CRUISING HEIGHTS IMPLEMENTATION OF GROUND HANDLING POLICY DELAYED — ONCE MORE
September 2011 ` 90
www.cruisingheights.in
A STAR IS NOT
BORN Air India’s Maharaja may be broken — the rejection by Star Alliance of Air India’s membership and the whimsical performance of its erstwhile CMD — but he has not given up the fight
Jet joins low fare battle...
The Praful Patel years
MAKS puts Russia on top
With IndiGo and SpiceJet taking away passenger share at home and abroad
PP established milestones that have acted as catalysts for the Indian airline industry
This year’s Moscow Air Show firmly put Russia on the map of global aviation majors
EDITOR-IN-CHIEF’S NOTE
An awful tax! y Emirates has said the European Union’s planned carbon emission scheme may cost it as much as $1 bn over 10 years, as it joined other K Srinivasan airlines in objecting to the tax. y The aviation industry uses 70 billion gallons of fuel, or 230 billion litres, every year. The International Air Transport Association (IATA) has pegged yearly carbon dioxide emission from commercial aircraft at 649 million tonnes, which is estimated to rise to 900 million tonnes by 2020. Several carriers have begun testing flights with biofuels. y China has threatened to cancel over $3.8 bn in aircraft orders from European manufacturer Airbus if it is not exempted. eginning January 2012, airlines flying to or from Europe will have to buy carbon credits from the European Union’s (EU) Emissions Trading Scheme (ETS) for 15 per cent of the carbon emissions produced during the entire flight. Airlines around the world are outraged and have indicated that the EU’s intransigence will produce a global trade war, the last thing needed in these economically-depressed times. While the EU is unwilling to back off, the airlines are clear that issues like emissions should only be tackled by United Nations bodies, such as the International Civil Aviation Organisation (ICAO). The biggest opponents are, of course, the carriers from the US. They will be the worst hit considering there are hundreds of flights across the busy Atlantic trunk route into North America from Europe and vice versa. The Air Transport Association of America (ATA) that is driving the challenge in the European Court of Justice in Luxembourg has two clear arguments: 9 Its climate regulations breached US sovereignty. 9 Moreover, they comprised an illegal charge under the international treaty on air travel, the Chicago Convention. The ATA’s argument is that the EU does not have the competence to regulate third-country airlines in third-country airspace. Their premise is based on cold statistics: A San Francisco to
B
CRUISING HEIGHTS September 2011
London flight, as they argued in court, has fewer than 9 per cent of emissions occurring in the EU, compared to 25 per cent over the Atlantic, 37 per cent over Canada and 29 per cent over the United States. But the EU wants to regulate right through, including emissions in sovereign countries. In effect, for emissions occurring in US, the European Union wants to regulate the carriers! Now the Arab Air Carriers Organization (AACO) asked Europe not to include the aviation sector in the ETS scheme. The Indian government has also indicated — though not formally — that it will oppose the European Union’s proposal to make airlines buy carbon credits for using its airspace on the grounds that it is unilateral and unfair. The Indian argument is that no ETS can be imposed “without bilateral negotiations”. After all, there could be another tax tomorrow and another day after. Where will it stop? Jet Airways which earns about 58 of its revenues from international operations will be hit big-time. It operates about 30 flights a week from India to Europe and London. Kingfisher and Air India will be other big losers and the total bill for the three combined is around the $50 million mark annually. The fact is that at the moment the ETS is a reality. Airlines will have to comply. Naturally, the cost-per-route will go up and there will be no option but to pass on that burden to passengers. In desperation, a Congressman in the US has now moved a Bill that finds support across the spectrum from both Republicans and Democrats that “prohibits operators of civil aircraft of the United States from participating in the European Union’s emissions trading scheme”. Having failed so far to persuade the Europeans to see reason (for the record, it must be mentioned that every airline is Europe is dismayed at the tax proposal), the Bill is a final missive aimed to telling lawmakers across the Atlantic that enough is enough. May be there is a lesson in it for the Indian Civil Aviation Minister Vayalar Ravi.
srini@newsline.in
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Off the cuff
For a cleaner atmosphere Lufthansa recently launched a climate research project that supports the creation of a worldwide measurement infrastructure. Dubbed the IAGOS (In-service Aircraft for a Global Observing System), the project has been several years in development and involves 15 European project partners under the direction of FZJ (the Jülich Research Centre) and will focus on long-term observation of the Earth’s atmosphere using scheduled Lufthansa services. The specially developed measurement devices on board the Lufthansa Airbus A340-300 "Viersen" will routinely record atmospheric trace substances, and in the future, aerosols and cloud particles as well, while in flight. This shall occur all over the world and on a broad basis. The generated data will be digitally sampled, processed and analysed after every landing. The goal is the creation of a worldwide measurement infrastructure that would allow the global observation of the Earth’s atmosphere by means of civil aviation. This gathered data will be of major importance for climate research and numerical weather forecasting. The first flight of the Viersen from Frankfurt to Lagos in Nigeria took place recently. A several-year development phase has gone into the preparation of IAGOS. The newly-developed instrument package is extremely robust, almost maintenance-free and can be efficiently integrated into an airline’s flight operations. The use of civil aviation aircraft allows for the collection of large quantities of important measurement data, in a volume and resolution that would otherwise not be possible using only research flights or satellites.
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contents
p36
AI: REVIVAL BLUES
There seems to be no end to the woes of Air India — from the shocking denial of membership for Star Alliance to the forced exit of Arvind Jadhav — but the government is determined to revive the international airline. Now that the lowkey Rohit Nandan has taken charge at Air India, the big question that remains to be answered is: Will he be able to turn the tide for the ailing airline?
NEWS DIGEST
p12
Even as low-cost carriers (LCCs) are making their presence felt in the Indian skies, the full service carriers are gearing up to join the bandwagon. Jet Airways has plans to increase domestic and short-haul international low-fare capacity in response to rising LCC competition. CRUISING HEIGHTS September 2011
SPOTLIGHT
p32
Praful Patel as a former Civil Aviation Minister took important steps to bring a turnaround in the aviation sector which was lauded due to his modern outlook and dynamism and hailed as best years in Indian aviation. A report on the Praful Patel years.
contents ARTICLES NEWS VIEWS EDITS INTERVIEWS CLIPPINGS PROFILES NEWS DIGEST
CRUISING HEIGHTS Volume VI No 5
Editor-in-Chief
SPECIAL REPORT
K SRINIVASAN
p26
This year’s Moscow Air Show showcased the Russian-built civilian planes. The show was also the platform for India to display its prowess in the aviation sector through its JVs. Plus: Putin’s appearance at the show and more.
Managing Editor
TIRTHANKAR GHOSH Group Consulting Editor
R KRISHNAN
INTERVIEW
p46
Consulting Editor
NANDU MANJESHWAR
Deputy Editor Michael Gaebler, Chairman & PC SINGH CEO of Aviareps is upbeat about Assistant Editor doing business in India. He JUSTIN C MURIK speaks about the future of Copy Editor Aviareps in India.
ASHOK KUMAR
Sub-editor-cum-reporter
PUNIT MISHRA Senior Designer
RUCHI SINHA Design
NAGENDER DUBEY, MOHIT KANSAL
FOCUS ON CHOPPERS
Picture Editor
PRADEEP CHANDRA
p49
DGCA has barred helicopter flights from Mahalaxmi Race Course while Mahindra and Eurocopter have tied up to manufacture helicopter sub-assemblies. Plus: How Omar Abdullah and party muster astronomical chopper bills.
SNIPPETS
p66
GoAir introduces web checkin while BIAL garners accolades for baggage handling of domestic airlines. In the international section, read about Cathay’s fleet modernisation.
Photo Editor
HC TIWARI —————————— Publishing Director
ROHIT GOEL
Director (Admin & Corporate Affairs)
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BACK PAGE
p74
The story of David Mackay, who is set to become the first pilot for space tourists aboard the Virgin Galactic. The lucky pilot is all geared up to fly SpaceShipTwo.
CARGO/INTERVIEW
p57
Nick Rhodes, Cathay Pacific’s Cargo Chief speaks about new freighter services introduced in India by the carrier. He remains upbeat about the cargo carrier’s future in the world. CoverDesign: Ruchi Sinha
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CRUISING HEIGHTS September 2011
Executive Director
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“ PERISCOPE
Unending zeal
“Air India is in serious difficulties is an open secret. A Group of Ministers is looking into what can be done structurally and otherwise to put Air India back into its normal course.”
MANMOHAN SINGH, Prime Minister, on the plans to restore normal functioning of Air India.
Tough taskmaster
LETTERS TO EDITOR
The cover story, Please, sir, I CRUISING HEIGHTS want some more (August Juhu refuses 2011) hit the nail on the head. to take off The revival of Air India, the Dreamliner shows its wings cash-strapped national carrier, Tough times for cargo carriers seems to staring at a dead-end as the present state of affairs PLEASE, I WANT indicates. The dilemma to SOME MORE continue or stop the national carrier from flying still needs to be worked out. Indeed, the carrier has become the burden on the country's exchequer. It is high time the government took a final call on whether to continue the operations of Air India or not. The mess which Air India has created seems to be insurmountable. Kamal Saxena, Jodhpur DOMESTIC CARRIERS MUST CORRECT COURSE TO WIPE OUT THE RED INK
August 2011 ` 90
VAYALAR RAVI, Civil Aviation Minister, on the domestic airlines’ transparency in tariff publication.
www.cruisingheights.in
Even with the green signal to expand, Mumbai’s Juhu airport still cannot accommodate traffic
Boeing’s 787 makes a whistlestop tour of India wowing those invited to fly in it
While multinationals TNT and FedEx are expanding services, Indian startups face financial obstacles
ONCE RESPECTED THE WORLD OVER, AIR INDIA’S MAHARAJA IS ALL BUT READY TO THROW IN THE TOWEL. AMIDST REPORTS OF ITS DEMAND FOR MORE FUNDS, A LAST-DITCH EFFORT IS BEING MADE TO REVIVE THE AILING GIANT
Surat cries out for cargo facilities (August, 2011) was interesting to read. As the diamond capital of the world, Surat deserves good air cargo facilities to boost its trade. It is interesting to note that despite being the business hub, it has long been devoid of good air cargo facilities. Though there has been an outcry by the business community to provide air cargo facilities at Surat Airport, the government has not heeded to the demands for one reason or the other. Radhey Shyam, Indore
The column, Painting the skies a deep red (August, 2011) provides an interesting anaylsis. It is not surprising to note that almost all the domestic airlines have suffered losses. Along with that, some of the airlines also owe heavy dues to oil companies. That really paints a sorry picture about the present conditions of the airlines in India. The airlines should pull up its socks as ATF might go up more in the future if the present figures are any indication. Though domestic airlines have displayed a positive outlook by placing a large number of plane orders, it may prove counterproductive in the future. Ram Manohar Mishra, Bharatpur All correspondence may be addressed to Editor, Cruising Heights, D-11 Basement, Nizamuddin (East), New Delhi -13, OR mail to cruisingheights@newsline.in.
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“With a view to maintaining transparency in tariff publication, domestic airlines have been asked to display established tariff route-wise and fare category-wise on monthly basis.”
Time to make headway “If Kolkata has to attract investment, it needs a world-class airport. Remember, the city is the gateway to not just South-East Asian traffic but the Far East as well.”
MAMATA BANERJEE, West Bengal Chief Minister, on the feasibility of a world-class airport at Kolkata.
Course correction “Market share is not something I am really focussed on, but if you ask me the number we would be looking at, it would be 10 per cent to 12 per cent in five years from about 6 per cent now.” JEH WADIA, Managing Director, GoAir, on the market share GoAir would control in the future.
Futuristic approach “We would like to fly to Nepal, Cambodia, Burma, Hanoi, Sydney, Manila and Mongolia in the next two years, as air traffic in these regions is rapidly rising.” TURKISH AIRLINES’ CEO Temel Kotil on introducing new flights in the future.
On the backfoot “There’s going to be more bankruptcies within the European airline sector and more amalgamations.’’ MICHAEL O’LEARY, Ryanair CEO, on the vulnerability of European airline sector in near future.
CRUISING HEIGHTS September 2011
Top fliers all
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and Best First Class Cabin Seats award. Thai Airways International: Thai airways also won in the category of Best Economy Class Onboard Catering and Best Economy Class Cabin Seats. Etihad Airways: Additionally, Etihad also bagged Best Airline (First Class) and Best First Class Onboard Catering award. Air New Zealand: Air New Zealand also pocketed Best Airline Premium Economy Class; Best Premium Economy Onboard Catering and Best Airline — Australia / Pacific awards. Qantas Airways: Qantas did not win in any other category. Turkish Airlines: Turkish Airlines won in other three categories — Best Premium Economy Cabin Seats; Best Airline — Europe and Best Airline — Southern Europe. Emirates: Emirates won in the category of best Inflight Entertainment.
COLD STATS
Qatar Airways recently won the coveted title as the World's Best Airline at the 2011 World Airline Awards. The carrier pipped the 2008 winner Singapore Airlines into second place, with Asiana Airlines in third position. Cathay Pacific Airways retained the fourth place from last year, and Thai Airways International notched up fifth position rising four places on the chart. ¾ Qatar Airways: Besides winning the World's Best Airline, the carrier also notched up Best First Class Airline Lounge Award and Best Airline-Middle East award. ¾ Singapore Airlines: The airline also won the Best Airline (Business Class) and Best Airline-Asia award. ¾ Asiana Airlines: Best Cabin Staff and Best Airline (Economy Class) were also won by the airline. ¾ Cathay Pacific Airways: Cathay also got Best Airline (Transpacific)
LOOKING GLASS No pilots, no flights! The pilots have all been wooed by steady jobs and regular salaries....
Still in the process “The regulator is in the process of finalising a consultation paper on the charges that can be imposed by an airport to supply fuel through hydrants.” YASHWANT BHAVE, AERA Chairman, on the supplying of fuel through hydrants by an airport.
Well-charted foray “There are 150 million in India going for pilgrimage and 150 million tourists travelling within the country. If we can tap this segment by giving them 10/18 seaters, then nothing like it.” HEMANT LUTHRA, Mahindra Group Director, on 10/18 seaters aircraft to be developed by Mahindra Aerospace.
CRUISING HEIGHTS September 2011
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NEWS DIGEST
Vanderlande launches investigation
competition. However, when it started happening with regularity, it caused alarm bells to ring. An internationally-recognised designer, builder and service provider of baggage handling systems, Vanderlande, leaders in baggage handling systems at a number of Vanderlande has special prices for India that are significantly lower airports in the country, recently discovered that it had become a than those quoted by it in other places. To its amazement, however, victim of industrial espionage. In a first of its kind — at least for the company found that its competitor was quoting prices that were aviation sector — move by an international company in India, just a fraction lower than it. Vanderlande has reported the matter to the Economic Offences Wing Officials and auditors were called from The Netherlands head(EOW). In turn the EOW has asked the Delhi Police to investigate the quarters to check the system. They advised that some areas needed complaint. tightening and that was done. To ensure that the documents were According to senior officials from the kept secret — a tedious task since tender papers have Netherlands-based company, competitors to be submitted in triplicate — a senior official seemed to be aware of classified informchanged the tender quote a few moments before ation offered by Vanderlande in tenders submission of the papers. When the tender bids were for baggage handling in airports. In May opened, Vanderlande officials found that their hunch this year, after successive rejections in was correct. The competitor had indeed bid lower than tender bids, Vanderlande officials — who Vanderlande and it was only due to the last-minute were suspecting industrial espionage all change in the bid quote that won them the contract. along — were certain that someone was Incidentally, Vanderlande has been associated Baggage handling system at Hyderabad stealing information. Over the last nine with Indian airports for a long time. One of its prized months, the company had bid for five tenders for baggage handling projects was the baggage handling system at the Rajiv Gandhi systems: one at Kolkata, two at the Colombo airport in Sri Lanka, one International Airport at Hyderabad. The baggage handling system at at Dhaka airport in Bangladesh and one at Bhubaneshwar. In four of the airport consists of two check-in islands each with 30 check-in the cases, the prices from the competitor was 3-5 per cent lower than counters with all the departing baggage being security screened Vanderlande’s. automatically. With the required security and customs functionality Vanderlande officials were not too worried when their bids were and the sorting equipment built in, the system has been equipped rejected on the first two occasions — taking it as a part of the with the Vanderlande Industries Sort Allocation Computer.
Reengine red beauty Russian freight specialist Volga-Dnepr has agreed to modernise the Antonov An-124, this time into a version designated the An-124-111VD. It will have a maximum take-off weight of 402 tonnes and a payload capability of 150 tonnes, with a range of 5,000 km with a 120tonne load. The upgrade will include powerplant modification to the Ivchenko-Progress D-18T 3M series engine, with full authority digital engine control. This will significantly improve the fuel efficiency of the aircraft, to increase its reliability, as well as reduce noise and maintenance costs. The heavy transport would have a crew of three and its cockpit would be modernised with digital avionics.
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Paris airport tests ‘virtual’ boarding agents
PARIS’ ORLY AIRPORT IS EXPERIMENTING WITH “VIRTUAL” BOARDING AGENTS IN A BID TO JAZZ UP ITS TERMINALS WITH 21ST CENTURY AVATARS THAT ALWAYS SMILE, DON’T NEED BREAKS AND NEVER GO ON STRIKE. THE PILOT PROJECT THAT BEGAN LAST MONTH, AND HAS SO FAR BEEN MET WITH A MIX OF AMUSEMENT AND INCREDULITY AS PASSENGERS FREQUENTLY TRY TO TOUCH AND SPEAK WITH THE STRIKINGLY LIFELIKE VIDEO IMAGES THAT GREET THEM AND DIRECT THEM TO THEIR BOARDING GATE. AIRPORT AUTHORITIES CAME UP WITH THE IDEA OF “2-D HOLOGRAMS” WHEN IT WAS CONSIDERING WAYS TO MODERNISE HALL 40, ONE OF THE DOZENS OF BOARDING GATES AT PARIS’ SECOND AIRPORT.
Flydubai doubles fleet Dubai’s low-cost airline Flydubai has doubled the size of its fleet in just one year following the arrival of its 18th aircraft recently. The new Boeing 737800 NG is the latest delivery of the order of 50 placed by Flydubai at the 2008 Farnborough Air show. With the induction of latest Boeing 737-800, Flydubai will soon be able to not only expand the 38 destinations that it already serves, the airline will also be able to ramp up frequencies between popular city pairs from its Dubai hub thereby giving customers additional choice and flexibility as to when and how often they wish to fly. Incorporating Green features, the airline has carbon brakes that saves over 300 kg per airplane and with lighter inflight entertainment, this translates into a lighter 737-800, which in turn means lower maintenance costs and lower fuel burn. Future 737-800 deliveries will also hone in on engine efficiency too as CFM International’s CFM56-7BE engine will deliver up to 2 per cent better fuel burn on all forthcoming 737s, which have aerodynamic airframe improvements that cut drag and fuel burn. Flydubai is very likely to commit to Boeings newly announced re-engined 737, to be powered by the CFM International LEAP engine at this November’s Dubai Air Show.
CRUISING HEIGHTS September 2011
Now don’t say Praful Patel (PP) is responsible for this! Can you beat it? As per the US Embassy or rather the American Council at Chennai, this southern city gets the maximum number of visitor visas in India or, perhaps, one of the few top cities in the world that get over 1.5 lakh visas annually. This includes the whole lot of engineering students, H1B geeks, their visiting parents, etc. The list is only increasing — notwithstanding the double-dip recession. But Air India has not a single widebody flight out of Chennai to the US — be it the West or East coast. It also does not have a single flight to Europe. The number of flights out of Chennai is actually contracting. Considering that it is a major IT hub and is also Chennai Airport becoming India’s automobile hub, there is something always but Air India’s dealings with the city where it has deliberately given up its space to all other airlines, mainly foreign carriers to make big time money, is questionable. Today, Air India has 27 departures in all from Chennai of which 23 are daily domestic and four international: Kuwait, Dubai, Muscat and Colombo. It was flying A 310s to Dammam from Chennai twice a week. These flights were apparently stopped in June 2011 by the then Jadhav regime due to “fuel availability”. What he meant was Air India was unable to pay for fuel and Chennai was not a priority. Once upon a time the erstwhile Indian Airlines used to fly its A 300 widebody planes to Kuala Lumpur daily from
Chennai. After the A 300s were taken out of service, these were replaced by A 320s. Now there are no such flights. Instead, the Chennai-KL sector is being operated by Air India Express using its Boeing 737-800s. There are other flights as well of Air India Express out of Chennai. The beauty is that the Air India Express flight comes from Singapore to Chennai in the morning around 9 am and remains grounded till night before leaving for Singapore on its return leg at 11 pm. So for more than 12 hours Air India Express Boeing 737800s remain parked at Chennai airport. In contrast, we have Jet Airways, which has 41 flights out of Chennai each day, followed by Kingfisher Airlines with 27 flights, SpiceJet 17, and IndiGo 16. As per the filing for the winter schedule, SpiceJet has sought a sharp increase in its departures out of Chennai. Incidentally, Jet Airways uses Airbus A 330 to fly daily to Brussels from Chennai and onwards to various points in the US as well as Europe using its own plane or code share from its hub in Brussels. In addition, there is Etihad, Saudia and Emirates which bring in their widebodies such as Boeing 777s and Airbus A 330s to suck passengers out of Chennai. Do you know Emirates has three flights out of Chennai each day using one B 777 and two A 330? And we have Air India saying it has more aircraft than it can use. (See pages 32-35 for detailed story).
Opting out
Kuwait Airways is divesting
UAV airport
BA is cutting direct flights to Australia from two a day to just one after axing its service from London to Sydney via Bangkok. From March, BA will operate one London to Sydney daily flight, stopping at Singapore on the way. After decades of flying the LondonBangkok-Sydney route, BA will stop at the Thai hub. Passengers wishing to fly on to Australia will be transferred to Qantas. Under the agreement, the Australian carrier will also stop in Bangkok and move passengers for London onto BA flights. A similar route via Hong Kong has already suffered the same fate, with the Oneworld alliance partners swapping passengers at the Asian hub. It leaves London-Singapore-Sydney as the last remaining direct daily flight to Australia. BA will swap the current Boeing 777 plane used on the route for a larger 747 to squeeze more passengers on board. The company denied this was the beginning of the end for the airline’s historic links with Australia. “We are absolutely committed to Australia,” it said.
The Gulf state’s struggling national airline, which owns 17 large aircraft, will this week start holding talks with potential investors to offer a management contract and 35 per cent of the privatised entity’s KD220m ($802m) share capital. The airline which currently has 17 planes, last year, appointed Citigroup Inc., auditors Ernst & Young and aviation consulting firm Seabury to handle the privatisation. Kuwait’s parliament approved a plan in 2008 under which the government will sell 40 percent of the airline to the public and 35 percent to a long-term investor. The deadline for submissions of expressions of interest is August 25.Kuwait Airways has reportedly lost money for the past two decades and has in recent years come under increasingly tough competition from better-funded, more aggressive state airlines in the region. The Gulf’s oldest national carrier recorded a net loss of $556m on revenues of $771m last year.
The world’s first airport for unmanned aircraft is opening in rural Wales and officials say it could be the first step to getting human and robot-piloted craft together in the same airspace. The United Kingdom’s Civilian Aviation Authority has just granted permission for both the West Wales Airport in Aberporth and a 500-square mile airspace to be dedicated to unmanned aircraft. General aviation pilots can still fly through the region, as well as Royal Air Force pilots who conduct training missions nearby.The Welsh government hopes the drone airport and airspace will draw commercial firms who are currently banned from testing their aircraft in the United States except in restricted military airspace.
