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TURBULENCE HITS AIR DECCAN EXPRESS SECTOR BOOMS

May 2007

Rs 60

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EDITOR-IN-CHIEF’S NOTE

Waxing eloquent

HEN IT comes to waxing eloquent, there are few who can match the marketers from Airbus. Airbus’ chief operating officer (customers), John J. Leahy, who was recently in India with the gargantuan A380 as part of Kingfisher Airways’ second anniversary celebrations, is no different. Leahy chose a perfect selling point by highlighting A380’s capability to carry 850 people on board in an alleconomy configuration, which is one hundred passengers more than what the Rajdhani Express carries. No wonder so many Indian carriers, like Air India, Jet Airways and Air Deccan, are bee lining at his door, showing keen interest in acquiring the A380, claimed Leahy. “Capt Gopinath was on the flight from Toulouse and he showed interest in operating the aircraft in India in an all-economy configuration. Capt Gopinath is convinced that Air Deccan can offer fares that are lower than what are charged by the Rajdhani Express trains if it operates the A380 aircraft,” Leahy delightfully told select journalists. But right now, no Indian carrier, other than Kingfisher, has shown interest in buying the aircraft. Well, they are not alone—the plane has only 156 orders, and no American, Chinese or Russian carrier has placed an order either. Amongst those who have ordered the aircraft are the likes of Emirates, Etihad, Singapore Airlines and Qantas. While the first two are simply ‘pack em, bring em and pack em back’ hub-and-spoke models that use Abu Dhabi and Dubai to bring in planeful of travellers from the subcontinent to onward destinations, Singapore has positioned itself as the Number One hub for Southeast Asia and could profitably use the aircraft on its longhaul routes. The same holds true for Qantas, which has several long-haul routes that could be profitable with the A380. But where does it make sense in the Indian context when the yield is going down, the load factors are hovering around the 75 per cent mark and each airline is bleeding deep into the red? The same Mr (or is it Dr?) Mallya, who is the Airbus pin-up boy in the subcontinent, was moaning sometime back that once he could rack

CRUISING HEIGHTS May 2007

up the number of aircraft to have increased frequency and connectivity, he would give the Jets and the Air Deccans a run for their money. So when it is a question of more flights, more destinations and smaller aircraft for Kingfisher, how can it be any different for the votary of the common man, Captain Gopinath? Or is it that Gopi wanted to do the French manufacturers a ‘good turn’ by giving them a ‘good’ quote for having been so good to him over the years? China, which has a market bigger than India’s or, for that matter, even Russia, which has a huge travelling public, hasn’t ordered a single one of these aircraft. The Chinese are collaborating with Airbus on a large number of other issues, but when it comes to ordering aircraft, they have stuck to the A330s, 777s and the 787s. If domestic operations are as lucrative as train travel, then surely the Chinese should have ordered the A380 by the dozen. Just two months back, Airbus was left with an empty order book for the cargo version of the A380 after UPS cancelled its order for ten A380s. At that time, UPS said it decided to cancel after it learnt Airbus was diverting employees from the freighter programme to work on its passenger plane programme. The announcement by UPS came months after rival FedEx Corp also scrapped its 10-plane order and left Airbus with no orders for the super jumbo freighter. Perhaps that’s one reason for Leahy’s delightful pronouncement that Airbus has also blueprinted plans to convert the A380 into corporate jets for private users. The five demo aircraft, which have visited more than 40 airports globally, would be converted into corporate jets. Some of the value-added services that airlines plan to put in the aircraft include pubs, private showers, lounge, duty-free shopping space, casino and even mini suites. Well, they don’t have to worry about a launch customer. Can they get anyone better than Dr Vijay Mallya?

Off the cuff

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Tackling pollution Aviation industry predictions maintain that greenhouse gas emissions from aircraft will double by 2030 even if airlines invest in new fuel-efficient planes. Any savings in average emissions per flight will be eclipsed by the huge growth in air travel forecast for the next 20-odd years. British airlines, airports and aerospace manufacturers recently published a strategy for improving efficiency, which included an ambitious target for halving emissions per trip. The Sustainable Aviation group, which includes British Airways, Virgin Atlantic, Airbus UK and BAA, the airports’ operators, has been set up to lobby against environmental taxes on aviation. The group aims to introduce new aircraft by 2020 that will produce 50 per cent less carbon dioxide, the main greenhouse gas, than equivalent new aircraft did in 2000. Other targets include reducing nitrogen oxide by 80 per cent and noise by 50 per cent. The group admits that improvements in efficiency will not keep pace with the rising number of flights. Roger Wiltshire, the chairman of the group, said, “Growth in demand for air travel may well exceed growth in technology’s ability to offset emissions.” The Government estimates that the number of passengers will reach 470 million in 2030. Aircraft carbon dioxide emissions, even assuming that fuel efficiency targets are met, are predicted to increase to 18 million by 2030. The group admits that emissions of greenhouse gases at cruising altitude are far more damaging than emissions at ground level. Environmental groups say that the impact is three times greater. At this rate, a passenger on a return flight from London to New York would contribute twice as much to global warming as the average driver does in a year. The group pledged to cooperate with scientists in investigating the impact of emissions at altitude. It also gave a commitment to report each airline’s fleet fuel efficiency. This will expose those airlines that have failed to invest in new aircraft.

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contents

VIJAY MALLYA ON A SONG

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Love him or hate him, the Kingfisher chief cannot be ignored. Forever making waves — whether it is buying the latest aircraft, acquiring a stake in an LCC or just setting the trend for upmarket air carriers to follow — Indian aviation’s unpredictable and unfathomable man is simply unputdownable.

EXPRESS SECTOR BOOMS p34 PERSPECTIVE Express industry is booming along with the new boom in the economy. Driven by record industrial growth and high domestic consumption, it is set to touch the Rs 6,203 crore mark by the year 2008. Presently valued at Rs 4,000 crore, the express industry is growing at the rate of 25 per cent annually. CRUISING HEIGHTS May 2007

p10

Air Deccan seems to have been caught in the whirlpool of a serious fund crunch. It will be an uphill task for Captain Gopinath to bail his common man’s airline out of this crisis. Time is literally running out for him and unless he succeeds in wooing new investors, the airline runs the risk of going belly up.

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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

p16

NEWS DIGEST

MONAVAR ALAM Copy Editor

India’s first all-vegetarian airline has started commercial flights on the Delhi-Chandigarh route with an emphasis on three Cs. Jharkand air passengers have lost the freedom of choice after the Jet Airways’ takeover of Air Sahara. AAI is bent on taking the service tax issue to its logical end.

SUNIL BHASIN Editor (Quality)

SHIVANGI SHARMA Editorial Coordinator

INTERVIEW

SPECIAL REPORT

p31

Jet Airways is going places now and reaching out to explore new vistas of business. In a startling move, it has helped the Brussels Airport to realise its long-cherished dream of becoming the gateway to the world.

BACK PAGE

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Layout Artists

Tulsi Nowlakha Mirchandaney, senior vice-president, marketing & projects, Blue Dart Express Limited, feels that propelled by the present economic boom, the express industry has evolved from a primarily document-centric service to a critical supplychain support for many industries.

BHART BHARDWAJ

GLOBETROTTING p22

Published by K. Srinivasan 4C Pocket-IV, Mayur Vihar Phase 1, Delhi 110091 and printed by K. Srinivasan at Nutech Photolithographers, B-240, Okhla Industrial Area, phase-I, New Delhi 110 020 Vol 1 No 12

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Indian flight carriers have started a new war on the ground after facing tough times in the skies. They are fighting an ad war to prove who has changed most. It started with Jet Airways’ “We’ve changed” to Kingfisher’s “We made them change.” GoAir has the smartest cap in the end: “We’ve not changed. We're still the smartest way to fly.”

RUCHI SINHA PRADEEP JHA

Go globetrotting and have a gala time. Read how a humble mouse delayed a Vietnam Airlines’ flight to Tokyo for more than four hours.

CRUISING HEIGHTS May 2007

Art Director

H.C. TIWARI

Consulting Photographer

RAJIV SINGH

Gen. Manager (Admn.)

RENU MITTAL Executive Director

Editorial & Marketing office: Newsline Publications Pvt. Ltd. C-15, Sector-6, Noida-201301 Telfax.: +91-120-4257701-03 All information in CRUISING HEIGHTS is derived from sources we consider reliable.It is passed on to our readers without any responsibility on our part. Opinions/views expressed by third parties in abstract or in interviews are not necessarily shared by us. Material appearing in the magazine cannot be reproduced in whole or in part(s) without prior permission. The publisher assumes no responsibility for material lost or damaged in transit. The publisher reserves the right to refuse, withdraw or otherwise deal with all advertisements without explanation. All advertisements must comply with the Indian Advertisements Code. The publisher will not be liable for any loss caused by any delay in publication, error or failure of advertisement to appear.

Cover photo: H.C. Tiwari

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PERISCOPE

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“The airline (Air Sahara) was selling low fares and undercutting no-frills carriers despite having high costs. As Jet Airways will now be answerable to its shareholders, this could come to an end.” SpiceJet director AJAY SINGH on the Jet-Sahara deal.

LETTERS TO EDITOR

Hoping high “I don’t want to voice an opinion. I just want to say India should have a top world-class airline — an airline which should be able to take on the best.” Civil aviation minister PRAFUL PATEL on the new entity emerging from the merging of Indian Airlines and Air India.

Where is the money

THE COVER STORY Sky-High Entertainment (April 2007) made quite an interesting reading. In fact, the in-flight entertainment system of the A380 is quite a good one. I have heard of it from my friends,but I am yet to experience it personally. I appreciate the view of Neha Lidder Ganju, marketing manager (India), Virgin, that “We know that people don’t travel on a flight purely to see the in-flight entertainment, but we understand it does make a large difference to the entire flight experience.” Akbar Ali, New Delhi FOR LONG the Northeast region has been neglected, especially in the field of aviation. After reading thoroughly about the AAI’s activities in the region, I can now understand and appreciate the problems and constraints faced by the organisation. Keep up the good work. Nisha Mehra, Mumbai

THE ARTICLE From Radar to GAGAN (April 2007) was quite good and informative, but it left me desiring for more. As this is a prestigious project, I request you to publish a more detailed article for serious readers. Ashu Sharma, Delhi THE NEWS ITEM “Ghost Flights Raise Fury,” in the Globetrotting Section (April 2007) really made me furious as well. Here we are all concerned about the global warming issue as well and of methods to save fuel , and British Mediterranean Airways is flying planes without any passengers. Surely, there would be a way out of the situation for the airline. Ravinder Singh, Chandigarh

“Foreign low-cost carriers like Ryan Air and EasyJet generate a chunk of their revenues from allied services. A major part of their ancillary income comes from selling alcoholic beverages on the flight but in India, we can’t do that.”

SIDDHANTA SpiceJet CEO and chairman,S SHARMA on the need to boost revenue from non-ticketing sources.

“Some years ago we favoured privatisation of airports. But unfortunately the experience has proved to be fraught with very grave risks. This experience should act as a wake-up call for all governments that that they have a very tough regulator in place.”

Director General and CEO of International Air Transport Association (IATA), GIOVANNI BISIGNANI, in an interview at Singaopre.

Any one out there “The only two companies that have elaborate aircraft maintenance structure in the county are Air-India and Indian, so we are looking for foreign partners. We are in talks and a decision is expected before the groundbreaking ceremony (in July).” Boeing vice-president of sales for commercial airplanes DINESH KESKAR, on Boeing’s looking for a foreign firm to partner in its proposed MRO facility in India.

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

Didn’t work

CRUISING HEIGHTS May 2007

Straight talk “It makes no sense to be a hypocrite and remove the cess only to put it in basic fare.” Kingfisher CMD VIJAY MALLYA on Air Deccan’s withdrawing of congestion surcharge.

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Abacus records rise in e-ticketing levels

The 2006 industry hull-loss rate was 0.65 accidents per million flights for Western-built jets. IATA’s member airlines registered a hullloss rate of 0.48 accidents per million flights. There were 77 accidents in 2006, compared to 111 in 2005. Of these 77 accidents, 46 involved jet aircraft and 31 involved turbo-props. In Africa, despite improvements, the accident rate remains the second highest in the world at 4.31 accidents per million flights.

*International Air Transport Association (IATA) statistics

COLD

Accidents worldwide*

Abacus issued some 9.3 million e-tickets in 2006, reflecting a year-to-year increase of 94per cent from 2005. India and South Korea recorded a yearon-year growth of 106 per cent in March 2007. Thailand recorded 93 per cent and the Philippines recorded 80 per cent. India recorded a notable 5,624 per cent more e-tickets processed by Abacus in March 2007, than the corresponding month a year earlier. Malaysia recorded 62 per cent; Indonesia, 57 per cent; and Singapore recorded 29 per cent.

LOOKING GLASS

“Now, we all have double-deckers”

That’s the way “Namaste Bhaisahab, kaise hain aap? Why don’t we forget the past and make a fresh start.” Jet chief NARESH GOYAL, addressing Subroto Roy, Sahara Group Chief, to melt the ice for beginning the Jet-Sahara deal.

Ha, ha “Jet just shot itself in the foot. It’s like getting married to a girl because you’ve lived with her for a while.” Air Deccan MD CAPT GOPINATH on the Jet-Sahara deal

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OFF THE RECORD

Tohfa for Ahmed bhai

HE SURAT flight was a long pending one and finally Praful Patel heaved a sigh of relief that he had been able to finally do it for his friend, Ahmed bhai, a favour that his fellow Gujarati had done to him over the years. The all-powerful political secretary to the Congress president, however, chooses, as usual, to keep himself off the radar. Being invisible has become something of a signature with Ahmed bhai and even low profile could be an understatement as far as he is concerned. For close to two years now he had been pushing for the airport to be upgraded so that Boeings and Airbuses could land, and when the big day arrived the good man was nowhere to be seen. There was Kashiram Rana (former textiles minister in the Ahmed Patel NDA government) and several other ‘local’ notables, but not the man from Baruch. One remembers the time when Ahmed Patel was an MP from Baruch and later a party notable from the state (by then he had graduated to Rajya Sabha and was close to Rajiv Gandhi): he would religiously catch the Rajdhani from Baroda (now Vadodara) close to half past nine on Mondays. It would be long past dinner-

time, but the catering staff would have his fish and chips ready. Dinner over, Ahmed bhai would chat for a while before getting into bed and would pull out just as the train entered New Delhi. Later, when the August Kranti Express, or the alternative Rajdhani, as it is dubbed, began services, he would take it from Surat. But all those are days of past. These days, the good man has little time from the heady politics of Delhi and a good direct flight into his hometown was the panacea for all his woes. And so it finally happened — a tohfa from one Patel to another. Those in the know state that Mantriji can be dogged when he wants to. As with Gondia, so with Surat, Praful has been nothing if not dogged. Airports Authority Chairman K. Ramalingam, on whose shoulders fall all these VIP projects (tell him that and he will turn around and tell you, “Please, Sir, every project is important for us. We want to develop the whole country ji.”), has been monitoring the Surat mission for close to a year and a half now, and there were problems aplenty. Mostly from the contractors who somehow seem to delight in getting into the hair of officials. Anyway, to cut a long story short, the runway was finally done, the airport CRUISING HEIGHTS May 2007

building refurbished and ready for operations. Well, the function was the standard one as any launch or inauguration would be in government. But the minister is fast getting a reputation for funny quips and someone mentioned he could be a stiff challenge in any laughter challenge competition. But here are a few quick bites: Mantriji arrived direct from Goa in a Kingfisher aircraft. He seems to love its planes. Earlier, the Indian inaugural flight into Surat arrived from Delhi with Chairman Ramalingam and CMD Vishwapati Trivedi. DGCA’s Kanu Gohain had travelled a couple of days earlier on a dummy flight to test out the airport. Function over, Mantriji flew in the Kingfisher aircraft to Delhi along with Ramalingam and Trivedi. Sorry, Praful, you should have taken the Indian flight. After all they acquiesced to your request to start a direct connection. Ask your friend Vijay Mallya if he is willing to do that. And you will know what we mean.

