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Rs 60

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EDITOR-IN-CHIEF’S NOTE

Offering ‘zilch’ as incentives!

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O what is it that finance minister Mr P. Chidambaram has offered the two sectors that have viscerally exhibited a growth rate (you don’t need a better example than a 40-minute wait in the air over smog-filled Delhi or a Rs 30,000 a night room in Bangalore) of over 30 per cent through the last two years? If one were to offer a five-letter word that can best describe the general Budget for 2007, as far as aviation and tourism are concerned, then the best description would be ‘zilch’.

Just look at the figures: The proposal: The FM has proposed a fiveyear holiday from income tax for two-, three- and four-star hotels as well as for convention centres with a seating capacity of not less than 3,000. The caveat that these need to be completed during the period April 1, 2007 to March 31, 2010.

The hard facts: There are already 60 new hotel projects in various stages of development, which will add 19,000 rooms by 2010 (all branded). This apart, there are over 12,000 branded rooms in the capital city plus another 11,000 in the unorganised sector in terms of guest houses and Paharganj and Chandni Chowk variety. Add to this the paying guest concept launched by the Department of Tourism that is likely to bring in another 10,000 rooms in its fold. At close to 45,000 available rooms there could be a severe glut.

Moreover, as one expert rightly pointed out, tax holidays are hardly helpful considering that hotels projects have ‘long gestation’and in any case there will be no tax liability in the first few years. Most projects in the NCR region are already under stream for the 2010 event and a 2007 Budget break hardly impacts them. The FM has given a tax break for a region where land prices are the steepest and it is impossible for hotels to think of budget properties (that is, of course if you consider Rs 3000-4000 as budget).

There has been no effort to review the debilitating luxury tax that has been the bane of the industry for years.

Compounded, one pays close to 30 per cent

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as taxes on a five-star bill. Year after year industry bodies have asked for a review, but the FM is unmoved.

Perhaps the only silver lining, if one can call it that, is the 23 per cent hike in the outlay for tourism, taking it from Rs 423 crore to Rs 520 crore. While this may look good, the fact is if one wants to develop the tourism infrastructure of incredible India this is a pittance. But who is to tell this to the FM?

The proposal: As far as aviation is concerned, the less said the better. For a sector that shows no signs of slowing down and has been growing at close to 30 per cent each year, the FM has offered several body blows. Just take a look: Withholding tax: The FM has offered his eloquent silence on the issue. In effect, stands withdrawn. Virtually two thirds of the industry will be affected (read News Digest). Certainly a great way to fuel growth and increase economic activity!

Taxing private aircraft: Another strange move. While he may want to tax messers Mallya and Ambani (see News Digest), what about the huge number of aircraft that are likely to come in for productive economic growth? The FM has failed to see the big picture.

Incentive for small aircraft: Good move but one that requires a lot more clarity.

While tourism minister Ambika Soni doesn’t have to huff and puff, Praful Patel has his job cut out for him. He has done it before, pleading with the FM on two different occasions to keep going with the withholding tax. This time he will have other issues to tackle as well. PC, as Praful is well aware, isn’t the easiest of persons to deal with. He will need all the guile and good humour that he has exhibited on two different occasions in the past — when getting the Mumbai and Delhi airport privatisation off the ground and in getting IA and AI to merge.

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Off the cuff

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Chatting on the plane is ‘No, no’ Air passengers could have their conversations and movements monitored as work intensifies to design terrorist-proof aeroplane.

Researchers in Britain and Europe are looking at technology that would see a comprehensive network of microphones and cameras installed throughout the aircraft, including the lavatory, would be linked to a computer.

This computer would be “trained” to pick up suspicious behaviour, according to Bae Systems, one of the British participants in a £24 million European Union Project Safety of Aircraft in Future European Environment.

It would pick passengers who are behaving oddly or in an unruly manner. They may appear nervous or could be getting up while the plane is taxiing. If someone looks as if they are praying, the microphones would be able to tell if they were by picking up key words. Eventually, the computer would be programmed to understand a variety of languages.

However, passengers have been assured that they will not be snooped on by humans, but by machines that will process the data, which would not be stored after the flight unless there is an incident. There are likely to be cameras and microphones in the toilet, because that is where terrorists go to assemble bombs, according to the Bae Systems. The camera could also be trained to detect seemingly harmless items being left in aircraft lavatories that could later be assembled to make a lethal device.

Bae Systems is cooperating with Reading University on the project designed to make the aircraft as secure as possible. The emphasis is on bringing about onboard threat protection.

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contents

AIR POCKETS APLENTY!

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The aviation sector is looking up, but it is facing a lot of turbulence. Ground handling remains a controversial issue, the AI-Indian merger’s going through birth pains and the implementation of peak hour charges has been halted by the Delhi High Court. An update on what’s happening in civil aviation.

AIR CARGO

p36 PERSPECTIVE

Air cargo security is something that cannot be avoided and the imposition of regulations by the US Administration has had its ripple effects on Indian air cargo forwarders. A system has to be worked out to ensure that there is no delay in the movement of goods.

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p17

The relationship between the civil aviation ministry and the two private airport operators, on the one hand, and the ministry and the AAI on the other is a taut one. Recently, Praful Patel did some hard talking with the GMR group.

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

CRUISING HEIGHTS K. SRINIVASAN Editor-in-Chief

TIRTHANKAR GHOSH Managing Editor

R. KRISHNAN Consulting Editor

BACK PAGE SPECIAL REPORT

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The Air India-Indian merger will create a mega carrier, but will bring in its wake serious challenges, especially as far as the integration of the two companies with completely divergent operations are concerned

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Bonking’s the name of the game that celebs play when they are 30,000 ft up in the air. The latest to hit the headlines was actor Ralph Fiennes and a Qantas stewardess, Lisa Robertson.

SHIVANGI SHARMA Editorial Coordinator

RUCHI SINHA PRADEEP JHA Layout Artist

BHART BHARDWAJ Art Director

H.C. TIWARI

Consulting Photographer

RAJIV SINGH

Gen. Manager (Admn.)

RENU MITTAL Executive Director

NEWS DIGEST

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Finance minister P. Chidambaram exempted import of helicopters by government and scheduled airlines from all duties in Budget 2007, but he sent shockwaves in the industry by keeping quiet on the withholding tax on leased aircraft and aircraft engines

GLOBE TROTTING

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The not-so-well paid Nepal Airlines Corporation pilots are in for a windfall: they have been given a whopping raise and their salaries are now Rs 2,00,000 per month

INTERVIEW

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Nisha Maharaj, American Airlines’ Indian subcontinent chief rubbishes rumours that the world’s largest airline was preparing to pull out of Delhi.

In fact, AA has enhanced its services by introducing a new Indian menu and improving its entertainment.

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

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

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

Published by K. Srinivasan 4C Pocket-IV, Mayur Vihar Phase 1, Delhi 110091 and printed by K. Srinivasan at Nutech Photolithographers, C-74, Okhla Industrial Area, phase-I, New Delhi 110 020 Vol 1 No 10

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Hellooo ...

PERISCOPE

“We are looking for a local partner in India to start our service from the country. We get at least two requests every month for flying into India.”

“

Bombardier Skyjet International MD JUDITH MORETON on Bombardier's plans to launch its premier jet charter business in the country with Bombardier Skyjet International.

LETTERS TO EDITOR

YOUR choice of the cover story (A Maharaja’s Chequered Odyssey, February 2007) was a good one. I especially liked the information given by you under the head “A Premium of Rs 200!” Only a visionary such as JRD Tata could think of cutting fares when business was good. Today, it quite the opposite. Fares are being cut to gather business. You have well tackled the airline from all angles.

Jitender Sharma, New Delhi

“India was a small blip in the global aviation map. Now it is driving the civilian airplane market.”

Boeing Commercial Airplanes' senior vice president for sales DINESH A. KESKAR on the huge orders places

by Indian carriers

Teething problems “There are only about 15minute delays during the peak hour. You cannot have painless growth... People are tired of hovering over Delhi and Mumbai airports but that cannot stop the growth of aviation.”

Civil aviation minister PRAFUL PATEL on the congestion over airports and the pressure on air traffic controllers

Your choice of Spotlight of the month (Fabulous Show, February 2007) on the Aero Show was appropriate, but I was expecting more behind-the-scenes story, just as you had treated the cover story. The cover story was an excellent piece.

Abbas Alam, New Delhi Your compilation of Back Page (February 2007) was adequate, but I was looking to reading more on Ratan Tata’s experience on flying a fighter aircraft. After all, it is rare that a civilian gets to climb aboard a fighter aircraft. Although I have never flown an aircraft, I would have really loved to trade places with Tata.

Ashwini Kapoor, Mumbai It is a good sign that India Inc is flying high and entrepreneurs, such as Greg Evans, are looking to expanding business in India. The government should now take steps to ensure that red tapism should not prove to be an obstacle in the growing economy.

Ashok Kumar, on email

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

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Changing times

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What the ...

“It's a lousy decision... This was a big bridge between the two countries that has been snapped.”

Canada-India Business Council President KAM RATHEE rapping Air Canada for ending India service

A for aircraft “In the past one year, we have not given clearance to 25 foreign pilots to fly in India as they were not found proficient in English in the oral exams."”DGCA DirectorGeneral KANU GOHAIN on axing 25 pilots for poor English.

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HAL Facts

Tourist gush

In 2006, Singapore received 6,59,000 visitors from India.

Indian travellers to Queensland increased by 29 per cent in the year to October 2006, generating a 23 per cent increase in visitor expenditure.

Last year, Austria saw an increase of 51 per cent in tourist arrivals from India over the year 2005. The increase by 51 per cent is highest in Europe so far.

COLD STATS

HAL was in the spotlight at the Bangalore air show and everyone wants to know what the ‘nits and bolts’ of the HAL story. So here are the details: Headquarters: Bangalore Employees: 28,000 Production units: 16 Research and design centers: nine in seven locations across the country. manufactures 12 types of aircraft with in-house R&D and 14 types under licence.

Overall record: In the last four decades, HAL has rolled out 3,500 aircraft, 3,600 aero engines and overhauled over 8,150 aircraft and 27,300 engines. Since March 2002, the $1 billion company has delivered about 100 Advanced Light Helicopters, christened Dhruv, to the Indian armed forces and the Coast Guard.

LOOKING GLASS

Maharaja moans “During JRD (Tata)’s time, Air India was considered one of the finest airlines in the world. It's not so anymore. If the present generation at Air India achieves even a portion of what JRD achieved in his time, it will be a true tribute to JRD.” Air India CMD V. THULASIDAS

“I was with him [JRD Tata] when he got to know that he was being removed as chairman of Air India. He turned to me and said, 'That's the way the world goes'. Then, he picked up the phone and rang up the man who succeeded him and wished him well. There was and will be only one JRD Tata.”

Mahindra & Mahindra Chairman KESHUB MAHINDRA at the launch of the audiobook of Russi Lala's biography of J.R.D. Tata, Beyond the Last Blue Mountain.

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OFF THE RECORD

Wanting it badly

Top: (Left to right) Sontosh Mohan Deb, Hansraj Bhardwaj, Suresh Pachauri, Pranab Mukherjee, and (below) Praful patel.

You have got to give the devil his due: when Praful Patel wants something badly, he works very, very hard to achieve it.

At the first meeting of the Group of Ministers (GoM), he was surprised and rattled at the vehement opposition to the Air India-Indian (Airlines) merger from several Congress ministers who are otherwise his good friends. There was opposition from Sontosh Mohan Deb, Hansraj Bhardwaj and, of all people, Suresh Pachauri. Pranab Mukherjee was completely muted and subdued. When the objections seemed to be getting out of hand, particularly with reference to interacting with the employees, Praful decided there was more homework left to be done. So, the meeting was rescheduled and he got down to brass tacks. There were marathon meetings with the unions, he met each member of the GoM individually to lobby his point of view and tell them why the merger was such an important issue. That he had done his job extremely skillfully was evident from the fact that the rescheduled GoM met for less than half an hour to clear the approval and send it to the Cabinet.

Now, we all know only one part of the story: his talks with the unions, but what about the other assurances he gave the GoM (you can read it elsewhere in this issue). As far as his persuasive powers go, one of the ministers present said, “Praful can charm the pants (or should one say pajamas) off anyone. Many of us still have reservations, but he won the day because of his lobbying.”

Speaking her mind For years Ambika Soni has enjoyed the reputation of speaking bluntly and losing friends in the process. But sometimes it’s good to have a bit of hard talk. One saw a glimpse of it the other day at the PATA conference to release their country profile on India. As usual they spoke about issues of infrastructure and the need to gear up a whole lot of things.

Soni listened patiently, but when it was her turn she made it plain that, while all this was very well, the fact of the matter is that India is a democracy where there are other priorities that need “greater attention”. Drinking water, electricity, irrigation, etc. Of course, we want to provide an incredible experience to our visitors, but we can’t keep our people thirsty, was Soni’s blunt assertion. Good point and well made. But India can still be incredible within our limited means. We only need to try a wee bit harder.

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OFF THE RECORD

Bzz.zzz.zzz.

Comfortable sinecure Captain Sharma (extreme right) with Praful Patel and V. Thulasidas in London Airport duty: Remember Captain Sharma, Air India’s man in London, who has had a long running battle with the top management and locked out of his office, has finally returned to India and is taking over as the general manager at Delhi airport. Sharma would be an ED, but his appointment has been held up, thanks to vigilance issues. Moral of the story: don’t tangle with Manjari Kakkar; you could end up in smoke.

Classroom plans: CAPA is planning to set up a training institute in the Capital this summer. The Sydney-based aviation consultancy, whose face in Delhi is Kapil Kaul (he is its regional director, but could well be called its brand ambassador considering the number of bytes this telegenic Kashmiri does each week), is believed to be looking at several other ventures as well for the Indian subcontinent.

Airport issues: The Greater Noida authority in Uttar Pradesh has decided that it has had enough of the civil aviation ministry’s ad hocism and decided that it was high time it set up a private airport that offered better services and at a cheaper rate for scheduled airlines and cargo airlines, which are tired of circling around Delhi.

Reports are the authority was ready to unveil its plans but for the intervention of the elections. It is now likely to present its blueprint after the polls.

GE goes to court: For the first time ever, General Electric has gone to court over a tender awarded to a competing overseas company with regard to scanning equipment at airports. If the single tender decision of the AAI is questioned in court it could well open Pandora’s box.

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The general perception is that former civil aviation secretary Ajay Prasad will get a comfortable job in return for loyal services of over two-and-ahalf years for Praful Patel. While the real job would be as the head of the Airport Economic Regulatory Authority (AERA), reports are that till that happens, Prasad is being appointed as the chairman of a committee that will go into various aspects of navigation across India. Amongst the other members of this committee will be former DGCA DG Satinder Singh, former member (planning) AAI, A.K. Mishra and Air Marshal (retd) Shahul. Joint secretary S.K. Shrivastava, who is responsible for airports, is believed to have moved the file and waits approval of the minister. That should be a formality. But is Satinder Singh keen to join the bandwagon – the low-profile former DG at the DGCA has already started practising in the Supreme Court?

Jet update

HAVEN’T we always said that Jet Airways is lightning quick in its reactions. Since the last issue appeared we have been informed by sources that the country’s premier airline has put its house in order as far as its flights to London and the US are concerned. Naresh Goyal has managed to persuade the South Africans to

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extend the lease on their aircraft. It has managed to get the seats with the entertainment systems approved and, if insiders are to be believed, the airline is ‘gung ho’ and ready with its plans for its launch.