CRUISING HEIGHTS September 2011
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NEWS DIGEST he pressure of passenger shift to LCCs in India has begun to tell. While the LCCs and their version in full service carriers are now in a commanding height having garnered 70 per cent of domestic passenger movement, the full service carriers are working overtime to join this bandwagon by reducing their full-service offering as much as possible. Evidence of this became clear when Jet Airways recently announced that it was going the whole hog to enter and occupy a bigger space than what it had managed to do so far in the low-fare segment. Not only in the domestic skies, but Jet is also planning to do that in its overseas flights as well especially those that are within
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Jet’s low
fare tales
Naresh Goyal
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CRUISING HEIGHTS September 2011
five hours’ flying distance from India. At the recently-held Jet Airways’ AGM, the airline chief and promoter Naresh Goyal said: “The budget carriers have made huge inroads into the industry over the last three years and now close to 70 per cent of the market is in low-fare segment. Jet has already converted a large number of its premium flights to its two fare units.” JetLite, an erstwhile Air Sahara taken over by Naresh Goyal three years ago, and Jet Konnect, a low-fare airline carved out of Jet Airways, together account for 72 per cent of Jet’s domestic capacity that will now be increased between 80 per cent and 85 per cent of its total domestic capacity offering. In a way it will not be wrong to say Jet Airways’ fine product as part of its full service offering is being fast-tracked to become a full-fledged low-fare carrier if not low cost. K G Vishwanath, Vice President of Jet’s Investor Relations Department, announced the possibility of merging JetLite and Jet Konnect into a combined low-cost brand soon after the airline released Q1 (April-June) results for the current fiscal 2011-2012. While no decision on this has been communicated, it was nevertheless stressed that eventually Jet Airways would have to have a single-brand lowfare offering or is it low cost category along with its full service offering. In his post-result conference call with analysts, Vishwanath said that Jet Konnect had proved to be a successful experiment as the carrier was able to use the same aircraft on its full service model in a nofrills service category. We are told it takes just an overnight effort for Jet engineers to convert its full service Jet Airways Boeing 737-800 into a uniform all economy Jet Konnect except for the front-end of eight seats four on each side being retained as executive class but not of the type that is seen on its full-service version. It is not possible to use JetLite planes in Jet Airways as the two have separate Air Operating Permits because Air Sahara taken over by Jet and renamed JetLite continues to have its own permit given to the former. It will require a series of regulatory approvals to transfer the planes from JetLite to Jet Airways. It was because of this that Jet Airways carved out of Jet Konnect more than two years ago. Currently, while JetLite has 110 flights, Jet Konnect has 170 flights. Incidentally, Jet Konnect accounts for 75 per cent of Jet Airways’ domestic operations. So, the possible merger of the two brandsto evolve a new single lowcost brand from the Jet stable might come
any time. Vishwanath had indicated that this could happen in September or October 2011. The need to merge its low-fare operations into a single brand is born out of necessity that includes financial factors. During Q1 April-June 2011, nearly 75 per cent of its domestic revenues came from JetLite and the rest 25 per cent from Jet Konnect, according to the airlines’ VP for Network Planning Raj Shivakumar. This was against the nearly two-third contribution by Jet Konnect in Q1 of the previous fiscal. The main reason was the increase in fuel costs. Taking the domestic strategy overseas, the airlines’ COO Sudheer Raghavan stated that the low-cost aviation was a global reality and his airlines also had to be ready to face any such demand. Accordingly, it was decided by the airline that very soon its operations to overseas destinations within five hours’ flying time will be done by the lowcost/fare model. That means its Boeing 737-800 and 737-900 will get increasingly utilised. It is believed that operating short-haul international flights will help Jet Airways to increase its yields as such routes are more profitable. However, it is not known as to what it will do with its proposed daily flights between Sharjah and Trivandrum, which it is hoping to start on October 30, 2011, as a low-fare model or not. It already has daily flights between Sharjah and Kochi using
Boeing 737-800 with 16 Premier class and 138 economy seats. Jet Airways currently operates full services to 24 international destinations that include London, Singapore, New York, and Brussels, which is its primary overseas hub. So, what it will do now is to retain its medium and long-haul routes in the fullservice category and convert the short-haul under five hours flying routes to the lowcost model or as it would like to call it: a low-fare model. It is not that Jet is not doing anything to its full-service product. Recently, Jet Airways retrofitted its Boeing 777-300 ER making it a three-class configuration to offer I class, J class and Economy. This has been done on its Mumbai-Hong Kong flights where the new first class is offered a new five star in-flight service. The first-class suites will provide a personal cabin with sliding doors and a fully flat bed and a dining table for two besides other business class amenities. As reported earlier, Jet plans to induct not less than 49 new aircraft in the next four years. Besides, it has also gone in for a large-scale leasing options for narrow-body Boeing 737s. As always Naresh Goyal is working to his plan except that in the last three years some factors were beyond his control like Spice and Indigo that have extended their lowfare offering to their international flights as well forcing Naresh Goyal to do the same. To actually drive towards a lowcost platform, Jet Airways is now
aggressively cutting down non-fuelrelated costs by at least 20 per cent in 2011-12. The airline is looking at a cheaper ticket reservation system and lower distribution expenses. In 2010-11, Jet spent `7680 crore on non-fuel related expenses. As part of this cost-cutting plan, Jet is planning to convert `500 crore rupee loans to dollar denomination which will help it cut interest costs. According to its Vice President M Shivakumar, the airline converted `2500 crore of debt service in October 2010 and saved `150 crore in interest cost. This saving will rise to `175 crore in the current fiscal. Meanwhile, Jet Airways has sealed a deal with Godrej Properties to jointly develop a piece of land at Bandra Kurla Complex. The development cost of `500 crore will be shared equally by Jet and Godrej. This is to increase in floor space index they had sought for from the Maharashtra Government. Godrej Properties will develop approximately one million square feet of saleable office area and office building that will be completed in three years. Godrej has agreed to take on the `360-crore debt obligation that Jet Airways has on the property and will also reportedly pay Jet Airways `135 crore to compensate it for the expenses already incurred. Jet Airways will get 162,000 square feet of carpet area at development cost. This space at Bandra-Kurla Complex will be used by Jet Airways as its new headquarters.
Spicing up the
here have been wild rumours about the Spicejet promoter wanting to sell part of his equity to meet rising expenses as well as fund new fleet acquisition. But all this was set at rest when the airline in a communication to the Bombay Stock Exchange said SpiceJet was not in discussion with PE investor TPG Capital as reported in a financial daily for stake
sale. In fact, the speculation about Spice wanting to sell stake to TPG arose because of the delay in getting some approvals and forward movement to raise US$ 270 million dollars it needed to fund among others the acquisition of 15 Q400 Bombardier turbo-prop aircraft as well. As we go to print, it appeared that Spicejet had ironed some of the issues and the first of its 15 Bombardier turbo-prop
region
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CRUISING HEIGHTS September 2011
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NEWS DIGEST
H.C. Tiwari
Q400 aircraft was on its way to India and join its brand new regional operations plan. This new light aircraft can seat 78 passengers and has proven to be highly fuel-efficient and thus could be an answer to the ATRs. Chennai-based Sun TV promoter Kalanithi Maran, who owns major stakes and management control of SpiceJet, had in the recent past faced some political disquiet that sparked off rumours about his financial standing. Though one has not heard the last of such rumours, there are some rumblings within the airline at the level of pilots and crew members. It is reported while some pilots have quit the carrier, a few cabin crew members have also put in their papers due to the “unadjustable culture of the new management”. SpiceJet was, therefore, on a hiring spree. Some top officials, have resigned and their places have been taken by those close to Maran who can now say his team is complete. Having aligned the management to Maran’s line, SpiceJet is now embarking on a major regional expansion spree beginning in the second half of September 2011 and for which it will deploy four Q
Neil Raymond Mills
400s. It also currently has 30 Boeing 737800s and Boeing 737-900s. From end September 2011, it proposes to launch flights from Mangalore to Bengaluru, Hyderabad and Chennai. Besides, it has sought permission from the Airports Authority of India (AAI) to allot it five parking bays for five of its aircraft -- may be all Q 400s to launch the intra-state (Gujarat) services from February 2012. Spice will connect Ahmedabad with Vadodara, Jamnagar, Rajkot, Diu and Bhuj. The LCC is also working on a similar intra-state services in Andhra Pradesh connecting Hyderabad with various regional destinations within AP. Should this plan succeed, it could be a major winner for Spice in the regional sphere where so far no airline has gone on a major connectivity exercise. It must also be stated here that the idea of intra-state connectivity was thought of by Captain G R Gopinath for his Deccan Charters. After he dropped the plan as he did not get regulatory approval from the DGCA (Director General of Civil Aviation), Spice seems to have caught on to the idea and the services are now to be launched from mid-September onwards. A little late in releasing its Q1 results in August 2011 for the period April-June 2011 of fiscal 2011-12, SpiceJet reported a higher net loss of `71.9 crore compared to a profit of `55.2 crore in the Q1 of the previous financial year. The fuel cost in the current Q1 accounted for 53 per cent of the total cost of operations as against 36 per cent in Q1 of 2010-11 fiscal. Notwithstanding this, the average passenger yield for Q1 of 2011 was higher by 5.5 per cent at `3663 from `3472 earlier. The total income of the company in Q1 rose 32 per cent to `945.6 crore as against `716.8 crore in Q1 2010. It recorded a seat factor of 78 per cent. While SpiceJet launched its foreign flights in late 2010, and is currently flying only to Colombo and Kathmandu, it has applied to the Ministry of Civil Aviation seeking permission to fly to 10 more destinations in South East Asia, West Asia and some of the CIS member nations. The airline management says it will not be just a point-to-point carrier but wants to create a partnership with international
low-fare carriers. This seems to be a different idea that might have taken off from the big boys’ alliances such as Star, Sky Team and OneWorld. SpiceJet CEO Neil Mills is on record that if an airline flies the usual suspect routes like Singapore, Malaysia, etc. it may face competition from different kinds of carriers, which can compete at rock bottom fares. For instance, Singapore Airlines flies off the cream of Indians from India while its two other subsidiaries, Silk Air and Tiger Airways, try to polish of the reminder from India. Tiger Airways which is the LCC arm of SIA, flies to Trichy and Trivandrum and in both these legs Tiger claims to be the low- fare leader. The next three months will see a new expansion phase of SpiceJet, which will see a rapid progression over the next three years. SpiceJet currently has 30 narrow- body Boeing aircraft and will add another two Boeing 737s, which will up its capacity to 32. The airline also proposes to add 11 Bombardier Q400s by the end of March 2012. In fiscal 2013, Spice will add another Boeing and four Bombardiers. By the end of fiscal 2013, the airline will have 37 Boeings and 15 Bombardier Q400s. Its regional operations will constitute about 30 per cent of its total operations but the contribution will not be the same in revenue terms. Like we said, if Naresh Goyal had to dump lowfare Konnect type of capacity to meet the threat of LCCs’ low fares, the latter claim that they have been hit badly by the sharp drop in fares by full-service carriers and as a result the real LCCs have not been able to pass on the rising fuel cost to passengers. So, the constant absorption of rising fuel costs has begun to hit the bottomline of airlines as evident from the Q1 results. The time has come to think out of the box so that non-fuel costs could be cut further. The question is how much more can you do when you have already reached the bones and not even skin is left. So, as an alternative, SpiceJet CEO Neil Mills hinted that this could be in the form of extracting much-higher productivity from the employees at all levels. In fact, the murmur in the market is that because of such out-of-the-box thinking to control costs, SpiceJet pilots and cabin crew have begun to feel that the rostering system was not scientific and it tired them faster than earlier. True, this is only one side of the story. May be if SpiceJet tells what is the real story for staff unhappiness then we can shed more light.
FOCUS
BUSY TERMINAL: International check-in counters at one of the airports.
Grounded —
once again THE GROUND HANDLING POLICY IMPLEMENTATION HAS BEEN STAYED — YET AGAIN, REPORTS R KRISHNAN.
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CRUISING HEIGHTS September 2011
he issue of Ground Handling has been engaging the attention of the government since 2002-03 but till today it has not reached any finality. It now appears that with the matter being heard by the Supreme Court, some definite dimension could be added to it so that investors, aviation companies, etc. could take a firm decision. Prior to 2007, the AAI’s (Airports Authority of India) Ground Handling Regulation 2000 governed ground handling activity in various Indian airports. According to that, AAI, Indian Airlines and Air India besides selfhandling could also do third-party handling. However, all private airlines including foreign airlines had the right of selfhandling. Additionally, Messrs Cambata Aviation was permitted to carry on business of ground handling in Delhi and Mumbai under court orders.
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FOCUS After 2002, the aviation scene began to undergo the first signs of change and by 2004-5, it had gathered speed. In 2002, the then NDA government formed a draft Ground Handling Policy by which it sought to prevent domestic private carriers and foreign carriers from self-handling and thus restricting it to only AAI, Indian Airlines and Air India. The policy was criticised by private operators who cited job losses and wastage of investments they had made for doing self-handling. Notwithstanding the criticism, the NDA government went ahead and adopted a Union Cabinet Resolution which decided to restrict ground handling to the three state-owned entities, namely AAI, AI and IA. Additionally it also allowed or rather encouraged the formation of Joint Ventures (JVs) by these three entities with well-known foreign ground-handling companies. At that time, the possibility of DNATA (a subsidiary of the Dubai government) becoming a JV member with one of the Indian state entities to provide ground handling had more or less crystallised. However, because the Bharatiya Janata Party (BJP) was the lead member of the NDA and some of its leading lights were opposed to having any such JV in a critical security-related area, the DNATA involved JV did not pass muster. This galvanised the private airlines to open other fronts of opposition against this policy and the net result was that the new Ground Handling Policy of the NDA was kept on the back-burner. By May 2004, the NDA government lost the Lok Sabha elections and the UPA-I came to power. UPA-I considered the earlier NDA policy on ground handling de novo. Since power equations had changed, the view about the UAE in general and Dubai in particular, also changed and a new debate was started on the Ground Handling Policy. It was also the time when domestic aviation in India began to boom and in about three years -- 2004-05, 2005-06 and 2006-07 -- domestic passenger traffic virtually doubled. This, in its wake, opened up new opportunities in ground handling besides a few aviation-related activities such as MRO, Cabin Crew Training, etc. This was also the time when the government opened foreign routes to competing Indian domestic carriers subject to certain conditions, concluded the Indo-US Open Skies, substantially and expanded the bilateral rights resulting in many more flights from India to foreign destinations and vice versa thus benefiting not only the state-owned Indian carriers and private airlines but also the respective nominated foreign carriers. This was also the time when the government formally allowed
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In 2002, the then NDA Government formed a draft Ground Handling Policy by which it sought to prevent domestic private carriers and foreign carriers from self-handling and thus restricting it to only AAI, Indian Airlines and Air India.
EASY GOING: Young girl carriying baggage at one of the airports.
CRUISING HEIGHTS September 2011
the transition under the Public Private Partnership (PPP) model to the taking over of Delhi and Mumbai airports. Besides, the government had already allowed the setting-up of Greenfield airports in Hyderabad and Bengaluru. As for Kolkata and Chennai airports, they are being expanded and modernised by AAI. As a consequence, the ground handing business began to rise exponentially and is now reported to be nearly `2000 crore. Seeing this opportunity, the UPA-I government, in 2006-07, reconsidered the earlier Cabinet decision and amended it to provide a competitive environment in the ground handling space. Accordingly in 2007, the Director General of Civil Aviaton (DGCA) issued a circular based on the earlier Cabinet decision to debar private airlines as well as foreign carriers from doing self-handling of ground handling activities. The policy clearly enunciated that there would be three players in each of the six metro airports of Delhi, Mumbai, Kolkata, Chennai, Hyderabad and Bengaluru. The first player is the JV between Air India (as Indian Airlines had been merged into it) and SATS; the second, the respective airport operators in the six metros with a JV partner of its choice; and, third, a new JV with foreign and Indian partner selected on the basis of bids. All of these have been done. Following the DGCA conveying its decision, private airlines that have been doing self-handling appealed to the government that they needed transition time. The Ministry of Civil Aviation postponed the implementation of the new Ground Handling Policy successively from January 2008 to June of that year and later to January 2009 and then to January 2010. It then finally decided not to wait any longer and the DGCA notified in June 2010 that the much-postponed new Ground Handling Policy would be implemented with effect from January 2011. Following the final postponement of the four-year-old policy, the private airlines under their umbrella body, the Federation of Indian Airlines
FOCUS (FIA), sought legal recourse. In November-December 2010, FIA approached the Delhi High Court seeking restraint on the DGCA and the Ministry of Civil Aviation as well as the scrapping of the new Ground Handling Policy on the plea that it would introduce inefficiency, lead to discrimination, throw out of job thousands of people engaged in ground handling activities as part of self-handling by the private airlines, bring about a huge loss of investment, etc. The FIA member airlines also challenged the government decision on the ground that it amounted to overturning the level playing field and was violative of Article 19(1)(G) of the Indian Constitution as it deprived the airlines of carrying out an intrinsic part of the running of any airline. The government had explained that it, was driven mainly by security considerations and that was the paramount reason for the formulation of the uniform policy. The policy, which was supposed to become operative from
In NovemberDecember 2010, FIA approached the Delhi High Court seeking restraint on the DGCA and the Ministry of Civil Aviation as well as the scrapping of the new Ground Handling Policy
Status quo till July 2012 The Ministry of Civil Aviation has informed Air India, DIAL, MIAL, BIAL as well as Hyderabad Airport about the delay in the implementation of the Ground Handling policy and the continuation of the status quo till July 2012. Earlier it was believed that the matter which was supposed to come up before the Supreme Court for final disposal in July 2011 would be sorted out. This did not happen prompting the Under Secretary of Ministry of Civil Aviation to write to the parties mentioned above. The communication from Rajiv Gandhi Bhawan dated July 29, 2011 said: “I am directed to refer to this Ministry’s letter No. AV 24013/004/2007AAI (Vol III) dated 06.04.2011 and letter of even number dated 26.04.2011 and dated 24.05.2011 vide which a copy of Order dated 05.05.2011 of Hon’ble Supreme Court in the SLP (Civil) No.7764/2011 was forwarded for compliance. The Hon’ble Bench were pleased to list the matter for next hearing for final disposal in the month of July 2011 and now on 02.07.2012 and till then status quo as on date will continue.” “In the light of above the airlines may be allowed to renew the passes of their ground handling staff up to 31.10.2011 subject to the conditions as
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mentioned in the aforesaid letter dated 06.04.2011 of this ministry. BCAS should follow its due procedure for renewal of such passes.” This effectively means that the ground handling policy that Air India thought could be of great help to it howsoever uncompetitive it may be, has not happened. So, will be the case of the likes of Celebi, Menzies Bobba, etc. This also means that all the Indian carriers can continue to do self-handling in the six metro airports where it was sought to be barred by the policy and instead allow only three players in each of the six metro airports of Delhi, Mumbai, Chennai, Kokata, Hyderabad and Bengaluru. It was following this policy that the Turkish ground handling major Celebi, Menzies Bobba, etc. made a beeline to India. Now, perhaps, they may have to wait for one more year by when it is quite probable that Air India would be able to decide whether it will be only a flying company or also as a ground handler. This is because the revenue stream AI expected from providing ground handling to member airlines of Star Alliance may or may not happen following its unsuccessful bid to enter the alliance (see Cover Story in this issue). The petitioners, the Federaton of Indian Airlines, should be quite happy now that its members have got a breather.
CRUISING HEIGHTS September 2011
RESPONSIBLE SHOULDERS:Ground-handling staff are responsible for baggage handling.
January 1, 2011, was initially stayed by the Delhi High Court. On March 4, 2011, the Delhi High Court rejected the petition of the FIA and vacated the stay. It ruled that the airlines concerned under FIA should immediately sign an MoU with any one of the three officially-approved Ground Handling agencies in the six metro airports. After the lifting of the stay, the Ministry of Civil Aviation (MOCA) through AAI immediately issued a detailed circular to six metro airports in which it noted that the policy was aimed to increase the security and safety at the airports. MOCA stated: “Our aim is to improve safety and services at each of the six metro airports and we want to bring in uniformity in all airports.” Official estimates suggested that the new move would generate additional revenues of $77 million. AAI and AI would be the major beneficiaries as well as SATS as a 50 per cent JV partner of AI. Other beneficiaries could include other officially approved ground handling companies such as the Bird Group with its JV partner Texas-based World Flight Services, Menzies Bobba, Celebi, Bhadra International, etc. After losing the case in the Delhi High Court, the private airlines were told to sign an MoU with any one of these officially approved ground handling companies authorised to operate in these six metro airports. On April 4, 2011, the matter was taken up and considered by the Supreme Court. It sought to know the Government of India’s stand on the plea challenging the Ground Handling Policy at the six metro airports. Accordingly, it issued notices to MOCA, DGCA and others. The two-judge bench of the Supreme Court comprising Justice R V Raveendran and Justice A K Patnaik, while admitting the petition of the FIA refused to stay the March 4, 2011 order of the Delhi High Court, which, among other things wanted the petitioner FIA’s member airlines to immediately sign an MoU with any one of
FOCUS
CORDIAL RELATION: Ground-handling staff at the airports usually hired by their respective airlines.
the officially-approved ground handling companies authorised to operate in the six metro airports. On April 4, 2011, the admission day of the petition by FIA, the Supreme Court asked some very tough questions. The Union Government was asked to justify its policy of keeping out private airlines from ground handling duties, which was to be handed over to a consortium led by Air India-SATS or the airport-operator-led JV or a third independent JV among others. The Supreme Court wanted to know if the policy would not hurt the efficiency of private airlines and sought the official response. The two-judge bench asked: ‘When they have their own services, why should they not go for the services of others? Will the AI JV be prompt enough to ensure the services?’ When it was told that security was the primary consideration for designing the new Ground Handling Policy, the Supreme Court retorted: “It is right for you to make policy but when something is going smoothly, why are you disturbing it? What prompted you to do this and what was the security threat?” The apex court further asked: “Why ban only in Delhi, Mumbai, Chennai, Kolkata, Hyderabad and Bengaluru? Why (have) others like Jammu, Kashmir, Amritsar and even Kochi (been) left out?” The Judges asked Solicitor General Gopal Subramanium, representing the Union of India: “Have you travelled by Air India and IndiGo? Try these airlines. You would start 10 minutes early and anybody who travels knows it. We do not want to say anything about Air India. You are killing the efficiency of the private airlines.” Meanwhile, it instructed the private airlines to sign MoUs with the concerned ground handling agencies pending the disposal of their petition. The private airlines concerned then signed MoUs with the relevant ground
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On April 4, 2011, the admission day of the petition by FIA, the Supreme Court asked some very tough questions. The Union Government was asked to justify its policy of keeping out private airlines from ground handling duties. CRUISING HEIGHTS September 2011
handling companies but none of them signed up with AI-SATS JV. The matter was posted for hearing on April 28, 2011 when the government and its various agencies, which had been issued notices had to make their written submissions. On that day, the government informed the Supreme Court that it had removed the private companies from doing self-handling at the six metro airports. This had been done in public interest and national security. In its affidavit, MOCA informed the Supreme Court that the Government of India had taken a policy decision to hand over the job of ground handling only to government staff and/or through agencies recognised by the government. The affidavit further stated that private airlines and companies usually indulged in outsourcing their jobs and in 2009 there were 15,945 workers of private companies of which only 6210 or nearly 36 per cent were their own employees while the remaining 64 per cent manpower was employed through outsourcing. The government refuted FIA’s claim that removing private agencies from ground handling jobs would lead to large-scale unemployment. It also mentioned that bational security could not be compromised under any circumstances and national security and safety of the people of India had to be accorded top priority even if that meant some people would be adversely affected due to the government decision. The government cited several incidents like 9/11 in New York, Kathmandu plane hijacking, etc. The affidavit further noted that dubious and anti-national elements found it easy to reach their targets by getting jobs in private companies. After hearing the two sides and also their affidavits, the Supreme Court in its April 28, 2011, order said: “The airlines are entitled to continue their earlier arrangement with certain conditions. The airlines shall be entitled to renewal of passes of ground handling staff subject to their entering into MoUs with any recognised and officially-approved GH agency.” (This is precisely what the private airlines under FIA wanted and got.) The matter came up for hearing again on May 5, 2011 when the Supreme Court ruled the continuation of status quo and postponed the hearing on the matter to July 2011. Everyone in the civil aviation industry is keenly awaiting to witness the resumed hearing once the courts open after the summer recess. Before that, however, it will be useful to recount what happened on May 5, which led to the continuation of status quo. The Supreme Court on May 5, 2011, permitted private airlines to continue their
FOCUS own ground handling till the matter was taken up for final disposal in July 2011. The order of the Supreme Court came in response to the FIA petition challenging the GoI decision through its new ground handling policy to restrict the rights of the private airlines in doing selfhandling of their ground handling activities. Accordingly, it was clarified that the private airlines will be able to continue with their ground handling work or duties after renewing of their workers/staff passes subject to the airlines entering into MoUs with the officially designated ground handling companies. (It is understood that none of the private airlines seeking continuation of self-handling signed up with Air IndiaSATS JV. In fact, the airlines reportedly signed up with the JV floated by the airport operator for obvious reasons.) Solicitor General Gopal Subramanium informed the Bench that the entire policy was formed to restrict the number of ground handling personnel because of security concerns at the six metro airports. He said: “If terrorists attack they would target busy airports like Mumbai and not Jammu.” (This seemed like a clarification which the Solicitor General offered to the Supreme Court which had earlier observed that the security threat was not just in or to six metro but also Jammu and Kashmir, Amritsar and Kochi). In response, the Supreme Court observed: “We understand the security concerns and reasons cited by the government but other reasons for the policy are not clear.” In this context, the apex court said: “On pricing norms of the new Ground Handling Policy, our only concern is the charges and money involved. If the pricing is more then it is the customer who will ultimately pay.” (It may be pointed out that the private carriers under FIA had earlier told the government that should there be an increase in the rates of ground handling charged by the officially appointed from ground handling companies in the six metro airports, then the private airlines would pass on the increase to customers or air passengers.) The Solicitor General replied that the pricing would be regulated by Airports Economic Regulatory Authority (AERA) ,who will be made a party to the agreement. He said: “The policy is not made for a particular airline. It is a general policy and none will have any higher rights.” The FIA Counsel, Shyam Divan, noted that there were a large number of employees of the private airlines and oth-
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HEAVY DUTY: Fuelling of an aircraft also forms an important part of ground handling.
