of just 10 aircraft we would be looking at 50 aircraft. So they also had an opportunity to sell more and better aircraft.

Q Once you began the revisiting process, you decided to look more closely at what would be best for you. You are talking about flying non-stop to the US, growing faster and bigger, you decided to look at a whole new range of aircraft.

A First of all we had to finalise the kind of requirements that we have. After a whole

22

We have made it very clear that with Airbus Air India has an extremely close and important relationship which we wish to continue in the future.

CRUISING HEIGHTS Junel 2005

lot of discussions in AI, the committee that was tasked with the job crystallised the requirement in four categories. One was the short range aircraft was going to AI Express. Having dealt with that, for AI itself there were three categories: One was the ultra long range non-stop aircraft which was again categorised into two, i.e., either 340500 or 777-200 LR. We also had long range, medium capacity aircraft but not ultra long range where aircraft could fly one stop to US. Most of our aircraft are on lease so there we decided to have two sizes: One should be 350 plus, other to be 250 plus depending on the markets. In both these categories we identified, the bigger one as A 340-600 and the other one was 777-300; for smaller one we identified, A 330-200 and Boeing 787 (which was called at that time as 7E7-8).

Our board finally approved these three categories and 6 candidate aircraft in November 2004. At that time there was no 350. We issued a tender in beginning of December. On December 10, Airbus had a meeting after which they announced that they are going to have an aircraft which could compete with 7E7. This took place after our tender was issued, the last date for which was 24 December. A month after this last date got over, we received a letter from Airbus saying that they wanted to offer 350.

Obviously that offer can apply only to our future and we did make it clear to the Airbus people that you don't have anything called 350, however in the future when we evaluate aircraft we would certainly consider 350. But 380 was available and our committee had a discussion on this aircraft. The A 380 is a very good aircraft but too big for AI in today's context. Our load factor at 71 percent now with the existing fleet doesn't justify a very large aircraft.

We also felt that AI at this stage needed a larger number of aircraft, not just a large aircraft and few numbers but medium capacity aircraft in larger numbers. It was a question of adding more numbers to the fleet.

That's how we finalised our requirement and issued the tender.

Q Now that you have settled with Boeing, you have to begin negotiations with them.

A There are three stages in the whole evaluation process: technical evaluation, financial evaluation, negotiation. Recently, I got to know that some photocopies of some AI document were circulating among the media which was done only to create confusion with some vested interest by someone.

We have issued a press release on that.

On May 13, there was a front page news in Kolkata Telegraph which said that AI's decision to buy Boeing will lead to heavy losses for the company. It further said that

the total cost to this deal was 53,000 crores and that the loss on this would be 15,000 crores whether it buys Airbus or Boeing.

This was an attempt to mislead the public.

Our evaluation had shown that both the buys would give us a profit but the profit given by Boeing option would be substantially much more than the Airbus. Obviously we had to choose Boeing.

Q How long this project will take to commence?

A I can't really comment on this. AI Express was the project that was sent in December, it has still not got clearance. So it'll take some time in this case as well. These are large projects in which a lot of government agencies are involved, it'll take some time to give their comments and finalise their recommendations. All I can say is 'the earlier, the better' (The Ministry of Civil Aviation has already approved AI Express project for acquiring 18 Boeing 737-800s worth $ one billion. The PIB approval exercise has been set in motion-Ed).

Our load factor is 71 percent now. Air India's existing fleet doesn't justify a very large aircraft.

Q One key area of AI has been 'service'.

Now with a lot of private competition, for example Jet Airways that has come up very well as an up market airline, what is your mantra for services in-flight to bring back the magic of AI? A I would like to put it differently. It's not AI that is competing with Jet but it's the other way round. Please remember that on the India-London route or any other long distance route, AI has been flying for years, Jet is going to just begin now. It is a good

domestic airline, but on the international front, experience of AI has been tremendous.

In the recent past, let's say 10-15 years, AI has had a setback in terms of equipment, aircraft being old, not being renewed. There has been a moral problem in the company mainly due to non-renewal of its fleet and a talk of privatisation plus some other factors as well.

These things need to be changed now, both in terms of adding to the existing fleet and also changing the orientation of people.

That's what we are trying to do now. Therefore we are not unduly worried about competition. I always maintain that AI is in this business of competition and there is nothing as competitive as international aviation. We are used to this as we have been competing with the best in the world.

There will be more competition in the days to come not just Indian private carriers, but there will be more foreign carriers coming now. Once the US carriers put their act together and the rapidity with which Indian-US market is growing, you can expect more US carriers to India. AI has to gear itself to face this and to upgrade itself, both the hardware and the software. This is exactly what we are planning to do.

Q What is your mantra for upgrading your in-flight services?

A Why the people in AI have had this problem is to be studied in the context of the entire thing because the entire corporate culture had a setback some time back. What we are doing now is that people are sent through an in-house training programme,

“

I feel India-US sector is going to become the major market. It's not only because of the open skies but it's going to be so even otherwise.

�

CRUISING HEIGHTS June 2005

23

INTERVIEW Q How long do you think this entire thing would take, when can we see the light?

A I get a feedback on our service almost everyday and my impression has been that there has been a small change already even now, it may not be very significant. People feel happy when they see the change in the aircraft today from the earlier one. If such positive things continue to take place, it will be just about a year or so when you will see a complete transformation. However the upgradation will take about one year to happen but the new aircraft will start to join us in the meantime. In that timeframe, the kind of change we are talking about can happen.