While the airline has not given out its tentative schedule as yet, there are some who believe that there may be some last minute fine-tuning that could mean launching in August, instead of June. That’s an issue of detail that one needs to wait and watch. Meanwhile, other private sector players, including Kingfisher, are redoubling their efforts to fly overseas. It remains to be seen whether Praful will oblige the good man.

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End of the story Oops, we are sorry, V.K. Verma wasn’t cleared for the commercial director’s post, as was reported in the last edition of Off the Record. In fact, the file came back from the PMO without approval and lost its way in the department of personnel and training (DoPT) for sometime till it was resurrected and sent back to the civil aviation ministry. It must be a record of sorts that for close to two years the file has been travelling up and down from Mumbai to Rajiv Gandhi Bhawan to the CabSec and the PMO and back again for clarifications. Just goes to show that when babus don’t want to do something, they can ensure it doesn’t get done. Verma was cleared for the job when Sunil Arora was still CMD at Indian (Airlines) and that was 24 months back.

Now, with the merger being the flavour of the season, it is apparent that the PESB won’t look for a new commercial director immediately. But the new board of the two airlines is being finalised by the civil aviation ministry and it is possible that Verma will find pride of place in the new set up. But all that is in the realm of speculation for the moment. In real terms, though, it is a big blow for Praful Patel, who personally staked his all in getting Verma the CD’s job. The point is will he now do something for Verma?

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SPECIAL REPORT

All photos: H.C. Tiwari

‘Managing’ the merger

Praful Patel gave a pep talk when he met senior management staff of Air India and Indian. His aim was to reassure everyone present that there would be no dislocation and, if reports emanating from the meeting are to be believed, he evoked ‘mixed’ response.

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T was the sort of ‘feel good’ meeting in which the civil aviation minister holds a doctorate. Soothing ruffled feathers, reassuring the staff, presenting the big picture and telling them what a wonderful party awaits them. The occasion was the first joint meeting of officers of Air India and Indian Airlines held at Hotel Ashok on March 6, just days after the Union Cabinet had cleared the proposal for the merger of the two public sector aviation giants.

Present on the occasion were a group of about 150 officers from the rank of general manager and above of the two airlines, additional secretary Raghu Menon, joint secretary R.K. Singh, the two CMDs—V. Thulasidas and Vishwapati Trivedi—and, of course, the minister himself. Secretary Ashok Chawla was the only absentee.

He was away at a committee of secretaries meeting.

It was evident from the meeting that Praful’s agenda was simple: get the senior staffers to relax and get out of their nervousness.

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SPECIAL REPORT

The union’s perspective

Praful Patel and Ashok Chawla at the meeting with union leaders of Air India and Indian

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HE IA staff non-technical is quite upset with the merger mania. While it is not seemingly opposed to merger, it is quite upset with the step-motherly treatment by the government. For instance, neither Air India nor Indian (Airlines) wage structures have been revised since the last agreement expired in 1997. In the last 10 years, they have not received the arrears except for the so-called productivity-linked incentive (PLI). By the way, PLI is being given to both Air India and Indian employees.

In the last 18 months, Air India management has cleared all the arrears, running into a couple of hundred crores, to its employees. So when the Air Indians get into the merger road they have nothing to fear. Even the retired Air India employees have been paid arrears. This is, however, not the case with Indian employees. At a recent meeting with the unions, primarily Air Corporation Employees Union (ACEU), the minister of civil aviation Praful Patel told them they will be paid current dues without qualifying what exactly is the current due. Later on, the unions got to know from the ministry that the IA management was told by the government that arrears need to be paid only from August 2006, thus taking away the previous nine-year arrears. How could the government behave in such brazen manner when both Air India and Indian are 100 per cent owned by the government?

What does the Cabinet note state?

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HE Cabinet note is unambiguous in handing over plenty of power to the ministry of civil aviation and the minister to call the shots in the merger. Here is the operative part.

A 3-tier Grievance Redressal Machinery is proposed to be set up to address employee grievances of individual, Group/Class nature. This would include an inter-ministerial committee under the chairmanship of Addl Secretary and Financial Advisor, Ministry of Civil Aviation (MoCA) at the apex level.

The new company is proposed to work on an Aviation Group Model wherein Strategic Business Units (SBUs) will be created to look after important functional areas such as integrated passenger airline business, cargo, MRO, ground handling, LCC and catering, flight training, IT, etc.

It is proposed to constitute a Board of

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Directors consisting of Chairman-cumManaging Director, three Functional Directors looking after Personnel, Finance and Commercial functions along with the six CEOs of the individual businesses. This composition of the Board of Directors has been considered by both GOM as well as the COS. It is, accordingly, proposed to adopt the same. The Board will also have a limited number of Government nominees (say 2-3).

As per prescribed procedure, the Chairman cum Managing Director and Functional Directors of a Public Sector Enterprise are selected through the Public Enterprises Selection Board (PESB). However, considering that the two airlines already have Functional Directors appointed through the PESB procedure, it is proposed that the Board of Directors of the new company upon merger of the two airlines may initially consist of the existing Functional

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Directors of the two merging companies. Since the two airlines have separate Functional Directors looking after Personnel, Finance and Commercial functions, whereas there is only one slot each available for these functions in the new company, the existing Functional Directors may have to be redeployed as CEOs of the SBUs or in other equivalent positions. This exercise will be undertaken in a fair and transparent manner by the MoCA as assured to GOM and the COS. Air India and Indian Airlines are presently headed by Chairman-cumManaging Directors recruited through PESB procedure, both of whom are IAS Officers. Considering that the merger of two airlines would throw up significant integration challenges, it is proposed that the selection of the Chairman-cumManaging Director for the new company may be made soon after the Cabinet decision on merger. Since selection

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Indian’s management feels the payment has to be prospective, as it cannot pay the new wage bill with retrospective effect. The arrears work out to about Rs 700 crore and the Indian management does not have the mandate to pay this amount. The question arises as to who authorised the Air India management to pay the arrears though its staff strength is lower, at 15,500 compared with Indian’s 17,500. Indian’s current wage bill is about Rs 1,100 crore and is likely to go up by about Rs 140 crore if the new agreement is signed. The ACEU is the largest among India’s eight unions, with a following or membership of 12,000 employees.

According to ACEU, there has to be parity between people who have joined the two airlines at the same time. Air India has time-bound promotion policy, which means that about 60 per cent of employees joining at lower ranks can become officers after 19 years. However, Indian has different rules, wherein employees have to go through an interview and other processes whereby only 30 per cent of them make it to officer level.

At the recent meeting with Praful Patel, the ACEU demanded that their grievance needs to be addressed and the assurance had to be minuted after the meeting was over and recorded. Strangely,

through the PESB procedure is a timeconsuming process, it is also proposed that the first Chairman-cum-Managing Director of the new company may be appointed in relaxation of the PESB procedure.

While the legal/procedural formalities for merger of the two companies are likely to take four to five months time, it is important that in the interim all decisions taken by the merging companies i.e. Air India and Indian Airlines are in common interest. It is observed that some of the Directors, including official nominees on the Board of two companies, are common.

In case of the remaining Directors, it is proposed that they may be treated as special invitees to the Board of the other company till the time of merger, so that all decisions have a common ownership.

Ministry of Civil Aviation may also be authorised to take all other consequential and ancillary actions for smooth and time bound merger of the two airlines.

they said, the minutes have still not been made. But the dialogue at the meeting was most interesting. The union leaders wanted to know why they had been left out of the arrears bonanza when Air India, Pawan Hans and the Airports Authority had been given this largess. The minister turned to joint secretary R.K. Singh, who said that there were three reasons for the exception: Indian’s net worth is negative unlike the others, It has not made continuous profit for three years unlike the others, and It has accumulated loss of over Rs 1,000 crore.

The union leaders declined to accept this argument and said that Indian’s net worth may be negative, but it had made profits in two different spells (1997-2000 and 2003-06) unlike Air India, which had profits in just one spell; While there may be accumulated losses, provision had been made in the balance sheet for the payment of these arrears.

R.K. Singh’s response was that the ministry had gone strictly by the DPE’s recommendations, which clearly spelt out that loss making concerns couldn’t dole out such largess. “What we have to take

“No one will be disturbed; I want the merger to take place with as little dislocation as possible.” He went so far as to suggest that, at overseas stations, he was willing to let both the AI and IA top dogs be in place till the HR issue is resolved some years down the line.

He spoke about the sort of giant airline they were all now a part of and how they would now be in a strong position to take on the competition once the integration had been completed. He mentioned the fact that IA and AI was the huge pool of talent from where the rest of the growing Indian aviation industry had picked its resources. But he did acknowledge that HR was a process of reconciliation that took a long while and it was they, the crème da le crème, so to speak, of the two managements who would have to show the way forward. Amongst the questions raised were ones on integrating the finances of the two companies, fixing the seniority of officials in the two institutions and integrating the schedules.

Earlier in the day, Praful met with union leaders from Air India in a separate closed-door meeting, where V. Thulasidas and other senior officials were present.

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into account is not provisions, but the ability of the institution to bear the burden,” Singh is believed to have remarked.

But there are other issues that need looking at: A huge chunk of the losses flow from the disastrous grounding of the A320 fleet by V.P. Singh in 1990. Surely Indian (Airlines) is not responsible for that gaping hole in its balance sheet.

The Kelkar Committee had decided also on a payment of Rs 400-plus crore for IA to offset the grounding.

That’s a sum of money that still requires to be paid to IA. How will the ministry account for that?

IA has accounted for profits in six of the last ten years, AI for three years.

Would that record not matter ?

Most important, is the IA-AI merger one of equals or unequals. Everyone accepts that HR issues are the toughest in reconciling the two airlines into one. In such circumstances, can the government treat two sets of employees differently when it holds the stake in both entities and is equally responsible to both?

Praful finally said that the ministry would be happy to make a reference to the DPE and take a final call on the issue based on its recommendation.

session with senior management, he drove down for a closed-door meeting with union leaders from Indian (airlines). They had several issues for which they wanted clear-cut answers (see box) and were upset that the meeting had not been minuted so far.

One union leader was emphatic, “We have a huge stake in the process, but we continue to be outsiders. Those calling the shots are the ministers and civil servants, who are birds in passing. They won’t be here two years later, but we will have to face all the consequences of their action.”

While that may be stretching the point a bit too far, the fact of the matter is that there is considerable disquiet within the ranks of both entities, more so in Indian Airlines, where the general perception is that it is an Air India driven merger where Indian (airlines) is being merged into AI and not really an amalgamation of the two.

Perhaps, civil aviation minister Praful Patel’s major test will be in convincing them that it is a marriage of equals where both partners will enjoy equal rights and responsibilities. The first test will come when the board is nominated after the

appointment of the CMD.

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INTERVIEW

“We are Nisha Maharaj, American Airlines’ Regional Manager, Indian Subcontinent, is bullish about the Indian market. As head of India operations for the world’s largest airline, she believes the market has a lot of potential. She spoke at length to K. Srinivasan and Tirthankar Ghosh.

There is talk in the market that American Airlines is withdrawing its Delhi flight?

Apparently, there are forecasts of lean summer months; hence the need to withdraw flights…

I find that very interesting because this market has performed brilliantly for us. In fact, it has exceeded our plans and our expectations. We have been very pleased with what we have seen. We have been consolidating and looking at increasing partnerships within the market and really building up our base. For all intents and purposes, it is a very important market for us and we are very committed to it.

If that is the case, are you looking at any other city in the country?

We would love to (look at another city). We are the world’s largest airline, we have got the largest fleet but it is all pretty much committed in different markets. That, however, has not been limiting us to look at growth within India.

So, we are looking and should something become available, we

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committed to India” would like to look at other places…

Automatically, Mumbai is the central point. It is the next key city because our business is based on our network: the strength of our network in the US that we have. We are not a point-to-point carrier but we have the hub-and-spoke concept. So, we look at markets where we can take something and connect beyond to meet a broad variety. That is something that interests us as well.

What sort of load factors have you been having…?

We do not disclose specifics but we have been having very high load factors consistently throughout the year. We have not seen an off-peak yet.

When you say high, would it be 75 per cent-plus…?

It is. And we are pleased with these load factors. These (the load factors), as I said, haveexceeded our expectations because our plans for coming into the market were very modest.

When you say your expectations were modest, what really was your expectation?

Well, in any new market, you start with the knowledge of what is driving the market and why you want to get into that market. You are looking at a long-haul flight and you have the weather and restrictions on

“

We would love to (look at another city). We are the world’s largest airline, we have got the largest fleet but it is all pretty much committed in different markets.

That, however, has not been limiting us to look at growth within India.

“

What about direct flights to west coast of US from Bangalore which has been attracting a lot of American businessmen as well as ethnic Indians to work in the Indian version of Silicon Valley?

Bangalore has a lot of potential. Again point to point, if you look at it, it is focused very much on the San Jose destination. And again with us, if you are looking at filling a flight, seven days a week, you are looking at more than one destination that you can fill. We have to be able to connect beyond that point.

I am not just taking you to Chicago. I am taking you to just about anywhere you wish to fly to (in the United States). A majority of our passengers connect on that flight. The aircraft comprises of such a variety of destinations in the mixture of passengers on it , which is a product few can offer.

weight… You have to do moderate planning. You also have to look at peaks and offpeaks in any market. What we have seen is a consistent demand–year-round for different destinations within the US. That is very satisfying.

You know with Delta, Continental and you–all three of you in the market–there is skepticism in the market whether longhaul, non-stop would work or not. Clearly all three of you seem to be doing well.

That essentially means that long-haul has worked. Do you think that people prefer such flights?

Absolutely. A lot of the time we have business travellers and it is advantageous for them. You are looking to save time. You are looking to reduce the amount of transit time so you can get to your destination and do business. And that is the advantage with our timing as well. So, you have a full day in India and we allow you the opportunity to rest. You get there (to your destination) the first thing in the morning and you can get to your destination by 9.00-10.00 am. And that is with a connection because you get into Chicago at 5.00 am. When you connect after that you can get to your destination by 9.00 or 10.00 am. There lies the benefit of another working day. The level of efficiency rises when you connect with a non-stop.

Air India is soon going to acquire its own Boeing 777-200 LR to start non-stop

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INTERVIEW The fares have gone down and so have yields… Do you see something like that happening on the India-US sector?

Again market forces will dictate what will happen. As you have competition you will have competitive fares, which makes it attractive for the customer as well. But then you also differentiate your product.

At AA's first anniversary celebrations: Nisha Maharaj, Don Langford, Managing Director, Customer Services, and Vanita Bhatnagar (extreme right), Sales Manager, Indian Subcontinent, with a travel partner.

What has AA done to improve services on India-US sector?

On the passenger side, we have added a premium services coordinator who will look after our premium–the first and business–and corporate customers. We also have our top tier frequent flyers in that.

We have also reviewed our menu, which we completely revamped. We had a fully Indian menu when we started. We had inputs from our Indian employees. We decided to have a look at it again and see if we can further improve it. We have added more quantity, more variety from November 1, last year.

We have also looked at the entertainment. We do have Bollywood options in there. I had a customer two days ago who emailed me to tell me that he had really enjoyed the trip and the fine entertainment he had. Entertainment is something that we continue to look at. It is all done in-house.

What is your configuration for the 777s?

We have a three-cabin product for the 777.

We are the only three-cabin non-stop: first class, business and economy with 16, 35 and 194 seats, respectively.