Solicitor General Gopal Subramanium informed the Bench that the entire policy was formed to restrict the number of ground handling personnel because of security concerns at the six metro airports. CRUISING HEIGHTS September 2011
er arrangements, which would be disrupted completely. The Ground Handling services include passenger and baggage handling activities at the airport, terminal and traffic service including passenger check-in besides other services such as aircraft handling, loading and unloading, flight operations, surface transport, etc. The FIA said that nearly 3600 employees deployed by member airlines would be displaced and that all the heavy investments they had already made would be nullified. FIA also expressed fear that their on-time performance could take a hit as competing airline companies selected for providing ground handling services could deliberately delay loading and unloading of baggage and handling of passengers that may benefit rival carriers. Independent of these observations, the Supreme Court asked the government whether it should allow the private airlines to continue some of the sections of ground handling duties if the private airlines could do them with their own staff and not by outsourced ones, which, in any case, was of one of the main reasons of security risks or concerns. “Can you identify the sections in which the staff of the airlines could do their duty without disturbing it? Is there any space for the airlines to do ground handling by forming their own companies because they are so much conscious of their quality?” the Supreme Court asked. To this, the Solicitor General said he would have to take instructions from the government and then inform the Supreme Court. Appearing on behalf of FIA and private airlines, Senior Advocate Mukul Rohatgi said that the airlines would have no objection while doing Ground Handling duties with or by their own staff. “If the government has any problem, we assure there will be no outsourcing. Every person from private airlines will prominently bear the badge of their respective airline”. The Supreme Court asked, as it had done earlier, what had prompted the government to take over the ground handling duties from the airlines? “What prompted you to take over ground handling work?” When there was no reply from the Solicitor General, the two-judge bench said: “You can take over even the airlines. The issue is arbitrariness — whether you have taken the decision fairly by drawing a line of services which needs to taken over”.
SPECIAL REPORT MAKS 2011(The Moscow Air Show 2011) — the eleventh edition of the air show at the sprawling Zhukovsky air field — the display this time included the Russian drone Luch, the huge 5M Galaxy military transport from the United States, the PAK FA T-50 fifth generation fighter jet, and a new manned spaceship called “Rus”. The cold statistics: The air show involved 627 aerospace industry companies, including 473 Russian and 154 foreign; and there were more than 800 companies from 42 countries and a record 600,000 people in attendance. Deals signed during the international air show MAKS have surpassed the event’s previous record of $10 billion. A special report rime Minister Vladimir Putin is a great one for aviation. He views it as one of the elements that will take the Federation back to greatness. On the second day of the event (August 17), Putin spent hours at the sprawling Zhukovsky air field, promised more support for Russia’s aviation industry after overseeing more than $1 billion worth of deals at the country’s biggest air show and he also watched the first public flight of the fifth-generation T-50 fighter at as well as flights of mid-size regional plane Sukhoi Superjet. “The state has supported and will support Russia’s aerospace industry. It is a strategic priority for us,” Putin told officials and industry executives in a speech, stressing that the government invested $9.5 billion in the industry in 2009-11. “Our national aviation construction centre is being built here in Zhukovsky. It will consist of leading research centres, design departments and testing plants. We hope that this will be a world-class research and production facility.” Russia is pinning its hopes on the Sukhoi Superjet, a plane designed to compete with Embraer and Bombardier (BBDb.TO), and T-50 fighter, which will rival F-22 Raptor made by Lockheed Martin and Boeing. Another Russian-made passenger aircraft, the MS-21, is due to be ready for delivery in 2017 and is intended to replace the country’s ageing TU-154 planes. Russia has consolidated almost all aviation production and research assets, split and partly privatised in the 1990s, into a state-controlled United Aircraft Corporation despite resistance.
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CRUISING HEIGHTS September 2011
A GREAT SHOW IN THE MAKING: (Pages 30-31) A panoramic view of the airshow; (from top left to right) the HAL stall; the Antonov 158 aircraft and A-50 Mainstay AWACS plane.
PUTIN STEALS THE LIMELIGHT...
BRIEFLY CRUISING HEIGHTS September 2011
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SPECIAL REPORT
“The consolidation of the aviation industry has been completed. This work has been long and difficult. Now all the enterprises that were integrated have clear vision of their future development,” Putin said.
Technical break
But disrupt Putin did the air show. It was like India where the halls are emptied for the VVIPs to move around and the mufti takes over the platform. The Moscow Times had the best take on the show. And their criticism only shows how far Russia has come since the early 90s: “A police officer politely raised his arms and shook his head as a group of suited men wearing exhibitor badges strolled toward the pavilions where their stands were located. It’s closed,” he said — which was confusing because five minutes ago there had been no police officer on this bustling central path at the MAKS air show. The officer had appeared like a frowning ghost in the middle of the crowded thoroughfare. “Why can’t we go down there?” a guest asked. “I can’t say.” “How long is it going to be blocked off?” “I can’t say.” A reporter walking in the opposite direction to file a story — aware that Prime Minister Vladimir Putin was slated to drop by the show that afternoon to preside over $1 billion worth of deals and
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The press centre — with the only accessible Internet-connected computers around — had been commandeered by the Prime Minister’s press service CRUISING HEIGHTS September 2011
watch Russia’s first stealth fighter take to the skies — was able to recognise the signs of an impending Putin visit. The suspicion was confirmed when, asked whether the path was closed for Putin, the police officer simply pretended not to have heard.But the reporter was soon as stymied as the businessmen. The press centre — with the only accessible Internet-connected computers around — had been commandeered by the Prime Minister’s press service. A young blonde in a see-through blouse and reflector shades, who seemed to have some kind of authority, repeated the police officer’s line when asked how long the disruption might last.”We announced this morning that there would be a technical break between 1 and 3 o’clock,” she said defensively. “Technical break” — bureaucratic code for stopping works for undisclosed reasons — was an interesting way of describing Putin’s visit.
Upgrading the big beast
Ukraine’s state-owned Antonov Corp. agreed on a timetable for upgrading the Volga-Dnepr freight carrier’s 10 An-124 cargo planes, the companies said. Volga-Dnepr is the largest civilian operator of the An-124, a monstrous 36metres-long Soviet-era design that is the only plane on the planet capable of shifting 150-tonne loads.
HANDSHAKES AND DEALS: (Clockwise from page 32, top) Another view of the airshow; the commander of the Sukhoi Super Jet 100 speaks to the passengers soon after landing; a view of the Super Jet interior single aisle aircraft which is similar to the A320 or Boeing 737; A view of the stalls and a model of the MS-21 in the background ; Dr. Siddharth Bose Chairman, Hindavia Aeronautical Services shaking hands after signing an NDA (Non-disclosure agreement) with Sukhoi Civil Aircraft CEO Vladimir Prisyazhnyuk (the Agency agreement for South Asia was signed at the Paris Air Show) and interior of the gargantuan AN124 that can carry tonnes and tonnes of equipment.
R&D as well
United Aircraft Corporation (UAC), the state-owned company that includes several of the country’s top aircraft makers, signed agreements with the Kompozit Holding, Rusnano and VIAM to develop and produce composite polymers. The ultimate aim is to produce carbon fibers to use in UAC’s civilian and military aircraft. Composite materials are lighter than traditional aluminium, which many believe will eventually be replaced. The first airliner built almost entirely of Polymers, Boeing’s 787 Dreamliner, made its Russian debut at the air show. Carlo Logli, chief executive of Superjet International, the Russian-Italian joint venture responsible for international sales of the Superjet 100, told local journalists that composite materials were still too expensive to be used by makers of smaller, regional airliners, who often sell to customers with tighter budgets.
The Sukhoi Superjet100 super success
Sukhoi Superjet 100, a joint project between Russia and Italy ( it is actually a JV with Italian company Alenia Aeronautica) hits the best-seller list. Only a prototype just a year ago, the Sukhoi Superjet is now officially in business, having gathered over 200 orders already from both Russian and foreign airlines. A joint project between Russia’s aviation giant Sukhoi, Europe’s Superjet International and several dozen other
UAC also expects to strike deals to sell The MS-21. It is a family of twin-engine jet aircraft still under development by the Irkut and the Yakovlev design bureau, part UAC CRUISING HEIGHTS September 2011
companies — this is the first civil aircraft produced in Russia from scratch since the collapse of the USSR. The Superjet 100 is a medium-haul passenger aircraft developed by the Sukhoi Corporation in cooperation with US and European aviation corporations including Boeing, Snecma, Thales, Messier Dowty, Liebherr Aerospace and Honeywell. The aircraft is capable of carrying 100 passengers for up to 4,500 kilometres (2,800 miles).The plane made its maiden flight in May 2008. The engine SAM 146 is joint venture between Russian NPO SATURN and French SNECMA. Geared up with some of the most advanced navigation equipment, the Sukhoi Superjet will replace Soviet-era aircraft like the Antonovs now on the or last legs so to say. And with a price tag of around $25,000,000 per piece, which is around 20 per cent cheaper than its main rivals, there is interest in the Superjet from foreign airlines as well. One did a demo flight on the superjet and the frankly the experience was no different to the flying on modern aircraft. In fact the entire feel is like any other single aisle bestseller like the A320 or B737. Its developers say they will continue working on the Superjet in order to overcome any teething problems. And with a line of orders already secured, they promise to deliver over 160 planes by the end of 2016. Meanwhile, the first Sukhoi Superjet, which was sold to an Armenian air company, has already made several international flights. Now with the huge number of orders and the success at the air show, production is likely to be increased to two aircraft per month from the year end with a goal of 3-4 aircraft by end 2012. How will that happen? Simple. Outsource. The wing assembly, painting could go to other vendors to speed up the process. There are plans for a state of the art delivery centre. It is also likely that engine production will be fast tracked. PowerJet hopes to boost output from two engines per month to four engines a month soon, and ramp up further to six-eight engines next year. There are problems with the engine weight that has still to come down. The Superjet 100 is in service with Armavia and Aeroflot. Meanwhile, Superjet expects to formally set up its Russian flight training centre in October, where a Thales full-flight simulator is based. Two more are due next year. Another area of emphasis for the regional jet programme is completing European Aviation Safety Agency certification. Most of the work should wrap up in November to achieve certification still this year that, it hopes, will trigger big time global sales. Sukhoi’s Superjet 100
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SPECIAL REPORT cruises at a maximum operating speed of Mach 0.81 and has a ceiling of 40,000 feet. Fully loaded, the basic-range version requires a runway distance of 1,731 metres (5,680 feet) runway to take off, while the longrange version requires a take-off runway distance of 2,052 meters (6,732 feet). Range with typical payload for the basic version is 3,048 kilometres (1,894 miles) and the long-range version has a range of 4,578 km (2,845 miles). So what is the Indian connection to the Superjet? It’s being sold and marketed in the sub-continent by Hindavia Aviation who’s CEO, Dr Siddartha Bose signed a key collaborative agreement with the Sukhoi Civil Aircraft Co. President Vladimir Prisyazhnyuk (see photo). Dr Bose said that the DGCA inspection and approval process was “underway” and added: “We are in talks with three customers who have experienced the Sukhoi Superjet and are keen on it. I expect some firm results in the next few months.”
The MS-21
The MS-21 is a family of twin-engine jet aircraft still under development by the Irkut and the Yakovlev design bureau, part of Russia’s United Aircraft Corporation. It has a capacity of 150-212 passengers. The model was showcased for the first time at the Farnborough International Airshow in Britain in 2010. MS-21 planes will be produced in three modifications. It will be the first plane with components made of carbon fiber. The new technology will save 25 per cent of fuel, 15 per cent of maintenance costs and reduce the damage to the environment. There was a mock-up of the aircraft at the air show and UAC is hopeful that this aircraft will take on the A 320neo and the B737 (reengineered) with a 15 per cent lower fuel consumption and category by category benefit. What the calculations are and how they have come to this conclusion is something one will have to wait and see. UAC also expects to strike deals to sell The MS-21 It is a family of twinengine jet aircraft still under development by the Irkut and the Yakovlev design bureau, part UAC. It has a capacity of 150-212 passengers. The model was showcased for the first time at the Farnborough International Airshow in Britain in 2010.MS-21 planes will be produced in three modifications. It will be the first plane with components made of carbon fibre. The new
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SKY IS THE LIMIT: A model of MS-21 aircraft displayed at the airshow. Virgin Galactic plane.
technology will save 25 percent of fuel, 15 per cent of maintenance costs and reduce the damage to the environment.
AN 148
Dr Bose has also been plugging the AN148, a regional jet with a capacity up to 70 as ideal for regional carriers In the sub-continent. He said that his company was in “an advanced stage of talks” with several operators both in the country and the neighbouring region to use this work horse. The aircraft had come to the India Aviation show last year and was well received. Since then the process of getting it certified for the Indian market has been in progress. Interestingly, Antonov that has designed the AN 148 is coming with the AN 158 that is likely to go directly into competition with the Sukhoi Superjet. Hindavia has signed a Road Map is signed with DGCA and IAC Russia for validation of Russian “Type Certification” of AN 148.
The CSeries gets in
Bombardier received a hopeful sign that the Russian market may be open to its new CSeries aircraft after years of having its efforts to sell its larger regional jets there stonewalled as the country builds its own planes. Russia’s Ilyushin Finance Co. (IFC) said it had signed a letter of intent to purchase 10 of Bombardier’s CSeries aircraft and that it had put another 10 aircraft on option and taken 10 purchase rights for the plane. The deal is valued at $614 million, and could grow to CRUISING HEIGHTS September 2011
$1.86 billion, if all options and rights are exercised. If the IFC order is firmed up, as is expected in the coming months, the Russian leasing company will begin taking delivery of the planes in late 2015, the company said. The order is critical for many reasons: firstly, while there are about 12 Russian airlines flying its smaller regional jets, and Bombardier has sold dozens of business jets in the country, the IFC order is the first for its new CSeries there. Moreover, the order will make the CSeries the first non-Russian aircraft in the massive Russian leasing firm’s fleet. IFC currently has a fleet of Antonovs, Tupelov, and Ilyushin aircraft, and is not only active in leasing aircraft in Russia, but also in Cuba and Iran. Until now, Bombardier has had difficulty getting its larger regional aircraft certified in the country while Russia developed competitive planes, the Sukhoi SuperJet, which entered service earlier this year, and the larger Irkut MS-21, which is expected to hit the market 2016. Murray said he believed the regulatory issues were simply protectionist tactics, noting the smaller 50-seat variations of the regional jet, which had no Russian equivalent, had received approval. “If Bombardier can announce additional new orders for the CSeries in the coming months to build on the IFC win, we believe that investor optimism in the programme will be regained,” he said. The CSeries is expected to take its first flight next year, before entry into service in late 2013.
z
z
z
For the record The US had a sizeable contingent at the air show — including a KC-10 Extender, two F-16C Fighting Falcons, two A-10 Thunderbolt II, one F-15E Strike Eagle, one B-52 Stratotanker, C130J Super Hercules and C-5M Galaxy statics for the show. Eurocopter had scale models of the single-engine AS350 B3, along with the twin-engine EC135 and EC145 — all of which have been ordered by customers in the region. Eurocopter’s overall share of the Russian and CIS marketplace for Western-supplied turbine-engine helicopters is more than 70 per cent. The must at airshows these days — the A 380 and the Boeing 787 Dreamliner — were on display. It seems without the superjumbo and the composite beauty, no show is really complete.
SPOTLIGHT
Last month, we had a former civil servant who had been associated closely with the Civil Aviation sector outlining his views on what ails the sector. Not surprisingly, the report produced a hailstorm of protest. We received several views and one detailed commentary from another contributor connected closely with aviation offering a perspective that is sharply at variance with the earlier one. Here is that piece that concentrates purely on the Air India segment of the story.
H.C. Tiwari
Changing the Matrix — The Praful Patel years I n May 2004 when Praful Patel took over as Civil Aviation Minister, there was a huge amount of optimism in the sector. The general perception was that here was a politician who was an industrialist in private life and had an understanding of the business of aviation, was modern in his outlook and would provide the necessary incentive and fillip to get the sector to take off even as it was rumbling across the runway. In the end, he created some sort of a record by being the first politician to spend over six years in the same job, established a huge amount of milestones that he can justifiably be proud off and has acted as a catalyst for an airline industry that will be amongst the top five in the world in the next quarter century. These are no mean achievements and these wouldn’t have been possible but for his persistence, his ability to bit the bullet and get all sides on board on even the most contentious issues. Tragically, vested interests, jealous rivals and even figures within the establishment are now attempting to put everything that ails the aviation sector at his doorsteps. Particularly with respect to Air India, the idea is that the Maharaja is suffering because of one man.Nothing can be farther from the truth and those who speak to the contrary actually have their own axe to grind. Let me put the issue in some perspective here.
Air India In August 2004, that is just after UPA-I assumed office, the Parliamentary Standing Committee on Transport, Tourism and Culture expressed serious concern over the delay in fleet acquisition by Air India and Indian Airlines. The decision to acquire new aircraft for Indian Airlines came 17 years after it got its A320s in 1988-1990. Praful Patel had said categorically in his first press conference after taking over that this would be one of his first priorities and within months the order was placed. The road map for the acquisition had been done earlier by the two airlines that had finalised their fleet plans but were waiting for the government push. The final story was told by the Prime Minister Dr Manmohan Singh himself on
A few days before the Prime Minister made his observation, the then CMD of Air India, V Thulasidas, said after merger of Air India and Indian and complete fleet delivery of brand new 111 aircraft, it would not be enough CRUISING HEIGHTS September 2011
July 29, 2007, a few days before the legal merger of Air India and Indian. The Prime Minister asked national carriers to ensure world-class services as they started inducting new-generation aircraft to face the growing competition. “I want you to focus attention on that. Our airports and our airlines and all related systems must be world class and must make every customer and client cared for.” He made this observation at a function in New Delhi to mark the launch of Air India’s new fleet. The Prime Minister said the government had taken decisive steps in a short period of one year for placing the largest procurement order of 111 aircraft for both Indian and Air India. He described it by saying this had been by far the largest procurement of aircraft by any airline in the country. Dr Singh expressed the hope that with these acquisitions, the national carriers would be better placed to take on competition at home and abroad and regain its lost elan. The Prime Minister said the national carriers had so far been unable to take advantage of the opening-up of the Indian skies primarily due to shortage of aircraft. A few days before the Prime Minister made his observation, the then CMD of Air India, V Thulasidas, said after merger of Air India and Indian and complete fleet delivery of brand new 111 aircraft, it would not be enough. In fact, the airline would require more aircraft if one looked at the future over a 10-year time frame. So when the recession set in, in early 2008 globally, it shook the global aviation industry. Many of Indian private carriers deferred deliveries and a carrier like Jet Airways even leased out its Boeing 777-300ER and earned enough money to meet its capex-related interest and principal payments. Air India, which had similar aircraft simply failed to lease them and grounded the aircraft causing it huge losses. But when the aviation market bounced back, most airlines reintroduced the big birds, but Air India simply did not know what to do. Obviously, the immediate conclusion would be there was no need for Air India to acquire so many big birds. But what
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SPOTLIGHT
But no one flies Air India(D) Indian Airlines (or the present Air India domestic) As on January 2006, IA had 47 A320s (30 owned and 17 leased), 3 Airbus A300 B4, 5 A319, 11 B737200, 2 Dornier 228, 4 ATR 42. What is of real significance is that way back in 2002, the IA board had evaluated and selected the purchase of 43 Airbus A320 family aircraft comprising 19 A319, 4 A320 and 20 A321. This was the time when NDA was in power and it took no decision on the purchase of new fleet even as it dilly-dallied on the sale or divestment of Indian airlines and Air India. This uncertainty severely affected the fortunes of Indian Airlines ,which lost its will to compete. Just before NDA government left office in April-May 2004, it abandoned the disinvestment of Indian Airlines and Air India totally. Indian Airlines was then left in a limbo and it had to make do with an inefficient and old fleet of A320s and much older fleet of B737-200 and A300s. The average age of IA fleet was 16 years old and this was the time when competing private carriers had brand new B737s or A320s. This was also the time when LCCs offered real low fares to passengers who flew in their brand new planes. IA could do nothing but just watch and see its market share erode. When finally the UPA-I approved the order and placed it on
was not addressed was what would happen if Air India did not have them to protect whatever little market share it had. As if the views of V Thulasidas were being seconded, a very recent report of SBI Caps suitably vetted by global consultant Deloitte has said Air India should acquire another 130 new planes, which have to be a combination of narrow and widebody planes. So where does Praful Patel come in all this? In the last six years, there have been four CEOs at Air India, all from the Civil Service, and continuously and precipitously the market share of the airline has dropped. It has now come to such a pass that IndiGo with fewer aircrafts has more market share than Air India. Surely not the former Minister’s fault!
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Airbus Industries on September 7, 2005, with Praful Patel as Minister, IA fleet had become even older. The 43 new A320 family, which have since been delivered to the airline ,comprised 70 per cent for replacement and 30 per cent new additional capacity. This at a time when the private airlines were aggressively expanding and the average of their aircraft was below five years including those of full service carrier Jet and Kingfisher besides LCCs Spice, IndiGo and GoAir. Deccan had later merged into Kingfisher and Sahara as a subsidiary Jetlite of Jet Airways. The decision to buy new planes for IA did revive the spirits of Indian Airlines’ employees who showed it by carrying 1.01 million passengers in May 2007 or a market share of 21.4 per cent. But again re-lapsed into the same complacency that killed it in the previous years and decade after wave one of private airlines entry way back in 90s. Today, with 43 brand new A320 family aircraft and another 17 leased A319s and A320s, the domestic part of Air India has a market share of only 15.4 per cent even as competing IndiGo with smaller fleet has garnered a market share of 19 per cent and SpiceJet also inching near Air India. Obviously, there is something fundamentally wrong. Surely, government policy has nothing to do with passengers not boarding Air India domestic? To attribute the lack of load factor in Air India to extraneous factors is not only silly but running away from reality.
A very recent report of SBI Caps suitably vetted by global consultant Deloitte has said Air India should acquire another 130 new planes CRUISING HEIGHTS September 2011
No upper-class travellers for the Maharaja As per a Parliamentary report of 2006 while looking into the financial performance of each of the routes Air India flew, it was revealed that: z Air India did not conduct any market survey periodically to assess or reassess market or route potential. It considered only performance reports given by the airlines’ Regional Directors (RD) and Station Managers.
The Committee on Public Undertakings (COPU) in its March 2010 report said that there were 80 international routes and domestic routes from where Air India had withdrawn flight services since 2002-03 and even commented that remunerative routes were being surrendered by national carriers to private airlines. In its deposition before the committee, National Aviation Company of India (NACIL) now Air India, said on the international routes, Air India’s long haul operations would give rise to cash deficits and so further international expansion would be meaningless. It pointed out that as many as 29 international routes operated by Air India brought in losses of `2000 crore and even the Delhi-New York and the MumbaiNew York non-stop flights made a loss of `750 crore. (See story on the Chennai operations of AI.) The Air India CMD clarified that granting of bilateral rights to new players did not lead to re-allocation of profitable routes to other carriers at the cost of the state-owned airline. ‘It is incorrect to say that more profitable routes have been given to private airlines as compared to Air India. As a policy, due consideration is given to the operational plans submitted by NACIL before allocation of traffic rights to other eligible applicants. Only on the exercise of first right of refusal by Air India for operations on a particular international route are such rights considered for being given to other Indian private sectors. It may be mentioned here that Qatar Airways request for additional rights to fly to India was rejected by the Ministry of Civil Aviation when the revision of bilaterals were considered. However, later the Ministry of External Affairs and even the PMO intervened in favour of
Air India prepared market surveys only before starting the new route based on inputs from the RDs and Station Managers. z During April 2002 to March 2005, Air India prepared market surveys for only five new routes. z It is indeed funny that even the Committee on Public Undertakings (COPU) said there were 80 international routes and domestic routes from where AI and IA withdrew flights since 2002-03. There are two things that need mention here. Continental and American Airways have been flying non-stop New Delhi-
New York and New Delhi-Chicago for more than five years now and have not withdrawn. Air India which launched its non-stop India-US flights from New Delhi to New York as also from Mumbai to New York lost `750 crores in a year. It is inexplicable as to why its brand new First and Business Class was never occupied more than 5 to 10 per cent while it had loads only in Economy class. Successful carriers like Singapore flew Boeing747 400, with only 389 seats of which more than half comprised First and Business Class and the balance Economy. Once when Air India wanted to take on dry lease Boeing 747-400s from Singapore
Airlines Leasing Enterprise it wanted Singapore Airlines to reconfigure its Boeing 747-400 to 425 seats which it refused. Obviously, SIA made money on its First and Business Class while Air India only lost money on its Economy class as none occupied its First and Business Class. This is happening even today. Anyone who can check out on Jet Airways’ flight DelhiLondon or Mumbai-London will see Jet Airways getting over 85 to 100 per cent load in First and Business Class. Now can anyone blame outsiders (read Praful Patel) for meddling with Air India which simply is not attractive enough to even patriotic Indians if one may say so.