THE TOP BRASS: Patel and Thulasidas along with Indian High Commissioner to UK Kamlesh Sharma(extreme left) and AI's RD(Europe) Captain Sharma(extreme right) which is called as 'making a difference'.

Every single Air Indian has to go through this training now which is a very small one or two day training provided entirely by an Air India team just to make people in AI sit up and take notice of what is happening around them. This helps them decide how they need to change themselves and their company to face today's competition.

This has been going on. The unions of AI have been involved in many of the discussions and we have had positive response from most of these unions. Ultimately, unless they also agree, nothing can really work. We are also inducting new manpower, co-pilots, cabin crew. For ground duties we are recruiting new people through our subsidiary called Air India Air Transport Service through which we plan to outsource this activity.

Also we are recruiting new management people in AI most of which is through campus recruitment in IIMs. We are recruiting people into a corporate cadre of AI which should become the backbone of the company in the days to come. So with the AI Express being launched, the decision being taken to induct more aircraft, to upgrade the existing aircraft, the manpower in AI also will feel the change that is now taking place because they are having training, new people are coming, new equipment is coming.

There is bound to be a change in the overall outlook.

24

Our evaluation had shown that both the buys would give us a profit but the profit given by Boeing option would be substantially much more than the Airbus.

Obviously we had to choose Boeing.

CRUISING HEIGHTS June 2005

Q Is 777 going to be the same as far as the seat configuration goes or there will be some change?

A We will reduce the number of business class seats because most of the routes, I don't think can justify this. We will have three classes but India-London is the route where this can be sustained. But for Toronto, Birmingham, I don't think you need a first class at all. We will reduce the first class from 12 to 8 and business class also from somewhere around 20 to near about 15. India- Los Angeles is again a route where we don't need so much of first class.

Hence there are few routes where these things can be fully justified.

As far as 777 is concerned we have decided over this change which will happen when the aircrafts go for their major check.

With regard to 747-400 we have already finalised the in-flight entertainment, we are getting a state-of-art equipment which will be there on our new aircraft also.

We have already undertaken the exercise for identifying seats, in-flight entertainment, gallies, toilets and other facilities.

Q How is the India-US market going to be like with open skies, increase in flights, etc.?

A I feel India-US sector is going to become the major market. It's not only because of the open skies but it's going to be there even otherwise. If you recall, our agreement with the US was already fairly liberal and has become even more so. This will help in driving the market. Today we have 28 flights a week, majority of them being 747200 which is a large capacity. Most of the traffic is still going through indirect carriers which is mainly European carriers like British Airways, Lufthansa, Air France or even Swissair, Austrian, etc. They carry Indians and then transfer them to transatlantic carriers.

It is going to be the mainstay of Indian carriers for a long time.

Q What are the cities that you are looking at in the US?

A We have New York, New Jersey, LA, California and Chicago. For AI we are looking at three other destinations- San Francisco, Washington, Texas. In Texas, we have to decide between two cities, Houston and Dallas Fortworth.

Q Aircraft availability is a big problem.

What will you do now even lease is not available as the market is so tight?

A We have taken three 777s, third one is going to join us in few days' time; we have taken one 747-400 which has come; we are taking three more ATRs, which will join us in June-July, these are coming from Singapore.

We need at least 5-6 more medium capacity long range aircraft for leasing.

Many of our expansion plans can take place in 2005 winter or summer of 2006 only if we get additional aircraft. What we are going to do with the available aircraft is Birmingham-Toronto that we have started, Dhaka-Kolkata-London has to be started, and Mumbai-Mauritius also we will start.

Apart from these, we are planning to have non-stop flights to Southeast Asian cities where we do not have any such flights. We believe there is a need to provide better connectivity to the cities like Singapore, Kuala Lumpur, and Bangkok.

We can start South Korea also in the late summer of 2005.

AI Express has also started with only three aircraft; we need four more which will come only in the beginning of 2006.

On the IndiaLondon route or any other long distance route, AI has been flying for years, Jet is going to just begin now.It is a good domestic airline, but on the international front, experience of AI has been tremendous.

Q Why is it that AI always comes up with ad hoc plans which are for the next 2-3 years? Do you have any long term planning; let's say for the next 10-15 years?

A Yes but then why talk about 10-15 years planning for an airline which is going to be privatised tomorrow so you can't really blame the authorities.

Right now we have prepared a plan, but it's not a 10-15 year plan. I believe that's too long a time period for us to plan for. We have planned up to seven years and have prepared a corporate mission, which is for three years, five years, seven years.

In this period what market share AI should have, what fleet size AI should have, what kind of benchmarking it needs to do against the existing Asian and other international carriers, what improvements need to be brought about is chalked out in our plan.

We made this document in 2004 and placed it to our board. In preparing this document, I involved the Indians of AI and I got it done through the middle management peo-

ple in the company, not the senior management. After that the document was put forward to senior people in to take their inputs and finally it was placed before the board.

Board has, in principle said that this approach is good and that we should now finalise it. But now things are happening so fast, which are actually a part of that vision document, that we will have to keep on updating it. This document will keep on being revisited because things are changing all around us.

Q What does your document say? What kind of airline would you be?

A: 75 aircraft fleet and making Air India as one of the top five Asian airlines in this period of seven years. Several parameters have also been prescribed that in certain key areas what kind of system should be followed. So far we have been strictly following this direction.

Q What about surplus manpower in Air India ?

A There has been a lot of misunderstanding about the surplus manpower of Air India because people have been dividing the number of employees in AI by the number of aircraft to show that the ratio is too adverse. This kind of a simple arithmetic doesn't work because how can you say that a 747-400 requires the same number of people as 747-200 or an Airbus A 320? These are totally different so you can't have a ratio that applies to all airlines.