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“

The basic limitation right now is the infrastructure more than the airlines’ need. I don’t think we have quite hit meeting the need (of travellers) as far as a non-stop service goes. India is such an attractive destination for so many people right now… it is a market that has not been fully tapped. There is a lot more opportunity for service on the India-US route.

“

flights from Mumbai first and later Delhi.

In fact the launch aircraft, which had come for demonstration to India last year, has already flown Mumbai-Los Angeles.

Is competition hotting up?

That’s expected. Any good business must look forward to competition. This is what makes it interesting. You don’t expect to go into a market where you would be the only player. I come back again to our strength: the US network and the hub-and-spoke principle. From Chicago alone we can connect you to over 125 cities in the US. So you land at Chicago and I can give you 125 cities.

And the connection is less than three hours.

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Let’s say you have a 75-80 per cent load and the yields keep falling day in and day out. To add to that fares keep falling…

It depends on how you manage that. You have to keep fares at a competitive level and then you also have a product that you offer.

You make sure that you can balance that. So, it is not always a natural thing where more seats are going to mean low fares and deals.

That is why you have a mix in the cabin of what you offer: advance booking, low fares…

How many more flights can the India-US sector take?

I think the basic limitation right now is the infrastructure more than our need. I don’t think we have quite hit meeting the need as far as a non-stop service goes. Because, clearly there’s quite a drive. You have the business travel, the leisure travel… and the tourism side is just picking up. India is such an attractive destination for so many people right now… that is a market that has not been fully tapped. There is, I believe, certainly a lot more opportunity for service on the India-US route. The Open Skies policy is a brilliant thing that is there for consumers and for business as well. I don't think we are anywhere near meeting the capacity required.

The agreement also provides for Fifth Freedom traffic. What is likely to happen in that case?

That is an option again. However, the unique thing is doing a non-stop. The Fifth Freedom provides an option all based on how the market grows. If you have, for instance, a catchment market that is going to help from a different point, then it makes sense.

Are you thinking of an Admirals’ Club at Delhi like the new one you have at Tokyo’s Narita Airport?

We would absolutely love to do that. Based on the plans that GMR has (for the remodelled Indira Gandhi International Airport), the airlines have been having discussions on lounge facilities. It is very important for us.

It is part of our business. We are proud of our Admirals’ Club, which is a unique club that we can offer to our top tier passengers on our frequent flyer programme. So that is something that we need to discuss with

them.

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PERSPECTIVE

A balloon that went limp The orders to impose a surcharge on airlines for landing and navigation at prime time died a hasty death. Apparently, the move was taken without much consideration, as K. Srinivasan found out.

Kanu Gohain

Ashok Chawla

K. Ramalingam

K

ANU GOHAIN floated the balloon, Ashok Chawla gave it official sanction, Praful Patel said he approved of the plan and then the Delhi High Court came down like a ton of bricks on them. Describing the efforts of the trio to rake up prime time landing and navigation rates as “passenger unfriendly”, the High Court wanted the ministry to file a detailed report by the middle of April. The timing was so bad that the proposed ‘hike’ was announced the day the High Court was hearing a PIL on ‘congestion charges’ levied by airlines. In one stroke the airlines and the ministry got a thorough thumbs down from the judiciary.

Air Deccan’s Captain Gopinath said the move to hike the rates was ‘no incentive to aviation’ and added, “Delhi and Mumbai are doing 25 flights at peak time.

This is inefficient; they can easily go up to 40. Also, the better practice would have been to lower charges for midnight flights.

Not increase the tariff at peak hours.”

It took less than 24 hours for the ministry to do a complete rethink on the issue.

Clearly, it didn’t want to get into a tangle with the court and open a Pandora’s box.

And it realised that it had rushed into the issue without thoroughly examining every angle. And the panacea it is likely to suggest to the court in about a fortnight’s time?

A complete 180-degree turn. And this, after Additional Solicitor-General P.P. Malhotra said the ministry could not intervene in this as airlines have the freedom to levy “ticketing fee”.

It is clear that both the travelling public and the courts are tired of the infrastructure bottlenecks and the speed at which the civil aviation ministry is plugging the loopholes. Ashok Chawla admitted as much that the peak hour hike would be ‘essentially a short-term solution’.

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K. N. Shrivastava

And to avoid embarrassment, civil aviation minister Praful Patel, who had waxed eloquent on the proposal on the sidelines of an ICAO conference in the capital, quietly fine-tuned his argument and said, “No decision had been taken. The plan to de-congest Delhi, Mumbai and Bangalore airports by way of levying additional charges for peakhour operations is only a proposal as of now. We have not decided on it.” But he was quick to add: the ministry is considering pushing for incentives for non-peak hour operations. “We will have to incentivise non-peak hour operations of airlines, we are seriously thinking of ways to do so.”

So, finally the minister was veering around to the idea that was the view of most of the industry: make available early morning and late night slots cheaper to provide an alternative.

The original decision was simple: encourage airlines to launch flights during non-peak hours rather than clubbing all take-offs to morning (6.30 am to 9 am) and evening (4.30 pm to 7 pm) that is the most popular time of the day for air travellers.

“We are working on a clear system of incentives or disincentives for airlines operating services during three peak hours in the morning and four in the evening,” Chawla told reporters a day after Holi. Airport charges for flights scheduled during midday or afternoon hours would remain unchanged.

The new tariff regime was to be introduced from March 25, the start of the summer schedule. The charges could be halved

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PERSPECTIVE between midnight and 0500 hours.

Airlines, which already levy a congestion charge (though there is no congestion barring Mumbai, Delhi and Bangalore), indicated they would further ramp up their levy. This would have resulted in a 10 per cent to 15 per cent rise in airfares during peak hours. This has been a sore point with the ministry, which wanted them to get rid of the charge (barring public sector Indian, every domestic player levies this charge).

The High Court directive has come as a handy stick for the government to beat the airlines and get them to completely withdraw this tax.

While that may be a move to placate the High Court, one wonders how the whole mess occurred in the first place?

Those in the know say that the eightmember committee – that included such

notables like AAI Chairman K. Ramalingam, Joint Secretary R.K. Singh, BCAS chief V.K. Mehra, DGCA DG Kanu Gohain and several others was headed by the joint secretary in the ministry K.N. Shrivastava.

Besides suggesting congestion charges, it had also asked the ministry to consider freezing fresh operations from Delhi and Mumbai until adequate infrastructure was in place.

This was a one-off meeting that had taken this far-reaching decision and according to several of those present at the meeting it was driven by Shrivastava who was vociferously supported by several present and opposed as well by several others.

When asked to comment Kanu Gohain said, “Many of the proposals are at the drawing board stage... In any case I can’t be discussing it with the media.” How could a

committee take such far-reaching decisions, including a withdrawal of Air Transport Circular Number 2 of 2006 and a complete transfer of these powers of the DGCA to the Aircraft Acquisition Committee at the civil aviation ministry. The circular was issued after the ministry of civil aviation had accepted the Kaw Committee recommendations and given the appropriate powers to the DGCA. The circular was an effort to streamline operations and read: “As recommended by the Kaw Committee and in view of the fact that scheduled domestic airlines (seek) approval of amendments to the Approved Flight Schedule at the last moment with/without necessary slot clearance from various concerned agencies, it has been decided henceforth, that DGCA will grant approval, to avoid inconvenience to the

“Soniaji gave us one hour” C

IVIL AVIATION MINISTER Praful Patel has often asked for patience in dealing with the infrastructure. His logic is simple: growth cannot be stunted simply because the infrastructure isn’t in place. Learn to bear and grin; in two years, it will be a different ballgame.

But two weeks back the grin disappeared and the face darkened as Praful landed in Delhi from Mumbai. Apart from the long wait in the air that most aircraft go through (as the mantri, Patel’s flight must have been given the Delhi Police treatment (when the cops stop all transport to let a VVIP cavalcade pass through on busy Delhi thoroughfares) in the sky, but on landing he found it took him a good 20 minutes to get out of the aircraft and had passengers gently chiding him on the state of the airports.

That was enough for Mantriji to blow his top. As soon as he got out of the aircraft, he gave a piece of his mind to Ioannis Papastefanou, the expat chief operating officer of Delhi International Airport Ltd (DIAL), the GMR-led consortium that now owns and runs Delhi airport. As usual the easiest thing for Yanni, as Papastefanou is popularly known, to do was to pass the buck on to the air traffic controller, blaming them for the inordinate

delay in the opening of Mantriji's aircraft.

That only further ruined matters for the poor guy, with Praful roaring that “blaming the ATC for all their problems will not help”. He made it plain that once the aircraft landed it was the joint responsibility of the ATC and the airport operator to

At the foundation stone laying ceremony: A beaming GMR chief, G M Rao (looking at the camera) with Delhi Chief Minister Sheila Dixit (in white sari), Praful Patel and Sonia Gandhi.

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CRUISING HEIGHTS March 2007

ensure that flights were able to get in and get out smoothly. “Don’t keep blaming the AAI for all your shortcomings and better get your house in order,” he is reported to have told a nervous Yanni, who had rushed to the tarmac on being told that the minister’s flight was waiting to find a parking

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travelling public, for mid-season schedule changes on the basis of NOC from the persons in-charge of concerned airports without reference to any other agency, provided the airline has given genuine reasons for making such changes…”

AAI Chairman Ramalingam, who is also a signatory to the minutes of this meeting, was present with senior officals who are believed to have made a presentation on the problems at Delhi airport. However, the present operators of the airports, GMR and GVK, were both not present. Something rather strange considering that they are the operational bosses in the two airports at Delhi and Mumbai.

Going one step further, one superannuated civil servant, who has worked in the ministry, said, “Shrivastava is a member on the board of both Delhi International Air-

bay so that the doors could be opened.

The incident only highlights that DIAL is still not completely in control of the ground situation at Delhi airport and badly needs to get its operational efficiency enhanced. It doesn’t help if there is going to be a constant squabble between it and AAI on who is to blame. For a change, Mantriji defended the beleaguered AAI, which is, no doubt, delighted at the turn of events. And he was right: it is the airport operator who decides the parking bay and

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It took less than 24 hours for the civil aviation ministry to do a complete rethink on the peak hour surcharge issue.

Clearly, it didn’t want to get into a tangle with the High Court. the priority after the aircraft lands. In fact, the muddle in Delhi could have been avoided if DIAL had constructed the link taxiways that was initiated under the AAI.But they are yet to be completed.

Later, Praful gave a piece of his mind to the project’s managing director Srinivas Bommidala–G.M. Rao’s son-in-law–and told him that the inefficiencies at Delhi airport deeply disappointed him. And, much worse, their internecine quarrel with AAI was affecting the quality of service for the passengers at large who had nothing much to do with all this. One doesn’t know what Bommidala had to say in return to his ‘Prafulbhai’.

Meanwhile, patriarch G.M. Rao had a preliminary meeting with the new civil aviation secretary Ashok Chawla at Rajiv Gandhi Bhawan sometime back. It was a routine meeting to discuss glitches that he wanted ironed out. If anything, the meeting turned out to be an exercise in namedropping, with Rao making it plain that “Soniaji spent one hour” at the GMR foundation stone-laying ceremony at the airport. If that wasn't enough he went on to state that he was going to be spending over Rs 10,000 crore over the next few years in modernising the airports and the least he deserved was all powers, including security issues.

In effect, what it means is the right to oversee all aspects of security at these aiurports. However, the OMDA (operation, management and development agreement) for the privatisation of both Delhi and Mumbai clearly stipulates that all security and ATC-related issues would be outside the purview of the airport operator.

This issue came to the fore at a meet-

CRUISING HEIGHTS March 2007

port (DIAL) and Mumbai International Airport (MIAL). For him to regulate traffic in these two airports is a gross conflict of interests. After all, which hat is he wearing, the one of the private sector players’ or the regulators’? Or, is it that the judge, jury and lawyer are all rolled into one?” He went on to add: why has the government suddenly got into the ‘congestion act’ when it has been an issue for close to two years now?

After all, time and again, they had prompted the AAI to provide slots at Delhi and Mumbai to different airlines and now they want to reverse the situation. Clearly this could also be viewed as “crony capitalism and a move to help the private players”.

After all the AAI was in command till last June. Why was no urgency shown at that point of time?

Clearly, the committee overlooked the

ing of the Standing Committee for Civil Aviation where Rajya Sabha MP Santosh Bagrodia took the ministry to task for not implementing the OMDA fairly and asking if indeed an act of Parliament had been overturned to allow the private operators a free run of the two airports. An embarrassed Praful Patel and his team wiggled out of the tricky situation, but what Bagrodia raised at the meeting continues to be a reality at both airports.

What he said was that it was the GMR/GVK officers who were issuing entry permits at two of India’s most sensitive airports: Delhi and Mumbai. Not just that, the Central Industrial Security Force (CISF) commandants, who are responsible for overseeing the security at the two premises, are actually reporting to two expats: Yanni in Delhi and Phillip Cash, the airport director at Mumbai. This is something that is unheard of and led to the uproar in Kochi where MPs had convened. There is a feeling that unless a clear-cut policy is enunciated or the laiddown framework is followed, there could be complication in Hyderabad and Bangalore as well.

There are other issues, too, that are at the heart of the present taut relationship between the ministry and the two operators, on the one hand, and the ministry and the AAI on the other. To say that the operators and their partner, AAI, have virtually no relationship would be to stress the obvious. While the AAI has responded point by point to several issues regarding the final blueprint submitted by DIAL for Delhi’s modernisation, they are still finalising their response to the Mumbai operations. Also, the ministry has its own view

on the matter.

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FLYING RETURNS LANDING CHARGES

(Delhi and Mumbai): Rs. 227 (approx) per 1,000 kg Airbus 320: Rs. 16,870 Boeing 737: Rs. 12,030 implications of its decisions. Some of them are obvious and stare one in the face: Several airlines park their aircraft in Delhi and Mumbai. How would they handle the problem of moving their fleet in case they didn’t want to participate in the hiked-up rates for the morning and evening hours. After all, the slots and the parking bays are a historic reality and wasn’t something handed to them yesterday.

According to a seasoned insider, there is no real congestion between 6 am and 8 am when most airports in the country are in the take-off mode. The inbound flights start piling up one after another close to 7.45 am. So where is the justification for including them in the peak morning slot?

How do you handle aircraft that are on a hop-step-and-jump route: starting from Delhi, for example, and ending up in Mumbai via Jaipur and Udaipur? Now surely you can’t tell them not to fly to the two metros at peak time and, therefore, take off late in the evening or early morning and do your trip. Either way, one end would be caught in the peak hours.

What happens to the scores of flights that connect the smaller towns with Bangalore, Delhi and Mumbai?

Would it make any sense for a midnight flight from Bellary to Bangalore? Or, from Ludhiana to Delhi or from Kullu to the capital? In any case, most of these smaller airports have no night landing or take-off facilities and the flights would have to stand virtually aborted.

What plan has the committee decided to put in place to look at aircraft movements that exceed parking

ROUTE & NAVIGATION

On Delhi-Mumbai route Airbus 320: Rs. 13,000-15,000 Boeing 737: Rs. 11,000-13,000 capacity because slots are historic in nature?

It is clear that both the travelling public and the courts are tired of the infrastructure bottlenecks and the speed at which the ministry is plugging the loopholes. Ashok Chawla admitted as much that the hike would be ‘essentially a short-term solution’. He admitted that in the long run, “we have to provide more facilities like additional runways and rapid-exit taxiways to overcome congestion. This should be in place by June 2008.” He said the three airports were handling between 15 per cent and 20 per cent of excess traffic during peak hours.