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What is Gohain’s future? STRICTLY SPEAKING, Kanu Gohain has less than two months to go at the top. The DG retires at the end of June. But who will succeed him? The ministry of civil aviation had, in a smart move, put out an advertisement asking for candidates with over a dozen years experience in the business of civil aviation. But nothing has been done on their applications so far. If insiders are to be believed, one was from a serving senior civil servant and the other from an Air Force officer. So what happens when Gohain retires? Does someone else in DGCA take over? They can’t, for no one has the seniority to be DG? Do they have the interviews soon and hope the ACC will clear the file in time? Or will Gohain get a further run on the job? It’s like a Kaun Bangea Crorepati question. Unlike KBC, though, this one

has a fourth answer: Ask Praful Patel. And the man at Rajiv Gandhi Bhawan isn’t talking. But the grapevine tells us a fourth option has already been put in place and

CRUISING HEIGHTS May 2007

one should know the consequences of the move in the next four months — closer to Gohain’s superannuation rather than earlier.

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OFF THE RECORD

Kudos for Khurana at Berlin

Singular honour ANITA KHURANA is delighted. For starters, she was in Berlin at the ITB to receive an award in recognition of the national carrier’s commercial performance. It was the PATWA Award for being India’s ‘Most Trusted Airline’. The award, instituted by the Pacific Area Travel Writers Association, was awarded at a ceremony recently at the world’s largest tourism event held at the ITB, Berlin. It was a

double achievement for Indian — Anita also received the PATWA award for the ‘Best Marketing Person in Aviation’. The airline, which had put up a hugely interactive stall as part of the India promotion at the travel mart, won rave notice for its presence and sold tickets close to Rs 10 lakh during the weeklong fest. That apart, the airline made an impressive improvement in its overall numbers.

ANITA KHURANA’S fellow director Anup Shrivastava made his mark when he was ‘elected’ to the executive body of the Standing Committee on Public Enterprises. This is a singular distinction for Anup. The elections are not a walkover, and directors from a large number of public sector companies participated in the process. For director (personnel) of Indian, who joined the board close to a year back, to get into this body does credit to Indian as well.

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PERSPECTIVE

Air Deccan

TURBULENCE IN SKY The common man’s airline is not exactly up for grabs, but it is going through a bad patch, financially. If it doesn’t get funds or the investors, Captain Gopinath will find flying simply tough, reports K. Srinivasan.

HE FIRST STORY that set the cat amongst the pigeons was a Mumbai datelined story in The Economic Times that said that Anil Ambani was ‘eyeing’ a tidy Air Deccan stake. The story added that Ambani was heading the pack to pick up a minority stake in India’s largest low-cost carrier, Air Deccan. The group has submitted a bid, along with other investors, such as the Texas Pacific group, for investment in the company. The Reliance ADAG group’s mutual-fund arm, which held 3.43 per cent in Air Deccan, has recently increased it to 4.65 per cent. Texas Pacific has strong interest in airline companies. According to the company’s books, the airline’s promoters hold 22.13 per cent, while the public has 33 per cent and the UK-based Investec Bank has about 1.96 per cent. Non-institutions, including corporate bodies, have around 45 per cent. When the markets and the media reacted to the story, Air Deccan’s response was predictable, “We have mandated Edelweiss for raising $50 million to $100 million for fuelling our growth plans. Several investors have evinced interest. We are evaluating multiple options with the objective of building a robust infrastructure and maximising shareholder value. Any such investment will be subject to all statutory, legal and regulatory approvals as applicable.” Strictly speaking, the statement was bang on target. Potential investors had IN HAPPIER TIMES: Captain Gopi with his top brass. Deccan's Chief Financial Officer John Kuruvilla (second from right) has since left the carrier to join the Oberois.

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been carrying out a due diligence of the Bangalore-based airline over the past month and bids are in with Edelweiss Capital, the investment banker to the deal, sources said. Among the private equity players that have finished due diligence in Air Deccan, are Tony Ryan’s investment arm, Irelandia Investments. The Ryan family is the promoter of Irish LCC Ryanair and Irelandia holds a 16 per cent stake in the Singapore-based airline Tiger Air. Why is Air Deccan racing against time to get the funds on board? Those in the know say there are several reasons. According to one financial website, “Time is literally running out for Air Deccan. It has time till May 31 to bring

Time is literally running out for Air Deecan. It has time till May 31 to bring in new investors or else it runs the risk of going belly up.

CRUISING HEIGHTS May 2007

in new investors or else it runs the risk of going belly up. By May-end it needs to repay Rs 200 crore it has borrowed from State Bank of India, or SBI. Curiously, the money was borrowed against a proposed equity infusion. Air Deccan is trying to get overbook-raising funds from IDBI to pay back SBI: Rs 500 crore in exchange for its daily ticket collections for the next six months. But for an airline that’s losing over Rs 2 crore a day, securitising earnings may push it over the brink. So, Air Deccan needs to stick to schedule, find new investors by May-end and pay back SBI.” Once the fund raising is complete, Air Deccan is keen to restructure the company and hive off businesses, such as charter, maintenance, repair and overhaul (MRO), cargo and training into separate profit centres. The cargo operations are likely to be the first off the block. The parent company — Deccan Aviation — would be renamed Air Deccan and the idea is to create a ‘scalable business model’. The Deccan Aviation board has already approved the hiving off of its charter services and the maintenance and repair facilities into a wholly-owned subsidiary. The company that has flown back into the red in the last quarter with huge pressures on yields and low passenger loads suffered a loss of Rs 213 crore during the quarter ended March 31. The loss was on a net income of Rs 437 crore during the period. The airline spent about Rs 229 crore on fuel during the quarter. The airline’s load factors, which were at a high of 83 per cent during February, fell to below breakeven levels of 70 per cent during March, sources said. The airline, which operates 65 destinations in India, carried 17.17 lakh passengers in the quarter. “A combination of high operational costs and oversupply is creating a weak domestic yield environment in the industry. Fuel prices are once again close to historically high levels coupled with the fact that February and March are inherently weaker months for

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PERSPECTIVE

DGCA ‘angry’ with Deccan

HY did the Directorate General of Civil Aviation (DGCA) issue a fresh CAR (Civil Aviation Requirement) circular and force Air Deccan to mandatory check in passengers with specific seat numbers? The circular is unequivocal: seat numbers should be allotted to all passengers at all stations. The boarding passes should indicate the row and seat numbers, the circular said, adding due care should be taken to allot specific, but convenient, seats to aged and infirm passengers, who should not be seated near the emergency exits. The new rule also made it clear that aged and infirm passengers should be allowed to board the aircraft before others and disembark at the end. Those in the know say that the DGCA ruling comes after its investigations into overbooking by Air Deccan found some truth in one of the several flights that were investigated. Ironically, while the Bangalore originating flight had been the cause for the investigations, the irregularities were discovered in Patna. A month and a half back, CNN-IBN had put the country's largest low cost airliner under the scanner and run a series of stories that accused them of overbooking — a charge that Captain Gopinath, Warwick Brady and Air Deccan denied. At that point in time, Brady, the company’s chief operating officer (COO), had angrily responded in an interview to CRUISING HEIGHTS, “Air Deccan does not overbook, nor does it doctor any figures. Air Deccan closes its check-in counters 30 minutes prior to departure. This is done to ensure that the flights leave on time. If passengers report beyond the counter closure time, they are not allowed to board the flight and they lose their money. That is absurd. Why would we do that? To earn a few pennies? We had a total passenger load of 180 passengers, out of which 10 did not turn up on time. The flight took off with 170 passengers on board.” Sources unwilling to be named at the

DGCA state that, in fact, on a Patna flight what they found was that four children “over the ages of three and between six and eight” were shown as infants when they had been booked with individual tickets and “should have been allotted individual seats”. The four vacant seats were then offered to four passengers who had been overbooked. Not just that, according to the DGCA, there were four more passengers who could not be accommodated because there “were no more children who could be persuaded to sit on their parent's laps”. In effect, there were eight overbookings and four had been adjusted and four couldn't. The DGCA revelation flies completely in the face of the argument put forth by Air Deccan that it does not overbook because its systems are made in such a way that it is impossible for any extra seat to be generated once the complete quotient of 180 seats is filled. Then how did the Patna episode happen? Does

DASHED DREAMS?: Air Deccan COO Warwick Brady with Capt Gopi

CRUISING HEIGHTS May 2007

it mean there is a lapse in its backend software and is it doing something about it? “If the government is going to dictate terms and get into micro-management of the airline, then we will have to take up the issue with them,” Air Deccan’s chief revenue officer Samyukta Sridharan said. “It will have a huge impact (on us),” he told one newspaper over the phone. They are right; it will impact them. Boarding time will go up, turnaround time will increase — all crucial elements for a low-cost model. It's a global practice first adopted by the likes of Ryanair and Air Asia. In fact, this free seating model, Gopinath has said many times, saves them a good 45 minutes during boarding. What he hasn't done is copy their model of charging more for “speedy boarding” wherein you get to board the aircraft on top of the line (after elders and infants) or for “specific seating”. DGCA Director General Kanu Gohain laughs off all talk of singling out Air Deccan and being tough on it. He is also disinclined to accept any talk of the Ryanair or Easyjet model. “The level of efficiency or sophistication of our staff at the ground level isn't the same as in many of the developed countries. We are putting in place a system that is eminently suitable to our environment. And in doing so my paramount consideration is the safety and security of the passengers.” While he declined to specifically discuss the Air Deccan case, it is evident that he is upset at the findings. “It will be unfair for me to go into the specifics. Let me put it this way. Each time we investigate an incident, we attempt to learn from it and put in place measures that will prevent any such incident from reoccurring.” Almost all other airlines, including low-cost carriers like SpiceJet and IndiGo, follow the practice of allocating seats.

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Vijay Mallya Day One “Am I interested? Yes. Am I imminently acquiring it? Not decided as yet.”

Day Two “Yes, I am interested. What is wrong with that? It is a public company, I don't know what has prompted him to give this very excitable reaction.”

Captain Gopinath Day One “With due respect, Mr Mallya is talking rubbish... Air Deccan is not up for sale. We are actually bigger than Kingfisher and we operate in a different market (low-cost one). If wishes were horses he [Mallya] could have this airline. But let me say we are not selling out to anyone.”

Day Two “Mr Vijay Mallya is free to make any statement. But Air Deccan is not there for sale either by Mallya or by anybody else. We are three times bigger than Kingfisher in terms of route and market share. We are growing very fast like a train. Deccan is here for a long haul. Mallya can think of buying more horses and planes, but not Air Deccan. Air Deccan has its own characteristics. We are from two different planets. He is from Venus and I am from Mars. I think Mallya should restrict himself to his airline rather than making speculative comments.”

Day Three “He may want to buy the moon, but the moon may not be available for sale. We are from the opposite ends of the business spectrum, consumer models and consumer space. We are mining at the bottom of the pyramid; he is picking the cream off the top. They can't co-exist (in a merged entity); one airline will only kill the other. We are good friends and enjoy drinking a beer together. But that's about all. Our vision and philosophy are totally different.”

And now… All's well that ends well The captain: “We are friends.” The baron: “Why should I take over Air Deccan? We are totally different.”

the travel industry,” said the company’s managing director Captain Gopinath. If the results and the news of ADAG and several others eyeing the ‘common man’s airline’ wasn’t enough, the company hit another severe patch of turbulence when news leaked out that one of the ‘pillars’ of Air Deccan and a formidable supporter of the company from Day One, S.N. Ladhani (with an eleven per cent stake in the company) wants to exit. A sort of mentor and father figure to Gopi and his team at the airline, Ladhani’s quitting the scene would have been a body blow to the company. Every time in the past several years, Ladhani had been the one who dipped into his pocket to keep Air Deccan going when the prognosis looked grim. In an interview to

Once the fund-raising is complete, Air Deccan is keen to restructure the company and hive off its businesses into separate profit centres CRUISING HEIGHTS May 2007

CRUISING HEIGHTS a year back he was categorical, “I find that I can trust them. And I shall always be there to fund them if they ever need it.” However, what set the wires buzzing was the fact that Ladhani declined to comment and Gopi angrily dismissed the story as “speculative and false.” The story, coming as it did just around the time when the one-year lockin period on his shares post-IPO was ending, only added strength to the buzz. Analysts started treating the news as correct and commented that maybe it was time for a new set of investors to take over and run the company as it moved to the next level. But there are some important caveats as well:

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PERSPECTIVE

That Ladhani is expected to

decide on a suitor for his holding only in conjunction with the airline’s management. That other investors, like UK-

based venture capitalist Sumant Kapur and Sudhir Choudhrie, would also exit. That Gopi might hold the right of

first refusal (RoFR) over the holdings of some of its core investors. Finally when the media buzz threatened to get out of hand, a reluctant

“Air Deccan is my baby. Whenever the airline wanted funds, we continued to pour in more.” - S.N. Ladhani AIR DECCAN FLIGHT ATTENDANTS: Turning the Indian dream into reality

CRUISING HEIGHTS May 2007

THE PLAYERS IN THE AIR DECCAN SWEEPSTAKES:: Vijay Mallya, S.N. Ladhani, Tony Ryan and Anil Ambani

Ladhani spoke to Hindu Businessline that Air Deccan “is my baby. I will invest more in the company soon.” He said funding was never an issue for his company. “Whenever the airline wanted funds, we continued to pour in more.” A low-profile businessman who owns Brindavan Beverages, the largest bottlers for Coke across the nation, Ladhani’s stake was as high as 76 per cent and post-IPO he and his family members own about 13.5 per cent. During the course of the interview, he did accept that, apart from the company, he, in his individual capacity, was in talks with investors in the US for raising up to $100 million in the airline. “We have several friends and are now in talks with them for raising the money,” he said. For a man who had simply no idea about the airline business when Air Deccan commenced operations, Ladhani has clearly learnt plenty about the business. As he told his interviewer, “The airline had focussed on increasing its network and market share. Now the focus has shifted to profitability and hence a major route rationalisation was on currently.” He said some of the routes that are no longer profitable are being merged with others to increase their yields. For example, the flight to Kanpur had been merged with the Lucknow flight. He said if the airline is

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able to make between Rs 400 and Rs 500 per seat per kilometre more, it would be on the road to profitability. He said the original business model of the airline when it commenced operations would have ensured profitability in two years itself. If all this was not enough, Kingfisher Airlines’ Vijay Mallya told the media that he was looking at the possibility of picking up a stake in Air Deccan. “Am I interested (in buying stake in Air Deccan)? Yes. Am I imminently acquiring it? Not decided as yet,” Mallya told reporters at the Indira Gandhi International Airport in New Delhi. Reports suggested that it would be a dream merger that would create a 38 per cent market share with a 68-aircraft fleet. In fact, there were some reports that suggested that Airbus Industrie, too, was gently nudging the two to come together, though that looks implausible, considering the two models are so far wide apart. Ladhani said as much when he told one interviewer, “Our mindsets are different. We are used to saving money while others are used to overspending.” He also used the opportunity of CNBC’s

MASCOT-POWER: R.K. Laxman’s Common Man symbolised the ordinary Indian’s dreams of flying

Awaaz programme to maker it clear that if there were indeed “any differences of opinion” they were expressed in the boardroom and that was about all. By stating that we all make mistakes, he made it plain that mistakes had been made. But his core commitment to Air Deccan and Gopi and his team remained unchanged and he said his stake in Air Deccan wasn’t up for sale to Vijay Mallya or, for that matter, to anyone else. But he did acknowledge that Mallya was a shrewd businessman who knows how to go about the business of acquisitions. That Ladhani, a low-profile, godfearing man, who keeps to himself ten times out of ten, had to go on TV to scotch rumours that he is exiting exemplifies how important he is to the Air Deccan scheme of things. Not Anil Ambani, not Vijay Mallya, not the blotch in the last quarter balance sheet, not the DGCA fracas, none of this really tied up Air Deccan in knots. But Ladhani did. It only goes to show that the Air Deccan vice-chairman has confidence in the boys, but he is worried as well. After all, as a good businessman, he knows, the hemorrhaging has to stop at some point in time.