Air India does many jobs in house. If others are hired for these jobs, the manpower in AI will come down but the cost to be paid to the outside agency would go up. Need of the hour is to outsource the work. This is exactly what we are doing now and what we are going to do in future.

Q What were the initial reactions to your Air India Express?

A Very good. Loads were very good and I hope similar loads remain in future as well. Last when I checked it was actually 95 percent plus load factor but that was only in Kerala operations. This may not be the case when we spread our wings to Delhi, Mumbai, Kolkata, Chennai, etc.

However, the beginning has been very good and what we now is more aircraft.

Q What have you thought about your domestic operations?

A First of all, our Board of Directors that had earlier decided that AI Express is going to have international operations has now agreed that it can have domestic operations

CRUISING HEIGHTS June 2005

25

INTERVIEW

as well and same goes for Air India as also.

Air India is a unique case of being a pure international carrier. Personally I and many other people do not think that this is a viable option to be a pure international carrier. On the domestic side the yield is much better than that on the international side. All the airlines that are flying international today have their domestic operations so why not Air India? When all the various other airlines in India like IA, Sahara, Jet are going international, why not AI? Our going domestic is again a decision in principle, it has to be put on paper. Its feasibility depends on aircraft, provided which within the next one-year time frame we can do everything and begin our operations.

Q You are on Indian Airlines' board, they are on your board, isn't this paradoxical that you are discussing so many difficult issues? How does it make sense?

A Till now it did make sense because IA was primarily a domestic carrier and AI was an international carrier, so there were linkages between the two. But in future we both will be doing exactly the similar things then it'll be a different kind of situation. Till now it made sense that the two airlines or even AAI and AI coordinate with each other.

Q What's the status of your IPO and how do you do it?

26

INSIDE INFO: Thulasidas chatting with journalists on board the inaugural Amritsar-Toronto flight.

People feel happy when they see the change in the aircraft today from the earlier one. If such positive things continue to take place, it will be just in a year or so you will see a complete transformation.

A Well IPO is not really essential for aircraft acquisition. AI's traditional route for financing aircraft acquisition has been export credit and commercial borrowing.

IPO is partly necessary for this but is necessary for other reasons also. IPO is going to make us into a real business venture. Otherwise we are a public sector company; we have not taken any money from the government for several decades. We have an equity capital base of 153 crores which has been there for very many years, but still we are a government company.

All this is going to change when we become directly accountable to the stock market, to the investing public. The culture in AI or for that matter in Indian Airlines will undergo a dramatic change, it'll be more businesslike. Employees in AI will become more stakeholders in the company as they would also become shareholders.

I feel all this would happen in the current year 2005. We have to move fast and are in the process of finding an advisor to help us in this process. We have to take government approval. The minister has been very proactive in the entire renewal and upgradation of AI. I

CRUISING HEIGHTS June 2005

AIRBUS

Airbus Vs Boeing:

Kiran's reply and the CVC's view It portends serious trouble.

The 165 shops on the Jetty Bazar, the nucleus of this settlement, have still not recovered from the vicious 00

CRUISING HEIGHTS February 2005

remarked.

Prior to this interview, AI's Company Secretary S.Venkat wrote to Airbus Industrie on May 7 pointing out the infirmities in its argument resulting in the controversy. It was thought that Venkat's communication would put out the flames. But it did not. Airbus Industrie Vice President Marketing and Pricing Policies, Dr Kiran Rao responded to Venkat in some detail: Writes Kiran Rao "Our intention is not to cause embarrassment or put in question the integrity of Air India. It is simply to put forward the facts and to request an opportunity for us to understand why we have been repeatedly rejected by Air India.

“In December 2002, a Request for Proposal (RFP) was issued by Air India for 17, 250 plus seater aircraft (MCLR). This was later revised to 10 firm and 7 option aircraft.

In January 2003, Airbus submitted its offer for 17 firm A 340-300E aircraft and later on at request of Air India revised the offer to 10 firm and 7 options.

“In January 2003, an RFP was issued for 160 plus seater aircraft (SCSR). Airbus was

T

WO DAYS before Air India board met in Mumbai to consider its new fleet acquisition plan, Airbus Industrie representative in India Nigel Harwood took a swipe at Maharaja and accused it of distorting the tender evaluation process.

When AI took the decision to go in for an all Boeing fleet at its meeting held in Mumbai on April 26, 2005, all hell broke. Airbus supported by the French Ambassador in India hurled charges that made it out as if AI had cheated them of the deal.Infact Harwood went to the extent of threatening to go to the Central Vigilance Commission (CVC) to scupper the deal. It was unprecedented. No one wishing to do business in India had ever done that before.

A fortnight later on May 11, members of the Parliamentary Consultative Committee attached to the Ministry of Civil Aviation cutting across party lines came out strongly

Airbus Industries that has been in the eye of a storm for the past few months thanks to its injudicious intervention in the acquisition process of Air India. The Tolouse based consortium is now attempting to retrieve lost ground by bringing back that old war horse Kiran Rao to handle issues from the airline's headquarters. Does it mean that Rao is back on the centre stage as far Airbuses' strategy for India is concerned? Or is it a one off attempt to clear the air. R Krishnan reports against Airbus for "making a political issue" out of Air India's decision to acquire 50 Boeing aircraft.

The MPs "deplored" the controversy created by the European Consortium over the Maharaja's decision saying "making political issue out of a purchase decision is not correct". The meeting was attended by members of various political parties including the Congress and the Left.