Strangely, a few months back when the HAL-owned Bangalore airport had announced that it would accept no flights because it had far exceeded its capacity, it was not speaking about a lean period as opposed to a peak time. Throughout the day, officials said, they were operating to the very limit of their capacity and it was impossible for them to accept more flights.

In such a situation, how does the ministry justify the 15-20 per cent excess capacity during peak hours?

Following the public outcry and the High Court’s remarks, the government quickly ordered a review, which was held

G. M. Rao has a word with Sonia Gandhi at the foundation stone laying ceremony of the proposed terminal of the Delhi International Airport. Civil Aviation Minister Praful Patel is on the right.

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PARKING CHARGES

Rs. 7.40/hour for 1,000 kg with housing facility. Half in case plane parked in open Airbus 320: Rs. 576 Boeing 737: Rs. 412 under the chairmanship of the Secretary, Ashok Chawla. Most members of the committee were present at the meeting. This committee took a few key decisions.

Both Gohain and Ramalingam would personally sit on scheduling committee meetings to ensure that there was no stack-up in the peak morning and evening hours.

A complete review of the slots held by various airlines at the peak hours (the biggest holders are Jet and Indian) and an effort to persuade airlines to move some of their schedules to periods when the pressure is less. (This would mean that the public sector Indian would be further hit: it is obvious that the pressure from Rajiv Gandhi Bhawan will be on the carrier.)

A close look at the congestion surcharge being levied by airlines. (It is more than likely that the government will declare this surcharge illegal and ask airlines to scrap it and then inform the court about their decision.)

The congestion problem will continue till Delhi gets another parallel runway, estimated to be 4,430 metres long, the foundation stone for which was laid on February 17. However, the runway work will be completed only by mid-2008. Thus, till

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(Left) Aritist’s impression of the new Delhi International Airport terminal and (right) aircraft parked at Mumbai: waiting for better times

then, congestion will continue and may even increase, with various airlines increasing their fleet size and operations from Delhi and Mumbai.

Gohain had waxed eloquent that lowcost carriers (LCCs) can shift to even earlier time slots in the morning, say, between four and six, after which full-service carriers can begin operations and the same time slot in the evenings. Interestingly, however, one runway is closed in Delhi between 12 noon and 2 pm and the other runway from 2 pm to 4 pm for routine maintenance. As a private operator said, Delhi (and Mumbai, for that matter) is congested throughout the day and there is nothing one can do till the parallel runway comes up.

Joint DGCA, A.K. Chopra, addressing a meeting of air navigation officers of the AAI the other day, said the number of aircraft movement over Delhi had increased to more than 700 per day. In a sense, air space had become limited and therefore required more innovative ways of reducing the congestion even in the sky. In this context, he said, there was need to reduce the vertical separation from 1,000 feet to 500 feet along with a reduction in horizontal separation

The number of aircraft movement over Delhi has increased to more than 700 per day.

In a sense, air space has become limited and requires innovative ways of reducing the congestion.

G. M. Rao explains the finer details of the proposed Delhi International Airport terminal model to his wife, who was also present at the foundation stone laying ceremony

CRUISING HEIGHTS March 2007

from the current 15 minutes/100 knots separation.

But this will mean taking adequate measures to ensure safety, and which is not possible in present circumstances where the navigation is dependent on VOR (VHF Omni-directional Radio Range). It will need more sophisticated satellite-based navigation that will be provided by GAGAN, due in two years. A senior official at AAI said that to ensure quicker turnaround of aircraft, the process needs to begin in the air. He said AAI had already taken steps in this regard. To reduce horizontal separation in air, AAI had already put in place a seamless handing over radar communication system between the ATCs of Chennai and Hyderabad airports, which has brought down horizontal separation between aircraft from 80 miles to 10 miles.

This system will also be introduced between Delhi-Varanasi and MumbaiAhmedabad by the end of 2007. Eventually it will be available between Delhi and Mumbai and will go a long way to reduce the horizontal separation. In effect, this would mean quicker clearing of the queue for landing and hence take-off as well. But all of this will have to wait till the completion of construction of the new longest parallel runway in Delhi by its developer, GMR-Fraport.

As for Mumbai, even though GVK promised to build a new parallel runway, physical obstructions have compelled it to abandon the idea. So, Mumbai may not be as lucky as Delhi; hence, the need for building the new airport at Navi Mumbai, where the International Civil Aviation Organisation has already given its okay.

The Navi Mumbai airport will be spread over 4,000 acres even though at present land identified is just over 1,900 acres. All such airport development cannot take place unless the government whole-heartedly

supports AAI’s ATM division.

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GLOBE TROTTING

Manna from the heaven IN ORDER to check attrition, Nepal Airlines Corporation (NAC) has decided to raise pilots’ allowances, bringing the total monthly salary and allowance up to around a whopping Rs 2,00,000. Presently, the pilots, on an average, draw salaries and allowances amounting to around Rs 80,000. The Himalayan Kingdom’s Ministry of Culture, Tourism and Civil Aviation (MoCTCA) had okayed the increase in salary. And this is not all. An NAC board director has revealed that when new aircraft will be added to the NAC’s fleet, giving pilots a chance to operate flights to the maximum extent, their salary may rise up to Rs 4,00,000. In the last six months, three senior captains of Boeing aircraft and three captains of Twin-Otter left the corporation due to lucrative salaries offered by foreign airlines. Most of the pilots quitting NAC jobs have joined Indian, including Blue Dart and First-Flight. Some have hopped to Chinese airlines. Now, around 55 pilots are working with the NAC, of which nine fly in the domestic sector.

iPods for five dollars FOR MONTHS, giant airlines, such as Continental, Delta and United, have been talking about offering iPod seat connections. Volaris, a Mexican low-cost carrier, simply went ahead, stepping on the toes of the giants, and purchased a bunch of iPods and started renting them out to passengers, initially free of any charge. The airline plans to rent the 30 GB iconic music and video device to passengers for 50 pesos per flight. The MP3 players are packed with Mexican TV shows and popular music, but the airline plans to load on US sitcoms and other music genres. The iPods are not integrated into seatback video screens, like the US carriers are planning, but have the advantage of being available now.

Russian planes to fly dry

RECENTLY, A flight from Moscow to Bangkok was reportedly delayed for around 10 hours after quite a few inebriated passengers smoked cigarettes on the plane and then became involved in a confrontation with the cabin crew. Although the offenders were removed, bag and baggage, from the flight, what was worse was that the cockpit crew, too, had to be replaced because of rules governing the amount of time pilots can spend on planes.

The Russian police say it is a common occurrence in the airports and passengers are drunk even before departure, with some getting sick during the flight. Casual drinking is widespread in Russia, where alcoholism is a major problem, and drinking during and before flights is a common practice.

Considering all this, the authorities are considering banning alcohol on the flights, but it is not yet clear whether the potential ban would include beer. Further, an alcohol ban in airports has not been proposed.

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A toddler’s tale ANA MIELE, a two-year-old girl, ran away from her parents at Nuremberg Airport, in Germany, sneaked into a plane bound for Egypt, took a seat and strapped herself in like an obedient child.

Even the hostess did not suspect that the naughty Ana was travelling alone. Ana’s adventure came to an end when her parents, about to board their flight to Tunisia, noticed her missing and raised a hue and cry. When a search of the airport failed to reveal Ana, air traffic control sent an alert to pilots to locate the child. A short while later, an air hostess on the Egypt-bound flight reported that the two-year old had taken a seat on her plane. The airplane, which was about to take-off, had to abort its start and Ana was returned to her parents.

Stuttgart woos India THE SEVENTH most important airport in Germany is gunning for direct international flights from India in a bid to boost its commercial and tourism ties with the country. Representatives of the Airport met with officials of Jet Airways and Kingfisher Airlines for initiating dialogue for starting direct flights to Stuttgart by 2008. While Stuttgart receives flights from 35 countries worldwide, India could be the first Asian country to operate direct flights to the German city if the negotiations fructify. It could also well be one of Kingfisher’s first targets once it starts its now imminent international operations, as the current restriction of five years of operation is likely to be amended. The possibility of convenient onward connection to the US could further boost traffic.

The future travellers FUTURE TRAVELLER TRIBES 2020, a joint study conducted by Henley Centre Headlight Vision (HCHLV), a global futures consultancy, and Amadeus, a technology solutions provider to the travel industry, was developed following significant research and input from travel, airline and technology experts to identify the types of persons travelling in the future.

As per the report, the four traveller tribes that are expected to emerge in the next 10-15 years are Global executives, Cosmopolitan commuters, Active seniors and Global clans.

Global Executives: These are the elite business travellers that want a private-jet type experience, and are expected to emerge predominantly from emerging economic markets such as Brazil, Russia, India and China, which will see significant growth in the next decade.

Cosmopolitan Commuters: The travellers belonging to this tribe are those that live in one city, but work in another and will use air travel to commute.

Active Seniors: These are the wealthy, healthy, older travellers, aged between 50 and 75, and who will travel for cultural and leisure pursuits, driven by a growing ageing population.

Global Clans: people that will increasingly use air travel to visit globally dispersed extended family members that will increase due to the explosion of global migration.

Fooling hijacker, the French way THE AIR MAURITANIA flight had taken off from Nouakchott, the capital of Mauritania, when a lone man pulled out two pistols and demanded it fly to France. The crew tried to convince the hijacker about how far the plane could fly, and in the process discovered that the gunman did not speak French. Quickly thinking on his feet, the pilot used the aircraft’s public address system to warn passengers in French of a plan to thwart the hijacking. As the Boeing 737 landed in Canary Islands, Spain, the pilot slammed on the brakes then quickly accelerated, knocking the gunman down. Flight attendants then threw boiling water in his face and about ten people pounced on him. He was arrested by Spanish police, which had then boarded the plane to arrest the would-be hijacker.

About 20 passengers were slightly injured by the rough land ing. The plane landed at its original destination.

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COVER STORY

GROUND HANDLING

A POLICY WAIT TO BE NOTIFIED

The new ground handling po p from the Union Cabinet but th is yet to notify it. There are, in i need to be sorted out before day, reports R. Krishnan.

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TING

g policy received its approval ut the Ministry of Civil Aviation e, in fact, many anomalies that ore the policy sees the light of

T

HE Union Cabinet, on February 1, 2007, approved the new ground handling policy that was in the making since the UPA government assumed office in May 2004. According to a bland press announcement, the new policy seeks to have three players in each of the six metro airports to provide ground-handling services. The three players include the airport operator, the combine of state-owned airlines Air India and Indian with a respective JV partner, and a third player chosen by tender but again a JV. Continued on Page 28

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North Block’s ‘No’ to Dnata B

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Dnata and SATS for security clearance by ministry of home affairs. It may be recalled that the previous NDA government decided to restrict ground handling job to SPVs floated by Indian, Air India and AAI in which they could co-opt minority foreign participation provided the latter had expertise in ground handling. But in doing that the NDA government barred the participation by Dubai-based Dnata, claiming that it could be a security risk to allow a Photos : Courtesy Emirates

EFORE the Union Cabinet approved in early February 2007 the new ground handling policy, valiant efforts were made by several people to get Dnata, the Dubai-based groundhandling agency, also a member of the group that operates equally well-known international carrier, into a working relationship with the state-owned airlines: Air India and Indian. Their logic was that Dnata was a top-class ground-handling entity and the previous NDA government had blackballed it unnecessarily. As usual, civil aviation minister Praful Patel had an “open mind” on the issue.

The job was for providing ground support in the upcoming Shamsabad airport, or what is popularly known as the Hyderabad International Airport Limited, being developed by GMR. As reported in the December 2006 issue of Cruising Heights, the GMR-eveloped HIAL had in its bid documents made it mandatory for the bidder to have joint venture partners–an Indian carrier should choose a foreign non-airline partner and a foreign airline a non-airline Indian partner. As a consequence, Indian, which bid separately from Air India, was told to get a foreign partner well versed in ground-handling business.

Accordingly, Indian was forced to invite bids and the bidders included Dnata besides Singapore Airport Terminal Services (SATS). It may be mentioned here that SATS had already got into a JV agreement with Air India for providing ground support in the upcoming Bangalore International Airport Limited (BIAL). There was clearly powerful behind-the-scene lobbying evident in Air India being prevailed upon to keep out SATS. Were the same forces keen on the Indian tie-up with Dnata?

However, as SATS had also bid besides Dnata, the authorities concerned decided to play it by the ear and referred the cases of both SATS and Dnata to the ministry of home affairs for security clearance. What indeed seemed strange was SATS had already been cleared from security angle when it tied up with Air India.

Even as the security deal was taking place, the ministry of civil aviation advised Air India and Indian to form a single venture in which the chosen foreign ground handler would become a 49 per cent equity partner.

The tamasha began now. The ministry of civil aviation referred the bids of both

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company that also had Pakistani links in Indian airports. The NDA government, while approving its variant of the ground-

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handling policy in mid-2003, shut the doors on self-handling by even Jet and Sahara, leading to huge protest. But without changing its cabinet decision, the NDA government allowed status quo to continue in regard to self-handling by Jet and Sahara. (see Main Story).

Cut to January 2007. About two weeks before the new ground-handling policy was approved by the UPA’s Union Cabinet, the ministry of civil aviation had received a communication from the ministry of home affairs rejecting its request for security clearance for Dnata. Of course, the ministry of civil aviation may argue that it did not seek security clearance specifically for Dnata but for all bidders, including SATS, which had responded to Indian’s

(Left) Dnata’s ground handling and (above) two views of Dubai airport tender for partnership in ground-handling business. But what is not explicable is the decision to refer even SATS to ministry of home affairs when it had been security cleared just a few months earlier when the SATS JV with Air India for providing ground-handling services in BIAL was approved.

Anyway when the reference was made, the ministry of home affairs, in its traditional investigative style, had no problem in clearing the case of SATS, but grounded the ground-handling proposal of Dnata. The ministry of civil aviation was accordingly apprised and which, in turn, told Air India and Indian to combine their bids and opt for SATS as the foreign JV partner with expertise in ground handling.

In a communication to Air India dated January 15, 2007, the under secretary of the ministry of civil aviation Sushila Anant noted,”I am directed to write to Air India's letter GS/30-01-143/357 dated 14-11-2006 on GHIAL (GMR Hyderabad International Airport Limited) Ground Handling and to say the Ministry of Home Affairs has informed that it has “No Objection”to AI CRUISING HEIGHTS March 2007

/IA forming consortium JV agreement with Mess SATS of Singapore provided the controlling shareholding remains with AI/IA. The Ministry of Home Affairs has, however, not recommended inclusion of Dnata of Dubai due to its dubious past track record."

In a way even with the change in government (from NDA to UPA), the ministry of home affairs has not changed its view on Dnata, notwithstanding its new backers in the UPA. The very inclusion of Dnata and the immense pressure on state-owned airlines to forcibly marry partners not of their choice despite being shown or termed as mere response to open bids invited by them seems to be seriously suspicious. "Two years back we had a solid JV ready with SATS for our ground-handling business.

The ministry sat on the files for two years and now we are going back to the same agreement with Air India on board. Is there any answerability? Shouldn't someone be held responsible for all this?” asked one senior Indian (Airlines) official.

Praful Patel, who has often said he loathes delay in project implementation, should take a hard look at this case. Where

was the file held up for two years?

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Nearly six weeks have elapsed since the ground-handling policy got its seal of approval from the Cabinet, but for some strange reason, the ministry of civil aviation has so far failed to notify it. It is understood there is considerable dilemma in Rajiv Gandhi Bhawan, for once the policy is notified, it will strike hard at many airlines, as they cannot continue their traditional selfhandling.