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NEWS DIGEST

If it is greens, it must be MDLR

AN vegetarianism improve your load factor? Can it help you fill your planes? Can it help generate more numbers? Well, one has to wait for the

answers. The Gurgaon-based MDLR Airlines — India’s first all-vegetarian carrier — has started commercial operations with flights on the Delhi-Chandigarh route. The airline’s chairman Gopal Goyal is gung-ho about their projects and believes that their plans to “operate a full-service regional operator business model” will be successful. He also added that they would gear up to add a fleet of three to four jets by the year-end. MDLR stands for Murli Dhar Lakhi Ram. The group has essentially been in the housing and construction business and has over the years expanded its activities from real estate development to high-value construction areas. The group has business interests in commercial and residential real estate development, farmland development, facility management, shopping malls, resorts, hotels, multiplexes and restaurants. According to the company website: “The emphasis is on the 3 Cs, i.e., Creativity, Comfort and Care. It indicates our constant concern in sustaining the ultimate objective of customer satisfaction and delight”. The airline is using 70- and 100-seater Avro RJ aircraft, dry-leased from British Aerospace. With fares starting from Rs 1,000, it plans to extend its services to Ranchi and Kolkata in the next 15 to 20

days and later to Mumbai, Surat, Jaipur and Bhavnagar. MDLR is setting up offices in all its destinations and plans to make Chandigarh as one of the large regional jet hubs after Delhi and Jaipur in north India. By next year, it plans to have 12 planes through internal accruals. According to Goyal, MDLR is offering dynamic pricing of eight fare levels that are 10 to 12 per cent lower than those prevailing in the market. The operator is also negotiating for two Kazan MI-172 helicopters each with 27 seats. The new airline, with a paid-up capital of Rs 40 crore, is a wholly-owned sub-

sidiary of the MDLR Group. “The flights to Jaipur should commence in the next couple of weeks,” Goyal said. The carrier currently operates with two four-engine Avro RJ70 planes made by British Aerospace Systems (BAe) and is looking at a fleet size of eight to ten aircraft by the end of 2007. “We are expecting two more aircraft to come in by September this year,” said Koustav M. Dhar, president, commercial and special projects, in the airline. “MDLR Airlines will operate on a fullservice regional operator business model. Our research has shown that about 48 per cent of the passenger load factor (PLF) comes from the non-metro routes, and our aim is to tap this segment,” Goyal said. “Our fares will be about 10 to 12 per cent lower than full-service carriers with all the services that they offer. We will be offering dynamic pricing of eight levels of fares, starting from Rs 1,000,” he said. Dhar indicated that besides British Aerospace (BAe), the company was also looking at leasing or acquiring regional jets from companies such as Canada’s Bombardier and Brazil’s Embraer. “We are planning to launch our exclusive lounges at different non-metro capitals and are also in the process of introducing a City Lounge check-in facility at Delhi, Gurgaon and Chandigarh,” Goyal said. And finally the icing on the cake. The airline will serve wholesome vegetarian meals. Well, it is a tradition with MDLR.

Freedom of choice THE RECENT takeover of Air Sahara by Jet Airways has dealt a severe blow to air-passengers from Jharkhand. Encouraged about the possible launch of one more flight of Jet Airways from Ranchi, passengers had been spoilt for choice. In fact, many had started preferring Jet to other private airlines. Their dreams, however, were shattered when Jet’s local authorities informed them about the management’s decision to suspend the launch of the new flight. However, the move has proved to be a boon in disguise for other private airlines operating in this sector. Indeed, Jet has reasons to revert

CRUISING HEIGHTS May 2007

its decision to launch another flight from Ranchi since the Jharkhand capital has an Air Sahara flight everyday to Delhi. Incidentally, the flight continues even after Jet’s takeover of Air Sahara. The Birsa Munda Airport, at Ranchi, with an average of four flights everyday, is the only airport in the state to accommodate the growing number of air passengers from the state. Airlines operating from Ranchi include Indian, Air Sahara, Air Deccan and Alliance Air. Despite the large number of flights from Ranchi, passengers, surprisingly, often fail to get seats at short

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AAI: No softening on service tax TAX ALWAYS bites. And the service tax is perhaps biting a bit too hard. Whatever be the reason, it has always been a ticklish issue ever since its inception. So when the government imposed it on business and first class international travel in the 2006 Budget, there was nothing airlines or

airport operators to various vendors, airlines, etc., through the Budget of 2004, would be carried on smoothly. But it has not been the case. In April 2007, the Supreme Court issued notices to Jet Airways, Flemingo Duty Free shops and Thomas Cook India on a plea filed by the Airports Authority of India (AAI), seeking the hearing of its case in the Delhi High Court. In its plea, the state-owned AAI sought the transfer of various petitions filed by these companies in the High Courts of Delhi, Bombay, Madras, Karnataka, Kerala and Andhra Pradesh that had stayed the recovery notices issued by AAI. AAI argued that allowNORTH BLOCK: Taxing decisions from the finance ministry ing the same case to be passengers could do. Travel agents and heard in different High Courts could result foreign airlines tried various permutations in judicial disharmony. The Authority in its and combinations to legally avoid carrying petition said that the Finance Act of 2004 this ‘burden’. However, the mandarins in brought airport services under the purview North Block (housing the finance ministry) of service tax from September 2004. AAI is has a different take on the issue and seems the only institution that collected service to have further tightened the monitoring tax and deposited it with the treasury. AAI machinery. Today, no one squeaks about it. levied service tax for airport services like As a logical consequence one pre- cargo, passenger handling, security, transit sumed that an earlier decision to levy serv- facilities, landing charges, parking and othice tax on flight services, provided by the er non-traffic revenues. notice. Air Deccan, for example, has two flights— morning and evening— everyday for Kolkata and an evening flight to Delhi as well. Tickets for these flights are not cheap and passengers have to pay whatever is demanded. Although private airlines often make announcements for apex fares, the availability of tickets at such fares remains a far cry. Even so, news about the launch of one more flight from Ranchi by Jet COMFORTABLE SEATING: Inside an MDLR plane had been received with hope. According to A.V. Krishna, direc- ducted a survey of the Ranchi airport tor, Airports Authority of India at and submitted a proposal for launching Ranchi, “Jet Airways had already con- its flight from Ranchi to Delhi after ini-

CRUISING HEIGHTS May 2007

Finance Minister P. Chidambram

AAI Chairman K. Ramalingam

It may be mentioned here that the management of Delhi and Mumbai airports (in which AAI holds only 26 per cent equity) was handed over to GMR and GVK in late 2006. Are they collecting service tax? We hope so or else poor AAI will be again left carrying the pan. tiating a negotiation with us. The deal appeared to be an open secret and aspiring passengers had started making queries about the scheduled dates of the proposed flight. Subsequently, the airline withdrew the proposal and resolved to go ahead with the existing arrangement meant for Air Sahara flights.” He was, however, quick to add that passengers from Ranchi need not worry since MDLR has proposed to start its Chandigarh-Delhi-Ranchi-Kolkata flight towards the end of this month. S. Biswas

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NEWS DIGEST

It is simply ‘no’ FINALLY, THE Tata group has ruled out any immediate plans to enter the aviation business. “We have no plans at present to enter the aviation business. However, this does not mean that we won’t relook at the business in the future,” Tata Sons’ executive director, R. Gopalakrishnan said to the media in Mumbai. The Tata group had announced its plans for the domestic airline business in the late-1990s in collaboration with Singapore Airlines but the project was abruptly dropped after rivals lobbied hard to make sure they never got the necessary approvals. “The market conditions then and those prevailing now are different. While I don’t rule out entering the business in the future, I can tell you that we are not looking at the business now,”

Gopalakrishnan said. It is speculated that their interest revived some months back when the Tata group took a stake in lowcost carrier SpiceJet. The general inference was that the Tatas were piggy-backing into the aviation business on SpiceJet. No, said Gopalakrishnan who described the investment in the Delhibased air-carrier as “purely a financial investment and nothing to do with us entering the business.” Nonetheless, Ratan Tata had announced that the Tatas were looking keenly at the modernisation plans for the non-metro airports. After their initial setback with Singapore Airlines, the Tatas have tied up with Singapore’s Changi Airport International (CAI) to look at these airports. As the process unfolds one

R. Gopalakrishnan

should know where the collaboration moves forward and how much toehold the Tatas are able to get into the airline business.

Flying penthouse for mystery shopper

IT IS A strange tale of a mystery shopper that is perhaps more suited to the James Bond kind of thriller than to two internationally reputed firms in aviation industry. In a rather mysterious move, Boeing Business Jets approached Designworks USA and challenged the firm to create a conceptual 787 aircraft interior for a fictitious affluent Russian client in his midthirties. Designworks USA took the challenge seriously and assigned the work to its

team of experts, which promptly sat down with a blank sheet of paper to create an aircraft that could function as a second luxurious home for a busy tycoon. The team endeavoured to visualise a day in the life of such an affluent person, who spends significant amount of his time globetrotting so that it could come up with a perfect penthouse sort of flying machine. The freedom to be able to go anywhere from anywhere, together with the possibility to create a truly inspirational

CRUISING HEIGHTS May 2007

space, served to define the vision for the design team. The design team came up with an interior with translucent walls, residential-style furniture that lets space “visually continue around it and vistas that let the eye travel beyond the immediate environment”. Designworks USA also incorporated a “vertical architectural experience” by taking advantage of the 787's generous cargo space to create space for a car to “offer a seamless air-toground experience”. Now the billion -dollar question remains whether this interior design would satisfy the whims of a super Russian tycoon?

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NEWS DIGEST

Kolkata on, Chennai maybe!

THE TAMASHA over who will modernise which airport is at last likely to get settled. After severe protests by the CPI (M), the Government of India has decided that only AAI will undertake the modernisation of Kolkata airport at a capital investment of Rs 1,542 crore. The upgrade will include construction of a new terminal for domestic and international traffic and increasing its capacity to handle 20 million passengers annually from the current 4.4 million. Of this, 15 million passengers are likely to be for domestic flights and the rest would be for international flights. According to a break-up of the proposed Rs 1,542 crore plan, Rs 1,300 crore will be for new terminals, Rs 100 crore for upgrading cargo handling facility and runway improvement and Rs 100 crore for upgrading navigation systems. The first phase of Kolkata airport modernisation will be completed by 2009-2010. However, the Left pressure on the civil aviation ministry and the centre to get even, the modernisation of Chennai airport by AAI has been more or less rejected. After all corporate-savvy politicians, like the Marans and the Stalins backed by Karunanidhi would very much want to separate political alliances from economic decisions. They have always been close to the Left parties, but on the issue of Chennai airport privatisation, DMK did not even oppose its sworn enemy Jayalalitha, when she decided to acquire land beyond the boundary walls of the existing Kamaraj airport at Meenambakkam. The only opposing political voice was that of PMK’s, which was then with ADMK and now DMK, but still continues to sing opposing tunes. As for Praful Patel, the matter was taken up at the recent meeting of the Committee on Infrastructure and it was felt that some more clarity was needed on the subject. Hence, another meeting would be held on May 31 to sort out the issues so that the job of modernisation and upgradation of Chennai airport can be done on the same lines as that done in Delhi and Mumbai.

Now air bug bites Sun

THE PRIVATE broadcaster, Sun TV, is planning to enter the domestic and international aviation business, both for commercial and non-commercial purposes. This could be both domestic and international flights. According to a communication to the BSE, Sun TV has stated it would seek shareholders’ approval for its foray into the aviation sector

through postal ballot, the results of which would be announced in the middle of this month. It is likely to seek permission from shareholders to “purchase, take on lease and/hire or otherwise own, employ, maintain, work, manage, control, let on hire, charge, lease all forms of aerial conveyance for the purpose of transporting or carrying passengers,

FAA renews JEOC status

THE US AVIATION regulator, Federal Aviation Administration (FAA), has granted Indian's Delhi-based Jet Engine Overhaul Centre (JEOC) the CRUISING HEIGHTS May 2007

status of approved repair station for the second successive time. The FAA certification renewal happened recently after a long and stringent audit. This

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TV, too

baggage, mail and freight and merchandise of all and every kind and description, whether as principals, agents or otherwise on national and international aviation services, scheduled domestic and international aviation services both for commercial and non-commercial purposes in India and outside India”. Even before it made its intent known, Sun TV has already been given approval by DGCA to acquire or lease two Bombardier aircraft. In fact, one such aircraft had flown into India some months ago to provide a demonstration on a short flight between Chennai and Bangalore and back. Be that as it may, the important question is, should Sun TV decide to start a scheduled domestic airline, what will civil aviation minister Praful Patel do? Well, we know that Sun TV is a powerful organisation owned by Kalanidhi Maran, elder brother of union communiwill enable the national carrier's facility centre to continue to undertake repair and overhaul of jet engines of foreign airlines also. The JEOC had been granted the FAA Repair Station Certification for the first time in 2004. The ISO 9001 : 2000 certified JEOC has been operating under the Indian aviation regulatory authority, the DGCA, since its inception in 1991 and has till date refurbished around 730 JT8D and V2500 engines installed on B737 and A320 aircraft. It may be mentioned that an MoU was signed with Singapore Airlines for the expansion of this centre and the paper was sent to Rajiv Gandhi Bhawan for approval. That was the time when the new government was sworn in

cations and IT minister the proper improvement of Dayanidhi Maran and scions the infrastructure, it may not of DMK family, sons of late be easy for him to allow new Murasoli Maran and grandairlines in the already crowdnephews of Tamil Nadu chief ed Indian skies. But what he minister M. Karunanidhi. also equally and frequently Can Praful Patel deny it perforgets to mention is that mission or even delay it inorexisting airlines merrily add dinately, or should we say new aircraft to their fleet indefinitely, as he has been without bothering about the doing in the case of other same inadequate infrastrucDayanidhi Maran budding new entrants, like ture. Perhaps in Praful Star Aviation, Premier Airways, etc.? Pra- Patel’s menu, sauce is sweet for some and ful has been stating ad nauseum that until sour for others. and Praful Patel had taken charge of the civil aviation ministry. Then the file went into cold storage and the rest, as they say, is history. Spread over 1,40,000 sq ft at Indira Gandhi International Airport, the JEOC was set up in 1991 by General Electric, USA, with a capital outlay of approxi-

CRUISING HEIGHTS May 2007

mately $20 million. Over the years, this establishment has acquired modern stateof-the-art technology and, at the same time, developed skills and the capability to perform in-house overhaul and maintenance jobs on jet engines, installed on the airline's B737 and A320 aircraft. Now, of course, Indian has gone for an airframe MRO with Jupiter (Rajeev Chandrashekar) that will be supported by EADS. They are looking out for one or two more partners to get the ball rolling and decide on a location for the project. But as far as engines go, there is no new move. Singapore Airlines has since tied up with GoAir, but one doesn't know the state of their MRO — how soon and when it will take off or whether it will ever take off at all.