In an exclusive interview,AI Chairman and Managing Director V Tulisadas(see cover story) has expressed his surprise at the manner in which Airbus reacted and said he didn't expect this from an institution that has had a relationship with AI for long.”

Infact,they should realize that we could be looking at their planes in the future,” he

IA has an allAirbus fleet and has plumped for more of the same.

CRUISING HEIGHTS June 2005

requested to submit an offer for A 321 and Boeing for 737-900.

“The evaluation of these offers progressed and Airbus was seen as the clear leader in both categories. For reasons not clear to us, the 340 proposal was put into question by Air India due to a simple point of interpretation of the language used to define the credits of option aircraft. Without consultation and despite numerous written clarifications by Airbus, Air India selected Boeing 777-200ER. This decision was rejected by Air India board as the misinterpretation of the Airbus proposal was seen as a minor issue.

“At the same time as A 340/777 evaluation, the A 321 and 737-900 proposals were being compared. It is well known in the industry that the A 321 is a much more capa-

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AIRBUS

They forgot the engines R Krishnan has been covering Airbus for close to two decades now. He knows most of the dramtic persona on a one to one basis and has interacted frequently with them. He responds to the Kiran Rao letter: I still cannot forget that evening in early June when I had dinner with senior Airbus officials at Tolouse.Inevitably the discussion was on the acquisition plans of IA and IA. It was a nice cool June summer evening spent chatting at one of those quaint and innumerable roadside cafes that dot all parts of Europe and look particularly appealing in France. We discussed Airbus's success in bagging the Indian Airlines order in spite of stiff competition from Boeing. I told the officials, you guys would not have won all of IA's order had the engine manufacturer CFM (50-50 JV between GE of US and Snecma of France headquartered in Cincinnati, US) not lowered the price for Airbus.

Reliable sources in India had informed me that that CFM offered its engines cheap-

ble aircraft than the 737-900 and therefore, it became clear that over the network evaluated by Air India, the Airbus solution was a clear winner in terms of profitability, performance, comfort and overall specifications. “In the midst of the controversy over the interpretation of the A 340 proposal, Air India issued a new tender for 150 plus seater aircraft. The new tender was issued in May 2003 for Eighteen 150 plus seater aircraft (12 firm and 6 options) with A 320 and 737800 under consideration. This tender was issued on the basis that no market existed for 160 plus seater aircraft and therefore A 320s would be compared with 737-800. In this aircraft category, it is well known that if a cost based analysis is carried out, then the A 320 will win whereas if emphasis is placed on the additional seats of the 737-800 than Boeing would have a better chance. “In June 2003, the 737-800 was selected

by Air India and the deciding factor was the revenue advantage of the 737-800 due to the extra seats, despite the fact that the A 320 offered the lowest cost solution. You can understand our frustration when you consider that just a few months before, the airline dropped the A 321-B 737-900 evaluation because these aircraft were considered to have too many seats. Based on Air India ground rules, the difference in capacity between 737-800 and an A 321 is only 20

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er to Airbus than to Boeing leading to a final price quote that was lower by 8 to 8.5 per cent compared to the competition. The official said it not true. One also told them that for Air India's requirement of SCSR between A 320 and Boeing 737-800, CFM could play favourite with the Americans this time. The gentleman immediately got up from his seat, walked a few steps and called someone from his mobile. We had just finished a drink each. He came back smiling and said triumphantly:" No we will win this time as well. I have got it from the horse's mouth". In any case I told him better watch out. I came back home and forgot all about it.

Cut to November 6, 2003. Air India board met that day and decided in favour of A 340300E and Boeing 737-800 which now powers Air India Express the Low Cost Carrier.

I remembered the Airbus official and over conversation in Tolouse.If only he had been less cocky, more practical and kept his ear to the ground. After all, my source had also

Boeing 787: The Dreamliner got it from the `market ` Siginficantly, never once did that gentleman complain about the scrapping of the earlier A 321 versus Boeing 737-900 race.

He was very optimistic that like with IA, he would win with AI. I had definite information then that some of Airbus own representatives told Air India officials that A 340300E was good but certainly not better than the A 340-500 and A 340-600. In fact that evening when I asked them if the order book for A 340-300E was large or was it true that

seats. The irony of this story however is that despite all the debate on seating capacity, the 737-800 in service today with Air India is THE CRUCIAL DIFFERENCE: The lower cost of the CFM engines had played a decisive role in tilting the price in favour of Boeing. Airbus was caught napping.

Our intention is not to cause embarrassment or put in question the integrity of Air India.

CRUISING HEIGHTS June 2005

it had reached the end of the assembly line with very few orders in hand, I was told "We can't tell you that. Why don't you ask Boeing if they can give you a split up of the orders received for Boeing 777 series".

As for Indian Airlines order, though Airbus won hands down, should they not have told them that it would be better to look for wide body aircraft to replace the A 300s instead of opting for A 321 a narrow body aircraft unfit for the very competitive South East Asian market or even the Gulf. Perhaps Indian Airlines could have taken more of the successful A 320 and instead of A 321 some of the A 330-300 twin aisle planes to meet the competition from the likes of SIA, Malaysian, Thai, Emirates etc.

After all market condition warranted such an aircraft for IA then as now.

The point I am making is that Airbus representative cannot argue to suit his convenience. They should have protested when Air India re-tendered for different aircraft.

It may be recalled that originally when Air India started its evaluation process, the first report sought to pitch the old Boeing 767s with the A330 and A 340. Obviously there was no wisdom in doing that. The

configured on 189 seats, 20 more seats than the A 321 originally studied.