A draft note on the subject states the following:�In pursuance of this objective following entities will be eligible to offer Ground Handling at metro airports in Delhi, Mumbai, Chennai, Kolkata, Hyderabad and Bangalore. (While Bangalore International Airport Limited has already chosen two consortiums, comprising Air India-SATS and another led by Ground Global, which is a subsidiary of Lufthansa, Hyderabad International Airport Limited recently okayed Air India-Indian combine JV with SATS. The proposal for shortlisting ground handling agents for Delhi and Mumbai are awaited, while the modernisation and upgradation of Chennai and Kolkata airports are awaited). The entities include: i) Respective airport operators (AAI or other operators, as the case may be) themselves or their JVs. ii) Subsidiary companies or national carriers, i.e. AI /IA, or their JV specialised in Ground Handling services.

Third party handling will also be per-

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The ground handling policy approved by the Union Cabinet is two-pronged: one for the six metro airports and another for nonmetros. But who actually takes the cake is the bounty that it provides to the private sector airport operator.

CRUISING HEIGHTS March 2007

mitted to these subsidiaries or their JVs on the basis of revenue sharing with airport operators subject to satisfactory observance of performance standards as may be mutually acceptable to the airport operator and these companies. iii) Any other Ground Handling service provider selected through competitive bidding on revenue sharing basis by airport operator subject to security clearance by Government of India and observance of performance standards as may be laid down by the airport operator. iv) Self-handling at the international airports by foreign airlines having minimum 14 services per week to and from that airport.�

It will be ensured that at all metro airports, there will be a minimum of two authorised ground-handling service providers in addition to subsidiaries of Air India and Indian. At other airports, in addition to the entities mentioned above, selfhandling will also be permitted to the airlines.

Essentially the policy approved by the Union Cabinet is two-pronged: one for the six metro airports and another for non-metros. But who actually takes the cake is the bounty that it provides to the private sector airport operator. For instance, of the six

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The players and their partners

metros, four have already been handed over to private consortiums. Chennai and Kolkata are also expected to fall in line shortly. Thus 90 to 95 per cent of India’s aviation business from airports’ standpoint would have been farmed out to private companies, including foreign, with AAI/state agencies owning 13 per cent each or a maximum of 26 per cent.

What it would also mean is that foreign airlines will now have to go in for one of the three unless they are doing two flights a day at the very minimum out of any Indian city.

And even if they were, would it make sense for them to have their own set up in one city and rely on others in another town in the same country?

This is also completely changing the complexion of the game as far as several private operators are concerned. Kingfisher, for example, is believed to be seriously mulling the prospects of doing its own ground handling at the non-metro airports and gradually moving to its own JV or seeking a long-term partner to handle its flights in the six major metros. It is at present in an agreement with Indian (Airlines) and has often said that the rates are ‘too high’. This is a complaint that even Spicejet and others have made about costs for ground handling at Indian airports. There are many who believe that the competition will drive down prices rather than pushing them up.

According to those in the know, the

Swissport has formed a 51/49 joint venture with the Punj Lloyd Group.

Globe Ground India, New Delhi, is a joint venture between Lufthansa Airlines and The Bird Group.

Jet Airport Services Private Limited, owned by Jet Airways, Mumbai, has reportedly entered into an MoU with ASIG.The Partnership is looking at servicing the entire Saarc region.

Aviation India, New Delhi, has entered into an MoU with Groundforce, Portugal, for opportunities in the groundhandling business.

Global Aviation, Mumbai, has tied up with Worldwide Flight Services for a joint venture. It had earlier signed an MoU with Apron Services, South Africa. The company is already working for Air India at Thiruvananthapuram and Kolkata airports and has a strong workforce.

Livewel Aviation, Mumbai, a large airport services manpower provider, has tied up with Aviapartner.

Menzies Aviation, UK, have a joint venture in place with the Bobba Group, of Bangalore.

The Bobba Group is a Lufthansa Cargo GSA for India.

Celebi, Turkey, has tied up with the Spencers Group (an RPG enterprise) to enter the ground-handling business.

Among the others who are examining their options are: Jeena

& Company, Mumbai–a freight forwarder in business for over 100 years.

Kingfisher, presently serviced

by Indian nationwide, is looking at options to spin off the business separately.

Cambata Aviation.

The Interglobe Group, which has also promoted IndiGo, is also looking at the options of a separate entity for ground handling.

CRUISING HEIGHTS March 2007

metro airport operator concerned, which will also be allowed to set up its own ground-handling business in its airport, will also lay down the minimum revenue share payable to it by successful bidders to carry out their business in that particular airport. The general perception is that the airport operator is looking at an astonishing 33 per cent share of gross revenue.

For example, if Air France pays 1,000 dollars for a flight, AAI or GMR/GVK may get 300 dollars depending on who is operating the airport and the balance 700 dollars will go to the JV actually providing the ground-handling services. Of this 700 dollars the combine, say, of AI/IA should get 51 per cent and the foreign JV partner, say, SATS 49 per cent depending upon the kind of equity structure that has been created to formalise the JV. Since huge costs are also incurred in providing these services, the two members of the JV will actually get to share much less as profits than the operator of the airport, which will not only get a 33 per cent share of the gross revenue of this money (before tax) as a sleeping member but also make more by virtue of running another ground-handling agency that is conferred on it as a birthright stemming from its airport operator status.

Revenue share or concession fee is charged worldwide. One may argue that the operator also pays a huge revenue share to the government that is part of the deal when it won the bid for modernising and upgrading the Delhi and Mumbai airports and also for setting up new airports in Shamsabad and Bangalore. While that is one side of the coin, there is another side to it as well: the operator also gets a huge chunk of land and other facilities at a throwaway price. GMR often touts the fact that he will be spending Rs 10,000 crore in Delhi in the coming years. What he fails to add is that land worth over Rs 50,000 crore is in his possession, besides huge scope for creating new revenue earning facilities for 60 years. In contrast, the ground-handling concessionaire gets nothing to ‘develop’. There is no mouthwatering real estate to convert into malls and driving ranges and hotels. There is no duty-free area to milk.

In fact, there is nothing. For instance, in HIAL at Shamsabad, one of the winning ground-handling bidders, Swissport, has offered a revenue share of 33 per cent, which is likely to become the benchmark in that airport for other successful bidder: Air India/Indian-SATS JV. What will happen in the non-metro airports? Perhaps, we will know only when AAI is actually allowed freedom to take its own decision. One only hopes that the precedent will not be the benchmark for future decisions-give the dog a bad name and shoot it. AAI was given a bad name for not doing anything even as the successive governments made it a point to oppress and suppress it. Should that happen, we need to rephrase the new policy from Ground

Handling to handling of other sorts.

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Chidambaram’s eloquent

silence P

CHIDAMBARAM’s eloquent silence on the issue of withholding tax on leased aircraft and aircraft engines has sent shockwaves in the aviation community. As per the last year’s Budget, the Finance Minister exempted from payment 10 per cent withholding tax on leased aircraft, which was available till March 31, 2007. Thus one expected it would be again extended in the Budget for 2007-08. But Chidambaram did not make any mention of it in either his speech or the Finance Bill, thus conveying clearly that he did not wish to continue the exemption beyond March 31, 2007.

V. Thulasidas, chairman and managing director of Air India, but speaking in his capacity as the chairman of the Federation of Indian Airlines, said if the exemptions were not available it would lead to significant increase in the fleet acquisition cost of airlines from India. This will be at a time when the aviation industry was witnessing a boom period and where demand was outstripping supply.

Thulasidas expressed hope that the finance minister would include the exemption provision in the Finance Bill later at the discussion stage.

While we don't have the exact tally of how many aircraft are being bought outright and how many on lease either directly or through the sale-andlease-back route, the numbers can be big enough to create a big hole in the budgets of even budget carriers.

In fiscal 2006-07, many private airlines, like Jet, Deccan and Spice, had followed the sale-and-lease-back route, which got them some premium on the aircraft they had booked earlier when demand was just surging. But, as the levy of withholding tax was to take effect only prospectively, these airlines, including state-owned carriers

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Air India and Indian, which have big lease liabilities on, currently escaped the tax.

If the finance minister refuses to budge, then there will be no escape from paying the tax. However, the tax to be paid on leased aircraft will depend on where the company or the special purpose vehicle (SPV) is located to sign the lease deed. To minimise the tax outgo, the way out is to look for that country with which India has a double taxation avoidance agreement. And as per such agreement, India cannot charge a tax rate that is higher than the maximum

marginal tax rate charged in that country where the SPV is located. Everyone wants to locate a joint venture company or a special purpose vehicle in Ireland as its double taxation avoidance agreement with India allows for a maximum withholding tax of only five per cent. This is based on the logic that withholding tax cannot be more than the maximum tax rate of the signatory country. Double taxation treaties also take precedence over any other agreement.

An economic survey, presented to Parliament a day before the Union Budget for 2007-08 was presented on February 28, noted that up to December 2006, Ministry of Civil Aviation had issued no objection certificate for import/acquisition of 42 aircraft for scheduled operators and 62 aircraft for non-scheduled operators besides 31 aircraft for private operators. Besides this, inprinciple approval for 135 aircraft was also granted to scheduled operators.

In the airline business, leased aircraft often arrive first, which are then replaced by owned aircraft. This happened with the initial and most Airbus A319s of Indian and Boeing 737-800s as it happened with the Airbus A320s of Deccan, Go, etc., as it did with Boeing 737 NGs (next generation) of Jet, Spice, etc. Obviously, these airlines would want to recover the cost of lease charge or owned aircraft so that they can pay the installment to the lessor or manufacturer, respectively.

Should the FM not relent, it is quite possible that airlines may even think of some fare hike under some new name akin to the congestion surcharge in the name of congestion on all flights notwithstanding the congestion affecting only DelhiMumbai flights and vice versa. But this time it’s the whole industry that is likely to face a severe bout of congestion!

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Small is good

M. Thiagarajan

THE BEST NEWS was reserved for operators using smaller aircraft. The FM, in his Budget speech, said, “Finally there is a small matter that has large beneficial consequences. In 2001, aviation turbine fuel (ATF) sold to turbo-prop aircraft was included in the list of declared goods under Section 14 of the CST act.

Turbo-prop aircraft have been replaced by new generation small aircraft that have taken air services to smaller airports and to the remote parts of the country. Hence I propose to amend the provision to cover all small aircraft with maximum take-off mass of less than 40,000 kilograms operated by scheduled airlines.” Obviously, charter operators, who by their very nature are not scheduled airlines, will not be able to gain even if they want to promote tourism. Perhaps little more clarity from finance ministry is required on this. The announcement of the FM has made Air Sahara and Paramount Airways very happy, who will now be able to procure ATF at a uniform four per cent sales tax rate. According to Paramount Airways’ managing director, M. Thiagarajan, his airline could save up to Rs 60 crore to Rs 70 crore annually on regional routes. According to Air Sahara president Alok Sharma his airline will save Rs 25 crore to Rs 30 crore annually.

Changi dreams SINGAPORE’S Changi Airports International has entered into a strategic alliance with Tata group to pursue airport projects in India. Both sides have signed an MoU to invest in, develop and manage Indian airports and the joint venture will bid for modernisation of Chennai and Kolkata as also compete for similar projects in non-metro airports. Changi’s vice-president, Ng Tim Peng, who was in Delhi to attend a seminar on airports, told newsmen that Tata would hold 51 per cent stake in the JV company and Changi would own the balance.

What is strange is the love-hate relationship Changi has been having with India. In the process it first hurt Tata in 1990s when it walked out of a Tata-led consortium that was to bid for the Bangalore International Airport Limited. This certainly angered Tata boss Ratan Tata. Later Singapore Airlines (SIA) teamed up with Tata to bid for Air India. Again this time SIA walked out leaving Tata high and dry. Later Changi tied up with Bhartis and bid for the modernisation of Delhi and Mumbai airports. But when the bid-related clarifications were issued and which put the onus of technical excellence and performance on the foreign partner along with the lead Indian partner, Changi simply walked out.

Despite Bharti beseeching it to stay put, Changi decided to walk out stating that Indian rules were unfair to the foreign partners. It was rather strange that no other big-time foreign player walked out and when indeed they had to it was because their consortium did not win the bid. With four of the six metro air-

ports already out of bidding, as they have been won by others (Delhi and Hyderabad by GMR, Mumbai by GVK and Bangalore by Siemens consortium), it leaves only Chennai and Kolkata for modernisation by private developers.

Anyone familiar with Tamil Nadu politics will tell you that it will be an uphill task for Tata to get over the political hump of DMK in Tamil Nadu. As for Changi, we do not know what will it do if the bid conditions that governed the tender for Delhi and Mumbai airports remain the same. Will it walk out this time as well stating it is not fair to foreigners?

By the way, poor Tata and Changi also do not know that they have no chance of getting any slice of business (it may be true for other bidders as well) in non-metro airports as both aeronautical and non-aeronautical development of 35 non-metro airports may be entrusted to AAI and rightly so. Already civil aviation minister Praful Patel is under pressure from the Left, without whose support the UPA government cannot survive even for a day.

The Left has made it clear that none will be allowed to stymie the efforts of AAI and it will be AAI that will modernise the existing Kolkata airport. The Left is, however, not averse to private sector developing the Greenfield airport in Kolkata. As for Tata itself, it will not want to repeat its bitter political experience of Tata Motors kind in Singur. After the Singur small-car project would Tata want another battle knowing polit bureau’s line of ‘No’ to anyone other than AAI for upgrading and modernising Kolkata airport?

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Houston via Dubai

DUBAI-BASED Emirates Airlines, which presently has a network connecting 87 cities of the world, is opening a second gateway to the US by the end of 2007 by launching services to Houston, in Texas. Emirates will operate non-stop Dubai-Houston service three times a week. According to Emirates’ chairman and CEO, Sheikh Ahmed bin Saeed AlMaktoum, the airline was convinced of a strong and growing Sheikh Ahmed bin Saeed demand for air connections Al-Maktoum between the US and cities in the Middle East and India. Houston will be the fourth destination Emirates will connect in 2007, the others being Venice (Italy), Newscastle (England) and Sao Paulo (Brazil). The announcement by Emirates’ boss is certainly weighty. In the past, the airline sucked off passengers from India and ferried them to Aus-

tralia via Dubai by offers that were even lower if a passenger booked a ticket for a direct flight between only Dubai-Sydney, instead of, say, from the Indian subcontinent to Dubai and then to Sydney. The decision to connect Dubai and Houston is based on similar thoughts.

Of course there is nothing wrong in a free market, but it will certainly and seriously impact the plans of Air India that proposes to use its Boeing 777-200 LRs for non-stop India-US flights and later on induct the Dreamliner Boeing 787. Interestingly, even Jet Airways is planning to connect at least four US cities that include New York and San Francisco. However, everyone knows there is a huge concentration of ethnic Indians in New York, San Francisco, Houston, Dallas and even Chicago. The advantage for Emirates is it has daily flights from Dubai to Delhi, Mumbai, Chennai, Bangalore, Hyderabad, Kochi and Thiruvananthapuram. Neither Air India nor Jet has got that kind of spread. Perhaps the Praful Patels of India think that a merged Air India and Indian can provide to themselves (merged entity) what Emirates can get on its own. Mind you, this is only the beginning of the competition.