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GLOBETROTTING

AT A GLANCE

We want women travellers...

Tale of lost luggages

AMERICAN AIRLINES is tailoring some of its services exclusively for the growing number of female travellers and expects that such a move may boost its annual revenue by $94 million. It unveiled a new website, intended to increase the number of women booking flights on the carrier by two per cent or more. The website sports articles catering to women, as well as travel and security tips. Further, changes will also be implemented to American’s planes and travel clubs. American already has two other dedicated websites—one catering to Spanishspeaking travellers, and the other catering to gay and lesbian passengers.

BRITISH AIRWAYS has been in news recently for quite wrong reasons. It was forced to apologise to customers for its record over lost luggage last year. Air Transport Users Council suggested that 'Name and Shame' league tables should be published to produce a record of airlines' performance over lost bags. By the way, major European airlines mishandled more than 5.6 million bags in 2006, but the figure applies only to the 24 airline members of the Association of European Airlines. The figures for all airlines worldwide could be mind boggling.

Surviving the desert

HARLES WOOLER, a resident of Johannesburg, took off in his two-seater Diamond Katana for Namibia. But while returning from Namibia, the 68-year-old made an emergency landing in arid southwestern Botswana. With just a 500 ml bottle of mineral water, a GPS device and some knowledge of the bush he managed to survive in the harsh Botswana desert for almost four days. Keeping his cool, he spent a night in the aircraft. The next morning he left a note in the aircraft, in which he wrote that he was walking south to Middelputs in the Kalahari Desert. He gave a radius in which a search party could find him. For the next two

days and two nights Wooler wandered through the desert dunes. He did not see a soul. For food, Wooler relied on his knowledge of the bush and said he ate twigs and anything else he could find in the dunes. The desert was extremely hot and water ran short. A special locating device in Wooler’s plane kept sending out SOS signals, which were picked up by the search party that had been assembled by Botswana authorities. They used special wildlife trackers to follow his footsteps and a military helicopter to scout for him from the air. After he was found by the search party, Wooler was taken to a hospital and placed on a drip because he was dehydrated.

Aircraft spook livestock? WHAT HAPPENS when a jet flies above you at 500 feet? You may be startled. But what happens to cattle? They are “spooked” and just run, with chances of injuring themselves being rather high. They may end up with perhaps a broken leg, which can mean they are put down. If there are pregnant animals in a field, it may cause them to abort, which has economic implications. In England, farmer was paid £126,565 after losing pedigree cattle when Chinook helicopters flew over them. The payout was revealed following figures published annually by the Ministry of Defence (MoD), which paid a total of £4.1 million in 2005-06 to claimants affected by low-flying aircraft, including a beehive owner in the Balkans. Who, What, Why?—a regular feature in the BBC News Magazine—aiming to answer some of the questions behind the headlines—checked out the situation. The number of incidents has fallen in the last decade, partly due to better contacts between farmers and defence officials. The officials of the National Farmers’ Union in England and Wales advise their members if a defence low-flying exercise is taking place, so they could move stock indoors, or from areas of low-flying aircraft. Interestingly, there is no obligation on the MoD to pay, because a Royal Prerogative gives an “absolute right” to military aircraft activity. But defence officials described it as an “emotive issue” so payments are made on an ex- gratia basis.

CRUISING HEIGHTS May 2007

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Minors offloaded to avoid overloading

No way for Iraqi PM WHEN A plane carrying Iraqi Prime Minister Nuri al-Maliki on a trip to Asia desired to fly over Iran’s airspace, Iranian aviation authorities ordered the pilot to go back. The visitors had to fly to Dubai, where they stayed for more than three hours to file a new flight plan. No reason has been assigned as to why Iran had barred Maliki’s plane from crossing its territory. Maliki is seeking support for rebuilding his war-devastated country on the trip to Japan and South Korea.

Illustrations by Mita Roy

QANTAS RECENTLY bumped two unaccompanied children off an overloaded Wellington to Sydney flight and sent them to Auckland, instead. William, 11, and Beatrice, 8, were stopped from boarding their trans-Tasman flight and their mother Victoria Read, of Martinborough, near Wellington, brought up the issue with the airline. Qantas confirmed that passengers were offloaded because the plane was too heavy. The children had to wait 90 minutes for a flight to Auckland and then another hour for a later flight to Sydney. years working on a lightweight, fuel-efficient hydrogen fuel cell-powered aircraft. Named as the SmartFish project, it is now at the small model prototype phase, and they claim that a fullscale model of their invention will carry two people at 560 mph using less fuel than a car. The prototype has a small wingspan, so flight relies on an aerodynamic configuration known as a lifting body. It is this and the craft’s fuel-cell turbofan technology that make it work. They say that construction is simple and, with few moving parts and low operating and maintenance costs, it shouldn’t be too costly to build.

Foul language cancels flight

Delta’s secret leaked DELTA AIRLINES was robbed of its thunder when the secret of its new aircraft paint job was leaked on the Internet. Websites for aviation buffs were abuzz since someone posted images that showed the purported new paint scheme. It was reported that a new paint job was in the works and was likely to be revealed when Delta exits bankruptcy court. According to the images posted on websites, the likely new scheme features the return of Delta’s triangular logo, known as the “widget”, to the tail of Delta’s jets, but in an off-kilter stance that cuts off the point of the triangle. The fuselage is mostly white, with a dark underbelly. Another red widget and “Delta” in a minimalist typeface is on the side.

Rats!!! A MOUSE delayed a Vietnam Airlines flight to Tokyo for more than four hours recently. A passenger saw a small, white mouse running around inside the cabin of the 777. A hunt began for the rodent, crews were sent in to sweep the plane... and kill the mouse. Now a 777 is not a small aircraft and they were looking for a very small mouse. While the passengers were accommodated in a nearby hotel, everything on board had to be unloaded and then reloaded.

Future flying machines A TEAM of Swiss aeronautical designers has spent the last five

A VETERAN pilot of Northwest Airlines got so worked up talking on his cell phone that his language turned quite obscene and that too while people were boarding. He even cursed one passenger. The airline had to cancel the Las Vegas to Detroit flight, the pilot was removed from the aircraft for investigation and passengers were accommodated on other flights to their destinations. In another case, a senior pilot of Pakistan International Airlines (PIA) stands to facing inquiry for using abusive language on a radio telephonic transmission with a colleague pilot and engaging an air traffic controller in an unnecessary hot conversation few minutes before take off.

Turning plane into hotel WHEN ED Guidicelli, a 40-year-old antiques enthusiast with a knack for restoration, saw the 42-passenger Convair, he wanted to turn it into a studio-style, luxury bed and breakfast. But this resident of Ohio, in the US, did not expect to encounter naysayers. The Township officials said they had received many complaints from residents, pressuring them to put an end to Guidicelli’s dream. Incidentally, the plane was part of Bhagwan Shree Rajneesh’s fleet and was once emblazoned with the words “Air Rajneesh”. When he left India in the early 1980s and established a commune of his followers in Antelope, Oregon, he created his own airline to shuttle disciples to and from the remote, arid town.

CRUISING HEIGHTS May 2007

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COVER STORY

Photos: H.C. Tiwari

THE UNPUTDOWNABLE DR VIJAY MALLYA

n June 2004, Singapore Airlines announced two bigticket flights into the US — the non-stop into New York would be an 18-hour wonder and the non-stop into Los Angeles would be done in sixteen-and-a-half hours. The New York flight, dubbed as the future of aviation, was an 8,900-nautical mile journey over the North Pole. The flight required 2,22,000 litres of fuel, weighing more than 10 times as much as the passengers. Return tickets on the route cost Rs 60,000 in economy class or Rs 3.5 lakh in “Raffles” business class. A 14-cabin crew and six flight-deck officers, each working four-hour shifts, were on duty. A special “passengers’ corner” on board allowed people to relax and stretch during the flight. Singapore Airlines has equipped its new aircraft with special cupboards big enough to take a corpse, in case any passenger kicked the bucket en route.

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COVER STORY

Photos: H.C. Tiwari

THE UNPUTDOWNABLE DR VIJAY MALLYA

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COVER STORY SIA had ordered five A340-500s to power this ambitious, new, cutting edge project. It has ordered none after that. The Los Angeles flight has been reduced to one weekly from a projected daily into the US west coast and the flight into Newark limps along. The payload penalties are huge, and SIA admits privately that it has been a losing proposition. And the A340-500, dubbed as the future of long-distance travel, has sold a total of 26 aircraft since production began. Clearly, Vijay Mallya can teach Singapore Airlines a thing or two about aircraft and airline management. The Kingfisher Airlines’ boss has ordered 15 of the A330/340 family and has hinted that he would use them non-stop on the India-US route. The New World has incidentally been something of an obsession with the liquor baron, who has been incessantly lobbying the government to go abroad. And Praful Patel says neither yes nor no. But those in the know say that, friendship apart, the hard-nosed minister won’t easily oblige his Rajya Sabha colleague. So what if we are not allowed to fly from India to the US? We will fly from the US to India. So goes Mallya’s argument. He knows the existing rule — a minimum fleet of 20 aircraft and been in business for five years — effectively bars his ambition, as his airline will complete only two years this month. After the signing of the Indo-US Open

ATR 72-500

: 10

A319-131

A319-100 CJ

A320-232

: 10 (31 on order)

A321-232

: 5 (2 on order)

A330-200

: 5 (on order)

A340-500

: 5 (on order)

A350-800

: 5 (on order)

A380-800

: 5 (on order)

Total

: 29 (76 on order)

Skies agreement more than a year and half ago, Mallya applied the reverse logic. With his offspring being US citizen, he thought it should not be a problem to fly from San Francisco or New York to Delhi and Mumbai. He recently disclosed, according to news reports, that his airline will shortly apply for starting an airline in the US to operate flights into India. “An application is being compiled by Kingfisher Airlines’ attorneys and will be submitted to the US authorities in the next six to eight weeks (meaning May-June).” The name of the American subsidiary of Kingfisher Airlines is Kingfisher International. “We have not received any application from Kingfisher for starting flights from the US to India. In the US there are a number of issues relating to ownership, etc. Dr Mallya has family members who are US citizens. However, there is no application at this point,” Blakey said while attending the three-day US-India aviation partnership summit in late April. What does Mallya have to say to that? “If Plan A does not succeed, we will have Plan B or even a Plan C.” The grapevine has it that Dr Mallya may even look at a different make of aircraft to realise his dreams. He has booked the A380, which may take quite some time before he can dream of using them. His deliveries begin several years down the line. In any case, it is ridiculous to suggest

Fifty-five A380s in 20 years

uropean aircraft maker Airbus Industrie hopes to sell 55 of its A380 planes, including 10 freighter aircraft, in India in 20 years. Mysterious sources have been quoted to state that Air Deccan, Jet Airways and state-owned Air India and Indian have evinced interest in the A380. On the same day that this ‘deep throat’ spoke, newspapers had comments about all the dramatis personae. Gopinath was blunt and to the point: the A380 is not an aircraft for the domestic skies (at least not in the Indian context) he made it plain. Naresh Goyal has ordered the A330s (and taken delivery of some as well), but he has not uttered a word about this aircraft. But the manufacturer received a big boost with the reaffirmation of an order for 43 of its A380 super-jumbo aircraft from Dubai-based Emirates, and a contract for another four. Emirates, which

Kingfisher Fleet

was one of the aircraft’s first customers, is also reported as having settled its compensation claim for delivery delays that have blighted the A380 programme. Emirates will now receive its first A380 aircraft in the third quarter of 2008. Emirates chairman Sheikh Ahmed Bin Saeed Al-Maktoum said, “We have repeatedly said we are committed to the A380 and, having now fully settled all past issues, this latest agreement should leave no one in any doubt about our faith in Airbus, the company and the quality of the aircraft we are committing to.” Emirate’s president Tim Clark clarified that the four extra A380s ordered recently were not part of the compensation package for delayed deliveries. “This is a new order for aircraft we need and we were able to take some delivery slots that opened up,” he said. EK is confident that Airbus has sorted out its A380 problems and he said that once it is in service, air-

CRUISING HEIGHTS May 2007

lines will clamour to get onboard: “The seat-mile costs are stellar.” Clark also gave the beleaguered French another thumbs up when he said, “There is a canyon” between Boeing 787 and Airbus A350. After reviewing the plane’s design at Airbus’ Toulouse, France, base, he remarked, “That gap has closed. Airbus listened.” Clark’s comments are significant considering that, apart from Emirates, Etihad and Qatar Airways, several American carriers are in the process of finalising their fleet plans. The top three airlines in the US — American, United and Delta —had approached Boeing and sought delivery of nearly 500 aircraft in the next three years — an impossibility for the manufacturer. It only reflected the enormous success of the 777 and 787 programmes and dramatic revival of the US-based airlines industry. US Airways is about to place one of

that it would be non-stop into the US on an A380. The A350s are still some time away. So which aircraft is Dr Mallya going to use in case he gets permission to fly to the US? The lease market is red hot and there is virtually no aircraft available, either for love or money. So what happens to Kingfisher’s dreams? As for cheaper tickets, only Dr Mallya can explain the logic. He started his airlines as a ‘funliner’ that would be in between an LCC and a full-service carrier. When it began operations, it was an alleconomy, full-service carrier and Dr M decried this business of ‘low cost’ stating that seventy per cent of all costs were the same, so the concept made no sense. Six months down the line, the good doctor decided that it was no fun having an airline without a great business class and introduced Kingfisher class. To be fair to the man, Kingfisher Airlines has set a standard of service that has won widespread appreciation from both the industry and the chattering classes. The business class has won rave reviews and the airline has, in its two years of operation, climbed to close to 13 per cent of the market share. “Vijay views himself in the context of Jet Airways. He doesn’t view anyone else as real competition. At each turn, he wants to beat Jet, both in terms of class, efficiency and numbers,” said one airline industry insider, who declined to be named. the largest aircraft orders made by any US carrier since the industry collapsed in 2001, a decision critically important to the future of Airbus SAS as it tries to catch up with Boeing Co. The carrier’s choice for its 60-airplane purchase will be closely watched by American Airlines, Delta Air Lines, Northwest Airlines and United Airlines, all of which are expected to buy planes over the next two years as their finances strengthen. Qatar Airways is A350’s biggest customer to date. The airline said that it plans to sign a firm order for 80 planes for use on mediumand long-haul routes. In India, thus far, Kingfisher is the only Indian carrier seeking the plane, which has 853 seats in an all-economy configuration and 475-525 in a threeclass configuration. And even Mallya, who blows hot and cold as per his mood, swung like a yo-yo from one side to the other. On the one hand, Mallya said he was still discussing the possibility of adding more aircraft, not just A380s. The airline can firm up orders for the five options that it has when it placed the orig-