“This brings me to the main point of contention on the selection of 737-800. All the evaluations carried out were for full service two class configurations. The aircraft finally delivered to Air India was a single class all

767s are of vintage technology compared to the 340 or 777 series. Thus the same logic applies to A 330-200 versus Boeing 787. This sadly Airbus is unwilling to acknowledge.

As for seating configuration, I am indeed happy that Airbus considers that Air India can become an international class airline. Recently, when I was returning from London in one of its leased Boeing 747-400, I found the three class configuration had been changed drastically. There were only 12 First Class seats-- an apology compared to what one gets to see in the British Airways, SIA etc. There were only 28 Business Class seats in the upper deck and the lower deck adjoining the First Class had all been converted into Economy Class seats. Only a curtain and the galley separated it from the First Class. The moral of the story is Air India or for that matter any airline has the right to change the seat configuration as it wants depending on the market condition not for the airline or the manufacturer per se but for its product. Obviously, the first and club class of Air India does not attract passengers while economy class does and in full.

An evaluation of an A 320 Vs 737-800 in a low cost model would have given a completely different result.

The A 320 would have won as it did in cases such Air Deccan and Kingfisher Airlines.

CRUISING HEIGHTS June 2005

economy 737-800 (a typical low cost configuration). Air India had many opportunities in 2004 to reevaluate the SCSR selection. In the case of A 340, the airline took the decision to re-look at other aircraft types due to what was described as changing market conditions.

“For the 737-800, however, where market conditions really changed from two class full service to one class low cost configuration, no re-evaluation was done. It should be noted that the A 320 is the preferred choice for the majority of low cost airlines, but this is not the point. The point is the market conditions changed dramatically yet Air India saw no reason to re-look at its selection. One further point why 737-800 was selected over A 320 was additional cargo revenue on the 737. It should be noted that, for the aircraft finally selected, the cargo capacity after carrying 189 passengers is significantly less than that of the evaluated aircraft.

“An evaluation of an A 320 vis a vis a 737-800 in a low cost model would have given a completely different result. The A 320 would have won as it did in cases such Air Deccan and Kingfisher Airlines. The Airbus A 320 family is the most successful aircraft family in the world and the "Low Cost Leader" 178 firm orders (81 per cent market share) from Low Cost Carriers in 2004. To summarise, the 737 selection should have been re-examined when the role of the aircraft was changed.

“In November 2003 ( November 8 to be precise when then Air India Board decided to go in for A 340 and Boeing 737-800), Air India Board selected 10 firm A 340-300Es. Airbus was pleased with the decision and we understand that the combined A 340/737 selection was a project that resulted in a net profit to Air India over the evaluation period of 17 years. You can imagine our surprise when in November 2004 with no explanation, the airline decided to go forward with the 737 selection but decided to drop A 340 for what were told were changing market conditions.

“Instead in the same month, the Air India evaluation team recommended to the Board evaluation of the following aircraft, 220 seater 787 (Dreamliner), 250 seater A 330200 for MCLR-B, for ultra long-haul the A 340-500 and 777-200 LR and for MCLR-A the A 340-600 and 777-300ER. To our surprise the profitable A 340-300E was not even considered. The detailed reasons for "changing market conditions" are still not understood by us, especially considering that the Air India board selected the A 340-300E less than 12 months before.

“A new RFP was issued in December 2004 with all the various wide body aircraft mentioned above and to our surprise, the cabin dimensions previously specified by Air India had changed. In economy class,

31

AIRBUS

BRIEFING THE MEDIA: Boeing’s Dr Dinesh Keskar explaining apoint

The CVC: A point of view

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FFICIAL SOURCES believe that nothing much will come out of Airbus protest. While Indian Airlines has already sent the entire evaluation document leading to the selection of all Airbus fleet to the Central Vigilance Commission (CVC), the Ministry of Civil Aviation has also sent those of Air India to CVC. There are two issues on which the deals could have come under a cloud: in the case of AI on the seating configuration and in the case of IA on Air Asia getting a cheaper deal from

Airbus. But in both cases there is no complaint before the CVC and is unlikely to get a hearing.

Take Indian Airlines first. According to official sources, a constitutional body like CVC and CAG has already been apprised of the evaluation. Besides the government appointed supervisory body headed by former CAG S.G.Somaiah has vetted the price negotiations between Indian Airlines and Airbus for the delivery of 43 aircraft comprising - 19 of A 319, four of A 320 and 20 of A 321. The deal is estimated to

The CVC according to official sources is of the view that it will be unfair to compare Air Asia order with that of Indian Airlines.

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CRUISING HEIGHTS June 2005

cost about Rs 9500 crore and IA is believed to have driven a hard bargain to bring down the prices.

However, the missile fired by some Members of Parliament that Airbus has offered the A 320s at a much cheaper rate (at least by three million dollar each) to a Malaysia based Low Cost Carrier Air Asia raised eye brows.

But what they failed to point out was that Air Asia placed orders for 40 firm and 40 options within a few months of the negotiations in which Boeing lost.

Compared to 40 A 320s sought on a firm basis with orders placed immediately and another 40 on options, the manufacturer will need to treat such clients with a difference. In the case of Indian Airlines, its board officially cleared the proposal to buy all firm 43 Airbus aircraft in April 2002. It is now more than three and a half years and an order is yet to be placed on Airbus. For instance only the PIB has cleared the proposal and it is yet to get an okay from the Union Cabinet.

Considering all this CVC according to official sources is of the view that it will be unfair to compare Air Asia order with that of Indian Airlines. In all probability, official sources believe this may not come in the way of IA acquisition.