Qatar Airways stating India badly needed Qatari gas for industries in India. At the end, Qatar got what it wanted and objections by Air India and Ministry of Civil Aviation were over-ruled by the PMO. In fact, the Prime Minister’s Principal Secretary T K A Nair led a delegation to Qatar to release the extra seats for them. Obviously, Qatar wanted to evacuate passengers out of India and carry them to its home hub before flying them to various global destinations as is being done by Emirates and Etihad. With millions of Indians working in the UAE and Middle-East, would the government of India refuse requests for more rights from these foreign carriers? Obviously not. It may be mentioned here that no new or additional bilateral rights could be given to any foreign carrier without the approval of the Union Cabinet. After the liberal bilateral rights reportedly became the talk of the corridors of power, MoCA (Ministry of Civil Aviation) itself put an end to it. In fact,
With millions of Indians working in the UAE and MiddleEast, would the government of India refuse requests for more rights from these foreign carriers?
there has been no grant of any new bilateral in the last two years except one with Brazil and another with Sri Lanka. Why to Sri Lanka because India thinks it will serve its strategic interest in the island nation where the Chinese are growing their influence by building Sri Lanka’s biggest seaport. So it needs to be dispassionately analysed to see how much of the liberal grant of additional bilaterals was due to the compulsions of India’s geo-political interest and how much was meant to genuinely help Indians travel all parts of the world without prejudice to any particular carrier. Aware of these issues, even the Vajpayee government in its dying days in 2003-04, tried to move a Cabinet note seeking to allow Indian private carriers to fly foreign routes. But the move was not taken to its logical conclusion as some members of the government felt it would become very controversial especially after the National Democratic Alliance (NDA) government dropped the disinvestment decision which was opposed by not just the Left parties but even the Congress party. So, Vajpayee chose the second best alternative and expecting to return to power the NDA in its 2004 Lok Sabha election manifesto even said if elected the government would open the Indian skies and allow private Indian carriers to fly overseas. Besides, capacity constraints on foreign airlines would be lifted. It was in the light of such attempts to open up the Indian skies, that Indian airlines then prepared a blueprint and sought permission to fly to the US, Europe and the Far East. It was in pursuance of these plans that Indian airlines even decided to go in for long lease of wide-body Airbus A330 which was ultimately shot down by Air India and not anyone else.
z
AHEAD OF TIME: The then Civil Aviation Minister Praful Patel showing the interior of the first of the new aircraft for Air India to Prime Minister Dr Manmohan Singh.
CRUISING HEIGHTS September 2011
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COVER STORY
After it was decided that Arvind Jadhav would be eased out, even the PM’s Secretary T K A Nair could not do much
inally, it was a combination of factors that forced the Prime Minister’s Office (PMO) to realise that the man they had put in charge of driving Air India would lead the Maharaja down the precipe. And so they decided that Arvind Jadhav, the 1978 batch Karnataka cadre officer who had been literally air dropped into the position almost 27 months earlier should be eased out. Even his singlemost important benefactor, the Prime Minister’s Principal Secretary, T K A Nair, could do nothing. So bad were the vibes that Jadhav wasn’t even offered the comfort of an alternative posting in Delhi, repatriated as he was to his home cadre Karnataka! And it speaks volumes for his interpersonal relationship that by the time he was shown the door, Jadhav wasn’t on talking terms with the Minister who declined to be briefed by him on the dozens of questions about AI that MPs confronted him with. Neither was he speaking to Secretary Dr Nasim Zaidi, who had spent a harrowing few months trying to calm down Jadhav. For the record, there was literally no one on the board with whom Jadhav had a working relationship: Two whole time directors, Anup Srivastava and Amod Sharma had been ousted while Anita Khurana, the sensible lady, had taken voluntary retirement and the fourth Director (Finance) S Chandrasekhar was a strokeless wonder. Joint Secretary and Financial Advisor Bharat Bhushan was a persona non grata and the other, Prashant Sukul, was the only link between the Ministry and Jadhav.Sukul spoke to the oil companies, liased with Jadhav and prepared answers for Parliament. The outside directors -Air Marshal Fali Major, Yusuf Ali and Harsh Neotia were in real terms ‘outsiders’. They didn’t have the foggiest idea of what was happening in AI. Jadhav didn’t trust them from the time they sought a meeting with the PM six months back to push for his ouster! The last straw that broke the camel’s back so to speak was Jadhav scooting off to London for an ostensible meeting with insurers. An incensed PMO asked he return pronto and he took the same aircraft that
F
Photos: H.C. Tiwari
Maharaja gets a
new guardian CRUISING HEIGHTS September 2011
flew him from Delhi to complete a marathon 29-hour trip and be in the capital to face the wrath of employees whose salaries were being delayed and that of MPs who were under intense pressure from the employees. If that wasn’t enough came two other developments that forced the government to finally bite the bullet. The first, believe it not, was Jadhav’s refusal to implement an ACC (Appointments Committee of the Cabinet) order reinstating Anup Srivastava and Amod Sharma as Executive Directors (EDs) in the company. He had made sure they where not reappointed to the Board and now he declined to accept them as EDs. After weeks of instrangience on the part of Jadhav, a fed-up Vayalar Ravi had decided that it was time to issue a show cause to him for his insubordination. And the other, of course, was the ignominy of being rejected by Star Alliance to become a member of the grouping. But for Jadhav, the Alliance would have come long back. Anyway to cut a long story short, things moved swiftly after the Star episode and Rohit Nandan took over as Jadhav’s replacement. Apparently on first go, the Ministry had put up Sukul’s name as the interim arrangement, but the Prime Minister wanted a whole-time CEO. That prompted the Ministry to come up with Nandan’s candidature. DGCA Bharat Bhushan too was in the fray. But, he reportedly said, ‘No’. While he has been a Joint Secretary in the Ministry for the past two years plus, Nandan wasn’t on the Air India track. His biggest asset is his low profile, low key approach and the fact that both he, Dr Zaidi and Cabinet Secretary, Ajit Kumar Seth are all UP cadre officers. And he was seen as a doer when shortlisted to oversee a part of the Commonwealth Games operations after the Kalmadi fiasco. In his first few weeks in office, Nandan has effectively brought the temperature down although inexplicably the two EDs whose reinstatement caused so much consternation in the first place have still not been reappointed. “Those would have been the first orders I would have signed, it
Rohit Nandan’s biggest asset is his low profile, low key approach and the fact that he, Dr Zaidi and Cabinet Secretary Ajit Kumar Seth are all UP cadre officers
Continued on Page 41
AIR INDIA BEGINS AGAIN FROM SQUARE ONE. THE HUGELY UNPOPULAR ARVIND JADHAV IS OUT AND ROHIT NANDAN IS THE NEW BOSS. WHAT DOES THAT MEAN FOR AIR INDIA? WILL NANDAN BE ABLE TO REVIVE A COMATOSE MAHARAJA? K SRINIVASAN REPORTS. CRUISING HEIGHTS September 2011
COVER STORY
JET Airways
Star Alliance
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CRUISING HEIGHTS September 2011
hile there is no clear evidence that the redoubtable Naresh Goyal played a part in Air India’s shocking exit from Star, the general inference in the corridors of Rajiv Gandhi Bhawan is that the entire sequence of events was orchestrated by Jet thanks to Goyal’s direct equation with most CEOs of the alliance many of whom are also on the IATA board where Goyal is a member. Aviation Minister Vayalar Ravi is fuming and at least for the moment there is a sense of anger with Naresh Goyal and India’s premier domestic airline. It also didn’t help that the former Air India CEO, Arvind Jadhav was almost nonchalant in ignoring his peers across the globe. A classic case in point is the CEO of Air Canda. Apparently, he was thrown together at a reception with the former Civil Aviation Minister Praful Patel during his visit to the International Civil Aviation Organization (ICAO) in Montreal a few months back. Calin Rovinescu was blunt in telling the Minister simply: How did Air India hope to do business and scale the walls, so to speak, if the Maharaja’s CEO wouldn’t return calls or speak to his colleagues in other airlines? Praful Patel was obviously hugely embarrassed but what could he do. That was the Arvind Jadhavstyle-of-functioning. Naresh Goyal, on the other hand, is the exact opposite. He has spent a lifetime working the wires networking and cultivating people across the board. And it also helps that he has known many of them as they were climbing the ladder to the corner room. They are friends he can count upon in good times and bad times. Therefore, the inference that he tweaked the Star Alliance Board to rule against the AI entry. In fact, just a week before the fateful decision of the Star Alliance Board, CEO Jaan Albrecht was in Delhi meeting with Secretary, Civil Aviation, Dr Nasim Zaidi and other officals.During the review when he was categorically asked about the AI application, his answer, according to one
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Skyteam
rld One wo
A broken dream DID JET AIRWAYS WANT TO GET INTO STAR ALLIANCE OR ACTUALLY MAKE SURE THAT AIR INDIA DID NOT GET IN? CRUISING HEIGHTS September 2011
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COVER STORY of those present on the occasion was simple: “Air India has meet with all the conditions as laid down by the terms of admission.” Strangely a week later, when the CEO announced the suspension of the membership he said, “All three parties agreed that Air India’s integration into the alliance will be suspended. With the collective decision to put the integration efforts on hold, we aim to contribute to Air India’s flexibility to concentrate on its ongoing strategic reorientation. In this process, our member carriers will continue to provide assistance to Air India wherever required. Existing bilateral relationships with Star Alliance member airlines will not be affected by this decision, which also leaves room to discuss a potential Alliance membership at a future stage, if deemed appropriate by both parties,” Star Alliance said. The release from Star also said: “This is due to the fact that Air India has not met the minimum joining conditions that were contractually agreed (upon) in December 2007.” Ministry of Civil Aviation officials state that this is far from the truth. Minister Vayalar Ravi said that the Alliance had “played a trick” on Air India and the government. If this be the case where was the termination on ‘mutually agreed’ terms? Another official said that the breaking point came at that very meeting with Albrecht, who had laid two conditions that he wanted the government to accede to before he placed the membership before the full board for approval: z Condition number one Star Demand: That the Alliance would be free from day one to choose another member from any of the other airlines (translation Jet Airways) and that the government immediately provide the NoC (No Objection Certificate). Government perspective: Star would be free to induct another member into the alliance but after a reasonable time gap (say six months). z Condition number two Star Demand: That from day one any member of the alliance would be free to enter any code share with any Indian carrier and that the government should have no objection to it. Government perspective: Not possible. What is the point of having an alliance with Air India, if individual carriers have to circumvent it with individual codeshare arrangements? A Star Alliance spokesperson was bland in his reaction to the media: “We have always, in public and in conversations with the government, made it very clear that we believe that because of the
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FROM OUR FILES: Jaan Albrecht , Chief Executive Officer, Star Alliance with Vasudevan Thulasidas, the then Chairman and Managing Director, Air India in Beijing after Air India got the nod to join Star Alliance.
There will now be questions asked on the millions of dollars (an estimation is that it was close to $ 10 million) in terms of admission fee, delays, etc. that had been doled out through the project. CRUISING HEIGHTS September 2011
importance of the Indian market, it requires more than one local carrier to satisfy the travel demand of the alliance customers. We have the same situation in China or in the US.” In any case, how does Jet benefit from the alliance? Over the years, Naresh and Neeta Goyal have sewed up a formidable number of bilateral arrangements, frequent flier partnerships and code share across the spectrum of the three alliances that there is hardly any need for them to get into any one arrangement. If you look at our illustration to go with this piece, you will get a fair idea of the sort of across-the-board arrangement they already have in place. Take for example Australia, the tie-up Qantas allows for code share out of India and literally transfers you seamlessly from here to Down Under without a whimper. Contrast that with a solitary flight to Melbourne that Arvind Jadhav was determined to start. There was not a chance by a long mile that the Maharaja would have made a meal of this foray. In fact, if anything, Qantas would have made mincemeat in combination with Jet of the poor Maharaja. So where does Star Alliance at all come into this alliance? And why would Naresh need it? But he would most certainly not like Air India offering the same-level service with an automatic codeshare with SIA (Singapore Airlines) once they were on board. Is there anything to the Sky Team’s recent foray into the Indian market? Insiders in the Ministry of Civil Aviation say there is really nothing to it. “Having lost one suitor, we are not going rushing into the arms of another,” said one officer rather dramatically. In any case, the entire PSS System that the airline had put together — that too years behind schedule — was tailored for the Star Alliance. There will now be questions on the millions of dollars (an estimation is that it was close to $ 10 mn) in terms of admission fee, delays, etc. that had been doled out through the project. Several officials too had stayed on post-retirement to drive the project. If the government is pissed off with Star Alliance, it is understandable. One Star insider said that the Alliance was fed up with Arvind Jadhav’s tantrums and the manner in which Air India was being run. There was simply not enough consensus within the grouping for the Maharaja to be admitted. Rather than bluntly say no, they put up impossible conditions. So what happens to the Alliance and its partners in India? Interesting question and one that we shall answer in the forthcoming issue.
Continued from Page 37
would at least help send the signal to the employees that this regime will go by the book,” said one senior officer who was surprised at the delay in reinstating Anup Srivastava and Amod Sharma. That apart he has set his priorities right by stating that the “turnaround plan will be my bible” and that everyone, including the management and the staff, “are on the same page”. He is right when he says it is a changing India and the youth of India need to fly the Maharaja. Therefore, a key focus on customer satisfaction and on-time performance: two areas where the performance of AI is abysmal to say the least. The two week deadline he had given operations to get the OTP (On time performance) to 80 per cent may be ambitious, but it is at least a move in the right direction. “I am concentrating on our OTP. It is integral to the turnaround plan and our priority. I have set a deadline of 15 days and asking for reports twice daily,” he told journalists. Air India has an OTP of 72 per cent compared to an OTP of 90 plus for Jet Airways, IndiGo and Kingfisher. But these are not the only issues that will confront Nandan in the months to come? There will be plenty of others and here are a few of them: Integration of the staff: Air India is still a company at war. There are clear battle lines drawn between the erstwhile Indian Airlines staffers and the AI employees. Jadhav had a clique who ran the airline as per his whims and fancies. Most of them either resigned or were sent packing within days of his sacking. Many, though, are still hovering around the top floors of AI headquarters. The pilots’ strike earlier this year was one great example of the divide and how the clique around Jadhav made sure
Witch hunt, AI-style? A few illustrations of harassment/ forced exit (though made to appear voluntary) of top executives of Air India. D S Ghakar, GM (Finance) - Voluntary Retirement. Uday K Gupta, GM (Inflight Services) Voluntary Retirement. J Chatterjee, GM (Inflight Srevices) Voluntary Retirement. Dr (Mrs) KS Verma, GM(Medical) Given chargesheet prior to retirement and dues held up. Deepa Mahajan GM (Personnel) Transferred Del to Kolkata. Brought back to Delhi now and ended up as a confidant of Arvind Jadhav who worked in tandem with ED (Personnel) Mrs Vinita Bhandari. S N Bhattacharya, GM(Personnel) Transferred Kolkata to Chennai. Proceeded on long leave since July 2010 till May 2011. Joined and again on leave. J Gurumurthy GM(Personnel) - Transferred Chennai to Mumbai five months prior to retirement. Given chargesheet on last woking day (31.12.2010) without clearance from CVC. K Raghuramaiah GM(Personnel) Transferred Mumbai to Delhi and given a chargesheet. Pankaj Srivastava GM(Commercial) Transferred twice and ten shunted to Kolkata. Capt Rakesh Anand, ED (Operations) Transferred twice. Now shunted to ED (Training) Hyderabad. Capt Ashok Raj - Transferred from Delhi to Hyderabad five months prior to retirement while on hospital bed for last three months with instruction not to
TOUGH NUT TO CRACK: Rohit Nandan’s first task will be to improve services that are today abysmal and the cause of passenger complaints.
CRUISING HEIGHTS September 2011
leave Hyderabad without written permission of CMD. Given chargesheet at Hyderbad before retirement and dues held up. S Senthilkumar, ED(Commercial) - Voluntary Retirement H S Grover, ED(Corporate Affairs) Voluntary Retirement Anita Mitroo, ED (Personnel -Coordination) - On leave without pay for last more than a year. Fali D Warden, ED (Commercial) - Voluntary Retirement D S Chibber, ED (Commercial) - Voluntary Retirement N Chellakumar, ED (IT) - Voluntary Retirement Manjira Khurana, ED (CommercialCustomer Services) - Voluntary retirement and chargesheet after retirement. Part of dues held up. Foisted CBI case. R Harihar, ED (WR) - Transferred twice and given two show cause letters. Shunted to ED(Project) GD Brara, ED(Commercial) - Transferred four times. Shunted to ED (Related Business) Chitra Sarkar, ED (Commercial) Transferred three times and then sent on forced leave. Ashvini Sharma, ED(Commercial/WR) - Transferred three times and then shunted to non-existing post of ED(North East) Shillong. Had to be withdrawn. T K Palit, ED(Planning) - Asked to go on forced leave but had to be withdrawn due to Star Alliance requirement. S K Kundra, ED(Finance) - Given Chargesheet. Sunil Kishen, ED(Commercial-SR) Given Chargesheet. Anil Sondhi, ED(MMD) - Given Chargesheet. Anup K Srivastava, Director(Personnel) - ACC appointee not allowed to function. Divested of all function in violation of Government order and harassed for last two years. Treated as a terminated employee; stopped his salary, allowances. Amod Sharma, Director(Related Business) - ACC appointee not allowed to function. Was not assigned any duty, victimised. Sealed his office, transferred his personal staff, stopped his salary, allowances, medical facilities contrary to the instruction of the government. Anita Khurana, Director (Cargo) - Voluntary Retirement; sent on forced leave. Got office vacated and transferred personal staff.
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COVER STORY
The sorry state of figures Pre-merger figures (`in crores) were: YEAR
AIR INDIA INDIAN AIRLINES
1997-98
(181.01)
47.27
1998-99
(174.48)
13.12
1999-00
(37.63)
45.27
2000-01
(44.40)
(159.17)
2001-02
15.44
(246.75)
2002-03
133.86
(196.56)
2003-04
92.33
44.17
2004-05
96.36
65.61
2005-06
14.94
49.50
2006-07
(447.93)
(240.29)
An agenda for Rohit Nandan t is, perhaps, paradoxical that every time a new incumbent is appointed at the helm in Air India, huge hopes are generated in employees notwithstanding the fact that the predecessors have consistently dashed them. This can be described as nothing but eternal optimism in human beings. The appointment of Rohit Nandan as CMD, Air India, has been no different. Air Indians have once again started looking at the airline's future with optimism, though cautiously this time. To be different from his predecessors, who had inherited the airline in a much better shape than he has, Nandan needs to be realistic in his plans recognising the numerous inherent weaknesses of the airline and in the systems. To his credit, Nandan has at least thus far not stated that he will
I
restore the past glory of the JRD Tata era — something that everyone appointed as Chairman or as the Minister of Civil Aviation in the recent past has promised and failed. Considering the Herculean task ahead, Nandan needs to take a step-bystep approach. Instead of looking to achieve higher revenues in one go, his first and immediate attempt should be to stem the declining trend in revenues, market share, load factors, yields, etc. by improving the quality of the product for which the onus should be placed on the senior management personnel and the employees. If the passengers are unhappy about the services at the airport, aircraft utilisation is low, contact with even loyal passengers is minimal or non-existent, sectors remain economically unviable
(The figures in brackets are the losses)
The February 2008 cover on the Air India-Star Alliance pact
that he never saw reason and allowed things to fester till it exploded. Justice DM Dharmadhikari Committee: All the Issues before this committee comes out of settlements/agreements/awards executed separately by the unions/associations of AI and IA. How will the recommendations of this committee be implemented? Committee’s recommendations will neither be binding on unions nor can they replace what has been agreed upon. As a result, the recommendations would need elaborate and separate negotiations with more than a dozen unions/ associations. Jadhav went into it inspite of being advised about the pitfalls. Nandan will now have to extricate himself from it. The original proposal of M/s Accenture — the merger consultants — to have Strategic Business Units (SBUs) for Ground Handling (GH), Cargo, MRO and
daijiworld.com
Post-merger figure for the merged company was: In 2007-08, `2226 cr loss which under the stewardship of Arvind Jadhav systematically went to `5552 cr loss in 2009-10 and increased by further 26 per cent to `6994 cr loss in 2010-11, an increase of `1500 cr, while other competing airlines of the country posted profits. Interestingly, in the premerged scenario, IA had registered profits between 2003 and 2006 and so had AI between 2001 and 2006. In 2006-07, the losses incurred by both companies totalled `688.22 cr (`447.93cr-AI + `240.29cr-IA). In 2007-08, the merged airline suffered losses totaling `2226cr, `5552cr in 2009-10, while losses in 2010-11 are `6994cr and increasing further. The Parliamentary Committee on Public Sector Undertaking (COPU) observed that the multiplication of losses suggest that something is radically wrong. They had further observed that there was a need for consistency in plans and policies of the company to consolidate and for this purpose there was a need for some credible leadership at the top.
BIZARRE SITUATION: Air India Employees Federation Union members protesting for their pending demands in 2009.
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CRUISING HEIGHTS September 2011
because of lack of proper marketing, where does the Chairman's role come in this? Some frank and bold talk is imperative to make all sections of the employees, particularly the senior management personnel, understand their respective roles in the efficient running of the airline. Nandan will thus do well to decentralise the functioning because there is no denying the fact that several Chairmen in the recent past have been guilty of seeking to run the various departments through remote control and senior management personnel, occupying key positions, have also been equally guilty of allowing themselves to be guided on day-to-day basis on how to do their work. What worth is their experience in the airline if they are needed to be guided at every step? With the kind of experience Air India employees possess they should be giving sleepless nights to others in the industry rather than find them-
Related Business was accepted by the Ministry. Jadhav declared that these functions will be carried out by the subsidiary companies of AI and IA. Later, he said it would be done departmentally. He then dropped Related Business and decided to go back to subsidiary companies. Finally, he decided to drop Cargo and go for a SBU model for GH and MRO. The GoM has been crying hoarse that they want some clarity on this model. The Cabinet is waiting to finalise it but what about the other SBUs that was part of the original plan. There are a whole host of other issues as well that will confront Nandan. The Commercial Department of the airlines is in a complete shambles. The best and the brightest have either retired or out in the wilderness having been charge-sheeted. There is literally no marketing of the airline and officers are busy ducking and saving their careers to bother about the fortunes of the Maharaja (see Witch hunt, AI-style?). The subsidiary company, Air India Express, is headless and is being run on an ad hoc basis. With Spicejet and IndiGo ramping up their overseas operations, can AI afford to be complacent? The five hour circuit is a critical component of AI’s revenue stream. But we are not touching upon the major financial issues or the monetary mess in Air India.We have debated that many times and the two boxes tell the story. Perhaps a good starting point for Rohit Nandan will be a long chat with Sunil Arora, former Chairman of Indian Airlines now serving in Jaipur. Arora took over the domestic wing of Air India, IA, at a time when SARS and 9/11 had just happened,
selves in deep slumber. It is interesting to note that in Air India one has always spoken about the failure of a CMD to deliver but never blamed the senior management or the employees for the decline in Air India's fortunes. The airline's future lies in achieving optimum utilsation of aircraft, enlarging the network through introduction of new flights, aggressive marketing — not necessarily through costly advertising but innovative schemes, providing good services to passengers at all contact points, etc. — are all areas which are in the employees' domain and cannot be affected by so-called external forces inimical to Air India's growth. Employees need to motivate themselves to deliver their best and what better time to show that “we matter and we can deliver” than now when the airline's future is at stake. So, the priority for Nandan in the first
phase for arresting the declining trend in all key performance parameters should be to effectively use the experience and skills of the employees to the airline's advantage, ensure redefining of roles for each section of the employees, getting the work practices to be made more productive and customer-friendly, making senior management personnel accountable for their performance or the lack of it, and seeing his own role as one who needs to provide inspirational leadership with a clear vision for the future. Things will fall in place on their own if the current declining trends are quickly reversed because if this challenge can be achieved there will be enough motivation generated in employees to silence the critics who are today questioning Air India's ability to survive. — Jitender Bhargava Former Executive Director, Air India
Financial barometer
Alliance Air had a major air crash in Patna and petrol prices had spiked, thanks to the war in Iraq and Afghanistan. “He steered brilliantly in the face of adversity and pulled us back from the brink,” said one official who had served in IA. Outlining the road back to good health that saw IA make profits during the final two years of Arora’s term, another official said that the IA board was a robust place of discussion and decision-making. “Arora’s decision to take aircraft on lease and enhance capacity till the government made up its mind on aircraft acquisition was a life saver for the airline,” he said and added: “They expanded the network, increased aircraft utilisation and put in place a financial process that ensured ruthless cost control.” So good was the IA performance that it won the PATA Gold award in 2005 and was rated by both A C Neilsen and IMRB surveys as one of India’s 50 most trusted brands that was high on service as well as India’s most preferred airline. There are several stories from those days that need recounting but we will keep it for another occasion. Maybe it will be of some interest for the present Chairman to know that Arora was briefly the head of both airlines when AI and IA were separate entities. And when the swine flu outbreak occurred in 200304, he made sure that pilots from both airlines flew into South East Asia. Not a flight was out of sync when the rest of the industry was in panic. Only goes to show that it’s leadership that will ultimately matter. And that is what will help Rohit Nandan in the end — his man management skills.
ill now, the airline had been seeking `6,600 crore more equity for this fiscal and fleet expansion by almost a 100 planes over the next decade. “The exercise of finalising the financial restructuring plan and restructuring of loans would take about three months,” Civil Aviation Minister Vayalar Ravi told Parliament. The GoM, headed by Finance Minister Pranab Mukherjee, is looking into Air India's turnaround and financial restructuring plans that have been prepared by SBI Caps. AI had earlier sent a proposal to the civil aviation ministry for permission to convert its short-term loans into long-term ones, thereby saving interest payments of up to `1,000 crore per annum. Currently, the working capital borrowings from various banks are `22,165 crore; longterm loans from financial institutions for financing aircraft acquisition programme aggregate to another `22,000 crore. As per the current revenue collections, the monthly collection on the network is around `1,100 crore whereas Air India’s expenditure is `1,700 crore, leaving a gap of `600 crore. Till now, the government has infused a total of `3,200 crore as equity in Air India.