Kingfisher Airlines has set a standard of service that has won widespread appreciation from both the industry and the chattering classes inal order. Minutes later he said, “I don’t think the A380 is built to fly an hour-anda-half”, indicating the limited possibility of flying it on domestic short-haul routes. And Thulasidas said that AI wanted “more planes” to cover “more cities” and not an A380. So much for deep throat and the interest evinced by Indian buyers. “This is ideal for budget carriers in India as A380 can be deployed on shorthaul routes with minor changes in the engine structure,” says a senior Airbus executive. Kiran Rao, executive vicepresident, marketing & contracts, customer affairs, and company are lucky that no one seriously questioned them on this remarkable piece of information. What they are saying is akin to putting the aircraft on the Singapore-Bangkok route with profitable results! It may not be a bad idea for Rao and Leahy to do that, considering SIA is their launch customer. Airbus sources said Kingfisher was planning to convert its five options for buying A380 into firm orders, taking its total order to 10. However, Vijay Mallya, the airline’s chairman and CEO, said, “I

CRUISING HEIGHTS May 2007

He is pretty right. Mallya can’t stand Naresh Goyal and believes he has much to do with what ails Indian aviation. To a large extent, the rules, he believes, favour Jet and smack of crony capitalism. He doesn’t say that in so many words, but it is evident he can’t understand the rules that stop him at every turn. By the same yardstick, Mallya’s being on the Civil Aviation Consultative Committee (as a Rajya Sabha member) and continuing to run an airline is nothing but a gross conflict of interests. Agreed, he doesn’t take any decisions at the committee meetings, but he gets a seat that none of the other airline operaam yet to take a decision in this regard. We are planning to deploy the plane on the India-US route for non-stop services. I will be offering US flights 30 per cent cheaper with A380.” How Mallya hopes to do a non-stop on the A380 is anybody’s guess. It isn’t built for such a range and how the costs will be cheaper is also something that only he can best explain. But Airbus did receive a big boost with Flyington Freighters, promoted by the Reddy family, promoters of one of India’s largest newspaper groups, Deccan Chronicle, and Odyssey, the retail chain, having selected the A330-200F for its entire fleet and signing a firm order for six aircraft, re-affirming its earlier commitment. Flyington Freighters Ltd was the first cargo airline to buy the A330-200F, and will be the world’s first operator of the new aircraft. The A330-200F is the newest freighter from Airbus and received its industrial launch in January 2007. “We opted for an all-Airbus fleet because the A330-200F offers unbeatably Continued on page 30

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ATR 72-500

: 10

A319-131

A319-100 CJ

A320-232

: 10 (31 on order)

A321-232

: 5 (2 on order)

A330-200

: 5 (on order)

A340-500

: 5 (on order)

A350-800

: 5 (on order)

A380-800

: 5 (on order)

Total

: 29 (76 on order)

Fifty-five A380s in 20 years

Kingfisher Fleet

CRUISING HEIGHTS May 2007

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COVER STORY

Kingfisher’s odyssey June 25, 2004

UB Group announces it would launch a low-cost, no-frill airline by the year-end with eight Airbus aircraft.

July 24, 2004

Signs $240 million deal with Airbus to buy four A320 aircraft, with an option to buy eight more planes for the new venture.

July 28, 2004

Announces the launch of the airline, christened Kingfisher Airlines.

September 26, 2004 Announces that Kingfisher Airlines would commence commercial flights in the first quarter of 2005 with a fleet of four new A320s. February 23, 2005

Signs agreement with Airbus for the purchase of three brand new A319 aircraft.

April 25, 2005

Takes delivery of its first brand-new A320 aircraft.

May 4, 2005

Directorate General of Civil Aviation (DGCA) issues its Air Operators Permit to the airline.

May 8, 2005

Slapped with a lawsuit by its main rival, Air Deccan, for poaching Air Deccan’s technical staff, signs a nopoaching pact. Later denies the existence of such a pact.

May 9, 2005

First flight takes off from Mumbai for Bangalore.

June 15, 2005

Becomes the first Indian carrier to sign a firm contract for five A350-800, five A380 and five A330-200.

October 18, 2005

Gives a clear hint that he is ready to pick up some stake in Air Sahara.

November 20, 2005 Places an order for 20 ATR72-500 aircraft at the Dubai Air Show 2005 in a deal valued at US $350 million. November 21, 2005 Places an order for 30 A320 aircraft at the Dubai Air Show 2005 in a deal valued at US $1.9 billion. December 6, 2005

Is recognised and honoured by CAPA as the ‘Best New Airline of the Year 2005’ in the Asia Pacific and Middle East.

January 9, 2006

Withdraws from the race to buy out Air Sahara, saying he is not interested in the bid as the airline promoted by him is doing well.

January 21, 2006

Claims to have registered a company called Kingfisher International in the US and aims to start international operations by mid-2007.

February 19, 2006

Is bestowed the 2006 Award for ‘Service Excellence for a New Airline’ by Skytrax.

February 20, 2006

Places orders for 15 aircraft, worth about $270 million, with French turboprop manufacturer ATR along with an option to buy another 20 additional aircraft.

March 30, 2006

Takes delivery of its first ATR72-500 aircraft in Toulouse, in France.

April 24, 2006

Signs a mega $1 billion deal in Germany to buy five new A340-500 airplanes, with options for five more aircraft.

May 10, 2006

In just one year, garners a nine per cent share of the market.

ADD

November 15, 2006 Takes delivery of four A321 single-aisle aircraft. November 21, 2006 Signs a $500 million deal with American aircraft manufacturer Pratt and Whitney to power its new fleet of Airbus aircraft.

December 5, 2006

Does not support the government’s move to scrap congestion surcharge.

December 9, 2006

Joins hands with Dish TV to provide live, in-flight entertainment, thereby becoming the first carrier in the country and only the second airline worldwide to offer the facility.

April 26, 2007

Announces that the A380 would visit India early May in the run up to the airline’s second anniversary celebrations.

May 7, 2007

Says he is keen about picking a stake in domestic budget carrier Air Deccan, but is not ready on buying out the no-frills airline.

CRUISING HEIGHTS May 2007

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COVER STORY tors get. They are on the other side of the fence. Some months back, Praful Patel told members of the Federation of Indian Aviation that they would assess business plans of new companies before they would be given a licence to get into the business. Vijay Mallya is extremely fortunate that he got into the business before his friend passed this edict. Considering that his is a privately held entity, no one knows what the profit-and-loss account of Kingfisher is or what the balance sheet says. Mallya is sanguine about it. “No airline can do without an IPO. Sooner or later we have to float one,” the Kingfisher Airlines’ chairman told the Hindu Businessline recently. UB Holdings, Mallya said, has already sought shareholders’ approval for raising up to Rs 6,000 crore through a mix of funding options for acquisition of aircraft and setting up infrastructure for the airline business. He told the financial paper that his company had received a proposal from a major investor recently and his company officials will hold talks with the investor shortly. Mallya said he will not dilute more than 49 per cent equity in Kingfisher Airlines. “We will continue to hold at least 51 per cent in the airline at any given point of time.” Reacting to Capt Gopinath’s statement that he will never sell his airline to Mallya, he said Kingfisher Airlines had not bor-

Fifty-five A380s... Continued from page 27 low operating costs and significant operational benefits. The aircraft is new, modern and designed for today’s business needs. The aircraft will give Flyington Freighters a solid springboard for success in the rapidly expanding Indian freighter market,” said Venkatram Reddy, chairman, Flyington Freighters Ltd. But it must be mentioned that during last year’s Farnborough Air Show, Flyington announced its decision to buy at least four 777 freighters from Boeing. It made much song and dance about it. However, like the American carriers, it wanted the freighters delivered yesterday, which was not possible for Boeing. So, on the rebound, it has now gone to Airbus for A330-200 Freighters. The fact remains that A330s were available even last year. But it must be mentioned that both the A330s and the A340s have lost out in the medium- and long-haul markets sim-

Mallya’s being on the Civil Aviation Consultative Committee (as a Rajya Sabha member) and continuing to run an airline is nothing but a gross conflict of interests ply because of the versatility and operating saving that the 777s and the 787s offered. Indeed, the plane has already secured its spot in the history of aviation. The 787 is the first to be made mostly of lightweight carbon fibre, instead of aluminium. Frankly, how many fresh orders have been received for the A340 series? After all, Naresh Goyal’s leased A340-300E from South African Airways to fly his India-UK or Mumbai-London and DelhiLondon route was a compulsion, as he could not get any better aircraft to do this. He was losing heavily on account of both high lease charges and fuel economics. The Gulf-based carriers are using them because of no alternative. After all, it is a natural trend. When Boeing’s oldgeneration 757 and 767 gave way, the A340s came to replace them in the widebody section. Now the A340s have been replaced by the 777s and now by 787s. Clark debunked rumours of an impending order for 100 A350s and 60 A330s. “Sure, if we go the A350 route, we will need some interim lift, and the A330 would fit that bill, but no decisions

CRUISING HEIGHTS May 2007

rowed even a single rupee to run the operations. “Those who run an airline on other people’s money do not know its value,” he said. Clearly that’s what gives Vijay Mallya the ability to plan putting an A340500 on the route to the US or buy several of the gargantuan A380s without knowing where he will use them. No, the public money is not being used; it is the poor shareholders’ money in this case. “Our cost per kilometre is as high as Rs 4,269 per seat,” he said, “It is easier for Capt Gopinath to say that he is from Mars and I am from Venus, but we are doing far better than them.” Meanwhile, Mallya, as per reports, has discussed with an Abu Dhabi-based engineering firm to start a private MRO in India. “We are discussing with an Abu Dhabi-based firm to establish an MRO in the country. Issues, like venue, costs, etc., are being discussed,” he was quoted over the wires. He has also set up a training academy and is seriously looking at the option of a flying academy. There isn’t a thing that Vijay Mallya doesn’t want to do. Don’t be surprised if he wants to do a galactic flight tomorrow. Gopi is half right — he could well be from Mars — but his fellow Kannadiga rules… there isn’t a planet in the Milky Way that can match him in orbit, style, flamboyance or resonance. He’s unique and unpredictable. have been made,” he said. He added that he is unconvinced about Airbus’ intention to stick with composite panels on an aluminium frame for the A350. There are many who want to go the all-composite route, which, he believes, is the future.That is why Airbus is touting the A350 as its next big aircraft. Qatar Airways is the A350’s biggest customer to date. The airline said recently that it plans to sign a firm order for 80 planes for use on medium- and long-haul routes. British Airways has said it will make a decision later this year on replacements for 14 mid-range 767 planes, and 20 of its 747 double-deckers. US Airways is the first major airline to pit the hot-selling 787 Dreamliner against Airbus’ new mid-size jet, the A350XWB, which will enter service in 2013. Meanwhile, Airbus Industrie has completed painting the A380 it is scheduled to deliver to Singapore Airlines in October, while Boeing is ready with the tail section of its Dreamliner 787. For the record, the Dreamliner is sold out until the “back end” of 2013.

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SPECIAL REPORT

Newark via

Brussels T With the help of Jet Airways, Brussels seems all set to materialise its dream, the dream of every ambitious airport for that matter, to become a gateway to the world. The Belgian capital may become a favourite hub soon.

CRUISING HEIGHTS May 2007

O BECOME a gateway to the world is the dream of every ambitious airport. And certainly for Brussels. As the airport of the capital of Europe, this ambition hardly seemed feasible. To see the great parts of the world, especially towards Asia, you first have to fly from Brussels to Frankfurt, London, Paris or Amsterdam. That will change today. Starting today, Brussels Airport and Brussels Airlines are taking a major new step forward towards making their dream come true. Thanks to Jet Airways. Well, for a change it wasnâ&#x20AC;&#x2122;t Civil Aviation Minister Praful Patel, a close friend of Jet Airways Chairman Naresh Goyalâ&#x20AC;&#x2122;s who was speaking, but another close friend, Prime Minister Guy Verhofstadt, of Belgium, who was speaking at the launch of the Jet Airways hub at Brussels Airport. Of course, Praful was there; having flown

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SPECIAL REPORT in specially from Delhi for the event. Verhofstadt waxed eloquent on the relationship, “In early November 2006 I was on a tour of India. … During my last stop, in Mumbai, I made two new friends. First of all, the minister for civil aviation, Praful Patel. Just like in Belgium, where the private and profitable Brussels Airlines replaced the loss-making Sabena, Mr Patel deregulated the aviation industry in India. He privatised the airports, permitting domestic airlines to operate to international destinations. This paved the way for making the Brussels Inc project possible. “I met Mr Naresh Goyal not once, but several times in Mumbai. Mr Goyal is an impressive man. During our lunchtime discussion about cooperation between Jet Airways and Brussels Airport, I was not only convinced that we would soon be partners, but also good friends”. According to the airline’s CEO Wolfgang Prock-Schauer, Jet chose Brussels (BRU) over London Heathrow, Paris Charles de Gaulle, Amsterdam and Frankfurt because of lack of attractive morning slots and cumbersome transfers, especially at LHR. Brussels Airport, privately owned since 2005, to add new long-haul destinations and the absence of a strong competitor, also played in its favour. Prock-Schauer told one journalist that the airline received a “good” marketing and support package “within the EU framework of what is allowed.” Does the Brussels hub fits in with Jet’s

Jet Airways plans to operate a total of ten daily flights via Brussels connecting cities in India, Canada and the US. Subject to government approval, Jet Airways also plans to operate from Bangalore, Ahmedabad and Chennai to LA, Chicago and New York via Brussels. BEAMING OWNER: John Leahy, COO (Customers), Airbus, hands over the first A330 to Jet’s Naresh Goyal at Toulouse. Jet’s flight attendants (extreme right) sport the new uniforms.