Now take the case of Airbus accusation of 9 abreast seating arrangement in 787 which is also true of the three leased Boeing 777-200 ER. The objection could be more to the seating arrangement of twofive-two sitting abreast in the economy class and that whether not it would inconvenience passengers. When the constitutional body discovered that even in the existing 777-200 ER, Air India has a similar arrangement (because the configuration was not disturbed when leased from United Airlines). If yankies can fly nine abreast so can Indians!

the seat width changed from 60 inches to 59 inches (triple) and from 80 inches to 78 inches (quad) and aisle width from 19 inches to 18 inches. Although the change appears small, it made a big difference to the 787 seat count. By allowing smaller seats the 787 was now able to accommodate 9 seats abreast compared with normal 8 seats abreast. This allowed Boeing to show 250 seats compared to the original submission of around 220 seats just one month prior, as shown to the Board. Airbus pointed out that 9 abreast seating in a 787 is the norm for charter airlines and not the standard for full service international airlines. We fully respect that the choice of comfort standard is yours. But let me state that we feel the 30 plus additional seats gained by Boeing are at the cost of comfort which I hope you would

It is well known in the industry that the A 321 is a much more capable aircraft than the 737900

agree will put Air India at a significant disadvantage versus competition.

“The delivery date of the 787 is again a major concern for us. While the RFP spoke of delivery dates between 2007-08, (whether 787 or A 330-200), Boeing has publicly stated that the earliest available aircraft is towards the end of 2009. It is an unfair treatment to Airbus and we have been barred from offering the all new Airbus A 350, just because it was launched a few days after the RFP.” “Kiran Rao concludes his letter seeking re-evaluation of 787 with A 330 based on eight abreast seating arrangement. The delivery dates should also be re-examined.

Air India should also take a re-look at the 737-800 selection in view of changed market conditions.

Harwood says Accha Accha D

URING THE Inder Gujaral Regime in the 1997, the British High Commissioner to Delhi was a gentleman by the name David Gore Booth. He had a petulant and hectoring tone about him. So outraged was the public reaction over his comments that Booth was sent packing much before his tenure was to end and he faded away from the foreign office.

Is Nigel Hardwood right out of the Booth mould? Those who know him say, most certainly not. Then why did he make the controversial remarks about the AI acquisition? Was it off the cuff or a thought out strategy? Whatever it be, it is pretty surprising considering Airbus reputation for a low key approach to its business in South Asia. But in one blow Harwood has dealt Airbus the sort of damage that will take a long long time to repair.

A former Rolls Royce employee based in Singapore, Harwood apparently got the nod to replace Kiran Rao as the Vice President for India and Africa on the basis of his stint in this country in the early nin-

IN BETTER TIMES: Nigel Harwood presenting IA CMD Sunil Arora with a memento .At extreme left is Deputy MD Sushma Chawla.

ties.He was the airport rep for IAE and was really nothing more than “a liaison man` dealing with the national carrier.”

But he picked up the gentle words that all expats love: koi Hai, sub theek hai, acccha accha ` to sufficiently impress his French bosses in Toulouse who though he had a deep understanding of the country's social dialectics and deserved a posting in Delhi.

So as Kiran Rao moved up as the Senior VP (Pricing and Policy), Nigel Harwood came calling with his accha accha.

But it isn't just the government that is deeply unhappy at Harwood's remarks threatening to take AI to the CVC, several private sector operators too have found themselves at the wrong end of Mr Harwood's Mach 3 tongue. He told one oper-

CRUISING HEIGHTS June 2005

ator, for example, that the A 320 would be off their table if they didn't come out in support of Airbus in their fracas with AI.He told an MP-- at the launch of Kingfisher Air-- that he `spirited response` had been widely appreciated.

What next? Long time observers state that Nigel Harwood will continue to be comfortably ensconced in Delhi thanks to the private sector carrier and the big number of A 320 they are jacking up. Some are even looking at the A 330 and A 340 the French giant isn't unduly bothered about adverse impact at the government level.

But there is no doubt that there has been huge damage. No government likes to be told by outsiders what to do. Nigel Harwood was trying to do just that.

33

AVIATION DIGEST

Amadeus gets more airlines

I

T IS believed that fifty leading airlines in Europe, Middle East and Africa have agreed to give Amadeus subscriber's low fares, full schedules, last seat availability and associated inventory

for distribution through all channels. This is one under the Amadeus Full Content Option.

Travel agents can make bookings on 25 low-cost carriers, including Air Tran and Independence Air in the US and Westjet in Canada and Air Berlin in Germany.

The first quarter of 2005 saw Amadeus' continuous support to travel agents in 66,000 locations around the world. Apart from airlines, Thomson Cruise Lines and Clipper Cruises were added to the Amadeus system. In March 2005, Amadeus became the only GDS to sign a global agreement with holiday autos which is known to be the world's leading leisure car Rental Company.

Airport Build & Supply Exhibition THE INTERNATIONAL Air Transport Association (IATA) use the Airport Build & Supply Exhibition held in Dubai in May as a way to help planners identify the safest, most modern and cost effective project designs.

According to a survey the construction and rehabilitation projects worth over US$13 billion are currently under way or just about to start at airports throughout the Gulf region.

Also plans are under way to modernise the existing infrastructure in other countries around the Middle East, Africa and Indian Subcontinent.