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CRUISING HEIGHTS September 2011
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COLUMN/CHOCKS OFF
When will we start thinking out of the box? R Krishnan
Almost all the major airlines around the world have been feeling the effect of the second bout of recession. Most of them have adopted strategies to keep themselves afloat. It is hightime we did the same, advises R Krishnan. he airline industry worldwide is rapidly changing and the old order of excellent product, shower at airport lounge, choicest wine, etc. may now remain part of a very select long-haul product as many airlines including some in the top category are coming to real terms with what is happening around. After the global economic recession that hit the markets and economies of the most powerful countries in the West, there was a complete breakdown in the aviation industry. While few disappeared, some airlines postponed their fleet-renewal plan indefinitely. India was no exception either. The 2008 recession was strange in that the economies were going downhill while fuel cost was shooting through the roof. When things settled down, it seemed the old order would return. But there was yet another bout of oil price rise seriously disturbing the new balance that was sought to be built by airlines worldwide. And, even as both airlines and passengers were coming to terms, a sort of double dip or a second wave of recession seems to have hit the US and EU member nations. Earlier, BA began to make losses and now even the mighty Lufthansa is in the red zone. The pride of Qantas also took a serious knock when it began to make losses forcing the Australian carrier to think out of the box or should we say out of Australia! Every one of these big boys and some not-so-big felt it was not fine wining and dining the passengers. Rather, they wanted to fly at affordable fares. Now, here comes the contradiction. How can you offer a seat in the aircraft when the inputs required to fly it, has begun to cost a bomb? And, herein lies the new thinking — cut non-fuel costs drastically and at the same time also make the best use of fuel to get even more mileage than what was being achieved all these years. Not just that: look for far more fuelefficient engines. The last of the options, however, cannot be exercised immediately, as it takes years of research with complete attention to safety. Like now we have GE’s next gen engines or NEOs, which the Airbus A 320 family is expected to come within a couple of years from now. Pending all that, the Dreamliner has offered an alternative in that its body weight has been
T
Till such time more fuel efficient engines and much lighter aircraft bodies become the norm, airlines should innovate. 44
CRUISING HEIGHTS September 2011
reduced by using all composite material or plastic bringing about 20 per cent savings of fuel consumption. Till such time, more fuel-efficient engines and much lighter aircraft bodies become the norm, what should the airlines do? Innovate. How? Simple. Junk the full service and opt for low-cost leading to low fare. IATA has stated that there was some softening of demand in June 2011: year-on-year the passenger demand rose by only 4.4 per cent while freight demand dropped by 3 per cent. Compared to May 2011, both passenger and freight demand fell by one per cent. Overall, the industry is seemingly witnessing a different set of realities as passenger business is doing better than cargo suggesting that there is some mismatch somewhere. Or, as I think, is there a greater movement of leisure travellers or what is called the VFR (visiting friends and relatives) sector. Had it not been so, cargo movement should have shown a higher growth instead of a dip both year-on-year and over the month. In a situation like this to expect business travellers to crisscross the globe even more than earlier and much more than leisure travellers seems rather out of place. All I am saying is: rising fuel prices have hit not just the airline industry but also economies worldwide or else inflation would not have become a concern globally. Having said that, it will be interesting to look at the response of various carriers to the new challenges. I have given a sample of what I found on the Net, which is much easier to travel than the actually travel. It is in this context that I wish to say that some people think differently as illustrated recently by the US Air Transport Association (ATA), which decided to cut airlines capacity to matching supply with demand but not necessarily by dropping fares. Australia’s Qantas, which has been rightly proud of its product, accident-free record and a fairly profitable regime for a long time, is now in some kind of a bind. It is also making losses and finds competition both from within and outside unmanageable forcing it to think out of the box and out of Australia literally. Its Jet Star has tied up with JAL and Mitsubishi to form a new JV
called Jet Star Japan, which will begin operations what other carriers in the region are seriously con— domestic and international — from Tokyo’s sidering and some even implementing the idea. Narita Airport from December 2012. Qantas is Jet Airways has decided to use its narrow-body also planning to give up some of its important Boeing 737-800s and 737-900s for these internalong-haul routes and in line with that retire some tional operations on a single class: Economy. It is of its older aircraft including four of its Boeing indeed smart on the part of Naresh Goyal to con747s. In order to realise its dream outside Ausvert Mumbai-Hong Kong Jet Airways flight into tralia, Qantas has placed an order for 110 Airbus three class to include a first class (reconfiguring A 320s and plus some more worth $9 billion. This his Boeing 777-300 ERs). This has already forced move of Qantas has already evoked serious oppoCathay Pacific to convert some of its similar sition from the government and the unions. Ausflights to include a new Premier Economy tralian law says that FDI into the Australian airbetween the business class and economy class. line business cannot be more than 49 per cent and Responses can be different depending upon besides an Australian board, the Chairman of the competition and load on particular sectors with airline has to be an Australian. As part of its fiveIndia-Hong Kong being one important such secyear transformation plan, Qantas is launching two tor. IndiGo has already said it will pursue its lownew airlines and the $9 billion order is to be seen cost model to its international destinations both in this context. It wants to reverse its loss-making on the Gulf and South East Asia side. SpiceJet is international business as out of 100 people flying also planning to go in the same direction. Now out of Australia, 82 per cent choose to fly with an take a look at Air India, which was the first to airline other than Qantas and Jet Star. The Japanstart the low-cost Air India Express and got 25 ese option means Qantas International will now B737-800s. It lost one in the Mangalore accident base operations in Asia creating a hub in the and because of its inability to maintain the fleet world’s fastest-growing aviation market. Like it due to rising losses returned the three of the sevcancelled some of its Boeing 787 Dreamliners en leased 737s. Even for its 20-odd 737-800s, it earlier, it has also deferred taking delivery of six does not have the pilots and one can see a 737A380s by six years. 800 parked for nearly 14 hours at Chennai airport Etihad CEO James Logan stated that Asia as there are no pilots to fly it. All this after Air would become the nucleus for aviation travel, and India Express was launched over five years ago it is no wonder that Qantas is seeing that reality as India’s first low-cost international carrier. even earlier than we in India. All Nippon Airways Perhaps, Air India can function only at no cost! has planned a budget carrier, Peach Aviation, and It is unable to fly widebodies because it is hopes to begin operunable to fill them. ations from March It is unable to fly 2012. Thai Airways narrowbodies in is proposing to start Air India Express a new low-cost because it has no option called Thai pilots. Arvind JadTiger, which it hopes hav, the erstwhile to fly from the first CMD of Air India quarter of 2012. SIA, had said at his first which already owns press conference Silk Air and also on August 9, 2009, Tiger Airways, is that Air India seriously consider- STRANDED: An Air India Express aircraft readies to fly — would start a lowing a low-cost option too late for domestic operations cost carrier soon for long-haul routes. for domestic operSIA CEO Goh Choon Phong stated: “As we have ation. That plan never took off like most of Air observed on short-haul routes within Asia, lowIndia’s other plans due to delays in and bureaufare airlines help stimulate demand for travel and cratic obstacles in getting regulatory clearwe expect this will also prove true for long-haul.” ances. It is strange that the then regulator, the Malaysian Airlines is trying to work out some DGCA, Dr Nasim Zaidi, is now the Secretary, kind of share-swap arrangement with Air Asia to Ministry of Civil Aviation, and it is now his come out of losses. This may also reflect in colturn to struggle with Air India. Why can’t we laboration on aircraft purchases. Tony Fernandes, learn from others? Instead of utilising the fleet Air Asia owner, is mighty pleased as all his short, in hand, the Ministry, the bureaucracy and all medium and long-haul low-fare flights are raking others are struggling to find out how many in moolah. May be he will take over Malaysian more aircraft Air India would require in the Airlines and tweak it become as profitable as Air next ten years to remain airborne when it Asia on a low-cost platform. urgently needs to be airborne immediately — Seen in this context, the decision of Jet Airor should we say yesterday? ways to opt for low cost and low fare option for (Veteran journalist and long-time aviation watchits Asia operations — both Gulf/Middle East and er R Krishnan is Consulting Editor at CH. He can South East Asia up to Singapore (that is a flying be reached at rkrishnanji@yahoo.com.) time of less than five hours) — is in sync with CRUISING HEIGHTS September 2011
Etihad CEO James Logan stated that Asia would become the nucleus for aviation travel... Qantas is seeing that reality unlike what we have done in India. 45
INTERVIEW
“ clients for India” We’re looking to grow
MICHAEL GAEBLER, CHAIRMAN & CEO OF AVIAREPS, BIT THE BULLET AT THE AGE OF 32, WHEN HE DECIDED THAT CARVING OUT HIS OWN GENERAL SALES AGENT BUSINESS WAS THE WAY FORWARD. AND THUS WAS BORN AVIAREPS IN 1994. IN THE 17 YEARS SINCE, AVIAREPS HAS GROWN TO BECOME A GLOBAL POWERHOUSE. GAEBLER WAS RECENTLY IN INDIA ON A TOUR TO MEET CLIENTS AND EXPLORE NEW OPPORTUNITIES. EXCERPTS FROM AN EXCLUSIVE INTERVIEW WITH K SRINIVASAN.
On the Indian market India is an important market for us. That is why we started five years ago and in both directions — on one hand, to grow with our own organisation and to use a source market, a south-bound market, where we represent airlines, destinations, hotel chains and many other travel-related services. And also certainly talking with the airlines, hotel chains, regions — like Kerala and Goa — that are also interesting for us to get the global marketing for. There’s been such a strong dynamism over the last ten years. We started representing Jet Airways some eleven years ago and working with more and more countries. With further liberalisation, more airlines came along, the low-cost airlines started and there were signs of consolidation. So, it seems to be that there is an extremely strong growing domestic market growing in the region… and certainly a long-haul market… it is an evolving product. The positive thing is that India in itself has a very strong domestic base. That means you catch up with the passengers from all corners of the country, feed them into the respective hubs and then go on with them. Also to do this homework first instead of just operating into international flights without any local feed, that’s positive.
On Indian airlines It is difficult for me to answer because we are representing an Indian carrier. Personal experience? I think Jet Airways has a brilliant product for twenty years, a won-
46
derful one. I once flew Kingfisher from Goa to Delhi and had an Indian Airlines flight once from Delhi to Mumbai. So, it’s difficult to compare one flight with the other. You have to look at more frequencies and more experiences for that. But overall, it’s stunning that even for short sectors flight there is a full meal. That’s something which in Europe is dropping step-by-step. Just the other day on the Mumbai-Delhi sector, (I had) a full meal in economy! It is not anymore normal in North America or Europe. So, this is something which is still unique. From the type of aircraft, which are being used, to the logistics, to the quality of the services, this is certainly a region which can’t compete with the rest of the world. India is en route in a region towards the Far East and the competition. The highest quality competition is certainly in the Far East traditionally. So, I think it’s a good benchmark for Indian carriers to look at.
On Indian airports I was very impressed when I arrived at the New Delhi airport. That is definitely an airport, which can compete with the rest of the world. Mumbai, I arrived on Lufthansa in the old terminal in Mumbai and departed on Jet from the new terminal. Surely, I mean there is no doubt, old terminals require change. I’ve heard that Mumbai’s scheduled to change in 2013 but that seems to be also a bit of an ambitious target. Infrastructure problems are in democratic nations always a bit of a problem because you have to work with all the CRUISING HEIGHTS September 2011
others. But this is certainly a difficulty, which you have, and we have other countries where it is difficult because the cows it’s being said get nervous if there’s an airport in the distance. So, you have millions of reasons why things are delayed but in the end, it’s progressing and that is what I can see here as well. Yes, everything has its pros and cons but you have to cope with your country’s requirements. I think that’s being done properly. I heard also about speed trains in competition to airlines in Delhi and Mumbai.
Yes, if the fuel price zooms, people will move to trains, it’s a price- sensitive market I hear that very often. Our market is special and our market is price-sensitive. I can tell you one thing, I don’t know any market in the world, which is not price-sensitive and which is not special. This is a global thing. I would say in this respect that every market is the same. In every market there are differences but at the end of the day airlines have to make money. Countries have to create infrastructure and transport and improve. Everywhere that is the same.
There is a feeling that in India ‘what you see is not what you get’. At least on the Net? Today, everybody is in competition with each other. I can’t confirm what you are saying that in Europe or in other places of the world what you see is what you get. Unfortunately, it is not the case and reflected surprisingly in the revival of the travel trade because people after they’ve done it themselves, they realise that it is the same price, not necessarily more expensive but they get the consulting (with the travel agent) and not end up in the wrong place just because of some nice videos or photos. So, consulting plays, all of a sudden, a bigger role: to find alternatives and to be proactive and say what is good and what is not good. The Web is great but it also has some limits as we see. I couldn’t say that I haven’t got in India what I have seen on the Web. I went to the Taj Mahal (at Agra) the other day and I looked at The Oberoi Amarvilas, Agra on the web and definitely what is I saw I got.
INTERVIEW The domestic tourist traffic is not all that great barring pilgrim tourism…
THINK GLOBAL, ACT LOCAL: Michael Gaebler (left) during the trip to Taj Mahal with his colleague Leslie J. Machado.
Is infrastructure still an issue? Yes, infrastructure is an issue. The centralisation and currently the decentralisation of Indian tourism is a topic certainly. There is a big brand campaign with ‘Incredible India’, which is good because really it is an on-going thing. The tourism traffic to India is a special segment because it’s predominantly the cultural thing. There are other things, which don’t compete so well because they have a tough competition from other areas. You have the Maldives around you, you have the Indian Ocean — Mauritius and Seychelles and Sri Lanka in a certain way. So, it is not competition-less. It seems that there is a top rank 5-star area and there’s a highly competitive lowcost area. What’s missing is a proper medium (middle) class. The good middle class, the high-quality middle class, the very good 3-star and the good 5-star and 4-star — and that happens in other places, sometimes you are in a brilliant 3-star hotel that can be at least just as good as a 5-star. So that’s where there is room I think. In the aviation area there is certainly more and more competition in the air and there is more competition to be seen at the airports. The airports have improved. I don’t know about many but I can imagine that this is a process which is on-going. You see more people, let’s say qualified travellers in the airports. In the past it was a more crowded situation and today it is certainly way more fragmented — the people… the way — you see different clothing, how they walk, how they talk, how they behave. You don’t talk to every passenger, but you do observe. I think that really went through a very strong process
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over the last ten year’s time. And in terms of tourism, it’s quite similar in a certain way. You see the same thing in hotels. I haven’t had the chance to take big holidays in India, so I couldn’t say what happens in these wonderful locations like Jaipur. I can just say what happens in the metropolis, in Mumbai and Delhi. India seems to be currently in the position where a big chunk of traffic is certainly going into the regions (neighbouring countries), but that’s normal. Every country has (people) first of all travelling in the regions. In fact, there have been some discussions that the outbound travel from India (intercontinental) is growing intensively. These outbound travellers who go all over the world in North America, in Europe and in parts of Asia are educated, extremely well-behaved travellers, who are extremely welcomed by the global hotels. I mean we are representing destinations and theme parks, etc. and we get the feedback from the destinations that are extremely positive. Everybody compares and when we compare other travellers with the Indian outbound travellers and that is absolutely positive.
It’s very very positive? I haven’t got a feedback from the regional traffic, say Sri Lanka, Myanmar or Thailand but I can say about the European and North American travellers — they are perceived in these destinations very well. They make a very good impression. Indian travellers to these areas are welcome because their behaviour, their education, the way they are, very comfortable and at ease. CRUISING HEIGHTS September 2011
I don’t know. I’ve seen Indian travellers in India in the hotels. So, I really couldn’t say if this is true or not. I don’t think it is necessarily so bad. Certainly, you need to have a certain local portion of travellers and there are countries in the world which are supporting this kind of thing. Then there comes on top some other reasons that some countries have language barriers to travel abroad. And this is not the case in India because English is widely spoken and there’s no problem to travel. On the other hand, international travel is something which educates. So, it’s really positive to make these international trips. Normally the local traffic — what we see in other regions — is something which people do on a short-term basis, on a weekend trip or maybe a week, but the annual long haul is something where they want to really see a new place. I wouldn’t say that’s a negative but I’ve seen a lot of Indian tourists so to speak in Indian hotels. I don’t have the statistics, but there are countries like France where I wouldn’t say it’s not very healthy, where I think 80 per cent of the French making holidays in France and I wonder if this is the best thing for the country.
Hotel prices in India are exorbitant. Is it so? These things come with competition. Theirs is a more competitive country than India, that’s absolutely true. There is space for more properties for sure in every segment as I’ve said before in the medium but also in the top class…that means there’s still a little competition to shrink the prices. But again it’s always competitiveness when you compare with Thailand or some other regions. It’s different when you compare with Singapore, Hong Kong, I think India doesn’t stand behind.
On Aviareps and India What we are looking at is certainly to grow the clients for India. In other words, we have plans to grow our organisation and get more clients for the outbound market. We are specialised in it; we are doing from airlines to destinations to hotels to car rental chains … it’s predominantly sales and marketing… that’s what we do. We don’t do any handling or airports or stuff like that. We are really the marketers. We are the interface between the product and the consumer trade or media. That’s what we do globally and that’s what we do in India.
FOCUS ON ‘COPTERS P51
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STRATEGIC ALLIANCE
FREQUENT FLYER
Mahindra, Eurocopter tie up to manufacture helicopter sub-assemblies
Omar Abdullah and party rack up astronomical chopper bills
CHOPPED
OUT
CHOPPER BLUES: The DGCA directive banning chopper operations from Mahalaxmi Race Course has taken the wind out of the sails of many highflying industrialists.
frontierindia.net
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DGCA SUSPENDS HELICOPTER FLIGHTS FROM MAHALAXMI RACE COURSE CITING SECURITY CONCERNS AND NON-AVAILABILITY OF EMERGENCY MEASURES.
he recent decision of the Director General Civil Aviation (DGCA) to suspend all helicopter flight operations out of Mumbai’s Mahalaxmi Race Course has bewildered many, including captains of industry. The ostensible reason is that the helipad does not have adequate security and emergency procedures in place. Strictly speaking the DGCA is right. The DGCA decision comes after a recent audit of the race course facilities showed that no heliport permissions were taken from the controlling body so far. According to the audit, there were no standard operating procedures in place and no visual aids or markings for navigation were available with choppers landing on the race course. Another contention was that no emergency procedures are in place and most
CRUISING HEIGHTS September 2011
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FOCUS ON ‘COPTERS
Bombay18.com
mumbai77.com AIR POCKET: One of the main contentions of the DGCA is that the helipad at Mahalaxmi Race Course was not large enough for modern helicopters.
importantly, there are no proper security arrangements at the heliport facility. One of the main deficiencies pointed out in the audit report was about the dimensions of the helipad. “As our audit found several deficiencies in the Mahalaxmi racecourse helipad, we asked them to suspend helicopter operations with immediate effect,” said Director General of Civil Aviation Bharat Bhushan, responding to the media on the joint inspection conducted by the DGCA and the Rotary Wing Society of India (RWSI). “It is 10 metres by 12 metres and thus suitable only for small helicopter operations,” said Capt Uday Gelli, President (Western Region), RWSI, and a member of the audit team. Until a few years ago, a majority of the copters flown for charter and private use in the city and the country were small, such as the Bell 206, which is a single-engine chopper with a gross weight of about 1,400 kg. In the last two years though, a number of medium-sized helicopters such as the Bell 412 and the Sikorsky S76, which weigh between 4,000 and 5,000 kg, entered several fleets. This made the helipad at Mahalaxmi unsuitable for operating such helicopters. “The race course helipad has to be bigger in size,” said Gelli. Vivek Jain, Chairman of Royal
Western India Turf Club, which operates the Mahalaxmi helipad, said they would soon take steps to reopen the helipad. “We have only been asked to suspend operations temporarily since there are certain things that are not compliant with the DGCA’s safety regulations,” said Jain. “We won’t be operating till then.” Jain added that the club may also consider relocating the helipad to another
This recent order, however, has confounded many as corporate heads, ministers, government officials and private operators have extensively been using the Mahalaxmi Race Course.
Helipads in Mumbai- Few and far between
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SOUTH MUMBAI INS SHIKRA | For military purposes RAJ BHAVAN | Used by politicians MAHALAXMI RACECOURSE | Open for civil aviation TAJ WELLINGTON MEWS | Privately owned; used by Tata Power WESTERN SUBURBS JUHU AIRPORT | Largest heliport in the country; used mainly by offshore operators, aircraft charter companies and private helicopter owners MUMBAI AIRPORT | Open for civilian use CRUISING HEIGHTS September 2011
site within the race course to avoid any obstructions or structures in its vicinity. A major deficiency pointed out by the audit team was that the helipad did not have a Final Approach and Take-Off Area as prescribed by the DGCA. The area is essentially an obstruction-free path for safe low-level flying performed before landing or after lift-off. The Mahalaxmi helipad has a raised platform over 30 feet high right in the approach area, which made the helipad unsuitable for safe operations. It also does not have equipment and personnel for firefighting. Further, a helipad operator is supposed to chalk out a list of Standard Operating Procedures, which was not done here. According to Gelli, the work needed to make the Mahalaxmi helipad compliant with DGCA norms, however, can be completed in a few weeks. This recent order, however, has confounded many as corporate heads, ministers, government officials and numerous private operators have extensively been using the Mahalaxmi Race Course for helicopter operations for travel both within the city and outside. The question is how operations at this site continued without any clearance from the DGCA in the first place. The race course used to see around 15-20 operations per day and each of these flights took off only after clearance from Mumbai airport. How could the DGCA not have realised that operations were being conducted from an ‘unsafe’ helipad flouting safety rules? It’s as if the DGCA suddenly woke up from its slumber and suspended operations from Mahalaxmi Race Course. Now it appears all the corporate bigwigs will have to get used to Mumbai’s packed roads. Chopper operations were recently moved from Mumbai airport to the Juhu aerodrome to ease congestion.
FOCUS ON ‘COPTERS
MAHINDRA AEROSPACE, EUROCOPTER MOU DRONE CHOPPER PACKS LETHAL PUNCH The Shadowhawk Unmanned Aerial Vehicle (UAV) may only be seven-foot-long and weigh a meagre 49 pounds, but it is already being used to track pirates off the Horn of Africa and enforce law on the streets of the US. It’s the latest weapon in the fight against crime — a tiny remote-controlled helicopter that can fire shotgun shells and grenades and taser targets as well. The discreteness of the chopper, and its top speed of 70mph, means it can follow suspects and conduct aerial patrols where traditional police helicopters would not go. The Shadowhawk has an endurance of up to two-and-a-half hours and the capability to launch in 25 knot winds. The Shadowhawk’s ability to record footage, and broadcast it in real time, makes it an attractive substitute to more conventional crime-fighting techniques. The Shadowhawk UAV is available in five different models and buyers have the options of turbine or piston engines, thermal cameras, laser pointers and range finders. They can also choose to install taser batons, 37mm or 40mm grenade launchers or 12 gauge shotgun rounds. The makers of Shadowhawk were awarded a multi-million dollar contract from an oil and gas exploration company to conduct anti-piracy operations off the coast of East Africa. This surveillance tool will mitigate threats by providing security personnel with unprecedented early warning capabilities.
SIKORSKY DELIVERS ‘BLACK HAWK’ FROM POLAND Sikorsky has delivered the first Polish made S-70i Black Hawk helicopters to an undisclosed customer. The helicopters — assembled, completed to customer specifications, and flight-tested at Sikorsky’s production facility in Mielec, Poland — are the first-ever deliveries of the international variant of Sikorsky’s iconic Black Hawk helicopter. The company plans to expand production to 10 aircraft in 2012 and 22 helicopters in 2013. The S-70i can be configured for multiple missions, such as troop support, humanitarian relief, VIP transport, search and rescue, medical evacuation, and armed patrol.
The Mahindra Group’s aerospace division has decided to join hands with premier chopper firm Eurocopter to manufacture sub-assemblies and other engineering products for the growing helicopter market in India. A Memorandum of Understanding (MoU) to this effect was signed by Mahindra Aerospace and Mahindra Satyam in Mumbai for a trade partnership with the Eurocopter Group and its subsidiary, Eurocopter India. The partnership will focus on manufacturing of sub-assemblies, engineering and customisation of civil helicopters and the joint development of specific market segments. Eurocopter President and CEO Lutz Bertling said, “The synergies between our two companies will enhance our contributions to the Indian civil helicopter market.”