CRUISING HEIGHTS May 2007

international expansion plan? The airline is taking delivery of ten 777-300ERs and ten A330-200s through October 2008, and one of each was at the tarmac at Brussels in new livery and configuration for the launch of the hub. In fact, the first 777300ER and A330-200 aircraft were received at Brussels specially for the event. The carrier has also ordered ten 787s. It currently serves six international destinations, growing to 15 by October. Jet will launch daily, non-stop services from Brussels to Mumbai, New York (Newark), from August 5 and later this year will also offer daily, non-stop services from Brussels to Delhi and Toronto. In the future, Jet Airways plans to operate a total of ten daily flights, via Brussels, connecting cities in India and cities in USA and Canada. Subject to government approval, Jet Airways plans to also operate from Bangalore, Ahmedabad and Chennai to Los Angeles, Chicago and New York (JFK), via Brussels. Jet Airways and Brussels Airlines have signed a memorandum of understanding implementing code-share, frequent-flyer partnership and through-check facilities. Brussels Airlines will implement codeshare on Jet Airways-operated flights between Brussels and Mumbai, Brussels and Delhi and Brussels and Toronto. To begin with, Jet Airways plans to codeshare on Brussels Airlines flights from Brussels to Stockholm, Oslo, Birmingham, Geneva and Madrid, and will later on expand the code-share to a total of 25

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routes ex-Brussels, subject to government approval. The Belgian Prime Minister also had several other Jet initiatives to outline, “I learned that Mr Goyal also has plans to use our flight academy in Brussels to train approximately 150 pilots. But Mr Goyal also has other creative plans. He wants to set up a travel product for transit passengers. Instead of letting them just sit around waiting in the airport, he wants to offer them a sightseeing tour of Brussels. I can only welcome these ideas. They are a great way of promoting our country. And they also create hundreds of direct and indirect new jobs.” Naresh Goyal was no less effusive. The Jet chairman said, “Jet Airways was looking for an opportunity to combine its expansion plan to USA and Canada with an efficient hub in Europe together with a strong national carrier offering a wide network. We have found them all at Brussels. Jet Airways is also pleased to offer its customers a world class in-flight product, with the latest innovations in the airline industry.” It is clear that Jet has managed to extract a hugely competitive deal from Brussels Airport, though they aren’t spelling out the details. In fact, Brussels is believed to have laid out the red carpet for Jet after another European airport, Berlin, started wooing Jet and other Indian carriers by offering a package whereby airlines would have to pay only 20 per cent of the airport costs during the first year of operations, progressing to full cost recovery during the fourth year of operations. By choosing Brussels, Jet now joins a host of other global airlines, including US carriers, such as American Airlines, Continental Airlines and Delta Air Lines, that have increased flights across the Atlantic through Brussels. With Europe now becoming key to Jet’s global operations, it is evident that the airline will soon make a move to join one or the other global airline alliance. Star, which was originally talking to the Air India-Indian combine, is now seriously pursuing Jet. But as per the indications so far, Jet is yet to make up its mind. But there are several other key issues that need resolution. Perhaps, the most important is the fact that Jet has several European partners, who participate with Jet in a variety of programmes, including code-share, redemption of miles, etc. These include Air France, Austrian Airlines, Gulf Air, KLM, Lufthansa, Northwest Airlines, Qantas, South African Airways, Swiss, Thai and British Airways. Most of them fly into Brussels. How will

NEW COLOURS: A Jet Airways aircraft in the new livery.

It is clear that Jet has managed to extract a hugely competitive deal from Brussels Airport, though they aren’t spelling out the details. In fact, Brussels is believed to have laid out the red carpet for Jet after another European airport, Berlin, started wooing Jet and other Indian carriers. CRUISING HEIGHTS May 2007

they react to the code-share that Jet will be sharing with Belgian? Also, what happens to their own programme with Jet? To be fair even Brussels Airlines must be having a view on these. These are issues that haven’t been spelt out as yet. Moreover, what are the regulatory approvals required for an ex-Brussels flight? Have they got anything to do with India’s own bilateral or air services agreement? After all, Jet cannot simply pass on its flight slots to Brussels Airlines for flights into India. It has to be the Government of India. In that event, is a new bilateral agreement in the offing between India and Belgium? Will that provide for frequencies even more than offered to big carriers, like Lufthansa, British Airways and Air France? Considering his clout in the marketplace and the corridors of power, Naresh sure can do that. What it would translate into is a period of intense competition between the European carriers on the one hand and Jet and Brussels on the other. Perhaps, the most important question, as far as Jet is concerned, is the load factor ex-Brussels. Will passengers be willing to travel to London and elsewhere via the Belgian capital when they are traditionally used to the London-Frankfurt hub? Moreover, will they be willing to make a detour to Brussels for onward trips either way on Jet? While there are no clear indices as yet, Jet is certain that the yields will more than justify its decision. Prock-Schauer expects 70-75 per cent of the passenger traffic between India and the US via the hub to be sold at either end, with the remainder being European feed. We should know in a couple of months.

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AIR CARGO

Express Delivery A key driver of the boom in the economy, the express industry in the country is all set to touch Rs 6,203 crore by the year 2008, reports Tirthankar Ghosh

HE economic boom is taking the express industry places. Valued at approximately Rs 4,000 crore, it has been growing by 25 per cent every year. This growth in the present situation is quite impressive, given the fact that in the new era of Internet, dependence on postal/express service has been adversely impacted. However, it has opened new horizons through B2B and B2C trade models. In that event, growth in the manufacturing sector is bound to boost the need for India-centric express delivery and logistics services. With a growth of 20-22 per cent per annum, the size of the industry is expected to more than double over the next five-year period. In its early days, the express industry was synonymous with on-board couriers carrying documents on commercial flights. Business users, who were quick to appreciate and exploit these innovative services, saw express delivery exclusively as an air operation. The industry, however, has changed dramatically since those days. The initial focus on documents has widened into the transport of packages and freight, carried by fleets of fully owned or dedicated aircraft, trucks, trains and delivery vans. The bulk of the business is dominated by guaranteed 24-hour or next-day deliveries. Overnight air services, while an essential link in the delivery chain, are now closely coordinated with road and rail movements, in integrated, precisely timed, door-to-door operations. Everyday, thousands of employees serve the distribution needs of an increasing number of businesses within India and the rest of the world. The express industry in India has indeed come a long way from its inception. Says Tulsi N. Mirchandaney, senior vice-president, marketing & projects, Blue Dart, â&#x20AC;&#x153;Domestic consumption is driving the Indian economy, creating a wide span of opportunities in distribution, from mobile phones to credit cards, auto components to pharmaceuticals.â&#x20AC;? The increasing affluence expanding into Tier II and III cities, which are emerging as important nodes of production, consumption or distribution, is indeed

SPEED IS THE ESSENCE: The express industry has prospered because of speed and reliability

CRUISING HEIGHTS May 2007

encouraging. These cities are enjoying more rapid growth than the metros and provide a wider catchment for suppliers of goods and services, and interesting distribution opportunities. This increased competition, says Mirchandaney, has given rise to a greater sense of urgency, to be first to market while sustaining cost-competitiveness. Express industry players have a major role in ensuring this. Logistics is estimated at between 11.8 per cent 13 per cent of GDP, which is

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higher than in more developed economies, presenting the whole sector with opportunities to create solutions that can help make our customers more successful. On the part of the customers who opt for the express industry, expectations, too, have scaled up. “They expect a greater ability to manage complexity and provide complete solutions — a more strategic partnership to meet common goals, rather than a fleeting transactional relationship. The onus is on us,” emphasises the Blue Dart senior vicepresident, “to continuously innovate ahead of the curve while retaining our fundamental values of building customer trust and pride in our work amongst our people.” When the moves by the governmentcontrolled Posts and Telegraphs (christened India Post not too long ago) to launch a dedicated freighter service for express operations made its appearance, it did not surprise the industry. After all, India Post was not doing too well and the freighter operations could be taken as a move for

HI-TECH: The express industry has moved ahead on the wings of planes and the power of computers and the Internet

Indian and Gati have been working together for the last 11 years, and the idea of the joint venture — IC-Zipp — was to have synergy between the large air and surface networks CRUISING HEIGHTS May 2007

diversification. However, coming as it did on the heels of an announcement about a tie-up—and a big one at that—it was time to sit up and take notice. The move was the tie-up for a proposed cargo service between Indian and Gati, a leader in express distribution. Indian chairman and managing director Vishwapati Trivedi pointed out that the plans were to start air cargo service by the middle of this year. To be known as Indian Cargo, the move would see Indian converting its ageing fleet of 11 Boeing 737-200 aircraft into freighters. The joint venture, primarily meant to cater to the express sector, has already been given a name: IC-Zipp. In fact, Indian and Gati have been working together for the last 11 years, and the idea of the joint venture was to have synergy between the large air and surface networks. Commenting on the move to join hands with Gati, Indian director (commercial) Anita Khurana said, “Amid a robust trade and business growth

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Logistics of numbers

hat is 3PL or 4PL? Third party Logistics (3PL) is the supply chain practice where one or more logistics functions of a firm are outsourced to a 3PL provider. Typical outsourced logistics functions are inbound freight, customs and freight consolidation, public warehousing, contract warehousing, order fulfilment, distribution and management of outbound freight to the client’s customers. Value-added services,like repackaging, assembling and return logistics,can be provided.A 3PL provider manages and executes these particular logistics functions. As for 4PL, a term coined by Accenture, it is “an integrator that assembles the resources, capabilities and technology of its own organisation and other organisations to design, build and run comprehensive supply chain solutions”.Every organisation has its own interpretation of and ideas on what exactly a 4PL should offer. To add more complexity to the interpretation, a few select groups of service providers actually provide 4PL type services. They are IT service providers, private organizations and logistics service providers (traditionally known only for 3PL activities).

“Amid a robust trade and business growth environment, companies can now seamlessly access the networks of two market leaders. So, whether it’s a business proposal, signed contracts, mass mail, print proofs, small packages or architectural drawings, customers can rely on our extensive network to get courier delivered on time.” ANITA KHURANA Director (Commercial), Indian

CRUISING HEIGHTS May 2007

environment, companies can now seamlessly access the networks of two market leaders. So, whether it’s a business proposal, signed contracts, mass mail, print proofs, small packages or architectural drawings, customers can rely on our extensive network to get courier delivered on time.” IC-Zipp will be launched in 119 cities of the country in the first phase. The pricing of its products will be competitive: ranging from Rs 50 to Rs 150 for 500 grams. The other features include door pick-up, realtime tracking and 24-hour service. Mahendra Agarwal, Gati’s CEO and managing director, added, “The agreement will enable the two companies to complement each other’s strengths, namely extensive network, multimode capability and a large base of customers.” The tie-up, according to industry watchers, would prove to be a win-win situation for the airline, Gati and the customer. Reason: Indian has a large network, a fleet of 74 aircraft that can carry 1,000 tonnes of cargo a day. Gati has the capability to deliver in 594 of the 602 districts of the country. The tie-up will allow the customer to ensure they have on-time delivery to most parts of the country. IC-Zipp, when it does take wing, will be in direct competition not only with the private domestic express industry, led by Blue Dart, part-owned by DHL and even the state-owned India Post. If reports ema-

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Express industry expresses discontent

he Express Industry Council of India (EICI) is upset with the Indian Post Office (Amendment) Bill, 2007. Representing 3,000 companies in the courier and express sector, EICI has taken up the issue of amendment to the Indian Post Office Act, 1898, with Prime Minister Manmohan Singh. According to the draft bill, the new rules charted out by the ministry of communications mention that courier companies can deliver letters weighing less than 150 grams only if they charge customers two-and-a-half times more than what the government charges for its Speed Post service. For non-urgent couriers, the difference would be as much as five times. This 150 grams-and-lower category is a high-volume one, comprising bills, cheques, vouchers and letters. According to industry experts, 40-45 per cent of all courier shipments are in the 150gram category. Incidentally, earlier, the government had decided to ban courier companies from delivering letters weighing below 500 grams.

nating from Airlines House are true, India Post has already started talks to lease at least three 737-200 aircraft. While India Post’s plans will certainly go well with Indian’s own plans to launch a dedicated freighter service in the country, there is certainly going to be a clash of interests since the markets both would be targetting would be the same. Whatever the outcome may be, the boom in the Indian economy, along with the growth in the retail and manufacturing sectors, has given a fresh fillip to the air express and logistics business in the country. Blue Dart Express, for example, will be setting up 57 new facilities across the country at a cost of Rs 22 crore and around half of its infrastructure expansion will come up in the south of the country. To service these facilities, the company is all set to induct its eighth aircraft. According to.Mirchandaney, Blue Dart would induct a 757 by the year-end to add to its fleet of seven Boeings. Incidentally, it will be the only player to operate a 757 in the domestic skies. The company’s aircraft fleet is now operating with a load factor of 80-85 per cent (see interview). In fact, Blue Dart has pioneered the express industry in the country. Says Mirchandaney, “We’ve pioneered many firsts in the industry, amongst them being the first and only domestic cargo aviation infrastructure in the country with dedicated jet freighters. Today, we have a fleet of two B-757 and five B-737 aircraft operating to the seven metros through which we service over 14,400 locations across a diverse

The express industry has protested the Indian Post Office (Amendment) Bill, 2007. The bill, which is being viewed as a death knell for small players, has been termed as unfeasible by Raj Kumar Saboo, chairman of EICI and deputy managing director of First Flight Couriers. Industry watchers believe the move will not work simply because big business houses will not use Speed Post facilities. To begin with, anything to do with the government is viewed with concern and, secondly, India Post will not be able to provide personalised services like the courier companies, which not only deliver on time but can also be tracked. It is no wonder, then, that industry chambers, like the CII and the FICCI, along with the EICI, have been lobbying to ensure that the department of posts, being a business competitor, should not be allowed to regulate the private sector.

Despite the boom, there is apprehension all around that the express companies would lose a lot of their business if a government order, making it mandatory for consumers to send packets weighing up to 150 grams by India Post, comes through. CRUISING HEIGHTS May 2007

and complex Indian geography. We have that workforce of over 5,000 employees driven by the single-minded focus of delivering peace of mind to our customers.” Despite the boom, there is apprehension all around that the express companies would lose a lot of their business if a government order making it mandatory for consumers to send packets weighing up to 150 grams by India Post, comes through. According to the draft Indian Post Office (Amendment) Bill, private companies may be allowed to carry letters up to 150 grams in urgent or express mail at a charge that will be two-and-a-half times more than that of postal department’s Speed Post’s. The express companies are putting pressure on the government to stop the order through their own body, the Express Industry Council of India (EICI). Points out Mirchandaney, “Our views on the proposed amendment to the postal bill have already been tabled by the EICI, whose stance is, by now, well known. We are not against modernisation of a law that dates back to 1898. We believe laws should reflect modern society’s needs and global best practices. However, the proposed amendment is against the spirit of economic reforms and is regressive. There are many successful, profitable, postal businesses around the world and some great examples from which to draw inspiration and practical solutions… The amendment in its present form would annul a 30-yearold business and financially impact thousands across the country who have worked

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“Customer is H ow has the express market grown in the past one decade? Express industry has evolved from a primarily document-centric service to a critical supply-chain support for many industries. In an increasingly competitive environment, where the focus is on pruning inventory costs and racing to capture customer eyeballs and footfalls, express provides the speed and reliability that meet the nature of current demand — of almost limitless choice and short attention spans. We have also responded to the infrastructure challenge of a developing economy by investing in extensive air and ground infrastructure, networks, technology and people to enable globally benchmarked services aligned to changing customer needs. Positive customer response and loyalty have, in turn, spawned a host of players that have found their niche across the spectrum of express services, creating employment opportunities for thousands in the industry.