Visitors included senior officials from civil aviation in Saudi Arabia, Morocco, Nigeria, Tanzania and India, and also representatives from airports in Bahrain, Kuwait, Cairo, Amman, Beirut, Tehran, Lahore, Islamabad and Nagpur in India. Over all, about 300 suppliers gathered for the Airport Build & Supply Exhibition.

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Emirates' latest venture

EMIRATES LAUNCHED Congress Solutions Dubai, a new initiative in the congress and meetings business at the Arabian Travel Market. This will provide comprehensive management and consultancy services to a broad range of institutions and associations, seeking to organise large scale meetings in Dubai.

The venture has the capability to plan and execute major exhibitions from start to finish, including enlisting participants, organising speakers, providing security, technology and on-site staffing, as well as venue management, protocol administration, budgeting and finance control. The central focus in the company's mission is the overall promotion of Dubai as a global venue.

CRUISING HEIGHTS June 2005

Ever-fluctuating industry's toll on some carriers ACCORDING TO a survey, amid higher oil prices and continuing industry pricing pressures, airline equities remain a difficult place for investors to make money. It is believed that 2005 could become a possible tipping point for giants such as US Airways and Delta Airlines.

The survey says that the major carriers can no longer withstand the massive losses they have sustained over the past four years.

Just as they are taking drastic steps to survive, the largely profitable low-cost carriers are rapidly gaining market share and may be poised to take over the lion's share of the industry in the future.

Thai's boost to local tourism

More traffic expected IN A bid to further enhance the connectivity between India and Singapore, Air Sahara's maiden flight from New Delhi touched down in Singapore around last month. With this, it seems Changi Airport is poised to handle the fast growing passenger traffic between the two countries in the current year.

Air Sahara becomes the sixth to join five others at Changi Airport plying the Singapore-India routes, namely Indian Airlines, Air India, Jet Airways, Singapore Airlines and Silkair. Together, they operate more than 220 weekly passenger flights between Singapore and 11 cities in India. Now Changi's network boasts a record of 80 airlines that connect Singapore to some 175 cities in 55 countries via more than 3,900 weekly flights.

THAI A I RWAY S International Public Company Limited (THAI) is offering half-price tickets to local tourists. This plan is part of a campaign to promote the local tourism. The tickets were offered on domestic routes at a minimum of 45 percent discount from 4-8 May. This was a five-day-campaign with the title "Smile Thailand". It was launched on the 4th of May at the Siam Discovery Centre in Bangkok.

As a norm, customers booking the discounted air tickets have to use them by the end of July. The discount programme covers both business and economy classes. Thai airlines is also offering special "Andaman SunSand-Sea" package tours.

IACA's rejection of development tax EUROPE'S LEISURE carriers IACA airlines have expressed a strong disappointment over the decision taken by the meeting of Finance Ministers to introduce a levy on air passengers to fund development aid.

The carriers believe it is fundamentally unacceptable to use air travellers as a source of development funding. Demand for air travel in Europe is increasingly price sensitive, even more so for passengers of leisure airlines whose holidays represent the single largest purchase of the year.

These airlines are amazed because the onus to administer this irrational tax has been placed on airlines without any consideration for the cost of compliance.IACA has planned to call up EU Ministers of Finance to abort plans for a development tax at their next meeting to be held on 7 June.

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60/37

TOURISM DIGEST

Launch of Endless Vacations Television

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CI announced the launch of Endless Vacations Television (EVTV). It is a new travel and lifestyle series designed to increase consumer interest in vacation ownership by showcasing new ways to play and great places to stay.

This series is part of RCI's tactical approach to drive demand for vacation ownership through innovative marketing and product development.

The first half-hour programme focusses on Family Fun in Central Florida showcasing lots of unique experiences including a visit to the Exploration Five Children's Museum where children can fly a mock space ship, appear on a TV-news station and shop in a child size grocery store.

Marien Coral is most hygienic Marien Coral hotel by Hilton is recognised as the most hygienic hotel in the world.

Check Safety First rewarded the resort with the Global Winner Award under the Cristal Mark programme. This progranmme is a standard developed in accordance with the World Health Organization's guidelines that set the benchmark for food safety.

A birdwatching brochure!

Through the series the consumers will be introduced to rciendlessvacations.com as the perfect place to find out the value and benefits of vacation ownership. The Web site is designed to help consumers, who may or may not be familiar with timeshare, learn more about vacation ownership and if the product is right for them.

JV between Gupta Group and Choice Hotels

CHOICE HOTELS India, a joint venture between the Gupta Group and Choice Hotels International, has announced expansion plans that call for the introduction of Clarion and Sleep Inn brand hotels throughout India's top markets.

The company is opening India's first Clarion brand hotel in Goa with plans for eight additional Clarion brand hotels in major markets including New Delhi, Mumbai, Bangalore and Chennai to be added over the next five years.

The Qutab Hotel in New Delhi, purchased by the Gupta Group in 2002, is undergoing an expansion to add 120 rooms to its existing 60 rooms. It'll be rebranded as a Clarion Hotel.

Choice Hotels India is also looking for a location for the first Sleep Inn brand hotel in India and is actively sorting out a joint venture partner to aid in the development of a minimum of 10 Sleep Inn brand hotels throughout the country.

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AT A GLANCE

Cruising as an art

AS A new trend, in addition to exotic ports, onboard entertainment and enrichment lectures, cruise lines offer vacationers an impressive variety of artwork in all its myriad forms. The ships of the 19 lines comprising the Cruise Lines International Association (CLIA) are live with extensive and eclectic art collections. Some of them are valued as much as $100 million.