Taxing Richie Rich IF WHAT finance minister did not say is creating problems, then what he said in the Budget comes as good news to some. Chidambaram, in his Budget speech, said the import of aircraft, including helicopters by government and scheduled airlines, is at present exempt from all duties. And that position will continue.

However, there is no reason to allow the exemption to other private importers. ‘‘Hence I propose to levy an import duty of three per cent, which is the WTO bound rate on all private import of aircraft, including helicopters. Such import will also attract countervailing duty and additional customs duty.”

What this means is India Inc will now have to pay more for the jets it wants to import. We have Vijay Mallya, who is crisscrossing the national and international borders in his Airbus Corporate Jet (ACJ), which is an Airbus A319. So is Mukesh Ambani, who also has this state-of-the-art business version of the A320 family. Should he now want to import one more for personal purpose he will have to pay more. With big India Inc members spreading their retail network across the country, it is only a

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question of time before they start inducting sizeable fleet of jet aircraft. It is rumoured that Mukesh Ambani’s Reliance Retail is likely to buy either MD-11s or Boeing 737-800s (freighter variety or a combi) and not one but at least eight to ten. Will the new levy be applicable to Reliance since it will, all said and done, be a private import? Or will the levy be withdrawn next year, by when its aircraft begin to arrive, irrespective of whether it then decides to buy Boeing, MDs or Airbus. If one goes by the aircraft market, while A320s are available even for lease, it is not so with other variants like A319 or A321. As for acquiring it on ownership, at least Boeing 737 NG’s minimum waiting period, in case you decide to book one today, is three years.

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Body scanner images too revealing THE Central Industrial Security Force (CISF), which is in charge of security of India’s airports, has decided to not use the state-of-theart X-ray body scanners it bought for security checks at airports due to concerns they violate passengers’ privacy. These machines use advanced X-ray technology to draw a skeletal image of a human body and are considered to be a foolproof measure as they can detect explosives or weapons even if they are hidden under the skin. But the move was abandoned as “we found the images were too revealing,” an official said, adding, “Using the machine would have become very sensitive here considering the hue and cry it has raised in the UK and the US.” Last month, Sky Harbor International Airport, in Phoenix, USA, became the country’s first to begin testing the controversial new federal screening system that takes Xrays of passenger’s bodies in an effort to find concealed explosives and other weapons. It can see through people’s clothes and show the body’s contours with blushinducing clarity. Critics have said the high-resolution images created by the ‘backscatter’ technology are too invasive. But the Transportation Security Administration adjusted the equipment to make the image look something like a line drawing, while still detecting concealed weapons. Passengers selected for screening by the device are asked to stand in front of the closet-size X-ray unit with the palms of their hands facing out.

Then they must turn around for a second screening from behind. The procedure takes about a minute.

Currently in a trial period of 90 days, the machine is being used only as a backup screening measure. Passengers who fail the standard screening with a metal detector will be able to choose between the new device or a pat-down search.

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Problems plague Mumbai COMMENTING on Mumbai airport’s expansion plans, which are yet to take off, civil aviation minister Praful Patel has admitted that Mumbai is facing ‘problems’ and that the state government is yet to iron them out. A GVK official has admitted that the group could not give any timeframe for building a new runway in Mumbai, because as per international guidelines, parallel runways need to be 1,100-metre apart, and even after all encroachments in the airport area are cleared, they would need to acquire private land to have that gap. Moreover, the approach funnel for the new runway also has some obstructions like the big headquarters of a big company.

Expansion spree in AP THE Airports Authority of India and the Andhra Pradesh state government have entered into an agreement for expansion of Vijayawada, Rajahmundry and Tirupati airports. At Vijaywada, a new terminal building to handle 300 passengers would be constructed, the runway would be strengthened and extended to 7,500 feet to facilitate the landing of Airbus 320/321 and other wide-bodied aircraft, and a Doppler Very High Frequency Omni Range (DVOR) navigation aid would be provided.

Rajahmundry would get a new terminal building to handle 150 passengers (the present capacity is a mere 10), night-landing facility and DVOR. In the case of Tirupati airport, Dr. Y.S.R. Reddy the chief minister asked the AAI to furnish the land requirement. The AAI suggested that a business model with a budget hotel for pilgrims within the premises of the airport could be worked out so as to meet the cost.

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Bridge-cumrunway in Kullu THE AAI is planning to extend, by a kilometre, the 1,450-metre-long runway at

Kullu so that bigger aircraft, such as Airbus, can land. Presently, only ATRs or smaller planes can land there. In Kullu, planes have to land from one side only in the morning as later in the day this area gets strong tail winds. Therefore, there is no option other than extending the runway towards the river. Although the technology for such engineering feats exists already, it is for the first time that it is being carried out in India. A team from IIT Roorkee is looking at the technical aspects of the project.

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More bays for Chennai INCREASE in domestic, international and cargo traffic has necessitated that the Airports Authority of India add 14 more aircraft parking bays at the Chennai airport. The space has already been identified and construction will begin in April.

The new bays would accommodate more A320 aircraft, while a separate parking area would be available for smaller jets.

Online security system for five airports

GHIAL picks majority in Credence

GOOD news is in the air for domestic passengers flying out of Kolkata, Chennai, Ahmedabad, Srinagar and Kozhikode.

Come September, they would not need to stand in long queues to get their bags Xrayed before airlines accept them for check-in. AAI has placed orders for online security systems and these would be installed at the airports at a cost of Rs 40 crore. In a first for the country, passengers at these airports can straightaway take the bags to airline counters and then they would be screened by a single agency, thereby reducing chances of pilferage from bags. Only in case of some suspicious object being detected in a bag, the passenger would be called for opening them and checking. The existing security system, in which bags are first X-rayed and then remain with unfrisked passengers, has one big flaw as anything could be kept in the numerous zipper pockets after the securityclear tag has been put on the bags.

GMR Hyderabad International Airport Ltd (GHIAL) has acquired 51 per cent stake in Credence Cargo Pvt Ltd, and the remaining is held by Menzies Aviation Plc of the UK. Menzies will handle Credence Cargo’s dayto-day operations. GHIAL had entered into a contract agreement with Menzies in May 2006 to develop cargo terminal on a plot of 3.5 acres at the new international airport at an estimated cost of Rs 50 crore.

AAI officials get institute AAI chairman K. Ramalingam recently inaugurated an institute for the officers of AAI at Meenambakkam, in Chennai. The institute will help provide them relaxation facility and thus reduce the stress faced by the officials due to increased workload. A similar institute is functioning in New Delhi and is quite popular with the employees.

DIAL M for Mickey DELHI INTERNATIONAL AIRPORT LIMITED (DIAL) has overhauled the dingy, cramped surroundings of the Childcare Room in Terminal 1-A to make the kids’ wait comfy comfy. Floors have been polished and walls have been painted. A new washbasin with a marble counter-top has been installed. Big cut-outs of Donald Duck and Mickey Mouse and a cupboard full of toys have been provided to keep the tots amused.

There is a cot and a high chair for children and a sofa for mothers waiting for their flight. It is expected that the cheery ambience will make the wait more bearable. Offering parents as well as children some privacy, the room is just one more step to providing basic services to passengers.

Runway in the ocean in Lakshadweep THE AAI is planning to extend the small runway, presently catering to 18-seat Dorniers, at Agatti island by merging it with Kalpati island, located about 400 metres away. The idea is to prevent seawater from entering the stretch between the two islands, which would then be filled and the runway extended from the current 1,204 metres to 1,600 metres. The expanded runway would be able to accommodate ATRs that can seat 48 to 68 people.

A team from IIT Chennai is looking at technical aspects of the project. Since both Agatti and Kalpati are coral islands, environmental clearance would also be required. Bigger airstrip would encourage more airlines to go to Lakshadweep.

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Courtesy: Lufthansa

AIR CARGO INFRASTRUCTURE

Cargo terrorism

ARE WE READY?

Globally air cargo accounts for 40 per cent of world trade by value, or $2 trillion.

A delay, due to security measures, of only five per cent will add at least $100 billion to shippers’ inventories. But air cargo security is something that cannot be avoided, reports Tirthankar Ghosh.

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W

E live in a dangerous world and nowhere is it more apparent than the world of aviation.

In fact, airline passenger safety often makes news – as it should – but the truth is that it is only part of the bigger story about transportation security in a post-9/11 world. The less spoken about topic that is potentially a ticking time bomb and could cause greater harm for more people is cargo terrorism.

Only about five per cent of the approximately 16 million cargo containers arriving by land, sea and air each year in the USA is inspected thoroughly by the

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The business of air forwarding is built upon the guarantee to provide safe transportation of goods. Without a high priority on security, the ability to execute these goals is compromised.

American authorities. If that is so, many industry experts believe that this lax security has left the United States wide open to another terrorist attack, which could be as catastrophic as 9/11. Researches done by experts have even gone on to predict that the next terrorist attack would occur through the supply chain and imported freight containers would be the likely targets.

Is the Indian cargo sector ready to adapt to the new security regimes that is being enforced through the world?

First, a look at history. Following 9/11, the US administration passed the Aviation Security Act (ASA). With that it

has become mandatory for freighter carriers to go through a system that screens and inspects goods on the aircraft. The law is strict: US forwarders could even lose their licences for security violations.

The Air Cargo Security Act has given the teeth to the Transportation Security Administration (TSA) to set in place air cargo screening and ‘known-shipper’ programmes.

The business of air forwarding is built upon the guarantee to provide safe transportation of goods in a timely manner.

Without a high priority on security, the ability to execute those goals is compromised, according to freight forwarders in India, and that harms customers as well as the businesses.

The industry believes that ‘screening’, according to the TSA, embodies a riskbased approach in that it relies on threat assessment rather than ‘inspection’. But there is a difficulty: air cargo has no one set size, shape or content, which means it cannot and should not be treated with a ‘one size fits all’ security strategy.

Cargo on passenger planes ranges from heavy automotive and assembly line parts to perishable goods such as seafood and flowers, sensitive high-tech goods like microchips and extremely delicate goods including medical supplies, transplant organs and blood to replenish blood banks. Additionally, the variation in size and presentation of cargo goods, be it boxes, containers or shrink-wrapped pallets does not easily translate into a single technology portal as baggage does.

There is also concern about the threeyear effective date to screen all cargo on passenger planes. The TSA has repeatedly stated that this would bottleneck just-intime cargo; slowing down the flow of CRUISING HEIGHTS March 2007

these goods.

The call to screen all cargo on passenger planes has come with a hefty price tag: at the beginning of February this year, the American Congress found that the aviation security provisions would cost $13.1 billion from 2007 to 2012. To top it all, inspection of all cargo would cost the federal government and airlines over $3.6 billion dollars over ten years.

Even before the ASA was passed, many air carriers started to refashion their cockpit doors making them grenadeproof. Apparently, these doors cost more than $50,000 each. While this security measure is hefty in terms of cost, what is perhaps, more important is the ripple effect of the ASA is huge. American Customs, for example, is believed to have proposed that information about every air cargo shipment be supplied to it 12 hours before take-off for regular cargo and eight hours for express. This is akin to the 24hour notification rule introduced for sea freight.

Security is essentially a global need because many supply-chains by their very nature are international. Avoidable restrictions would harm air trade. It is imperative that caution be exercised to ensure that security barriers do not in any way become trade barriers.

What does all this mean to Indian freight forwarders? According to the Air Cargo Agents Association of India (ACAAI), the recognised trade body representing airfreight forwarders in the country, the TSA’s regulation has certainly started having its effect. To begin with, the security clearances for the employees, Xray screening and the whole gamut of security procedures has increased costs for freight forwarders.

Screening and security measures, at least for the United States, could not be avoided since the volume of air cargo from India was sizeable. While top freight forwarders would have no problem in cushioning the cost of the mandatory security requirements, others who have put the necessary measures into effect are going through huge expenses. These expenses amounting to Rs 4-5 lakh include 24-hour surveillance in warehouses, higher walls and sniffer dogs to detect explosives.

It is not merely the USA that has put cargo security as top priority. In fact, the UK, too, is planning to introduce a similar cargo security regime. Chalked out by the UK Home Office’s Counter-Terrorism and Intelligence Directorate, the regime would require consignment and transport data to be submitted to authorities before the arrival of any cargo in the UK. These

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Facts about the TSA THE Transportation Security Administration (TSA) was formed following the September 11, 2001 attacks. The agency is a component of the Department of Homeland Security and is responsible for security of the nation’s transportation systems. With its state, local and regional partners, the TSA oversees security for the highways, railroads, buses, mass transit systems, ports and the 450-odd US airports. It employs approximately 50,000 people.

TSA, in a recent directive to the airlines, has tightened the requirements for the screening of air cargo on passenger airline flights, but has stopped far short of screening all cargo for explosives. This directive applied to cargo that was shipped by freight forwarders on passenger airline flights. It followed a directive issued some time ago that required screening for all ‘‘counter-tocounter” air cargo – packages checked at airline ticket counters by individuals for shipment aboard passenger flights.

With TSA’s new air cargo regulation, TSA would be doing 1,00,000 more background checks, specifically on cargo

measures are similar to the US requirement for all container carriers and would most probably be brought into effect by April 2007.

Once again, freight forwarders have

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employees.

The rule required more robust checks and more visibility on the shipping companies and their employees. Additionally, the TSA has extended security areas at the airport to include air cargo areas.

As for air cargo, the TSA-certified explosives detection canine teams usually are put to work. Within the airport environment, the TSA uses explosives detection canine teams to search aircraft, cargo, vehicles, terminals, warehouses and luggage. Currently, there are 425 explosive detection canine teams working at more than 75 airports around the USA, conducting random screening of cargo and surveillance of cargo facilities.

(Top) A security dog being trained to guard cargo in the United States and (below) closed-cricuit TV cameras keep strict watch on the cargo within the airport perimeter.

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reacted sharply to the UK law and the European Shippers Council (ESC) recently went on record to say that the new security plan – that would require details regarding every consignment entering and leaving the UK to be supplied to police – would cause major bottlenecks at ports. However, the Act would not make much of a difference to trade between the UK and India.

Meanwhile, the International Air Transport Association (IATA) has been working to formulate a plan of action to bring about paperless cargo. That would not only simplify the process of security but also smoother the air cargo supply chain. Although cargo has until the end of 2010 to achieve its objective, the IATA cargo board headed by Aleksander Popovich has made significant progress in freeing their processes from paper in air cargo by the end of 2007.

IATA Secretary General Giovanni Bisignani sometime ago aptly put how important e-freight would be in aviation.

He pointed out that the aviation sector, basically air cargo, was sinking in a sea of paperwork. “E-freight is a big challenge,” he said. Unlike e-ticketing, it was not entirely within the IATA’s control. Blaming the governments concerned for the inaction, he said, that not a single government had all the legislation in place to support efreight.

According to Popovich, the air cargo industry could fill 39 Boeing 747 freighters each year with paper wasted on documentation. In 33 years, the average time for an air cargo shipment has been reduced only from 6.5 days to 6 days. Paperless cargo processing, then could save the industry $1.2 billion each year and reduce shipping

time by at least 25 per cent.

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WORLD CARGO NEWS Emirates SkyCargo addresses industry challenges at WACE’07 THE recent World Air Cargo Event (WACE) provided a platform for industry heavyweight Emirates SkyCargo to provide insights on the issue of technological challenges facing players in the air freight industry. “The fact is, if air cargo does not adapt, face the changes and embrace technology, it will be left out in the cold,” forecasted Ram Menen, Emirates Divisional Senior Vice President, Cargo.