A seasoned campaigner of the express industry, Tulsi Nowlakha Mirchandaney, senior vice-president, marketing & projects, Blue Dart Express Limited, told Tirthankar Ghosh that the strong economic environment would support the express industry players. 38

CRUISING HEIGHTS May 2007

A credit rating agency has predict a 20 per cent plus growth in the next 5-10 years in the express industry. What is your response to that? There have been projections of a 20 per cent growth in the next 5-10 years. However, our internal estimates and market research peg it at a more conservative 17.2 per cent compared with the early years which,witnessed strong growths of between 30 and 35 per cent. India’s GDP is buoyant and the government has projected growths of between 8and10 per cent. Both services and manufacturing have registered significant growths. We have reason to be optimistic because these macroeconomic indicators augur well for our business. What makes Blue Dart different from other express services in the country, and that includes the MNCs? In our business, I don’t believe the customer really cares about lineage or pedigree — he is more concerned about service quality, consistency, responsiveness

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”

concerned about service

What is the load factor on your planes today and how do you operate them? What are the problems, if any, that you face at our airports? Our current network load factor is about 80.7 per cent. We inducted two B757s last year, augmenting capacity from 166 tonnes to 250 tonnes across 60 route connections each night. We are constrained by the sizes of the facilities at the airports, as they have remained the same while our loads have increased five-fold. In addition, parking bays, airside/cityside access and traffic congestion adversely impact costs as well as service quality. We understand that you operate the aircraft on a hub-and-spoke principle.

Could you please give us details? Ours is not a classic hub-and-spoke model, but a unique network that meets our OD pair demand expectations as well as the time constraints under which we operate to support our business model.

“

Our current network load factor is about 80.7 per cent. We inducted two B757s last year, augmenting capacity from 166 tonnes to 250 tonnes across 60 route connections each night.

“

and reliability, because these aspects directly impact his business outcome. These attributes build a trusted brand that ensures a loyal following. We’ve done things differently to embed that trust in our brand and deliver on our promise. Since inception, our focus has been on the delivery of service excellence and, it’s a source of great pride to our people that, as a home-grown organisation, we’ve benchmarked ourselves to global standards. To build that trust, we’ve pioneered many firsts in the industry, amongst them being the first and only domestic cargo aviation infrastructure in the country with dedicated jet freighters. Today we have a fleet of two B757 and five B737 aircraft operating to the seven major metros through which we service over 14,400 locations across a diverse and complex Indian geography. We have a workforce of over 5,000 employees driven by the singleminded focus of delivering peace of mind to our customers. We are the only express company providing the entire spectrum of services from air express (both domestic and international), airfreight, ground and charters. Our customer loyalty has validated our business model and quality service. In 2006, we carried close to 58 million shipments, weighing 1,52,600 tonnes, to over 14,400 domestic locations and 220 countries worldwide.

CRUISING HEIGHTS May 2007

With the boom in air cargo, Indian is going in for freighters. Will Blue Dart go in for a major shift in business and decide to go for full-scale cargo operations? Our core competence and the heart of our business model is air express, though we include air cargo in our service portfolio. We understand our customers’ businesses and requirements very closely, and would continue to be driven by their needs. What about competition from IndianGati venture in the courier segment? Our value proposition is our unmatched service performance within a predetermined short time frame, door-to-door, across India’s expansive geography. This value is delivered via our integrated air and ground infrastructure, advanced technology and a professional, committed workforce. Air transportation is just one of the components in this chain. I’m sure our strong economic environment would support players who are starting to find out a niche for themselves in the industry.

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Act of contention The proposed amendments by the government to the Post and Telegraph Act 1898 constitute Packets below 500 grams will be shipped by post offices. Private couriers cannot touch these packets. Appointment of a regulator, who will monitor private couriers. Courier operators have to pay regular registration and renewal fees to the postal department. Large courier companies would have to pay universal service obligation fees fixed by the government.

hard to set up the infrastructure and build the business,â&#x20AC;? she says.

his boom in the express industry did not come about in a day. It is part of a gradual makeover from the traditional form of shipping goods and mail as general cargoâ&#x20AC;&#x201D;belly holdâ&#x20AC;&#x201D;to the dynamic express mode. It started some 30-odd years ago in the United States. During the 1970s, there was nothing like express service and only the traditional postal services ruled the scene. Then, when express came in, it added value to the service, offered to customers by top manufacturing organisations. In Europe, for example, express service providers went all out to get business by providing services that no one had offered before: delivering goods to the doorstep. India, however, remained on the sidelines, primarily because the manufacturing sector was not that strong or healthy. The situation changed when AFL introduced express through DHL in the beginning of the Eighties. But even so, express did not make an impact: shippers and forwarders did not bother to change their traditional mode of sending goods. One of the main reasons was the heavy cost of airfreight. The situation changed dramatically sometime in the beginning of 2000. With international trade rising, there was no way in which the express mode could be ignored. Look at how the express business has grown: from Rs 2,500 crore in 2003-04 it has now become a Rs 7,000 crore market. According to Tushar Jani, promoter of Blue Dart and an active EICI member, the growth of the express industry is directly proportional to the GDP and revenue for the country. The industry, which is all set to triple its valuation by 2008, needs the sup-

port and helping hand of the government as with other high growth sectors like IT, telecom and insurance. EICI, the apex body of Indian express industry, believes that around 2004, the organised sector of express industry constituted 65 per cent of market share; semiorganised, along with unorganised sector, made 25 per cent, and the governmentowned EMS Speed Post accounted for the rest.

Facts and figures The express industry in the country employs more than a million people. It contributes over Rs 600 crore in taxes. The express industry is a Rs 4,000-crore industry. It is growing at over 25 per cent per year More than a billion shipments are carried every year.

It was during the 1990s that the express industry in India witnessed progressive growth. The changing economic scenario, led by the removal of trade barriers, the globalisation of markets and trades, resulted in an increase in international business. This saw the entry of almost all global express majors into India. They were equipped with technology-driven valueadded service products that met the various needs of customers. In course of time these express products became popular with users since they were cheaper and better than the government postal service. To add to that there was quality service by the CRUISING HEIGHTS May 2007

The industry has objections For private couriers, packets below 500 grams form a bulk of their business. Naturally, the 500 grams embargo would hit these private players severly. The amendments would not create a level playing field for the industry. Instead, they would protect the postal department while limiting the scope of the private players. Registration and renewal fees are high. The need for a regulator would bind the private players and restrict their growth.

express operators: faster and JIT deliveries, confirmation of deliveries, technologydriven trace-and-track information, etc. According to a market survey carried out by EICI across India sometime ago, the express industry is still undergoing a growth and transition phase, primarily due to the presence of international express majors and challenges posed by Web-based technology. In the country, the business comprises large players who are fast and use technology-based infrastructure to integrate air and surface solutions for the domestic and international markets.

hat, then, is the future of the industry? As the air cargo sector experiences a boom, logistics solutions emerge and express service providers, with their distribution network and technology, are in the best position to offer services to customers. It is no wonder, then, that manufacturing companies in the country have got over their initial fears and have started outsourcing their logistics requirements from 3PL and 4PL service providers, thus allowing themselves to focus on their core competence. Today, 3PL and 4PL activities comprise a wide range: from order compilation and dispatch planning to physical transportation, in-transit monitoring, confirmation of deliveries, payment to transporters and providing MIS to the clients. All this has become possible only because of the high efficiency and organisation of the express industry, where air and surface transportation is dovetailed to the satisfaction of the consumer. Growth in the express industry in the country will take place when new service sectors, such as the IT, automotive, lifestyle, pharmaceutical, agricultural, banking and financial sectors, move forward.

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NATIONAL

Indian leads the market INDIAN HAS wrested the Number One position in domestic carriage in March, recording an average carriage of 21.9 million RPKs per day and achieving a market share of 21.9 per cent. This market share has been achieved on a capacity share of 21.2 per cent. The national carrier registered an increase of 27.5 per cent in daily passenger carriage over March, achieving a

carriage of 23,740 domestic passengers per day. The airline also registered an increase of 2.5 per cent over February market share, achieving a domestic market share of 21.9 per cent in March. Incidentally, Indian is the only airline that has registered an increase in its market share in March over February. The airline’s domestic seat factor of 71.8 per cent in March was also higher than the industry average seat factor of 69.5 per cent.

IndiGo starts new services

GoAir gets accolades

THE CARRIER recently started operating its eighth A320 by commencing daily non-stop services on Delhi-Mumbai and Delhi-Chennai sectors. IndiGo will also use this aircraft to connect Jaipur to Guwahati via Kolkata. At present, the airline is offering non-stop services from Delhi to Mumbai, Chennai, Bangalore, Kolkata, Goa, Guwahati, Hyderabad, Pune, Vadodara and Jaipur. The airline currently operates 52 daily flights with a fleet of eight A320 aircraft and flies to 13 destinations.

GO AIR recently became India’s first low-fare carrier to win the international award for “Excellent Services”, awarded by the Pacific Area Travel Writers Association (PATWA). The award was presented to GoAir at Berlin Federal Republic of Germany during the ITB. The print campaign of GoAir won the Grand Prix and the Best Ad in Services Category at the Pink Slip Awards 2007, which are India’s first awards show for excellence in creative recruitment advertising.

Kingfisher News Training Academy: Kingfisher Training Academy (KTA) is all set to launch educational courses to prepare students for new age, fast growing careers in retail, hospitality, aviation and customer services management sectors. The academy has been started with the intention of supporting India’s economy with trained manpower to handle the ever-growing requirements. Double daily flights: The airline has launched double daily direct flights between Mumbai and Nagpur, double daily direct flights between Mumbai and Indore, and once daily direct flight between Mumbai and Guwahati. The Mumbai-Guwahati flight will be the longest non-stop flight offered by the airline—the flying time is approximately 3 hours and 30 minutes. With the launch of services on these three new sectors, Kingfisher Airlines now connects 28 cities with 163 flights a day on the wings of a fleet of 26 aircraft. CRUISING HEIGHTS May 2007

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Continental to connect Mumbai and New York CONTINENTAL AIRLINES has announced it will launch daily non-stop flights between Mumbai and New York/Newark effective October 31, 2007 (westbound), subject to government approval. The airline is operating a Delhi-New York non-stop service since 2005. Mumbai will be the 30th city in Continentalâ&#x20AC;&#x2122;s trans-Atlantic route network.

Air Deccan News AA shifts its Asia Pacific call centre to India AMERICAN AIRLINES has announced the shifting of its Asia Pacific call centre operations to India from Australia. The airline has appointed Bird Information Systems Pvt

Ltd (BIS), a technology provider of automated aviation and travel related software solutions, to provide call centre services for travel related queries of its customers in India and the Asia Pacific region. This agreement follows an earlier city ticket office (CTO) agreement, which American Airlines had signed with the Bird Group last year. While the outsourced city ticket office operations will be run in Delhi, Mumbai, Chennai and Bangalore, the outsourced call centre operations will be run from Delhi only.

Flies to Shimla: The airline has recently launched its first ever flight from Delhi to Shimla and back. An ATR 42-500 (48 seater) aircraft has been deployed to serve this route. Samyukth Sridharan, chief revenue officer and head, marketing, informs that Oberoi Hotels & Resorts, The Chalets Naldehra, Radisson Jass, Combermere, East Bourne, Kufri Resorts and Taarika Jungle Resorts at Shimla have underwritten seats on the flights on the Delhi-Shimla-Delhi sector on a regular basis. Connecting Leh: The low-cost airline has announced the launch of new flights connecting Delhi to Leh, the capital of Ladakh, starting on the 23rd May, 2007. An A320 aircraft (180 seater) is expected to be deployed on this sector. The bookings for this sector have already opened on April 28. Air Deccan would be the first low-cost airline connecting Ladakh by air. APAI Excellence Award: Air Daccan has won the Excellence Award for the Best Low Fare Airline in India for the year 2006, instituted by the Air Passenger Association of India (APAI). A poll was conducted amongst APAI members, aviation correspondents from all across the country and frequent flyers from various industrial bodies to choose the winners. Suresh Pachauri, minister of state for personnel & public grievances and Parliamentary affairs presented the award to Capt G.R. Gopinath, managing director, at the opening ceremony of the Airport and Airline Expo at Pragati Maidan, New Delhi. The Air Passenger Association of India is Indiaâ&#x20AC;&#x2122;s only national, non-profit organisation totally dedicated to the welfare of air passengers. It was established in 1990 and has its headquarters at Chennai. CRUISING HEIGHTS May 2007

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INTERNATIONAL Emirates Sky Cargo wins award

Jazeera Airways announces profits

EMIRATES’ SKY CARGO HAS been awarded the “Cargo Airline of the Year” by the editors of Air Transport World in the 2007 Airline Industry Achievement Awards programme. Air Transport World, a monthly magazine serving the global airline industry, presented this award at a ceremony in Washington, DC. Sky Cargo operates an extensive network within India with dedicated freighters to Chennai and Bangalore. It also operates a bonded trucking service within South India and currently offers an average of 1,200 tonnes of cargo-carrying capacity between India and Dubai.

THE MIDDLE EAST based Jazeera Airways KSC has announced that it has registered a profit of US $8.7 million in its first year of operations ending December 31, 2006. Jazeera Airways’ audited financial

Chairman-CEO Marwan Boodai

statements covers its first complete financial year from January 1 to December 31, 2006, and reported revenues of $74.5 million with a profit of $8.7 million and earnings per share of 8.7 cents. Jazeera Airways recently submitted its application to the Kuwait Stock Exchange, the second largest bourse in the Middle East in terms of capitalisation, and the airline looks to gain approval for listing in the second quarter of this year.

British Airways news Refurbishing cabins: The engineers of the airline are now refitting up to three Boeing 747s every month with the new larger beds in business class and improved in-flight entertainment systems across the plane. The new Club World is currently available on 17 of the airline’s 100 Boeing 747 and Boeing 777 aircraft, flying to a number of destinations worldwide, including regular appearances on routes from Asia. Each Club World cabin on Boeing 747 services to JFK contains 70 beds that enable customers to work, sleep or relax in comfort. Key features include a six-foot long fully flat bed that is 25 per cent wider;and a new ‘z’ bed position that extends to six-foot sixinches and allows the body to assume a position similar to that in zero gravity, ideal for watching movies. Invites young flyers: The airline is inviting young travellers to join an advisory board created to develop its brand and services in line with young people’s thinking. The British Airways Kids’ Council will consist of 12 young people (aged 8-14 years) from across the globe and will be chosen by a panel of British Airways marketing and brand experts. To qualify, entrants must be

aged 8-14 years and have flown on British Airways once in the last 18 months. Once formed, the Kids’ Council will meet twice a year at British Airways’ headquarters near Heathrow. Wins accolades: The airline was nominated in eight categories at the annual Business Traveller Cellars In The Sky awards. The awards recognise airlines’ wine collections. British Airways received the most awards out of all the participating airlines.