CLIA cruise lines with Italian heritage, such as Costa Cruise Lines, MSC Cruises and Silversea Cruises, boast murals and sculptures by Italian artisans. These provide passengers with a distinct ambience reflective of the country. Norway's proud seafaring history is showcased on board the ships of Seabourn and Norwegian Coastal Voyages.

CRUISING HEIGHTS June 2005

Kuoni Specialist Travel UK has launched a dedicated bird watching brochure to meet a growing demand for wildlife holidays. It has a handpicked selection of 17 of the world's top bird watching destinations, including the Middle East, Asia, the Indian Ocean, Africa, the Caribbean and Central and Southern America. It has great itineraries and tours being led by resident experts in each country.

ITTFA gets a new member Arabian Travel Market (ATM) has become the industry's first nonEuropean exhibition to join the newly formed International Tourism Trade Fair Association (ITTFA). ATM has become the 17th member of the association, which already covers most of the major travel exhibitions in Europe. Several shows in Asia are expected to join over the next 12-18 months. The long-term plan is to take in shows in North America and Latin America.

Macao has 20 million tourists Despite the tightening of restriction by China's central government on gaming involvement of governmental employees there has been no huge damage to Macao's tourism. Gaming is not the only selling point of Macao's tourism.

The first quarter saw a 4.45 million visitor arrivals leaving tourism booming this year.

Environment friendly website THE EU Eco-label scheme was established in 1992 to promote products and services with a reduced environmental impact.

Each EU Member State has a competent authority, which provides information on how to apply, checks compliance, and helps companies that want to earn the right to get the Eco-label Flower.

The trend towards more environmentally friendly tourism services has steadily increased in recent years, with consumers becoming more and more demanding in their quest for greener holidays. Satisfying this demand is increasingly seen by the tourism industry as a key to success.

Bali WTO TOURCOM conference

THE TOURISM communication conference held in Bali marked a turning point for media relations and crisis communications in Asia and the Pacific.

Organised by the World Tourism Organisation in cooperation with the Indonesian Ministry of Culture and Tourism, the event attracted decision makers in international tourism communications from the public, private sectors and a large group of journalists.

The purpose was to share experiences and exchange views on a wide range of tourism communications issues, such as media relations, corporate and marketing communications and to establish a new partnership between the tourism community and the travel and business media.

Boom in Vietnam's tourism

THE FOURTH month of the current year saw Vietnam welcome around 250,000 foreign visitors. This brought the total number of foreign travelers it received in the first four months of this year to 1.13 million, a 20.2 percent yearon-year increase.

The number of domestic travelers also increased 6.1 percent from the same period last year to 5 million in the first four months.

One of the factors responsible for this is that many festivals have been organised around the country recently.

During the liberation and May Day holidays from April 30 to May 3, tourists flocked to the Mekong city of Can Tho, whose ecological sites, floating markets and trade fairs welcomed more than 200,000 visitors.

Buon Ma Thuot town of the Central Highlands province of Dac Lac also received around 15,000 visitors a day, an increase of 20 percent over the same period last year.

BACK PAGE

Delay headache Last month the world went ga ga over the first take off of the Airbus A 380 double decker from Toulouse. Now comes news that the much awaited Jet could be delayed by nearly six months and the launch customer Singapore Airline may have top postpone its first flight till early 2007.Quantas and Emirates too have had to rejig their plans to fit in with the changed schedule. Clearly last minute technical glitches could be responsible for the delay and there is still no word that all problems are over. Quantas and Emirates have already spoken about doing everything to meet Airbus demands on specification ` on time `. They now want to be compensated to reschedule their plans. It's over to Toulouse.

Back to the pavilion Once at Jet always at Jet is perhaps perfect for Nandini Verma.After a brief separation, Nandini is back home at Jet where she has been a star fixture for the last nearly quarter century. Now who persuaded whom is anybody's guess but our grapevine tells us that the last thing Naresh Goyal wanted was for the formidable Ms Verma to work with bitter rival Vijay Mallaya.So he is believed to have used all his persuasive skills to tell the lady to come home. It's a bit of a dampener for Kingfisher Airlines that was hoping to lure some of the country's best and brightest aviation brains to get together and work for them.

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One rupee millionaire Trust Captain Gopinath to become a millionaire by keeping the common man happy. The Managing Director of Air Deccan caused a minor riot by announcing a one-rupee ticket that saw his site getting inundated and down for a few hours. Clearly Indians have fallen in love with the low cost model and `Gopi` must get credit for putting his money where his mouth is. Time and again he has cried hoarse about making air travel cheaper for the Indian people and systematically he has set out to prove it. There is only one problem; Deccan can't go below the Rs one. But don't underestimate the captain. Everytime, you think he is passĂŠ, he's pulled one out of the hat. What next?

Superman Chairman We have the greatest respect for the Chairman of the Airport Authority of India. He is back to square one. Well before you get any ideas let us explain. As in the past, he is back to handling several portfolios at one go. After the exit of P S Nair he is now the member (Personnel). With no one in place as member (operations) and member, (planning) he handles those chores too. No wonder he is in office all day smiling and waffling his way through a load of files.

CRUISING HEIGHTS June 2005

Dancing at Trafalgar Well she won't exactly be dancing but Delhi Chief Minister Sheila Dixit will sure be giving Indian arts, crafts and tourism a huge shot in the arm with the Dilli Haat exhibition scheduled for June 18-22 in London. The India celebrations is part of Dixit sister city pact with the city of Westminister that she signed with London Mayor Livingston some two years back.

All travel agents and tour operators in India must applaud the sprightly Delhi CM for her great work. May we add that Delhi's Tourism Minister J S Lovely accompanies her.