“Information technology is as core to our business as airplanes, trucks and ships. To keep up with the best levels of customer care and ensure supply chain efficiencies, industry cannot afford to overlook the importance that technology has on its business,” he added.

Menen outlined the necessity for industry to move quickly on ushering in technological updates in order to maximise its benefit from the IATA e-freight initiative.The initiative was developed to improve productivity and reduce costs while speeding up the movement of cargo from production to consumption.

The Emirates SkyCargo stand was again a popular stop for trade visitors and industry players. The stand, which featured information on the award-winning carrier’s extensive range of products and solutions, also provided access to www.skycar-

go.com through on-site computer terminals, enabling visitors and customers to view and transact business online.

Prakash Nair, Emirates Manager Network Cargo Sales Development, said, “At last year’s WACE event, Emirates SkyCargo welcomed an estimated 2,000 visitors from 62 countries to our stand. In its second year, the event has indeed gained momentum. It has been another tremendous success for us.”

The World Air Cargo Event: Dubai was organised under the patronage of H.H. Sheikh Ahmed bin Saeed AlMaktoum, President Dubai Department of Civil Aviation.

BAX’s new logistics facility at O’Hare BAX GLOBAL has opened a new logistics facility at Chicago O’Hare International Airport. The 14-acre ‘BAX Chicago World Freight Campus’ covers 2,28,003 sq ft. It is US customs bonded and complies with Technology Asset Protection Association (TAPA) standards. The logistics campus provides expanded import and export operations, including industrial cooling featuring temperature alarm and remote monitoring devices for temperature-sensitive cargo. According to Bernhard Kleine, Chicago area director for BAX Global, the new center is one of the largest in the United States.

Libyan Arab Airlines is Mercartor’s 50th customer LIBYA’S flag carrier, Libyan Arab Airlines, has signed up for the RAPID revenue accounting system offered by Mercator, the airline IT solutions provider of the Emirates Group. The contract marks a landmark in Mercator’s history, boosting its user family to 50 major airline and aviation organisations.

RAPID will be used at Libyan Arab Airlines to meet its passenger revenue accounting requirements. It will analyse the data on over one million of its used air ticket coupons, giving senior airline managers a stream of incisive, business critical financial and management information.

From left to right: Rashid Al Khayat, Manager Regional Libyan Arab AirAccounts & Sales, Mercator, signs the contract with Ali M. lines and Mercator Saleh, Libyan Arab Airlines’ Financial Director teams will start the implementation in Tripoli shortly, and the airline will soon be able to enjoy the benefits.

RAPID will realise their revenues quickly and accurately, reduce revenue accounting costs, maximise productivity and enhance commercial confidence and competitiveness.

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Ram Menen, Emirates Divisional Senior Vice President, Cargo, welcomes Jamal Al Hai, Director Strategy and Management for the Dubai Department of Civil Aviation and member of the Federal National Council, to the Emirates SkyCargo stand at the WACE 2007 conference.

Cargo security is big business AN Australian company – SecureGlobe Pty Ltd – has shown its interest to provide security to air cargo facilities in India. Apparently, the airport sector alone could bring in business worth between $10 million and $20 million.

Secure-Globe is into selling of perimeter security, or boundary fencing.

This is more cost-effective than the conventional microwave security system that is generally used by many airports.

The perimeter security concept is unique and easy to use and causes no harm to human beings or grazing animals in the surroundings.

The installation process is very simple: aluminium zinc-coated frames come with wires, stainless steel springs and UV resistors. The frames, also called poles, are installed at strategic locations and electricity ranging from 12 to 9,000 volts (adjustable) is passed on to the installation. These poles can also be connected to hidden cameras through a centralised monitoring hub.

The airport authorities can easily thwart any attacks by miscreants that come from across the boundary. The perimeter fencing is less expensive and could cost about $0.5-mn to cover a small airport of around 3-km in size.

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SriLankan Cargo sets new record for freight handling at BIA SRILANKAN CARGO set a new record for handling of freight at Colombo’s Bandaranaike International Airport in 2006 with a total of 1,67,289 metric tonnes, an increase of 4.48 per cent over the previous calendar year.

Nalin Rodrigo, Head of SriLankan Cargo, pointed out that the success was due to the expanded network throughout the Indian subcontinent, coupled with promotional activities to increase awareness and confidence in customers in the SriLankan Cargo brand.

Total volumes handled by SriLankan Cargo at BIA have increased steadily from 1,02,497 tonnes in 2001, to 1,13,891 tonnes in 2002, 1,24,522 tonnes in 2003, 1,46,883 tonnes in 2004, and 1,60,118 tonnes in 2005. SriLankan Cargo itself carried more than half of the total freight handled in 2006, while other airlines carried the rest.

SriLankan Cargo has positioned Colombo as the “Hub in the Ocean” linking the fastgrowing Indian economy with the rest of the world, both for exports and imports. In fact, the carrier is the largest foreign carrier into India, with 94 flights to 10 Indian cities flying on a daily or more frequent basis to each of them except for Goa, where services were launched just last year.

In addition to these flights with Airbus A320 and A330 aircraft, SriLankan Cargo also operates dedicated freighter services to several Indian cities and the Maldives, using an Antonov AN12F freighter.

Quality certificate for IGI’s cargo terminal CLOSE on the heels of the foundation stone laying ceremony, the Delhi International Airport Limited (DIAL) was awarded the ISO 9001:2000 quality certificate for its International Cargo Terminal. The certificate, awarded by the Lloyd’s Register, was recognition of the efforts put in by DIAL to improve customer service, quality control and efficiency. The company achieved this landmark within a span of seven months after taking over charge of the airport.

Air cargo traffic has been growing at a very fast pace in the country and the Delhi airport presently handles more than 0.4 million tonnes of cargo per annum. The figure is expected to grow to 1.27 million tonnes by 2020 and touch 2.0 million tonnes by 2025.

DIAL has chalked out an ambitious plan to modernise Delhi Airport to help it cater to the growing cargo and passenger traffic. The Master Plan for the modernisation envisions the construction of a brand new cargo complex as well as a new integrated passenger terminal.

The present air cargo terminal is spread over 27 acres of land and operates a common user infrastructure facility for storage and processing of international air cargo.

DHL looks to India for growth RESTRUCTURING and consolidation is the name of the game and DHL is playing it with panache, considering the fact that the whole express industry will see a growth rate of 17 per cent.

In focus is India in particular and the South Asia region in general.

The restructuring process was recently announced by Scott Price, CEO– Asia Pacific, DHL Express. He pointed out that world trade flows had grown to over $9 trillion in recent years.

This was especially reflected in the increasing trade to, from and intra-Asia. International Express volumes in Asia Pacific were expected to grow up to twice the rate of total worldwide air cargo. These factors had led to growing challenges for the logistics service providers. There was a demand for national and international coverage, short lead-time, efficient warehouse management, advanced IT systems and value added services.

India, said Price, was complex in terms of geography and infrastructure. That is why DHL had gone in for a restructuring.

The logistics major had redrawn territories and created a new region within the Asia Pacific business circle. To be called the South Asia area, the region, which would encompass India, Sri Lanka, Pakistan, Nepal, Maldives, Bangladesh and Bhutan, would be headquartered in Mumbai.

To take care of the new region, DHL had appointed former

Scott Price, CEO–Asia Pacific, DHL Express (second from left) addressing a press conference to announce the restructuring within DHL. On his left is Malcom Monteiro, the newlyappointed Senior Vice President and Area Director of the South Asia region.

Blue Dart Managing Director Malcolm Monteiro as Senior Vice President and Area Director. While he would also be a member of DHL Express’ Asia Pacific Management Board, Monteiro would also oversee the operations of Blue Dart Express, in which DHL has a majority stake, and Blue Dart Aviation.

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NATIONAL It’s non-stop to Kochi

Air Deccan going places

NATIONAL CARRIER Indian is offering a second flight between Delhi and Kochi—a non-stop one in both directions, reducing the flight time from five hours to just three.

The A319 flight IC 465/466 will operate on Wednesdays, Fridays and Sundays from Delhi and Kochi. This is in addition to the existing daily morning A320 flight IC 165/166 on the DelhiKochi sector via Mumbai. The airline is offering an introductory one-way fare of Rs 3,000 (taxes and levies extra) besides the other fares like Unchecked Fares and Spot Fares already available.

New flights: The airline has announced the launch of flights connecting Delhi to Udaipur and Jodhpur, in Rajasthan. Bookings are on for the flights scheduled to begin operations from 1st April 2007.

Financial results: The airline has declared that it has posted a turnover of Rs 637 crore and a net profit of Rs 9.64 crore for the second quarter ended December 2006. Deccan Aviation’s financial year period is from July to June. The composite yields recorded a 9.55 per cent growth in the last quarter despite a 15 per cent increase in seat capacity over Q1. The Q2 net profit was recorded at Rs 9.64 crore, as compared with a loss of Rs 42.94 crore in the first quarter.

Partners with ATR: On the occasion of the Aero India Airshow 2007, ATR and Air Deccan announced the opening of a new joint training centre in Bangalore in order to prepare future pilots for the ATR fleet of the airline. The centre counts a Full Flight Trainer (FFT), the latest generation of flight simulators, developed jointly by ATR and Canada-based Mechtronix.

Migrates to Radixx: The airline has recently migrated to Radixx Reservation System. Previously the Air Deccan booking engine was being powered by Inter Globe Technologies. The airline advises passengers to contact its helpline, at 39008888, and choose option 8 on the IVR (city code to be prefixed if dialling from a mobile phone) in case they face any problems.

Indian, CFM sign MoU INDIAN AND CFM International have signed an MoU proposing to establish a joint-venture MRO facility in India for CFM56 engines. CFM International is a 50/50 joint company between Snecma (SAFRAN Group) and General Electric Company.

India and Tanzania amend agreement AFTER A round of bilateral air services talk, the Air Services Agreement between India and Tanzania, which first came into being on 29th September 1982, last ratified on 9th March 1984, both the countries have agreed to modernise the existing agreement by amending the necessary provisions. The new amendments have the potential to spur greater trade, investment, tourism and cultural exchanges between the two countries, besides bringing it in tune with developments in international civil aviation.

Canadian companies join hands with Cubex WINNIPEG AVIATION and Red River College, of Winnipeg, Manitoba, Canada, together with Mumbai-based Cubex India Pvt Limited, have signed an MoU that formalises their agreement to meet India’s burgeoning demand in the aviation sector. So far, forty pilots from India have been trained at Winnipeg Aviation and at Harvs Air, and have received their CPLs.

Kingfisher engages Sabre KINGFISHER AIRLINES has engaged Sabre Airline Solutions to provide a full suite of more than 20 enterprise applications to enhance its guest processing functions. The airline is also leveraging other technology from Sabre Airline Solutions to help analyse the market and determine the best approaches to maximise revenue, including Sabre AirMax Revenue Manager, the Quasar passenger revenue accounting system and the Sabre Loyalty Suite. To optimise operations, Kingfisher Airlines is also leveraging the Sabre AirOps Flight Operations Suite and the Sabre Rocade Crew Management System.

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CAE mulls training centre in Bangalore CAE has announced it will establish its first Indian aviation training centre in Bangalore, which will be located close to the Bangalore International Airport at Devanahalli. The centre, to be open by the end of this year, will train up to 1,000 pilots annually when fully operational.

The initial plan involves an investment of approximately $20 million and would likely include the participation of a partner. The centre will be part of the CAE-Airbus cooperation and will initially offer pilot, cabin crew and maintenance training as well as flight operations support on the Airbus A320 and the Boeing 737.

Jet introduces mobile ticketing JET AIRWAYS and Hutch have come together and introduced JetWallet. This service is available to Hutch customers with GPRS-enabled phones, who are also Jet Privilege members. With this facility, Jet Privilege members can book, pay and generate e-tickets on their phones. The mobile ticketing solution has been developed by C-Sam Inc. USA, founded by Sam Pitroda.

GoAir appoints new CCO THE AIRLINE has announced the appointment of Birender Ahluwalia as its new Chief Commercial Officer. He will look after network planning, pricing, revenue management, aircraft scheduling, distribution and pricing in addition to sales and marketing functions.

Mobissimo to include private jets MOBISSIMO, INC., a travel search engine, and BusinessJet Class, a marketing and automated distribution system for private charter jets, have announced that consumers will now be able to search for discounted private jet rates directly on Mobissimo.com. Mobissimo.com is the first travel search engine to search and display private charter jet rates. BusinessJet Class had launched, early January, a direct-to-consumer version of its travel agent website at PrivateJetSpecialist.com.

Bell lauds United’s safety BELL HELICOPTER, a Textron Inc. company, at an award ceremony during the Aero India air show, recognised the outstanding safety record of United Helicharters Pvt Ltd. During the past 11 years, United Helicharters has logged more than 40,000 hours of flight flying Bell helicopters in India while maintaining the highest safety record by achieving a zero accident rate.

HCC orders second Bell/Agusta BA609 Tiltrotor HINDUSTAN CONSTRUCTION CO. LTD. (HCC) has ordered a second BA609 tiltrotor aircraft. The BA609 is a joint aircraft programme between Bell Helicopter and AgustaWestland, of Italy. The BA609 tilt-rotor aircraft can take-off like a helicopter, then transition during flight into airplane mode giving it the capability to fly at speeds up to two times as fast as a conventional helicopter’s. HCC is the first Indian company to order a BA609.

Air Arabia connects Ahmedabad to the Middle East AIR ARABIA LLC has announced flights to Ahmedabad from 3rd April 2007, and with this launch, Air Arabia will now connect seven Indian stations to the Gulf—Ahmedabad, Mumbai, Nagpur, Jaipur, Kochi, Chennai and Thiruvananthapuram.

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At the inauguration of the expansion at the Burgess Hill training centre: Nic Anderson, Managing Director, Nicholas Soames, MP, and Jeff Roberts, Group President, Innovation and Civil Training & Services

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INTERNATIONAL CAPA launches data bank CENTRE for Asia Pacific Aviation (CAPA) has launched CAPA DATA monthly airline traffic database that covers data from over 100 full-service and low-cost carriers worldwide. The PDF analysis report compiles data from a number of sources, including the International Air Transport Association, the Association of Asia Pacific Airlines, the Association of European Airlines, the Air Transport Association (US), the European Low Fares Airlines Association, various Departments of Transportation, as well as Airports Council International and various airport operators.

Releasing figures on Boeing vs Airbus Annual Aircraft Orders: 200106, CAPA informs Airbus has 2,533 outstanding orders, and Boeing around 2,434, and production lines for many models are essentially sold out for the next two to three years.

Releasing figures on Annual Aircraft Deliveries: 2001-07, Boeing’s backlog rose 40 per cent by the end of 2006 to a record $174 billion, or more than six times current annual commercial aircraft revenues. The 2007 deliveries should be neck-and-neck, while Boeing forecasts deliveries in 2008 to rise to between 515 and 520 (and are essentially sold out), while deliveries in 2009 are expected to be “higher” still. Airbus has not disclosed 2008 and 2009 delivery targets. Airbus delivered more aircraft in 2006 than ever before (434 aircraft—slightly above the original target of 430) and continues its production ramp-up of the A320 range from 30 aircraft per month reached at the end of 2006, to 32 in early 2007, rising to 34 in early 2008 and to 36 at around the end of 2008.

CAPA notes Singapore Airlines posted a strong quarterly increase in net profit, helped by record revenues, which rose +6.7 per cent in the three months ended 31-Dec-06. But if the one-off gains from the sale of its share in Singapore Aircraft Leasing Enterprise are excluded, SIA’s net earnings would have fallen 1.4 per cent, due to higher fuel and staff costs, as well as sluggish performances by SATS and Virgin Atlantic (the latter due to changes in international accounting standards).