CRUISING HEIGHTS May 2007

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SNIPPETS Gulf Air’s new restructuring plan THE BOARD OF DIRECTORS of Gulf Air has approved a new restructuring plan aimed at significantly reducing company losses

shareholders have guaranteed a capital injection to cover past costs, fund the restructuring process and invest in future operational improvements. To improve the profitability of the company Gulf Air will reduce its fleet from 34 to 28 aircraft.The total cost of the programme is BD310 million ($825 million), say company officials. It would take until the beginning of 2009 to complete the fleet replacement and restructuring programme.

Emirates’ profits hit new high

over the next few years. The board unanimously endorsed the plan, which will involve some tough new measures, including cost cutting across the entire company, streamlining the structure of the organisation and making network operations more efficient. The

Malaysia Airlines News Wins award: Skytrax, research advisors to the world’s airline and air transport industry, has ranked the airline as ‘Five-Star’ airline again. The national carrier was assessed by Skytrax’s Quality-Cost-ValueSatisfaction (QCVS) audit, conducted between November and December 2006, with focus on service quality and product delivery as well as customer service on long-haul and regional routes. The QCVS audit covered a number of assessment categories such as seat comfort, in-flight entertainment as well as onboard catering and the general efficiency and quality of the staff service. Pact with Alitalia: Malaysia Airlines and Alitalia signed a code-share agreement that will allow the two

THE EMIRATES GROUP recently reported its 19th consecutive year of profit, with a new record performance backed by continued double-digit growth.The group’s net profits increased 23.5 per cent to a new high of Dhs 3.5 billion ($942 million) for the financial year ended March 31, 2007, while group’s revenue increased by 28.4 per cent, to Dhs 31.1 billion ($8.5 billion), compared to Dhs 24.2 billion ($6.6 billion) last year. Emirates also maintained a cash balance of Dhs 12.9 billion ($3.5 billion) at the end of March, an improvement of 17.8 per cent against a year earlier. Emirates will pay a dividend of Dhs 400 million ($109 million) to its owner, the Government of Dubai. The 2006-07 annual report of the Emirates Group,comprising Emirates Airline, Dnata and subsidiary companies,was released in Dubai recently at a news conference hosted by His Highness Sheikh Ahmed bin Saeed Al-Maktoum, chairman and chief executive, Emirates Airline and Group.

airlines to gain access into each other’s networks between Malaysia and Australia and the southern part of Europe. Starting June 1, 2007, Alitalia will have access to Malaysia Airlines’ seats inventory for flights between Kuala Lumpur and Rome as well as between Kuala Lumpur and Penang and market them under its designator code AZ. In addition, Alitalia’s customers will also be able to travel from Malaysia to Malaysia Airlines’ three international Australian gateways of Melbourne, Sydney and Perth. Meanwhile, Malaysia Airlines’ customers have the option of services to Italian destinations served by Alitalia from Rome and Milan as well as five destinations in Southern Europe, namely, Barcelona, Athens, Geneva, Frankfurt and Madrid.

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TRAVEL & TOURISM Tourism Malaysia announces package SETTING A target of 4,00,000 Indians to visit its country during the Visit Malaysia Year 2007, Tourism Malaysia has announced its third VMY Campaign package—the “Magnificent Malaysia Holiday @ Rs 26,999”. The package, targetted for the 120-day Indian summer holiday season, is expected to generate a visit flow of 1,20,000 on an all-India basis to Malaysia. The package would be duly supported by two major marketing initiatives, VMY Passport programme, to create value addition, and the six-week Malaysia International Aerospace Adventure—2007 (MIA), which would attract visitors to experience the original Buran— the Russian space shuttle. The five-night/six-day package would include return airfare, accommodation with breakfast in star category hotel and airport transfers on SIC basis on per person bassis. Travellers would get a chance to go on tour for two nights in Kuala Lumpur and three nights at a beach destination at Langkawi or Penang. The package is valid till June 30, 2007.

ITB Berlin expands to Asia RAIMUND HOSCH, CEO of Messe Berlin GmbH, the show organiser of ITB Berlin, has announced that ITB Asia will have its first run at Suntec Singapore from October 22-24, 2008. It will be targetted at creating new and cost-effective networking and business opportunities for the outbound buyers from the Asia-Pacific, the small and medium enterprises as well as the vast numbers of suppliers of products and services to the industry at large.

Taj selects Amadeus TAJ HOTELS, RMS is implementing Amadeus Revenue Management System in 32 of its properties around the world. Amadeus RMS stores detailed information on reservations made throughout a hotel chain. This can be used to support sales, marketing and financial processes. The system generates accurate predictions of future demand, making suggestions on how to price rooms and manage availability so as to maximise yield. With this tool, Taj will be able to sell the right room at the right price to the right guest. Taj Hotels, Resorts and Palaces is India’s largest hotel group with 76 hotels in 51 destinations and an international presence in major cities such as Dubai, London, New York, Boston and Sydney.

Mauritius Tourism launches campaign MAURITIUS TOURISM PROMOTION AUTHORITY (MTPA) India, has unveiled its ‘Mauritius Magical Luxurious Vacations’ campaign in Delhi, Mumbai and Kolkata. Supporting partners with MTPA India, in this new campaign is the national carrier Air Mauritius, coupled with six hospitality partners from Mauritius. The average package cost starts from INR 48,495 onwards per person, which includes return airfare, six-night/seven-day stay, return air-

port transfers, breakfast and dinner and three full-day sightseeing. Additional value-added services offered along with this package at competitive price includes submarine ride, sub-scooter ride and helicopter ride.

ITC and Starwood join hands THROUGH A new franchise agreement, ITC-Welcomgroup will now have an exclusive tie-up and partner Starwood in bringing in its premium brand, the Luxury Collection, to India. The hotels that will be part of this unique brand are ITC Maurya, in Delhi, ITC Maratha, in Mumbai, ITC Sonar, in Kolkata, ITC Grand Central, in Mumbai, ITC Windsor, in Bangalore, ITC Kakatiya, in Hyderabad, and ITC Mughal, in Agra. The agreement further includes the rebranding Fortune Hotel Sullivan Court Ooty, had the of the Wel- privilege of playing host to HRH Princess comHotel New Maha Chakri Sirindhorn of Thailand on her recent visit to the Nilgiris Delhi as a Sheraton, while the Chola and the Park, in Chennai, and the Rajputana, in Jaipur, will continue to retain their Sheraton connections.

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SNIPPETS The Minister’s Corner Visit from Egypt: An Egyptian tourism delegation, led by Amr El Egaby, chairman, Egyptian Tourism Authority, called on

Ambika Soni,Indian minister of tourism and culture, recently. During their half-hour meeting, he lauded the Incredible India campaign and efforts of the union tourism ministry to spread social awareness about preservation and cleanliness of cities and historical monuments for domestic tourists. Amr El Egaby said his country would be happy to know the process how forts and havelis have been converted into heritage hotels in India. The guest also offered Egyptian expertise in the field of monument preservation.

Both sides expressed willingness to assist the NTOs/tourism boards of each other’s country in carrying out promotion and marketing activities to increase the tourism traffic between the two countries. Both the countries agreed to formulate an action plan for promotion and marketing of important destinations . Calls for better connectivity: Addressing the recently-held inaugural session of the 14th Annual South Asian Travel and Tourism Exchange (SATTE), Soni has called for better air, train and bus connectivity to promote tourism in the SAARC region. She said all members of the SAARC must collectively commit to making travel easier in the region, and added that people-topeople contact and connectivity were the best ways to have harmonious relationship and peace in the region. She said efforts should be made to work on tourist circuits that would take people to at least two to three countries. Receives Pakistan tourism minister: Nilofar Bakhtiar, Pakistan tourism minister, who was recently in New Delhi to participate in SATTE, paid a courtesy visit to Ambika Soni. During the 40minute meeting, she discussed tourism related matters with Soni, and complimented her on the Incredible India campaign and lauded the successful participation of India at the recently concluded ITB-Berlin. Soni welcomed the initiatives of Pakistan in promoting tourism, especially the steps taken to grant visa on arrival to the nationals of 24 countries.

Hi Seoul! Korea recently hosted the ‘Hi Seoul Festival’ from 28 April to 6 May, and on display was the unique and colourful culture of the peninsula. This encompassed the historical, contemporary and exquisite domains at the metropolitan Seoul. The event was organised in the historic City Hall as well as on venues along the Han River. Amateurs, swinging to the tunes of professional musicians and dancers and folk performances upholding the centuriesold civilised culture, were the major highlights, of the festival. Other events included an ancestral ritual at Jongmyo Shrine, the procession of the Royal Carriage, and the re-enactment of King Sejong’s coronation. These events took place along with streetside displays of various folk games from the eight provinces of Korea. In addition to traditional Korean music, there were stage performances of hip-hop, classical and fusion music to suit the varying tastes and preferences of the festival audience.

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CARGO NEWS AIR INDIA GETS ITS FIRST FREIGHTER AIR INDIA CARGO received its first freighter, A310, recently in Mumbai. The aircraft was initially acquired by Air India in 1990

fits of an IOSA audit lie in worldwide standardised checklists, creating comparable criteria for evaluating diverse aspects of flight safety. The audit encompasses flight operations, ground handling, cargo operations, crew training, maintenance and operational security.

Crystal Cargo flies in Spyker Formula 1 car

for passenger operations. It should be noted that Air India would be starting dedicated cargo operations from June this year. It will be converting six A310 aircraft into freighters at an estimated cost of around $7 million each and has plans to dedicate the remaining fleet of A310 aircraft to cargo freighters in the next three years. European Aeronautic Defense & Space Company (EADS) NV converted the 16-yearold passenger aircraft, VT-EQS, one of the youngest in the A310 fleet. The payback for the conversion amount will be done in four years. Speaking about the transition, S. Venkat, executive director, public relations, Air India, said, “The region has been experiencing an upsurge in the import-export market. Owing to this increase in demand, Air India has decided to deploy the freighter in the Gulf sector. This is a step taken to bolster the AI Cargo operations and cater to the growing import-export demand. The long-term plan includes conversion of more aircraft into freighters.” Earlier, Air India had also made attempts to wet lease cargo capacity from airlines in order to cater to the market conditions. Incidentally Air India had dedicated cargo operations to the US till 1996, which it discontinued due to operational reasons.

Lufthansa Cargo sets example in flight safety LUFTHANSA CARGO is the first IOSA-registered all-cargo airline worldwide. After the successful conclusion of an intensive five-day audit, the airfreight carrier has assumed a pacemaker role on flight safety standards among the airlines in the air cargo business. According to Lufthansa Cargo board member (operations), Karl-Heinz Köpfle, the IOSA registration was evidence of Lufthansa Cargo’s firm commitment to implementation and ongoing improvement of uniform flight safety standards in the airline industry. The IATA Operational Safety Audit (IOSA) programme was initiated by IATA in 2003 for the purpose of enhancing operational flight safety. So far, IOSA registration has been achieved by 144 airlines; among them 121 airlines are IATA member-carriers. The IOSA programme has become the auditing benchmark for global safety management across the aviation industry. The bene-

WHILE ETIHAD AIRWAYS is busy preparing for the Arabian Travel Market (ATM), Etihad Crystal Cargo has flown in the key element of the airline’s ATM stand-a replica Spyker Formula 1 car. The replica car was flown to Abu Dhabi from Frankfurt recently in one of Crystal Cargo’s A300-600 freighters. According to Des Vertannes, Etihad’s executive vice-president (cargo), the Spyker Formula 1 replica was no exception for the carrier, which regularly transports cars of high value. The Spyker car was placed on one of Crystal Cargo’s state-ofthe-art transporters, which can carry any vehicle with a gross weight of up to 3,600 kg, during its journey from Frankfurt to Abu Dhabi. Crystal Cargo acquired eight car transporters in September 2006. Each one is purpose-built to Etihad’s specifications and has a loadable wheelbase of up to 394 cm. The transporters also have a built-in loading ramp that allows many different types of cargo on both freighter and passenger aircraft. To date, Crystal Etihad Crystal Cargo has transported the Cargo has trans- replica Spyker Formula 1 car, which was ported 200 cars, a on display at the Etihad Airways stand figure that is set to throughout the Arabian Travel Market increase signifi- (ATM) in May cantly as Etihad Airways continues to expand its international network of flights. Among the vehicles transported by Crystal are a special armoured Rolls-Royce Phantom and several other Formula 1 charters for the recent Bahrain Grand Prix.

DHL introduces Trade Advisory Services DHL has announced the introduction of Trade Advisory Services, which will effectively expand the comprehensive suite of products under the global DHL Global Trade Services (GTS) platform. Trade Advisory Services complements three other key features of DHL Global Trade Services, which comprises Importer and Exporter of Record Services, Customs Brokerage Services and Trade Automation Services. Since its launch in late 2006, Global Trade Services, used widely by both first time and experienced international shippers, has successfully helped to facilitate crossborder trading by helping businesses manage complex duty regulations, shorten lengthy business processes and lessen the stress of global trade management. The addition of Trade Advisory Services completes the suite of products provided by the Global Trade Services platform to further simplify the process of international trade for businesses. This enhancement is launched in partnership with the US-based company Sandler & Travis Trade Advisory Services, a prestigious and established international customs and trade consulting firm with vast experience around the globe.

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To change or not to change!

HEN there is a war in the skies, it must be reflected on terra firma. That seems the dictum, as far as the countryâ&#x20AC;&#x2122;s airlines are concerned. Now, what do you say to Jet, Kingfisher and Go? Perhaps

they are being driven by the age-old wisdom that change is the essence of life. As long as you keep changing and reinventing yourself, you are bound to have the cutting edge.

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Ne w

n io ct e nn Co

Dep. 1030 1240

Arr. 1200 1410

Days Daily Daily

From May 6, 2007

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Flight No. From - To IC 150 Vadodara - Mumbai IC 149 Mumbai - Vadodara

Dep. 1720 1855

Arr. 1810 1945

Days Daily Daily

No w

Delhi-Vadodara-Delhi Dep. 1515 2030

Arr. 1640 2200

Days Daily Daily

Di re ct *

Delhi-Ahmedabad-Delhi Flight No. Dep. From - To IC 817 Delhi - Ahmedabad 0600 IC 818 *Ahmedabad - Delhi 0805

Arr. 0725 0930

Days Daily Daily

From May 1, 2007. There is regular evening flight too

INTERPUB

From May 1, 2007

tio n

From May 1, 2007

Flight No. From - To Delhi - Vadodara IC 819 Vadodara- Delhi IC 820

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Vadodara-Mumbai-Vadodara

Delhi-Surat-Delhi Flight No. From - To IC 417 Delhi - Surat IC 418 Surat - Delhi

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For more information contact Indian's offices or approved Travel Agents or call all-India 24x7 helpline number 1800 180 1407 (toll free number from MTNL/BSNL lines) or from other phones, call 1407 (prefix STD code of one of the six metros, where required) or log on to www.indianairlines.in