CONTROL THIS CHOPPER WITH YOUR PHONE The Parrot AR Drone, a remarkable radio-controlled quadricopter with cameras attached to it, can now be manoeuvered with nearly every smartphone out there. The developers of the AR DRONE have upgraded the nimble little chopper so it can now be controlled by software used by the major cell-phone makers of the world from the Google’s now ubiquitous Android, to Samsung’s Bada and Nokia’s Symbian. This is in addition to the ability of the phone to run on Apple’s iOS software. The Drone takes advantage of technology developed by the military and has four propellers for optimum control, with a camera that streams live video via wi-fi, to the pilot’s phone. It features built-in flight stabilisation technology and interchangeable hulls for flying both indoors and outside. The AR Drone has a number of motion sensors attached to the central hull and inertial measurements are used for automatic pitch, roll and yaw stabilisation and assisted tilting control. The ultrasound telemeter provides with altitude measures for automatic altitude stabilisation and assisted vertical speed control. The device’s four fans allow it to fly in all directions and real-time video is sent back to the controlling device from the copter’s two cameras. CRUISING HEIGHTS September 2011
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FOCUS ON ‘COPTERS OMAR ABDULLAH RACKS UP `12 CRORE CHOPPER BILL
INDIA MAY BE OFFERED BLOCK III APACHE LONGBOWS It is likely that India may be offered Block III Apache Longbows for its tender for 22 attack choppers. The AH-64D Longbow Apache Block III is the latest version of the Apache Helicopter that has been introduced by the United States Army. This latest variant of the attack helicopter is the third in a long line of development that dates back to the mid-1990s, when the Block I programme began. The Block III takes the current Block II version and updates it to 21st century technology, according to the US Army. Officials from the US Army said, the new version incorporated a lot of new features, a 25 per cent increase in power and features Modular Force Connectivity achieved through global information system grid connections. The new Apache also features Level IV Unmanned Aircraft System (UAS) control, new extended range sensors and weapons, and reduced pilot workload through the use of cognitive decision aiding technologies. Block III will be able to operate at 6,000 feet and reach a top speed of 164 knots, about 20 knots faster than the Block II version, as well as achieve an out-of-ground effect hover at an air temperature of 95 degrees with a full mission payload. The aircraft’s new cognitive decisionmaking technologies make the helicopter easier to fly, reducing pilot stress and allowing the pilot to focus more on situational awareness. The Block III programme adds a major development in aerial combat – the ability for the Apache pilot to communicate with unmanned aerial vehicles.
HAL EXPLORES NEW BUSINESS AREAS Hindustan Aeronautics Limited (HAL) and Eurocopter have reiterated their commitment to take their fivedecade long relationship to the next level. The two aviation majors are in the process of signing agreements to further reinforce their industrial cooperation and links. This alliance will focus on increasing existing partnerships and exploring new potential business areas to serve both Indian and international markets. "HAL is fast developing into a major player in the aerospace sector. With this increasing pace of growth, HAL welcomes opportunities for joining hands with a global player like Eurocopter. We look forward to corroborating this partnership further in the coming years," said Ashok Nayak, HAL Chairman. Since 1962, Eurocopter has partnered with HAL, through two cooperation agreements, enabling HAL to manufacture more than 600 helicopters based on the Alouette 3 and Lama, more popularly known in India as the Cheetah and Chetak. This fleet has formed the backbone of the Indian Armed Forces over decades. India was the first nation with which Eurocopter signed a license agreement which included technology transfer. Today, HAL manufactures components for the AS550/AS350 helicopters, and contributes to Eurocopter global supply chain.
BELL HELICOPTER RANKED NO 1 IN PRODUCT SUPPORT Textron’s Bell Helicopter has been named number one in product support in Aviation International News’ 2011 Product Support Survey for the sixth consecutive year. Bell also top scored in eight of the ten categories surveyed. Earlier this year, Bell Helicopter received top honours from the readers of Professional Pilot in their annual independent customer support survey. Customers ranked Bell Helicopter first in terms of authorised service centres, factory service centres, parts availability, cost of parts, warranty fulfillment, technical manuals, technical representatives and overall aircraft reliability.
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CRUISING HEIGHTS September 2011
The Civil Aviation Department (CAD) of Jammu and Kashmir has revealed that the state exchequer spent `12 crore for ferrying Chief Minister Omar Abdullah and other ministers to various destinations within the state during the last three years. The CAD revealed the details in response to an application filed under RTI by a B u d g a m resident, Bashir Ahmad Malik. The information shows the expenses invited on the usage of the state chopper service from 2009 up to June 2011. Bhat had sought the details from the Chief Minister’s office in June this year but he was refused. He then approached the state’s Chief Information Commissioner’s office which forwarded the letter along with his complaint to the civil aviation department and which provided him with the particulars. Ironically, the Jammu and Kashmir’s civil aviation department is directly under the control of Chief Minister Omar Abdullah. Committee recommends action against errant chopper travellers A parliamentary committee has asked the government to come up with penal provisions against those travellers, including VIPs, who force helicopter pilots to operate in hostile conditions. This comes on the back of the directive of the Director General Civil Aviation (DGCA) that gives chopper pilots the right to refuse flights in inclement weather. “Some kind of penal provision may be considered against those putting pressure on the pilots to fly without proper clearances,” said the Parliamentary Standing Committee on transport, tourism and culture report. The statement observed that undue pressure was put, including for commercial reasons, on technical personnel, including pilots, to ignore key safety-related clearance to operate flights.
A I R
C A R G O
&
L O G I S T I C S
CRUISING HEIGHTS September 2011
62 CHOPPER ON BOARD EMIRATES' SKYCARGO SETS ANOTHER RECORD BY FERRYING A CHOPPER
Keen to build on its global ambitions, the Hong Kong-based carrier starts dedicated freighter services from Bengaluru to Europe and is looking forward to touch more Indian stations
South is golden for
RIP AI CARGO? ITS FREIGHTERS UNUSED OR SOLD, AIR INDIA HAS ALL BUT PUT AN END TO ITS CARGO BUSINESS
WANTED: KNOWLEDGE ABOUT LOGISTICS
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CEOS MUST KNOW THEIR LOGISTICS PARTNERS AND LEARN ABOUT LAST MILE DELIVERIES
Cathay
TNT’S FASHION HUB IN HONG KONG
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A NEW DEDICATED HUB IN HONG KONG COVERING 99,087-SQUARE-FOOT
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LAST IN/FIRST OUT
Ten reasons not to panic
THE DOWNSLIDE in the economy around the world has prompted fears of a major recession again. However, there is no reason to worry, according to analysts with Transport Intelligence. In fact, the analysts have forwarded ten reasons why the financial crisis will not affect the global logistics industry. The analysts maintain that the global economy is “not as bad as is being made out. We are in middle of a fiscal/political crisis rather than an economic one. Growth in advanced economies was weak — but positive — in the first half of 2011 and remained strong in the emerging markets. Organisations such as the IMF believe the slowdown in growth to be temporary”. The downward slide of the share prices of major transport and logistics companies “have nothing to do with their financial performance. Companies as diverse as Expeditors, Kuehne+Nagel, UPS and DHL have all seen margins improve in the first half of 2011”, say the analysts. There has been a slowdown in air and sea volume growth but not a reduction. IATA figures point out that in the first six months of 2011 air cargo volumes were up by 1.2 per cent in terms of freight tonne kms compared with 2010. Sea freight volumes from Asia to Europe were up about 5 per cent and imports to the US from all destinations rose by the same figure. The Japanese tsunami applied brakes on production of high-tech and automotive parts. In addition, production in auto plants across the world was affected. TI believes that in the second half of 2011 these supply chains will return to normal and this will impact the logistics sector, both up and downstream positively. Semiconductor production, a traditional bell-weather indicator of air cargo growth, has remained strong. The industry saw a 3.7 per cent increase in the first half of 2011 sales compared to the same period last year. This suggests that demand for products, which use semiconductors — and this includes just about all electronic equipment
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— will be strong, having an indirect benefit throughout the logistics industry. The major impediment would be oil prices. It is now down (August 20, 2011) on fears of growth prospects in the Eurozone, USA and China. If this movement becomes a downward trend it will be beneficial to the economy, reduce inflation, and help many transport companies improve their margins. Low interest rates will be the norm. This will not only stimulate borrowing, capital investment and economic growth but help the more-leveraged transportation companies. Ocean shipping rates have stabilised. Although this won’t help shippers or freight forwarders, a market in which shipping lines make losses or indeed go bust is in nobody’s interest. More M&A activity. The financial market crisis could counter-intuitively lead to more M&A activity. Freight forwarding gross margins are up. The falling sea and air rates have helped push up forwarders gross margins. These look likely to remain high with significant new shipping capacity set to enter the market.
“It would benefit all if international governments could better coordinate their effort to create a more uniform multi-level approach to air cargo security. What is needed is less confusion interpreting rules and regulations all around.” ) Jo Frigger
President and CEO EMO Trans
CRUISING HEIGHTS September 2011
TRENDS THERE IS good news for all those who use the Bengaluru International Airport (BIA).The airport promoters have chalked out extensive plans to expand cargo facilities.With cargo expected to grow at about 9 per cent during 2011-12, the plans include initiatives that will make the airport a future cargo hub of South India. Among the measures are the setting-up of a transshipment facility supported by
Customs.The move will make the transshipment of cargo easier. In addition, there will be plant and animal quarantine facilities and a textile committee office, which will benefit the garment and apparel industry. There are also plans to have an import drug controller for pharmaceutical goods. According to Hari Marar, President-Airport Operations at BIA, the airport has a total cargo-handling capacity of about 350,000 MT. It handled about 222,778 MT of cargo in 2010-11 and witnessed a 27 per cent growth of cargo tonnage during the same period, which was dominated by engineering goods, electrical and electronic goods, and garments. BIA is one of the few airports in the country that has a cargo village and that is used by global freight forwarders like DHL, Nippon and, Keuhne & Nagel.The airport's warehouse operators are Air India SATS and Menzies Aviation with Bobba Group.
CARGO
TIME TO SAY GOODBYE: Air India cargo operations is passing through tough times.
Troubled
times for AI cargo Once the king of cargo carriers from India, Air India’s financial problems had put paid to its cargo and freighter plans. Today, while its passenger services plod on, cargo is nowhere on its radar. A report
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s it going to be R I P Air India Cargo? From all indications, it certainly looks that way and each passing day brings more bad news about the sinking fortunes of the carrier and while its passenger business — both domestic and international — seems to be limping on, its cargo business, once a bright star, is nowhere to be seen. Two years is a long time but it was in 2009 that Air India won the ‘Cargo airline of the year award’ for the year at the 26th Cargo Airline of the year award function in London. That, incidentally, was the first time that Air India Cargo had won the Award constituted by the Air Cargo News. The carrier won the award in the category of the ‘Best Central Asia Cargo Airline’, in recognition of its role in developing the air cargo market to/from the region. The award winners had been selected based on the voting by more than
CRUISING HEIGHTS September 2011
20,000 freight forwarders around the world, which was fully audited by the British International Freight Association (BIFA). In the process, Air India Cargo beat other Central Asian carriers, viz. Sri Lankan, PIA, Air Astana, etc. Air India’s achievement was a clear indication that the proactive approach adopted by Air India Cargo to encourage growth of air cargo industry, especially during the time of recession, had found greater acceptance amongst the freight forwarders. The carrier’s cargo’s downward saga began early last year when plans were drawn up to spin off the cargo business into an independent unit. The then Air India Cargo Special Business Unit (SBU) head Anita Khurana — who has since superannuated — had announced the spin-off plan. “We plan to hive off our cargo business into an independent, autonomous business unit within NACIL
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CARGO (National Aviation Company “What I’d meant by induct more freighters. We freighters, which it had to of India that was overseeing increasing belly capacity, is are working out the business put on hold. “We are hoping the merger of Air India and that with more wide-body plan for that.” that with the creation of the Indian Airlines) from April 1, aircraft getting inducted into Focussing on cargo had cargo SBU with effect from 2010,” she had said and had the fleet, our belly capacity been part of Air India’s April 2010, we would be in a even pointed out that a fivefor cargo will also go up in revival plan. Before the better platform to actively year road map had been due course. We offer almost global downturn, the cargo pursue what we have drawn up. 1500 tonnes of cargo division contributed around planned,” she had said. At that point of time, the capacity per day at present, half to the national carrier’s The plans, alas, still newly-set up cargo unit was which would grow by about 8 total revenue. Separating the remain on paper! As the supposed to hunt out new per cent year-on-year within cargo unit, it was forecast, carrier struggles to lift its markets and look after the the next five years with the would bring in four times head from the spiraling debt cargo division with its fleet of induction of wide-body more revenues. In fact, Air that it finds itself in — eight planes: six Boeing 737s aircraft,” she had said. She India had converted six of its among a host of other and two A 310s. On its had also mentioned that AI older aircraft B737-200 into problems — the cargo SBU agenda was the restarting of would “operate existing freighters in the hope that it remains on the backburner. the international cargo freighter aircraft for more would corner between 25 and To top it all, towards the end services — that had been number of hours to boost 30 per cent of international of last year, Air India discontinued in September revenue from the cargo cargo. announced that it planned to 2009 — to the US and business”. Cargo, both Even as the hiving-off sell six of its Boeing Europe within six months. domestic and international, plans continued to be talked freighters and even before That move was contributed around eight per about, Air India’s domestic that, the decision to sell the interpreted by the air cargo cent to the revenues of cargo did quite well. Khurana A 310s had been taken. community in the As of August 2010, country as a strong the carrier had nine ray of hope. In fact, freighters — three A Air India gave out 310s and six B 737s. Of the impression that the 310s, two were not the carrier’s being used while one financial worries was operated for Aryan would be over once Cargo Express for some the hiving-off time (Aryan too is in process started and hibernation, trying to former Air India gather capital to restart Chairman and services). As for the Managing Director Boeings, all had been Arvind Jadhav even phased out. These went to the extent of planes had been announcing plans converted to freighters that would help the in 2007 in the hope carrier strengthen its that Air India would financial position. start a domestic air Among the plans cargo service using the FROM OUR FILES: (Centre) Anita Khurana, SBU Head, Cargo, Air India, receiving the was the separation of Nagpur hub as the 'Best Central Asia Cargo Airline' award. the cargo-handling base. In fact, four of the operations into a profit National Aviation Company had commented in early A310s had undergone centre. The separation, of India (NACIL) or the 2010: “The domestic market conversion as freighters at a according to Jadhav, would merged entity of Air India has been very robust in the whopping $40 million. bring in much-needed and Indian (Airlines). last year. Despite the global No one has bought the revenues for the carrier The cargo chief had then recession, we have done very planes yet. Today, Air India through lower operating emphasised that AI’s cargo well on the domestic front. is saddled with a problem: its costs and improved unit would take care of both We carried more than freighters are too large for efficiency. national and international 80,000 tonnes of cargo in domestic operations and too The hiving-off process markets. The new cargo unit April-December ‘09 — a 3.5 small for international had started a restructuring would have a fleet of eight per cent growth over flights. Apparently, the exercise in the carrier and aircraft: six Boeing 737s and corresponding period last carrier is reported to have the division headed by Anita two A 310 Airbus aircraft. year.” around 40-odd planes that Khurana had gone to the She emphasised:“There The financial crisis in the were supposed to be used for extent of chalking out would not be any increase in carrier did affect Air India’s cargo operations — once it expansion plans. On the the number of freighter fleet cargo operations leading started. These planes have sidelines of a 2010 trade for now. We have actually Khurana to say that the been sitting idle on tarmacs show in Mumbai, Khurana leased two A310 freighters carrier had not been able to around the country and it is had mentioned that Air India and at an opportune time aggressively pursue “our anybody’s guess when Air had planned to increase the when the market picks up, business plans”. One such India will restart its cargo belly capacity of its aircraft. we would be looking to plan was to induct more operations.
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CRUISING HEIGHTS September 2011
CARGO/INTERVIEW below the 6.3 per cent in April. Though economists and policymakers have been saying that the industrial output will move ahead but the slowdown in manufacturing is sure to have its effect on the gross domestic product growth target of 8.5 per cent — that now seems a far cry. According to industry watchers, however, the April figures point out that 14 of the 22 groups in the manufacturing sector have shown positive growth during the month. Cathay, the biggest freighter operator in India, did a lot of background work before the launch of its freighter services to Chennai. Said Tom Wright, Cathay’s General Manager-South Asia, Middle East and Africa, “Ever since the freighter services were launched from Chennai to Hong Kong in 2006, the route has performed well.” Ashish Kapur, Cathay’s Regional Cargo Manager-South Asia, Middle East and Africa, backed that up saying that the “twice weekly freighter services between Chennai and Frankfurt — which is in addition to the four freighter services from the south Indian city to Hongkong
— was started to ease the capacity constraints that the route has been experiencing”. TIRTHANKAR GHOSH spoke to avid golfer — he would have become a professional golfer had he not joined the aviation business — and Cathay’s cargo chief Nick Rhodes about the
carrier’s India plans. What came through were focus, dominance and confidence — all traits of a champion golfer and those most needed in today’s competitive world of air cargo. Excerpts:
Nick Rhodes, Cathay Pacific's cargo chief is upbeat about the new freighter services
“ only one hub in India We did not just want to grow with CRUISING HEIGHTS September 2011
“
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une was a bad month and the dips in exports from India affected the air cargo sector. Two months down the line, there was the debt crisis imbroglio in the US and its fallout, inflation around the world and weak consumer demand. The downward trend continues and even India — that remained relatively unscathed — is now feeling it. This after India’s exports moved 46.45 per cent year-on-year to $29.21 billion in June this year. The total exports between April and June 2011 increased 45.7 per cent to $79 billion from a year earlier. Almost everyone associated with the air cargo sector in India has been unanimous that there has been little growth over the last two months. Nick Rhodes, Director Cargo, Cathay Pacific, accepted the slowdown though he was not unduly worried. Cathay, incidentally, is looking at the “growing” Indian market closely and between June and August this year has introduced new freighter flights from the south Indian cities of Chennai and Bengaluru. Despite the optimism, there is reason to worry. India’s manufacturing output grew at only 5.6 per cent in May, well
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CARGO/INTERVIEW
NEW BEGINNING: Cathay Pacific’s freighter makes its first landing in Bengaluru and is given a watery welcome.
Q: Cathay Pacific has been concentrating on increasing services to India and your latest move to start freighter services from Bengaluru is obviously part of a wellplanned strategy. Tell us about your India plans and Cathay’s cargo plans? NICK RHODES: The Head Office made quite a conscious decision to grow as a cargo carrier. I mean we want to be a big carrier. We had a long strategy discussion many years ago whether we were going to remain as a niche cargo carrier just flying between Hong Kong and some particular markets or whether we were going to be visible and grow globally and we made a very conscious decision that we are going to be a big airline. We’ve seen the trend among most freight forwarders in the industry to consolidate and the global forwarders are emerging now as the force in global influence. So anywhere you go in the world now, the top twenty freight forwarders think and work globally. We want to be an airline that has a dominant position really in all the major markets of the world and the freight forwarders can work with Cathay and meet all of their needs … all of their shippers’ requirements covering all of the major markets. So we decided at that point to order more freighters. We placed orders for ten Dash 8 freighters and then we decided to build our own cargo terminal in Hong Kong. We
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have been busy building that cargo terminal over the last few years. It will open in 2013 and the new freighters will start coming in this year. We are going to be a big airline. The crux then is what do we do with all this capacity? And the two major markets we are trying to serve is, of course, China and India. These two countries are the major economic engines of Asia and we are well placed in between the two. It will help us move the cargo between India and China and between Asia and those two markets. But we are also well placed to serve Europe and North America. India has been a target for us to grow as a freighter carrier for many years. In fact, we have been flying to India for a long time…we started flying freighters to India from 1994. And even before that we were flying freighters out of India to China in the 1940s. We had a DC3 flying to Calcutta. We’ve always been a big carrier but since ‘94 we’ve added freighters and have been growing rapidly ever since. India doesn’t have a major home-based freighter operator. So we have an opportunity to try and help fill that niche and carry cargo from India not just through China to North America and Asia, but also from India to Europe. Having made that decision to grow in India, we did not just want to grow with only one hub in India. We know that cargo exists in various cities of India. So we have been looking to develop more than
just Mumbai and Delhi. Chennai’s been a great example. We started there a few years ago and now we have grown to six (freighters a week) and the freighter business is expanding there. We are flying now from Chennai directly to Frankfurt and, of course, through Hong Kong to North America. So the next step was: Do we operate into Bengaluru as well or do we continue to truck (shipments) from Bengaluru to Chennai? It was quite a simple decision; there is so much cargo here…We have tried and I am very confident that we will rapidly grow the freighter service into Bengaluru from two a week to three to four. We will also start from Hyderabad. India has a very big growth market not just general cargo but also specialised cargo. From which Indian stations does Cathay have direct freighter services to Europe? From Chennai we do (direct flights to Europe) and Mumbai and Delhi we do. At the moment we don’t fly from Bengaluru; there’s a possibility in the future we could. For the moment it’s Hong Kong-Delhi-Bengaluru-Hong Kong. From Bengaluru we fly — we have a daily passenger service with Dragonair with some belly capacity that the two freighters effectively double the weekly capacity. We are going to have maindeck loads for Bengaluru and Hong Kong. Bengaluru-Hong Kong will connect of course followed
CRUISING HEIGHTS September 2011
by Asia, Japan, Korea, China and North America, but Bengaluru-Europe will either have to go back to Hong Kong or truck through to Chennai or go through Mumbai or Delhi. In the future we could operate from Bengaluru, Hyderabad. There are a few operational challenges to go from Bengaluru to go to Europe with the 747 freighters — mainly runway lengths and there may be some payload restrictions. That can get a little technical but we can overcome those issues if the market assures us of a steady and regular supply. Over the last few months we have seen Middle Eastern carriers ramping up their cargo services. How do you view this competition? They are serious competitors. They are building up their own hubs. The Middle Eastern carriers have never been into cargo until recently and they are going to grow. We know they are going to grow as cargo carriers. In the same way that China is the major market for Cathay Pacific, India will be a major market for the Middle Eastern carriers because there is no cargo being produced in the Middle Eastern region. We will be competing with the Middle Eastern carriers for cargo to the USA. They will be trying to take cargo from India through the Middle East to Europe to North America. We can take it from India to Hong Kong to North America. (That does) Not (translate into) a
huge difference in time. Certainly, the West Coast (of the USA) is better to go through Hong Kong. That’s genuine competition… healthy competition depending on the products and the routes; we think we have greater depth of experience as service providers. A lot of the cargo that we try and ship — pharmaceuticals, heavy lift, complex cargo, perishables, etc. — we have a lot of experience in handling and we are building our state-of-theart cargo terminal in Hong Kong where we can capture these special cargo in transshipment. It’s not easy to break into this business. Other Middle Eastern carriers will develop their expertise. It takes a long time to acquire the knowledge how to handle a lot of specialist products. We think we can be quite competitive into Europe. As I’ve made the point, it will be even more competitive with Qatar and Etihad and others that fly from India non-stop to Europe.
we’re going to have to go online at some point into Hyderabad. So we just need to decide when that would be. But the first step was to come into Bengaluru where we think that more traditional cargo (exists) — the electronics, the IT business... we have also noticed auto products, etc… So we’ll try Bengaluru first and then we’ll look very closely at Hyderabad. I can probably let you know a little bit of more sensitive information: we’re looking quite closely at some regional freighters. At the moment we only have 747 freighters, which are quite large and the Dash 8 is 130 tonnes. We don’t want to fly 130 tonnes Dash 8s into Hyderabad or Bengaluru. If we can do that frequency with a much smaller freighter, that’s going to be much better. We are looking at the 777 freighter and the 330 freighter and the study is coming very close to conclusion. We will be making a decision or making an announcement about some regional freighters soon.