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Continental shares profits with employees HOUSTON-BASED Continental Airlines distributed $111 million in profit sharing to employees on Valentine’s Day, February. 14, the highest ever paid by any US carrier this year and the highest profit sharing distribution in Continental’s history. The carrier recorded net income of $343 million in 2006. This marks the first Continental profit sharing payment since the payment for the 2000 results.

Boeing signs MoU with L&T THE BOEING COMPANY recently signed an MoU with Larsen & Toubro Limited (L&T) for the joint exploration of business opportunities in India’s defence sector. The signing ceremony took place at the Aero India Aerospace Show in Bangalore. While offering defence products to India, Boeing’s business strategy aims to transform product sales into a springboard for private and public industrial partnerships.

Marhaba enters India AFTER SRI LANKA and Pakistan, Marhaba Services, Dnata’s airport passenger services unit at Dubai International Airport, is gearing up to boost its presence in the Indian Subcontinent with plans to market all Marhaba Services in India. Dnata has teamed up with Kuoni Travel Group, India, to sell Marhaba’s passenger-assistance services in India.

Etihad unveils summer plans THE NATIONAL AIRLINE of the United Arab Emirates is to increase its flying programme this summer by 18 per cent. The carrier has announced that non-stop flights from Abu Dhabi will take off this month for the first time to Sydney; Dublin will be added to the airline’s network in August and flights will begin in September to Milan’s Malpensa airport.

Etihad’s summer flying programme will be boosted with additional 40 weekly flights added to its current schedule from Abu Dhabi to the Indian Subcontinent (six extra), the Middle East and GCC (15 extra), Europe (five extra), the Far East (eight extra) and Africa (six extra), bringing its total to 258 services a week. Four new three-class Airbus A330 jets and two new three-class Airbus A340-600 aircraft will join the airline’s fleet throughout the summer months to cope with demand.

Meanwhile, Etihad has moved to a new office at Mumbai.

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Miles go a long way

SriLankan Airline’s Regional Manager Middle East, Africa and CIS, Mohamed Fazeel exchanging agreements with Saudi Arabian Airline’s Vice President Marketing Planning.

SriLankan touches Jeddah BEGINNING this 27th, SriLankan Airlines will make Saudi Arabia’s Jeddah its 51st global destination. The new city will be serviced by twice-weekly flights. The airline has signed a code-share agreement with Saudi Arabian Airlines for this purpose. Jeddah is SriLankan Airlines’ third destination in Saudi Arabia and the ninth in the airline’s Middle East route network.

Lufthansa gets new chef ZHANG JIN JIE, or JinR as she is known, the owner and chef of Green T. House in Beijing, has joined hands with Lufthansa to create a gourmet cuisine for the airline’s first and business class passengers.

Without any formal training or experience, she had begun to experiment when her chef had deserted her unexpectedly in 1997. JinR combines classic Chinese cuisine with Western influences.

Lufthansa is encouraging its passengers, who collect bonus miles with the airline’s “Miles & More” to use them for a good cause and help people in need or support the protection of the environment. More than 25 million miles were already donated in the first few months since the start of the programme in November 2006.

As a result, it has been possible to provide medical care for over 12,000 children in India and more than 500 children in Latin America were able to remain with their own families, thanks to a special family sponsorship programme of the SOS Social Centres. Further, 5,37,000 square metres of rainforest in Pantanal, in Brazil, could be protected.

KLM and Northwest awarded THE Association of Strategic Alliance Professionals (ASAP) recently named KLM Royal Dutch Airlines and Northwest Airlines transatlantic joint venture as recipient of its global 2007 ASAP Individual Alliance Excellence Award. The award is given to companies that have achieved dramatic success in their alliances and alliance programmes. Recipients of the Individual Alliance Excellence Award are judged by the ASAP Awards Committee, consisting of leading academics, analysts, thought leaders and consultants who have extensive experience with and insight into strategic alliances.

BA acquires four more A320s BRITISH AIRWAYS has placed a firm order for four more A320 aircraft, thereby bringing the total number of Airbus aircraft in operation in the British Airways fleet to 66, with 14 on firm order.

The aircraft will have 156 seats in a two-class configuration and will be powered by International Aero Engines V2527-A5.

MAS woos Indian travellers MALAYSIA AIRLINES (MAS), the national carrier of Malaysia, is offering lucrative discounts to woo Indian travellers–Purchase one business class ticket and avail an attractive wavier of 80 per cent on next business ticket to Kuala Lumpur and Singapore. The offer is valid for travel till 31st March 2007, effectively from the carrier’s gateways of Delhi, Chennai, Bangalore and Hyderabad.

Malaysia Airlines operates 27 weekly flights out of five gateways in India. The airline operates daily flights from New Delhi, Mumbai and Chennai and thrice weekly flights from Bangalore and Hyderabad.

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TRAVEL & TOURISM Humayun’s Tomb safe THE Delhi government has clarified that the construction of a Link Road connecting NH-24 by-pass to Lodhi Road will not cause any damage to Humayun’s Tomb and some of the other nationally important monuments in that area. The Archaeological Survey of India examined in detail the proposal of the Delhi government for constructing the Link Road and, after joint inspection by a team consisting of the Director General, Archaeological Survey of India, and officers of Delhi Administration, noted that it has examined the project from the point of its impact on the historic monuments and is satisfied that construction of the underground road does not, in any way, violate any of the statutory provisions of the Ancient Monuments and Archaeological Sites and Remains Act, 1958 and that it will not affect the structural stability or conservation of the monuments protected by the Survey. On the other hand, an underground passage would help to reduce the impact of automobile exhaust resulting from the heavy vehicular traffic on the Mathura Road and around Subz Burj. The clearance of the project by Archaeological Survey of India is subject to a number of conditions.

Twentieth Garden Tourism Festival DELHI TOURISM, Incredible India and Govt. of Delhi recently organised the Twentieth Garden Tourism Festival in the Garden of Five Senses in the Capital. Inaugurated by chief minister Sheila Dikshit, the theme of the festival this year was Topiary in Garden Designing—the art of training and clipping shrubs into ornamented figures, which is an ancient art of the country. The garden festival made an attempt to revive this forgotten skill. Apart from the topiary formations, more than 15,000 plants—potted, foliage, cut flowers, medicinal plants—were on display. Haryana Urban Development Authority (HUDA) won this year’s first prize in the theme section. Participants included New Delhi Municipal Corporation (NDMC), Municipal Corporation of Delhi (MCD), Central Public Works Department (CPWD), Delhi Jal Board (DJB), All India Kitchen Garden Association, Delhi Dahlia Society, NOIDA and Greater NOIDA Industrial Development Authority.

view of the increase in total bilateral trade between India and Thailand expanding at a rate of 29 per cent in fiscal 2005-06 compared with the previous year, Thailand desired to enhance and build up its association with the Indian trade associations, travel trade and Indian companies.

India signs CEPs with Italy, France and Russia IN separate instances, India has signed Cultural Exchange Programmes (CEPs) of cultural cooperation for the years 2007-2009 with Italy, France and Russia. The CEPs, collectively, envisage cooperation in education, arts and visual events, archives, libraries and publishing, cooperation in the fields of restoration, preservation and protection of cultural heritage, information, radio and tel-

New Park hotel in Navi Mumbai THE Park Hotels recently launched its new hotel in Navi Mumbai, which is the group’s sixth hotel. Located in CBD Belapur, the 80room hotel caters to both business and pleasure. The interiors mix traditional Indian patterns and textures with clean lines and modern shapes, bringing together East and West and fusing technology with local crafts.

Other facilities include Dusk, the bar; Zest, the all-hours restaurant; Bamboo, the yet-to-open Chinese speciality restaurant; Aqua, poolside space; The Rosewood Hall, banqueting space; and The Terrace. The hotel has been designed in conjunction with Project Orange, UK. The project has been managed and executed by Apeejay Projects.

Thailand woos India THE Thailand Convention & Exhibition Bureau (TCEB), the official organisation for the promotion of association and corporate meetings, incentive events, conventions and exhibitions (MICE) in Thailand, recently announced its drive to promote Thailand as an international exhibition centre for specific high potential industries in India.

Kajit Habanananda, Director General, TCEB, stated that in

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evision cooperation and cooperation in tourism and youth affairs and sports, exchanging folklore, musical, theatre, ballet, circus groups and individual performers for participation in tours, festivals, etc.

Flemish minister meets Ambika Soni

World Heritage Committee chairman meets Soni THE Chairman of the World Heritage Committee, Tumu te Heuheu, recently met Ambika Soni, and during their half-hour meeting, Soni thanked the World Heritage Committee for its decision to delete Hampi from the list of World Heritage Properties in danger. She conveyed to Heuheu that India is implementing the recommendation made at the time of deletion of the site from the list of World Heritage’s in danger. These include finalisation of the site management and master plans, relocation of the Interpretation Centre, modifying the designs of the bridge across the river Tungabhadra, strengthening of the Hampi World Heritage Area Management Authority, etc. She further informed her guest that recently a UNESCO mission visited India in this connection and expressed its satisfaction at the measures taken by the state party.

Soni also requested Heuheu to consider deletion of Manas Wildlife Sanctuary from the list of World Heritage Properties in Danger in view of the improved situation at Manas and restoration of normalcy in the sanctuary.

Singapore minister visits Soni THE Minister of Trade and Industry, Singapore, S. Ishwaran, called on the Minister of Tourism & Culture, Ambika Soni, recently and during their 40-minute meeting, they discussed the relevance of the Buddhist Circuit for the ASEAN region since all ASEAN countries have a stake in this circuit. The guest mentioned that he would urge the Singapore airlines to fly to Gaya and Varanasi to facilitate flow of Buddhist tourists from the ASEAN region, and Singapore could serve as a hub in this context. The Indian side would, in course of time, identify suitable packages in order to attract tourists from the region. Both the ministers discussed about the importance of reviving the glory of Nalanda. In the context of the 2550th anniversary of Buddha Mahaparinirvana, Soni briefed the visiting dignitary on various programmes being organised to commemorate the event.

Early bird discounts from the Taj TAJ has lined up some exciting offers this summer. Available at exotic leisure destinations, the offer entitles stay between April 15 and June 15, 2007.

The attractive rates are available at Jaimahal Palace, Jaipur, Taj Harimahal, Jodhpur, Rawalkot, Jaisalmer, Taj-View, Agra, Usha Kiran Palace, Gwalior, Taj Garden Retreat, Madurai, Taj Malabar, Cochin, Taj Garden Retreat, Kumarakom or Taj Green Cove Resort, Kovalam. There are also offers in Goa at the Taj Exotica, Fort Aguada Beach Resort and Taj Holiday Village. For guests who dream of international destinations, the summer holiday discounts can be had at the Taj Exotica, Bentota, Sri Lanka, Taj Samudra Colombo, Taj Coral Reef Resort, Maldives and Rebak Island Langkawi Resort, Malaysia.

GEERT BOURGEOIS, Flemish (a region in Belgium) Minister for Foreign Affairs, Media & Tourism, recently met Tourism & Culture Minister Ambika Soni, and during their 40-minute talk, both the leaders felt that the interaction will help in promoting tourism and related activities in each other’s country. Soni briefed her guest that, with a view to attract investment in tourism sector, the Indian government has declared the hotel and tourism related industry as a high priority industry for foreign investment and it is now eligible for approval of direct investment up to 100 per cent. The visiting leader said they would explore possibilities of opening an office in India to promote tourism. He also assured that, in view of the proposed direct flight from New Delhi to Brussels by an Indian private airline, package tours to India will be encouraged.

Korea thrills KIM IL JUNG, Deputy Director, Bangkok office, Korea Tourism Organisation, in a bid to woo Indians, states that the Indian tourism industry is witnessing an unprecedented growth, and the leisure segment is growing at a phenomenal rate. The latest initiative is directed towards tapping the leisure segment. Therefore, instead of travelling to the US, tourists can visit Korea, and enjoy the Korean theme parks—Everland Amusement Park and Lotte World Amusement Park. He adds that zooming ahead of the world-class amusement parks, like Epcot, Disney MGM and Disney’s Animal Kingdom, Korea’s theme park Everland is the fifth most popular theme park in the world. Moreover, the park celebrates its 30th anniversary this year, and special events are lined up to commemorate the year, which include nighttime parades and animal-themed safari tours among others.

Everland sprawls across 3,700 acres and consists of three theme parks: Festival World, Caribbean Bay and the Speedway.

Festival World has 40 theme attractions as well as a zoo, plus seasonal festivals. Caribbean Bay has both indoor and outdoor water sports facilities, and Speedway offers racing courses.

Sarovar and ICICI tie-up ICICI Bank and Sarovar Hotels recently joined hands to launch the ICICI Bank-Sarovar Hotels co-branded credit card. The card offers discounts on room tariffs and food & beverage bills at all Sarovar Hotels. The Multiple Reward Points scheme enables a customer to earn four reward points for every Rs 100 spent at Sarovar hotels, resorts and restaurants. A customer can also avail of a night’s free stay for a couple at any Sarovar Hotels on incurring a spend of Rs 10,000 on the card.

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Going bonkers in the

sky!

T

he tabloids in Britain call it ‘bonking’. Ask Liz Hurley and she'll tell you how she nearly bonked Arun Nayar at 35,000 feet over the Atlantic, while indignant BA first classers called in the air hostess to put some sense into them. The Mail on Sunday left nothing to the imagination in its report: ‘‘Liz Hurley is well known for her public displays of affection for her new love Arun Nayar. But the lingering goodnight kiss and close embrace she gave him at 35,000 feet went a little too far. As Hurley and Arun caressed each other in the first class cabin of a London-bound British Airways jumbo jet, concerned passengers and crew feared the movie star and her boyfriend were about to join the exclusive mile-high club.’’

More recently it was the Qantas stewardess Lisa Robertson who claimed an amorous encounter with Ralph Fiennes on a flight to Mumbai from Darwin. Lisa, according to British tabloids, who salivates at the mention of sex in the stratosphere, told friends she was a big fan of the British actor’s and found herself luring him to the cubicle. As one publication saucily put it: ‘‘Sex on an aeroplane–after the seatbelt lights are off, naturally–makes good reading for fans of blockbuster romance novels,

but for some it is more than just a fantasy.’’

Among the self-confessed members of the mile-high club are Janet Jackson and Richard Branson Airlines, by and large, maintain a discreet silence about the mile-high club, but one airlines celebrates “shagging’’in the sky: a Virgin Atlantic Airways billboard features the perpetually horny Austin Powers straddling the fuselage of a jumbo jet. The caption reads: Virgin Shaglantic ... Yeah, baby. And Richard Branson said, “We’re not the type of airline that bangs on bathroom doors.’’ The airline said their lavatories are “larger than on other airlines’’, prompting one acerbic newspaper to comment that Virgin may soon develop a reputation for having lavatory queues that are longer than on any other airline.

A BA spokeswoman, reacting to the Liz-Arun episode, said, “We’re delighted to see that British Airways’ spacious flat beds in first class are being put to good use. It is a welcome example of how our unique flat beds offer not only great comfort, but room enough for two.”

Now what do you say

to that?

Thumbs up! Richard Branson (in the centre) exults at the inauguration of Virgin's Mumbai-London flight; and (left, from top) Actor Ralph Fiennes, Qantas' Lisa Robertson, Arun Nayar and actress Elizabeth Hurley

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