Like Lufthansa, are you planning to put up a pharma hub as they have done in Hyderabad? Very possibly, yes. We are becoming a specialist pharma carrier, out of Europe, out of Canada and Australia and certainly out of India.That is a market that we are looking at very closely, whether we should fly freighters into Hyderabad. If we are serious about the pharmaceutical market in India, we do think
How will Cathay’s regional freighters help boost your cargo services? Regional freighters will be perfect between Hong Kong and India; Hong Kong and Hyderabad, Hong Kong and Bengaluru, Hong Kong and Chennai, Delhi, Mumbai. These would be smaller freighters with a twin-engine operation. We think these would be ideally suited to the Indian market. These regional freighters will also fly between
Japan and Korea and Chengdu, Chongqing and the new markets in China. Sydney, Melbourne, Penang, Djakarta, Hanoi, Saigon all those sort of markets. These regional freighters will feed into the hub in Hong Kong where the 130 tonne Dash 8 freighters will provide the main pipeline between Hong Kong and North America: 36 flights a week between Hong Kong and North America. That’s the ideal market for the Dash 8 freighter. Our strategy is to replace the BCF (Boeing Converted Freighter) freighters over time with the production freighters with a regional freighter, either the 777 or 330 or a combination of both, and bring cargo from all of these regional hubs into Hong Kong. We have smaller freighters to prove a lot of this strategy thinking in Asia into a more attractive economic proposition. If you fly a fourengine BCF or a big freighter in the lease market, it’s a high cost operation. It’s what we’ve figured out completely; we don’t make money. So you can bring a twin (engine) in with 60 tonnes or 80 tonnes for the price, we think that’s the best strategy. What is your freighter fleet like now? At the moment we have 13 BCF freighters. (Of this) Two have gone to Air China cargo and two more will go to Air China cargo at the end of this year. So we’ll be down to 9 BCF freighters. And they are getting a little bit old now — some of
CRUISING HEIGHTS September 2011
them are ‘91-’92 aircraft. So they will need replacing in the future. They’ll be replaced by regional freighters. We’ve then got 12 production freighters and we’ve got 10 Dash 8 freighters coming. So we’re going to have about thirty-one 747 freighters by September 2012 and that shouldn’t change throughout 2013. Those 31 freighters will take some digesting capacity. But then from 2014 onwards, as the BCF starts to reach their normal retirement age, we will start to bring in these regional freighters. That’s the plan. The plan is for 2014 — one was to add regional freighter capacity, either 777s or 330s or both and they will start to replace the BCF freighters. So there will be 31 freighters owned by Cathay Pacific but some of those are being dry leased to Air Hong Kong. So, not all of the 31 are providing lift for Cathay; two at the moment providing DHL lift for Air Hong Kong and that number may increase. Is doing business in China easier than that in India? Do you feel the infrastructure in India — or rather the lack of it — has hindered your progress? We want to increase (our services) in India and China and you are right, the Chinese government seems to be a little more proactive in developing infrastructure ahead of the increase in manufacturing. India is increasing manufacturing in all of these cities and some of the
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CARGO/INTERVIEW
Tom Wright
Cathay’s G M South Asia, ME & Africa
“Ever since the freighter services were launched from Chennai to Hong Kong in 2006, the route has performed well.”
infrastructure is slow to catch up. I hasten to add that Bengaluru is not one of those examples. It seems to be a very busy airport, but from what I can gather it is a wonderful Greenfield site airport where the cargo facilities have been taken into active consideration. Many airports you see in India put in a lot of investments into passenger terminals — like in Delhi and Mumbai — and cargo tends to become second in the queue. There needs to be development in the cargo village. It’s just not for the airlines but for the freight forwarders as well. So, people can bring cargo and trucks don’t need to wait for hours on or even days. Mumbai is a bottleneck, Chennai is a bottleneck and it’s not necessarily the problem with the building in a place like Chennai. It’s just getting access to the terminal because the trucks are restricted in movements during the day. So, it does tend to cause congestion in the evenings when you are likely to bring the trucks in. It’s a combination of the city government and allowing trucks access as well as the facilities themselves. But there’s progress that I have been hearing about that’s planned in Mumbai regarding the cargo terminal in the coming few years. Delhi is doing a lot to build another terminal and renovate the existing terminal with Celebi doing some good work there. So there is progress, but your
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point is very valid: it is a little slower in India than that in China to recognise the importance of infrastructure. Not quite so long ago, freighters from China used to be full but those going back were empty. Do you feel that the same situation exists today? There seems to be a very strong demand for import and export cargo. (Earlier) We used to only have trouble leaving China and nothing would ever go back but China’s developing an import market. The consumers there are now demanding products from Europe to North America. We’re flying a lot of cars and wine and household products and luxury goods. There is a real correction in the trade zone and the imbalance and China is growing as a consumer market and India, I am sure, will follow suit. That is exciting for us as a business. How is Cathay moving to e-freight? E-freight and electronic airway bills are an initiative we are very keen to support. It is not in any stage that we can tackle singlehandedly. It’s got to be run by IATA and the industry but where we take some control of course is in our home market in Hong Kong and we have become quite an example of how it can be done in Hong Kong by going with the airway bills. We are a small country though. We are a dominant home-based carrier.
Ashish Kapur
Cathay’s Regional Cargo Manager South Asia, ME & Africa
“The twice weekly freighter services between Chennai and Frankfurt was started to ease the capacity constraints that the route has been experiencing”
So, perhaps, we have an unusual position. But we insisted on January 1 this year that all cargo exported from Hong Kong must come with an electronic airway bill. We have managed to iron out any bugs in the system very quickly and we are now on a global initiative to bring Cathay exports from other cities around the world 100 per cent e-airway bill in the next three years and we’ve got a timetable. Some of the European countries, Australia and some of the Asian countries are going to connect this year. I have to say India and China are towards the back of that timetable and America as well more because of the Customs restrictions. We think that electronic airway bills will be embraced by Customs in the future. You get advance information; you can see what’s coming. You can then decide before the aircraft’s arrival, what to look at and what to check. We think it’s going to enhance the speed of the cargo. It will improve safety. It will improve Customs efficiency in clearing cargo. We are great supporters of e-freight and the shipments and the Customs authorities all to move to electronic documents over the nest 5-10 years. It’s going to be quite a difficult initiative to institute in the industry but it will happen; we will constantly work on it. How is Cathay coping with the 100 per cent screening measure by the USA?
CRUISING HEIGHTS September 2011
With the USA? No problems, not particularly. USA now has Homeland Security and USA has said that cargo coming to the States must be X-rayed at the final point of departure, which meant Hong Kong. There is talk of the world economy slowing down. Has Cathay been feeling the effect? It’s already started. The total exports out of Hong Kong this year is down nearly 8 per cent this year. Having said that, India’s booming and cargo is still moving despite the economy slowing down. August is still up market, the traditional holiday period in northern Europe. It’s also Obon in Japan and Ramadan in the Middle East. So with all this it’s going to be a quiet month this year. MidSeptember should be the start of the pick-up season, the traditional pre-Thanksgiving /Christmas week. We are still optimistic that there will be a pick-up in the final course of this year — October and November — but how strong a peak will be, it’s difficult to say. We suspect it won’t be as strong a peak as we have seen in previous years. But we are full capacity of a peak of some form in October/November. Now the first three Dash 8 freighters should be in place by the end of October. So we will have some capacity in the peak and we will have some new routes. We are still hoping to fly to Mexico in November this year.
COLUMN/FULLY LOADED
Logistics partners need
a closer look SHESH KULKARNI
Most corporate entities cut costs when it comes to logistics leaving delivery of high-end products to unqualified organisations run by people who understand little about these products. There is an urgent need to pay as much attention to logistics partners as the manufacturing process, advises Shesh Kulkarni.
was recently invited by one of the trade bodies, that has on its rolls members from diverse industries, to speak and share insights about logistics. What insights could I share with CEOs who run successful enterprises? I wondered if it would be apt to share the latest jargon and practices in the logistics space without being sure if they would understand the importance of, say the ‘last mile partner’. Unable to decide but egged on by curiosity, I accepted the invitation. The prospect of speaking to more than a100 CEOs was, of course, the other equally bigger incentive! As I did not have a specific approach or presentation in mind, I decided to drive my talk through interaction instead of a soliloquy. I have realised that people on most occasions listen to what they want to or only if they are able to connect to the Whys, Whats and Hows. So, it was important for me to dangle a ‘magnet’ or a reference to engage them. I decided to take the bull by the horns. I asked my CEO listeners a simple question: “How many of you are involved in the manufacturing process of your company?” Some 70 per cent raised their hands and acknowledged. They were not only involved but most were also on top of it, some of them claimed. A few others said that they had the highest productivity levels in their industry. That impressed me and a few others. I asked another question: “How many of you are involved with the marketing activity of your company?” Around half of the listeners present raised their hands to confirm that they take daily looks at the marketing activity. “How many of you are involved in the financials of your company?” was my next question. This time around, the hall was filled with raised hands. And the look on their faces said it all: why are you asking dumb questions? Then came the punch: “How many of you are involved in the logistics activities of your company?” The silence was deafening. Worse still was the fact that there were only two hands in the room of which one was raised
I
There is very little visibility or control on the logistics process that leads to the wrath of the client for delayed, damaged, pilfered deliveries. All this because we often cut corners.
rather half-heartedly. I was forced to say rather loudly that they sold whatever they produced or manufactured. Everyone nodded their heads to confirm that their products were doing very well with their buyers. A few even asked me what was the point that I was trying to make. It was time now to throw in some important questions. Since most of the CEOs were involved in the major activities of their business, why were they not involved in the cash realisation cycle? Always done post delivery, why is it relegated down the order in many cases and in most cases, never a part of board room discussion? Had anyone of them bothered to know who their logistics partner was? What service level agreements were in place and whether those service-level agreements really focussed on service or was cost reduction the end objective? All this becomes relevant as logistics partners in most cases run the last mile, and whose failure or success in delivery, determine shippers’ or consignees’ abilities to realise payments. In many cases, organisations spend time in ensuring that great R&D, marketing, machines and tools, etc. but turnover high-end products to unqualified organisations run by people who understand little about products and value creation for delivery. The aim is to save a rupee or two per kilo. There is very little visibility or control on the logistics process that leads to the wrath of the client for delayed, damaged, pilfered deliveries. All this because we often cut corners. Was it not important for CEOs to be involved and know logistics partners as much as they were involved in the manufacturing, marketing, finance, R&D, etc? It was interesting to hear the murmurs and see the CEOs in discomfort. The seeds of doubt had been sown. It will be worthwhile to hear from our readers what they think.
CRUISING HEIGHTS September 2011
(The writer is President and CEO of a leading logistics company which provides complete logistics solutions and can be reached at cruisingheights@newsline.in)
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CARGO JOTTINGS
SkyCargo India team emerges on top
bellyhold capacity of the passenger aircraft which it did efficiently and smartly. The team became best performers worldwide commercially and operationally overtaking stations like Hong Kong, Shanghai and Germany which have far more cargo opportunities in comparison to India, and have exportoriented economies. Choppers take a ride on Emirates freighter: In its move to meet the growing demands of the thriving UAEBrazil trade route, Emirates SkyCargo will be adding a third weekly freight flight to Brazil. The oil industry is just one of many areas that is bustling in Brazil and SkyCargo recently delivered two large helicopters for energy giant Petrobras. The helicopters — to RIDING HIGH: Ram Menen (seventh from left), Divisional Senior be used by Rio de Janeiro oil rigs — were transported from Vice-President, Emirates SkyCargo; Keki Patel (seventh from right), Cargo Manager-India and Nepal and Robert Siegel (second from right), Dubai International Airport to Viracopos Airport in Regional Manager Commercial Cargo-Europe and Americas along with Campinas, a route which the carrier will serve three times a the entire Emirates SkyCargo India Team after receiving the award. week from September 16. THE INDIA team of Emirates SkyCargo, was recently awarded “Transporting helicopters requires the highest degree of care for being the best performers worldwide for the financial year and special handling, from when we take delivery of them, to 2010-11. The India team was awarded for their outstanding work loading, right through to their arrival in Sao Paulo,” said in aggressively promoting and Dener Souza, Cargo Manager of educating the trade about e-freight SkyCargo in South America. “This in the country. In the last year, it is a great example of the expertise carried out successful e-freight we can offer customers who want shipments from all the major cities to quickly transport valuable outin India and also started offering sized items, while the addition of interline capacity of three tonnes another flight is a tremendous from Lucknow. In addition, the boost to the service we can team had also put in continuous provide.” efforts to consolidate the agents’ “The logistics and careful network throughout the country. monitoring of the cargo from door According to a press release, to door is the Emirates SkyCargo Emirates SkyCargo India team differential,” said Alexander Gulla, overcame hurdles pertaining to President, AGS Group, the infrastructure and limitations in international logistics company HEAVY-DUTY AIRLIFTER: Emirates SkyCargo carries a available facilities. Besides, it also variety of goods to Brazil each week and recently responsible for transporting the had to limit its operations to the transported two helicopters for energy giant Petrobras. helicopters.
DHL and Blue Dart launch smart truck
DHL AND BLUE DART, part of the DHL Group, are piloting Smart Truck technology in Bengaluru, India, the first deployment of this logistics innovation outside Germany. Created by DHL Solutions & Innovations (DSI), the DHL Smart Truck is an “intelligent” pickup and delivery vehicle that combines a number of innovative technologies including a route planner. Launched in Germany VALUE-ADDITION: Smart Truck is another in 2010, DHL Smart feather in the cap of DHL and Blue Dart. Truck reduced number of miles travelled by 15 per cent and length of average route by 8 per cent during its pilot stage, reducing both fuel consumption and CO2 emissions. Piloted by Blue Dart in India, the Smart Truck technology is designed to provide solutions to urban logistic challenges such as traffic restrictions, density and clogging, while ensuring environmental protection and fulfilling customer need for on-time delivery.
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FedEx donates MD-10 freighter to ORBIS
FEDEX AND ORBIS International recently announced a new five-year, $5.375 million commitment in the form of cash and in-kind contributions from FedEx. In addition, FedEx Express will donate an MD-10 cargo aircraft to ORBIS to be the thirdgeneration Flying Eye Hospital. The new Flying Eye Hospital, the world’s only airplane with a fully functioning state-of-the-art eye hospital on board, will be built on an MD-10-30 freighter and will utilise a modular design concept. It is the first time such modular units have been designed for an aircraft, and building them presents an enormous engineering challenge to meet the demanding technical requirements for both aviation and medical certification. The Flying Eye Hospital is a unique tool that brings dedicated eyecare professionals from across the world to developing countries to provide two to three weeks of training and state-of-the-art surgical demonstrations. “Preventable blindness can be avoided through routine, inexpensive medical procedures and eye care education,” said Dr Barbara DeBuono, President and CEO of ORBIS International. “Through the support of companies like FedEx and the hundreds of doctors, nurses, technicians, engineers, aviation staff and pilots who have dedicated their considerable time and talents we have been able to save sight for millions of people around the world.”
CRUISING HEIGHTS September 2011
PayMate introduces Cashless purchase service
Pharma Expert on UPS Board
FIRST PayMate has recently introduced the country’s first mobile, Cashless Purchase Management Service for fleet operators in the country. The new service called WAYPAY is in collaboration with Mahaventures. This innovative system is specifically designed to help fleet operator across the country manage all in-route expenses from nominated retail outlets, without cash. WAYPAY PMS (Purchase Management Solution) is another breakthrough technology innovated by PayMate and Mahaventures that eliminates the need for carrying cash, thus increasing the level of security felt by fleet drivers. The elimination of cash also makes it easier to prevent fraudulent transactions. It’s convenient and comprehensive reporting enables fleet owners and managers to receive real-time reports and set purchase controls online. Speaking on the launch of the new service Ajay Adiseshann, Founder and Managing Director, PayMate said, “While India continues to mature as an economy there will be a definitive shift from cash to electronic with the mobile phone playing a key facilitator in this transition. The PayMate platform is particularly suited for such applications and in Mahaventures we have the ideal partner for rapid deployment in western India.”
THE UPS Board of Directors recently named Dr Candace Kendle, a noted expert in the biopharmaceutical industry, a company director effective immediately. Her appointment to the post expands the UPS Board to 12 members. Dr Candace Kendle The Board also declared a regular quarterly dividend of $0.52 per share on all outstanding Class A and Class B shares. The dividend is payable September 7, 2011, to shareholders of record on August 22, 2011. Dr. Kendle, 64, is the co-founder and former chairman and CEO of Kendle International Inc., a global clinical research organisation that delivers a wide range of clinical development and clinical trial services to biopharmaceutical companies around the world.
First Airbus freighter for Maximus Air Cargo MAXIMUS Air Cargo recently received its first Airbus A300-600 converted freighter from EADS EFW. The first delivery, which arrived in Abu Dhabi this week, is reportedly the world’s youngest airbus passenger plane to ever be converted into a freighter and has a non-stop range of 2650 nautical miles at maximum payload. At a ceremony in Germany, Maximus Air Cargo CEO Fathi Hilal Buhazza formally received the aircraft from Dr Andreas Sperl, CEO of EADS EFW. “The new aircraft will become a key part of our fleet. It is expected to make a major contribution to building the strength and network of our business,” said Buhazza. “The additional capacity will help us significantly expand our footprint in emerging markets such as Asia and Africa, as well as enhancing our worldwide charter services.”
Gulf Air unveils new cargo system GULF AIR recently introduced Cargospot, a fully modernised cargo management system. Cargospot is an integrated end-to-end cargo management solution to manage the airline’s cargo business, from booking, pricing and sales to accounting, providing enhanced services for both clients and Gulf Air. “The introduction of Cargospot is a key development at Gulf Air cargo as we aim to aggressively expand our cargo operations as well as deliver a consistently better customer service and improved reliability," said Gulf Air Senior Cargo Manager Rory Black. "This is another accomplishment for Gulf Air as we strive to offer end-to-end business solutions through deployment of innovative technologies that will support our business units," said Gulf Air Information Technology Director Dr Jassim Haji. The Cargospot system will allow Gulf Air to introduce efreight functionality later in the year, one of International Air Travel Association’s goals and requirement towards reducing paper work and improving cargo automation.
WELL-POISED: TNT Express aircraft at one of the airports.
TNT opens fashion hub in Hong Kong TNT EXPRESS is looking to expand its presence in the AsPac apparel market by opening a new dedicated hub in Hong Kong. The 99,087-square-foot facility is located at the ATL Logistics centre in Hong Kong’s Kwai Chung Container Terminal. The hub will offer complete, customised supply chain management solutions to the AsPac fashion sector, and will reach out to countries including Japan, Korea, China and Singapore. Edward Lau, Managing Director, TNT Express Hong Kong, said, “Hong Kong is a highly-efficient logistics centre and a global hub for trade in garments and luxury goods. The city is not only a gateway to the fast-growing mainland China market, but is well connected to the entire region. That is why we are opening our new AsiaPacific Fashion Hub here, and in turn the facility reinforces Hong Kong’s status as one of the world’s leading fashion hubs.The fashion industry is all about responding quickly to fast-changing, intensely competitive global and local marketplaces. Our clients must anticipate demand and constantly keep ahead of the curve.”
CRUISING HEIGHTS September 2011
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HIFLIERS
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6
z Emirates
5
z Aer Lingus
z Lufthansa
7
z Cathay Pacific
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F
z Etihad
1
z Virgin Atlantic
2
z Singapore Airlines
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lier, flier on the plane, who is the hottest of them all? That question was popped to a 1000-odd people — a large number of them British — at the Business Travel and Meetings Show (BTMS) — sometime ago and the results were not surprising. Sir Richard Branson’s iconic Virgin Atlantic’s ‘hotties’ won the poll hands down: a whopping 53 per cent said that they were the sizzlers. With their tight red uniforms, long legs and perfect smiles, Virgin’s girls lived up to their training manual that states: “You’ll be the face of the airline. As such, your grooming should always be immaculate — even after a long, tiring flight.” Apparently, the dashing and effer-
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Spark and sizzle
z KLM
SIR RICHARD MAY NOT BE A LION-HEART BUT HE HAS THE BEST LOOKERS IN THE AIR… vescent Sir Richard always stresses the importance of the appearance of his crew believing it is vital for customers to have an enjoyable and memorable flight. Though some of the least charitable of the voters might have criticised the Virgin girls for showing off but it is a fact that the carrier’s advertisement campaigns feature flight attendants with
8
z TAP
clingy red uniforms in sexy poses — a la James Bond movies. A bit more about the famous Virgin girls. Being a stewardess on the Branson-owned airline is considered by many to be one of the toughest jobs to get in the industry. Incidentally, the perks are often very, very interesting. Take, for instance, the case of Kayte Walsh, an attendant in First Class. She met Frasier and Cheers star Kelsey Grammer on a flight between London and New York and would possibly be married by now. Whatever the reasons the Virgin girls were chosen for the almost ‘staid’ Singapore girl(s) got only 18 per cent of the votes despite being named the best cabin crew in the world for a number of years. Close on their heels was Etihad with 12 per cent — in fact, the Middle Eastern carrier shrugged off the stiff challenge from neighbouring airline Emirates: stiff because with their conservative beige and red uniform and bright red lipstick, the ladies do present a pretty perfect picture. This time around, their perfection earned them only 12 per cent of the votes. Holding fort at No 5 with six per cent of the votes were the Aer Lingus girls in their bright green uniforms. Obviously, those voting for the Irish airline girls had little compassion for them — in fact, their poster girl Aideen Walsh whose image welcomed visitors to the airline’s home on an enormous poster at Dublin Airport that read ‘Welcome to our home’ was taken off the payroll along with many others a few days before the polls, for refusing to work the new roster rules. Lufthansa’s cabin crew were at the sixth position followed by Cathay Pacific Airways, TAP (Portuguese Air Transportations), KLM (Royal Dutch Airlines) and Iberia (Spanish Airlines). Strangely, while none of the American airlines figured in the top ten in the polls, the only Asian carrier was Cathay. One wonders what happened to the beauties from India and China.
CRUISING HEIGHTS September 2011
10 z Iberia
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SNIPPETS
DOMESTIC AIRLINES GoAir introduces web check-in GOAIR recently introduced the facility of web check-in that enables the discerning traveller to just log on to www.GoAir.in and check-in online, choose his/her seat, even get his/her boarding pass. Web check-in facility is available for customers with confirmed booking. Customers may check-in online within 24 hours until two hours of the departure of their flight. Web check-in facility is currently available on direct flights only. Customers travelling on connecting flights would need to check-in at the airport as per normal procedures. Customers who have checked-in online and want to modify or cancel their booking, can do so up to two hours prior to departure of their flight by calling or by visiting Airport Ticketing Office.
partner airlines and ground-handlers has put into place all the key processes that ensure high quality of baggage services and a negligible lost baggage rate. Commenting on this achievement, G V Sanjay Reddy, Managing Director of BIAL, said, “By participating in this programme, Bengaluru International Airport has once again reaffirmed its commitment to delivering the highest standards of consistent and reliable service to airlines and passengers. This
BIAL receives honour for baggage handling BENGALURU International Airport Limited (BIAL) recently achieved a significant milestone. The airport has now become the first in the country and among the first few airports globally to have participated in and received certification as per the Baggage Improvement Programme (BIP) of IATA. This certification testifies that BIAL in coordination with all its
Jet extends Première One Fare pass JET AIRWAYS recently announced the extension of its highly popular domestic One Fare pass for international travel for its premiere guests, at no extra cost. This offer now becomes available on Jet Airways’ network covering the Gulf, ASEAN, and SAARC regions. Première One Fare pass holders now have greater flexibility to travel not only domestic India sectors but also select International sectors without any additional cost whatsoever within the validity of the pass. The One Fare pass is valid for six months. Each Première Class One Fare pass booklet contains four coupons with a total value of `81,088 all inclusive with all taxes. One Fare pass booklets can be purchased by individuals and organisations alike. One Fare pass coupon holders can now avail of destinations in the Far East like Bangkok, with eight flight connections from Mumbai, New Delhi and Kolkata or to Kuala Lumpur and Singapore from Chennai. On the Middle Eastern sectors, guests can avail of 22 flights options from Mumbai to Abu Dhabi, Dubai, Riyadh, Jeddah, Bahrain, Dammam, Kuwait, Muscat and Doha. Unveils “Epicurean Series” with First Class suites: Jet Airways recently launched an all-new in-flight dining service — ‘Epicurean Series’. Partnering with renowned gastronomic brands to offer fine dining experience for connoisseur travellers, the series will inaugurate onboard its long haul Boeing 777-300ER aircraft on the Hong Kong-Mumbai route. This is the first time Jet Airways has teamed up with another internationally-acclaimed establishment to offer the finest food and service in the skies to its passengers. The first
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CRITICAL ACCLAIM: BIAL has once again been recognised for the good show
partnering restaurant will be Man Ho of Hong Kong SkyCity Marriott Hotel, the Chinese restaurant brand of Marriott International, famous for dishes from the Pearl River Delta. As part of the airline’s continuous endeavour to offer world-class service for its guests, a range of varied and delectable Indian and international menu options will be offered onboard its First and Première (business) class starting from August this year. Passengers departing from Hong Kong will be served with Man Ho’s designed menu highlighting an array of sophisticated Oriental Flavours. The luxurious in-flight dining experience will be enhanced by a new line of bespoke crockery from the house of William Edwards — one of Britain’s leading and awarded ceramic designers. The design elements of the new crockery incorporate the traditional hand decoration techniques of English potters in the Stoke-On-Trent area, handed down from generations. Working mainly on special commissions, the William Edwards hand wrought tableware for Jet Airways sets the airline’s hallmark onboard service to a new level. Eyes more short-haul low-fare international flights: Jet Airways recently stated that it plans to increase domestic lowfare capacity to 80 per cent of the total fleet from present 72 per cent and may launch more budget flights for short-haul international routes. “In order to do this, the airline is considering the possibility of merging its low-fare service brands called Jet Konnect and JetLite. We may also consider more low-fare flights for short-haul international routes. Globally, there is a progressive transfer of capacity from full service to low-fare carriers,” said Jet Airways CCO Sudheer Raghavan.
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participation and result demonstrates the passion of the workforce towards being the front runner in airport efficiency initiatives and reflects our commitment to continuous improvement.” Adding to this announcement, Sunil Chopra, Assistant Director IDFS, India & Nepal said, “In our ever-changing air transport industry, the true leaders are those who champion change for the better and set standards for the rest to follow. It is also the simplest prescription for success, which Bengaluru International Airport has embraced. The certificate is but an acknowledgement of that true leader among airports around the world. By implementing solutions pursuant to our Baggage Improvement Programme, BIAL has set the standard for other airports to follow, not merely in India but around the world.”
Kingfisher bullish on EBITDA profit KINGFISHER continues to improve operations with another quarter of EBITDA profit. The airline has been able to achieve these results despite a 40 per cent increase in the price of Aviation Turbine Fuel (ATF). Kingfisher Airlines’ total revenue for Q1 FY12 was `1,911 crore which is a 15 per cent improvement over the same quarter last year. Increase in capacity, higher load factors, and improvement in yield contributed to the revenue growth. The momentum in Indian aviation industry has continued with a strong demand growth of 15 per cent in Q1 FY12. Even though the capacity growth at 19 per cent slightly outpaced the demand growth, Kingfisher effectively capitalised on its strengths to achieve a 4 percentage point increase in domestic load factor. In the same period, industry load factors experienced a decline of 2 percentage points. For the quarter ended Q1 FY12, EBITDA was `252 crore vs. `340 crore in FY10. EBITDA margin for the year was at 13 per cent vs. last year at 20 per cent. This profitability was achieved despite additional fuel cost burden of `260 crore. Kingfisher Airlines reported an operating EBITDA profit of `4.6 crore in Q1 FY12 compared to a profit of `99 crore in Q1 FY11. The overall EBITDA margin for the quarter was 0.2 per cent. Growing maturity of international routes was a major contributor to the improvement as the EBITDA loss on international operations reduced to `40 crore in Q1 FY12.
SpiceJet to operate to new destinations SPICEJET recently announced the commencement of its muchanticipated Q-400 operations by opening bookings for the first phase. In this phase, SpiceJet will connect Hyderabad to seven TierII and Tier-III destinations-Aurangabad, Bhopal, Indore, Mangalore, Rajahmundry, Tirupati and Vijayawada. SpiceJet will be commissioning a brand new fleet of the latest Q400 NextGen turboprop aircraft from Bombardier which have been ordered to cater to enhance e air connectivity to Tier-II and Tier-III towns. SpiceJet will also be adding routes within its existing destinations using the Q400 aircraft and will now operate direct flights from Hyderabad to Goa, Madurai, Nagpur and Pune and Bangalore to Vizag. The carrier will also be flying on three currently unconnected routes — Hyderabad-Mangalore, Hyderabad-Aurangabad and Vizag-Tirupati. Announcing this development, Neil Mills, Chief Executive Officer, SpiceJet said, “We decided to strategically focus on improving air
GOOD MOVE: Loyalty passengers of SpiceJet will be the happier lot.
connectivity in Tier-II and Tier-III towns as we believe there is a large market in India which is yet to be touched by the benefits of the aviation revolution. With the launch of our Q-400 turbo-prop operations, Kalanithi Maran’s vision to offer extensive domestic coverage to SpiceJet passengers in Tier-II and Tier-III cities is now being realised. We are very happy to be entering this new phase of growth, which we believe holds the future of the aviation industry in the country.”
INNOVATING IDEA: Shop n Collect service may prove a boon to the travellers.
DDF launches Shop n Collect service DELHI DUTY Free announced the launch of its new Shop n Collect service. The Shop n Collect service is perfect for the travellers that want to travel light and want to take advantage of the amazing limited period special offers. Said Delhi Duty Free Services Spokesperson, “A year of operations has given us the understanding that travellers usually don’t want to carry extra shopping bags throughout their journey and at arrivals they don’t have much time to explore. Keeping this in mind we have now launched the shop-n-collect service wherein travellers would be able to order their favourite duty-free products from departures and can collect it later on their return at arrivals. The facility will not only provide the traveller the convenience of shopping but the benefit of great offers and also ensure a lot of time saving for them.” The traveller can simply use this service by contacting the retail team members at DDFS departures highlighting the products they want and paying for the same. The goods will be securely stored, transferred to arrivals and while arriving one can conveniently pick up their goods from our dedicated shop-n-collect counter at Arrival shop. It’s a free service.
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INTERNATIONAL AIRLINES Qatar touches Kolkata
Emirates fare treat for Australia EMIRATES AIRLINE recently introduced a delightful offering for Indian travellers to experience Australia. The airline introduced attractive fares to various Australian points starting August 2011 until November 2011. Passengers travelling from India can now choose from attractive one-way or return economy class fares while travelling to Brisbane, Sydney, Melbourne and Perth via Dubai. Travellers from Delhi can book either a one way economy class fare at `27,890 to Perth or a return economy class fare at `42,900 to Perth exclusive of taxes. Speaking on the occasion Orhan Abbas, Vice-President, India and Nepal, Emirates Airline, said, “We have always introduced attractive offers within the business cycle based on the opportunities that exist and this offer to the East is no different. We hope travellers to Australia whether on leisure, business or for education benefit from these offers and that, we receive a good response from them.” Vinay Malhotra, Regional-Manager, North and East India, Emirates Airline said, “Australia has grown to become a popular leisure destination to a large number of Indians and also the student community. With our special one-way and return fares to Australia and the special baggage allowance for students, we aim to provide our passengers greater value for money.” Touches Denmark: Emirates recently entered a new chapter by starting flights to Denmark. Aboard the inaugural flight from Dubai were Richard Vaughan, the airline’s Divisional Senior Vice-President, Commercial Operations Worldwide; Salem Obaidalla, Senior VicePresident, Commercial Operations, Europe and Russian Federation; Pradeep Kumar, Senior Vice-President, Cargo Revenue Optimisation and Systems and Luc Delcomminette, Vice- President, Arabian Adventures. The guests on the first flight included Claus Rubenius, founder of Rubenius; Jens Lund, Chairman of the Danish Business Council in Dubai; Lars Oestergaard Nielsen, Managing Director, Maersk Kanoo (UAE) and an international media group. “Copenhagen brings a new and exciting dimension to the Emirates’ network,” said Richard Vaughan, Emirates’ Divisional Senior Vice-President, Commercial Operations Worldwide. “Emirates’ passengers from Scandinavia no longer need to travel to Germany to join our flights. They can travel directly from the Danish capital all the way to the Far East and Australasia, via our ultra-modern hub in Dubai.” “This new link opens up Scandinavia for Emirates on the cargo side too,” said Pradeep Kumar, Emirates’ Senior Vice-President, Cargo Revenue Optimisation and Systems.
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QATAR AIRWAYS broadened its network in India with the launch of daily non-stop passenger service from Doha, Qatar, to Kolkata, India. The inaugural flight, carrying a full load of passengers including international media, arrived on July 28 at Kolkata’s Netaji Subhash Chandra Bose International Airport to a water cannon salute welcome following its five-hour flight from Doha. The addition of flights to Kolkata on the Qatar Airways growing global network strengthens the airline’s presence in India, where it now operates 95 flights a week, offering North American customers a seamless travel experience to 12 Indian cities. Speaking about the launch of Kolkata, Qatar Airways CEO Akbar Al Baker said, “Introduction of our latest destination has been well timed to coincide with the busy holiday season as families travel to and from India, one of our most important markets. As our 12th Indian gateway, the addition of Kolkata demonstrates Qatar Airways’ commitment to one of the world’s fastest growing economies with India’s rapid pace of development prompting the need for more flights to serve rising demand for air travel to and from the country.”
BRANCHING-OUT: Inside view of the Qatar Airways.
Air Arabia reaches 20-million passenger mark Air Arabia recently announced that it had welcomed onboard its 20millionth passenger. In India, Air Arabia connects Sharjah to 13 destinations: Ahmedabad, Bengaluru, Calicut, Chennai, Coimbatore, Delhi, Goa, Hyderabad, Jaipur, Kochi, Mumbai, Nagpur and Thiruvananthapuram. Air Arabia’s first flight took off from Sharjah, UAE, to Manama, Bahrain, on October 28, 2003, marking the introduction of the LCC concept to the Middle East. At the time, the carrier served five regional destinations. By the end of its first 12 months of operations, the pioneering airline carried 500,000 passengers to 16 different destinations. “Eight years ago — when our first flight took off from Sharjah International Airport, at a time when the low-cost model was just introduced to the region — few of us could have imagined the day when we would cross the 20-million passenger mark,” said Adel Ali, Group Chief Executive Officer, Air Arabia. “The tremendous growth of Air Arabia since then is testament to our single-minded focus on providing our passengers with a growing range of destinations, great service and value-for-money fares. Today, despite serving over 20 million passengers, we remain a young company committed to further expanding our horizons,” he added. Announces Q2 2011 profit: Air Arabia recently announced its financial results for the three months ending June
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30, 2011, demonstrating steady growth in profit, revenue and passenger traffic. Air Arabia’s net profit for the three months ending June 30, 2011, which rose to `620,813,151, an increase of 2 per cent compared to `608,640,345 in the corresponding period in 2010. This increase in profitability exceeded analyst expectations, showing the strength of the airline’s core business amidst tumultuous market conditions. The airline served 1,161,944 passengers in the second quarter of 2011, an increase of 5 per cent compared to 1,108,310 passengers in the same period last year. In the three months ending June 30, 2011, Air Arabia’s average seat load factor — or passengers carried as a percentage of available seats — maintained its impressive rate and stood at 82.5 per cent.
Cathay continues fleet modernisation CATHAY PACIFIC Airways recently announced that it is continuing to make significant investments to modernise and grow its fleet, entering into an agreement with Boeing to purchase four Boeing 777-300ER passenger aircraft and eight Boeing 777-200 Freighters. The 12 new aircraft have a list price of about HK$25.6 billion but will be acquired at a considerable discount, as is the usual practice in such transactions. The aircraft are expected to be delivered to the airline between 2013 and 2016 and will be powered by GE90 engines. The airline already operates 22 Boeing 777-300ERs on its key long-haul routes, and with the latest purchase will have another 28 on order for delivery up to 2015. The airline plans to retire the older aircraft in its fleet, including 21 Boeing 747-400s and 13 Airbus A340-300s, before the end of the decade as it progressively takes delivery of new-generation aircraft that will provide much greater fuel and operating cost efficiencies. The 747-8s, with a payload of nearly 130 tonnes, will be used almost exclusively on routes between Hong Kong and North America.
BA unveils top holiday destinations BRITISH AIRWAYS Holidays has unveiled the destinations that have received the most bookings for August. The package tour operator arm of British Airways said the main holiday hotspots this
Virgin Atlantic returns to profit VIRGIN ATLANTIC recently announced an £100m investment in product development as it reported a strong year of trading and a return to profit. Despite the winter closure of London Heathrow and the ash cloud crisis costing the business a combined £40m, strong growth in business traffic and solid load factors across all cabins delivered a good recovery. Revenues have increased on the airline’s route from London Heathrow to Delhi, India, driven largely by sales in India. Demand remains high with a positive 80 per cent seat load factor. Michael Burke, Country Manager in India said, “Virgin Atlantic in India has made a positive contribution to the airline’s overall 2010/11 results. Loyalty to Virgin Atlantic continues to grow. Last year, we saw a 13 per cent growth in our Delhi to London business reflecting a rebound in confidence particularly in the business travel sector.” Steve Ridgway, Chief Executive of Virgin Atlantic, said, “We have demonstrated the resilience of our business by weathering the toughest economic period for aviation and have now returned the business to profit. A sharp recovery in the first half of the year has been tempered by more challenged trading in the latter period due to increased capacity in the market and high fuel prices.”
summer season were Orlando, Barbados, Las Vegas, St Lucia and Mauritius. The most popular short-break destinations are New York, Rome, Venice, Barcelona and Jersey. British Airways Holidays Managing Director Claire Bentley said the carrier was witnessing an increased demand from customers in the UK for last minute overseas holidays. She said, “Thanks to a range of new leisure destinations, including Marrakech and even more flights to the Caribbean, customers can be sure we can help them get away for their perfect summer holiday.”
Osaka: AirAsia X new destination
on the brand new A330 aircraft. The seats feature universal AIRASIA X recently announced its second destination in power sockets, adjustable headrests and built-in personal Japan after Tokyo. The latest international route from Kuala utilities such as tray table, drink holder, reading light and Lumpur to Osaka, Japan; will be the airline’s sixteenth privacy screen. This new improvement offers unmatched destination to date. AirAsia X will commence comfort to the guests and position AirAsia as the services and fly direct to Kansai International market leader, further bolstering the brand as the Airport, Osaka from November 30, 2011 onwards epitome of innovation and excellence. with four non-stop weekly services between Kuala To charge check-in fee: AirAsia will charge Lumpur and Osaka. The Osaka service will be $3.3 check-in fee for flights booked from operated on the Airbus A330-300 aircraft with a September 21 onwards to counter rising jet fuel configuration of 12 premium fly flatbeds and 365 prices. The surcharge would only affect passengers economy seats. using the conventional check-in counters, not the Azran Osman-Rani, Chief Executive Officer, web or self-service kiosks. The airline said the AirAsia X, said “The Osaka service marks AirAsia surcharge was to offset escalating fuel costs and Azran Osman-Rani X’s second foray into the Japanese market. In less encourage passengers to check in online. The than one year since the commencement of the airline’s airline said the additional charge was part of its plan to inaugural flight to Tokyo in December 2010, we are pleased to aggressively grow revenue through ancillary income and be adding one of Japan’s commercial and economic hub into services, instead of transferring the full cost, amid escalating jet our growing international network. The four times weekly fuel prices to its passengers. However, the charge is not applicable flight is expected to help meet demand from business and for passengers opting for self-check in. New self-service options will allow passengers to check-in online and via mobile for leisure travelers between, South East Asia and Japan.” Guests flying on this new route will have the chance to AirAsia X flights up to four hours before departure and AirAsia experience the new comfortable ‘Premium fly flat bed seats’ flights up to one hour before departure. CRUISING HEIGHTS September 2011
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TRAVEL & TOURISM Lantern Festival: Malaysia’s pride THE MOONCAKE Festival, also known as the Lantern Festival, is a harvest festival that celebrates family unity. This festival is believed to have originated from the ancient ceremony of making a sacrifice to the Moon Goddess for the year’s end harvest. The festival is celebrated with family gatherings, prayers, distribution of Moon Cakes and lantern parades by children. Weeks before the festival, families present gifts of moon cakes to friends and elders to foster better ties with them. Offerings of the harvest such as apples, pears, peaches, grapes, pomegranates, melons, oranges and pomelos are made to the Moon Goddess. Other offerings include cooked and baked items including
STRATEGICALLY LOCATED: Inside view of a room at Hilton at Mumbai
ITC Mughal Agra unveils Khwab Mahal KHWAB MAHAL or the Palace of Dreams, a special wing was recently unveiled by ITC Mughal Agra. The Khwab Mahal offers 42 opulent suites and rooms where the ultimate endeavour has been to recreate a Mughal paradise for today’s contemporary Mughals. Designed with this in mind, it offers an ambience, which celebrates the pomp and perfection that was the hallmark of the legendary Mughal dynasty. The new wing takes inspiration from ITC Mughal’s awardwinning Kaya Kalp-The Royal Spa, where rejuvenation comes through an experience of unmatched luxury and total well-being. Located close to the spa, the pomegranate theme of the spa has been subtly repeated in the décor of Khwab Mahal. Unlike the spa, where the vibrant red of the pomegranate is the theme colour, the motif is repeated in the décor in the soft furnishings in varying shades of gray, considered the most fashionable colour today. CULTURAL EXTRAVAGANZA: Lantern Festival is one of the most awaited festivals of Malaysia.
Moon Cakes, Cooked Taro, and Water Caltrop, a type of water chestnut resembling black buffalo horns. And of course the ‘Tang Yuen’, which is made from glutinous rice. The lantern parade includes various animal-shaped lanterns beautifully made of coloured cellophane paper and decorated with coloured glitter. After sunset, candles lit inside these lanterns make for a memorable sight. The Lantern Festival is celebrated on the 8th moon, the 15th day of the Chinese Lunar Calendar, which will be on September 12 for 2011, around the same time as the Autumn Equinox.
SOTC announces exclusive package SOTC recently announced the launch of an exclusive four days package for travellers to feel the adrenaline rush at the Formula 1 - Singtel Singapore Grand Prix. Starting September 23-26, this package is designed to experience Singapore Grand Prix weekend festivities at its best. Travellers can witness the city with electrifying parties, thrilling race-themed events and the splendid art, culture and architecture of the city. SOTC offers a variety of tailored 4 days 3 nights’ packages for the travellers. The basic packages include accommodation stay and Zone 4 walkabout pass to Marina Bay circuit starting for `27000 per person. The premium packages include accommodation in selective hotels with options of hospitality suite combined with passes for Pit and other grandstands. SOTC heightens the Grand Prix experience with entry to the exclusive after race F1 party at Amber Lounge and the most awaited Linkin Park live concert on September 25 post the main race event. The package includes return airfare, hotel accommodation, meals as per itinerary, access to the most happening after race parties and private return air transfers in Singapore.
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ITQ and Taj Hotels announce joint promotion IN A NEW partnership with Taj Hotels and with the aim of increasing awareness on GDS adoption, InterGlobe Technology Quotient (ITQ) recently announced an all-exclusive promotion for IATA and non-IATA travel agents across India. The promotion would incentivise travel agents, who book for Taj Hotels through Travelport Galileo and Travelport Worldspan GDS. This pan-India promotion would be valid till September 30, 2011, and prizes have been kept slab-wise keeping in mind the requirements of travel agency counter staff. The initiative was further substantiated by the Chief Commercial Officer (CCO), InterGlobe Technology Quotient (ITQ) Marco Gorin, who said, “In order to promote booking of hotels through GDS, we devised this reward opportunity for the travel trade. The GDS is arguably the most influential link in the travel value chain. For our partners, the Taj Hotels, we do hope to see some positive results.”
HitchHiker and BIS join hands Everyone who has own airfares or has negotiated fares, knows that the efficient administration of net fares is a challenge. Depending on the amount and complexity of the tariffs, companies load and manage their fares themselves or outsource this service. HitchHiker’s Visual Fares Entry is a professional fare loading and distribution tool used by many international customers for more than 15 years. The application can be utilised internally or through a HitchHiker service partner. Many HitchHiker customers have already outsourced this service successfully. Bird Information Systems (BIS) has partnered with HitchHiker. BIS is a CMMI Level 3 certified company, part of the travel conglomerate The Bird Group. The Bird Group has over 40 years’ experience in the travel, tourism and aviation market. The Indian Travel Technology Specialist takes care of the loading,
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SNIPPETS administration and distribution of net fares. This service is attracting to airlines and consolidators as well as to tour operators and portals. They can have all their airline contracts loaded by BIS and are able to outsource the complete administration of their fare database. To export the fares the HitchHiker VFX format and the STADAF (standard format) are available. No matter if tour operator, consolidator or other net fares, all tariffs can be distributed target-oriented in the desired format to the customers. Amadeus bags Superbrands Award yet again: Amadeus India recently honoured with the Superbrands Award for the third consecutive time. Ankur Bhatia, Managing Director, Amadeus India received the coveted award from Montek Singh Ahluwalia, Deputy Chairman, Planning Commission. Speaking on the achievement, Ankur Bhatia, Managing Director, Amadeus India said, “It is a very proud moment for Amadeus India to be honoured with this award third time in a row. I am extremely grateful to the organising committee to have recognised and appreciated the discipline of branding at Amadeus India. This fortifies that Amadeus along with its commitment towards developing ONE MORE IN THE KITTY: Ankur breakthrough products and Bhatia, Managing Director, Amadeus solutions for its partners is India receiving the award from Montek Singh Ahluwalia, Deputy Chairman, also acknowledged for its Planning Commission. brand excellence.” Thomas Cook India partners with Amadeus: Thomas Cook (India) Ltd and and BirdRes recently partnered to provide visa information at the click of a button. Through this association, travel agents and corporations who are registered users of the Amadeus Selling Platform can now access visa information by obtaining a user ID and password from Thomas Cook India’s Visa and Passport Service “Knowledge Centre”— a unique online visa content platform. This solution is called “BirdRes Visa” and is available as a Smart Tab on the Amadeus Selling Platform. The users have the possibility of using this solution within Amadeus Selling Platform through the Amadeus Smart tab. Along with relevant and updated visa information, the users can also download visa application forms through a simple and easy interface. The portal also provides detailed information about visa
procedures of the country of travel, documentation and checklists, visa fees, VFS/IVS charges, holiday list, consular addresses and also the processing time of the visa. The information available on this site is useful for an Indian national travelling from India to other countries. Moreover, registered users can also benefit from conveniences like timely e-mail updates during the subscription period.
DELICACY: Chili celery prawn with pan fried noodles.
Claridges goes gastronomic The Delhi Claridges’ iconic restaurant Sevilla is holding a special promotion of food from the Mediterranean. The ‘Call of the Mediterranean’ is a showcase of the mesmerising kaleidoscope of colours and contours that gives the region its unique charm. Be it travel destinations, art forms, cuisines or wines, the Mediterranean is home to some of the finest things in the world. The chefs at Sevilla have been conjuring the magic of authentic culinary gems from the Mediterranean region for an exclusive fine dining experience. During the promotion, Sevilla will be serving innovative recipes prepared with ingredients specially brought in from Canary Island, the Mediterranean sea region and south west France. The menu features authentic delicacies based on truffles, caviar, exotic varieties of fish and meat. Wood-fired oven-roasted swordfish play with handpicked Mediterranean wines and savoury desserts. Meanwhile, at Sevilla’s sister Chinese restaurant, Jade, Chef Yang brought in cuisines from the Cantonese, Sichuan and Hunan regions. Made with handpicked spices and ingredients from China, Chef Yang put together a menu with a delightful selection of dishes ranging from dimsums to appetizers, soups, main courses and desserts.
A P P O I N T M E N TS PATRICK YEUNG IS CEO
VIKAS KAPAI JOINS HILTON
Dragonair recently announced the appointment of Patrick Yeung as the airline’s next Chief Executive Officer. Yeung succeeded James Tong in the role. Earlier, Yeung was Director, General Manager and Chief Representative of Patrick Yeung John Swire & Sons (China) Limited overseeing the group’s development and investment strategies in Mainland China. In the past, Yeung amassed considerable experience in aviation sector having worked with the Cathay Pacific Group for a number of years. Expressing excitement after taking over as CEO, he said, “The Dragonair team has never forsaken its peopleoriented culture and customer-minded approach to service and has soared to new heights in recent years.”
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Vikas Kapai has been appointed General Manager of Hilton Mumbai International Airport in India, 171-room hotel, which is just a five-minute drive from the international airport, 15 minutes from the domestic airport and Vikas Kapai within easy access of the commercial, shopping and entertainment districts. Announcing the appointment, Neeraj Chadha, Regional General Manager, Hilton Worldwide-India, said, “On behalf of Hilton Worldwide, I welcome Vikas to this new assignment and wish him the very best. With his extensive commercial background and deep understanding of the market, we are confident Vikas will lead the team at the hotel to great success.
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BACK PAGE
Sir Richard gets a
pilot for his mothership
LUCKY BLOKE: David Mackay, the pilot designate in front of Virgin Galactic plane.
eady for the blast-off! Well, we may not be in this part of the world but Sir Richard (of the Branson name) is. For his Virgin Galactic’s first foray into space in 2013, the good Sir Richard has chosen David Mackay as the chief pilot. His passengers and there are 400 who have signed up for the dare have paid a whopping £125,000 for the weightless flight 100km above the earth.
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GREATNESS AT ITS BEST: (Above) SpaceShipTwo spacecraft flying during the test trial and (below) spacecraft on the runway.
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David Mackay incidentally is a true blue Englishman from Salisbury, Wiltshire. He has cherished an ambition to fly to the moon after he saw the 1969 moon landings on TV as a schoolboy. “When I was 12, I saw the Apollo moon landings and I thought that was really fantastic and exciting and thought that’s what I want to do.” So he took the first step toward becoming an astronaut and joined
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the RAF where he spent well over 15 years. He then quit the force to join Virgin Atlantic as a captain in 1995. The Virgin team, comprising Mackay and three others, are busy training for their flight at the Mojave Desert in California in the Virgin WhiteKnightTwo ‘mothership’ that will act as the stage for the launch of the SpaceShipTwo spacecraft carrying those 400 passengers. Mackay has wide experience of piloting different kinds of planes. He joined the Shuttleworth Collection in 1994 and started flying historic aircraft in 1999 (the Shuttleworth Collection is an aeronautical and automotive museum located in Bedfordshire, England and is one of the most prestigious in the world due to the variety of old and well-preserved aircraft). For the sub-orbital flight, his mothership will take an hour to reach an altitude of 50,000 ft after which the spacecraft will be launched. When the spacecraft reached 360,000 ft above earth, the passengers will be told to unstrap their seatbelts and fell the weightlessness of space. Way to go, Dave!