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PUBLISHER’S NOTE

Happy reading! or all those who were at the first edition of the India Aviation in October 2008, there were many remarkable sidelights that actually overtook the real event: the airshow. For starters, there was the amazing spectacle of Vijay Mallya and Naresh Goyal cavorting around like freshly-minted lovers (aka Dostana) in a golf cart at Begumpet Airport. The duo announced an alliance between Kingfisher Airlines and Jet Airways and said they were coming together to face the recession that had come as a fierce reality check for the gungho, couldn’t-care-less Indian aviation fraternity. The paparazzi thought this was the story and that’s what made the front pages the next morning. To offer ‘ahuti’, if one may be permitted to use the word for want of a better one, Naresh Goyal sacked 800 cabin crew from his airline the same day. The Shiv Sena and the MNS played havoc in Mumbai, the young kids went crying before a gaggle of TV cameras who loved the soap opera dimensions of the story and before the day turned into night, a tearful Goyal went before TV cameras to tell the world that no one would be sacked and that the girls and boys were like his own children. A fuming Praful Patel, smiled and made his way through the turbulence. On Day Two came news that Air India was also planning a big ticket VRS and giving marching orders to close to a 1000 employees. The then Chairman Raghu Menon cancelled his news

It’s rare to have a Minister continue for so long. In that sense, Civil Aviation has been fortunate to have continuity at the top. But that is only useful if issues like Air India are given longterm solutions.

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conference and Praful Patel spent most of his time reassuring the media that there was nothing of that sort even on the distant horizon. So where are we 18 months down the line? For starters, nobody knows what the fate of the great JetKingfisher alliance (ask the two and they’ll tell you it’s a work in progress) is. In fact, it looks a distant dream now that Kingfisher is joining oneworld. As for Air India, the turbulence continues. And Raghu Menon has moved on. He was sacked months after the airshow and is now someplace else. Air India continues to grope for solutions. The only silver lining on the horizon is that the severe slump is slowly but surely dissipating and its looks that the sector should revive by late 2010 or early 2011.That apart, it’s rare to have a Minister continue for so long. In that sense, Civil Aviation has been fortunate to have continuity at the top. But that is only useful if issues like Air India are given long-term solutions. It’s been one roller coaster ride putting this special edition together. Between the covers you will find some of the best and the brightest in the aviation business speaking their mind out. We had a blast putting it together. We hope you enjoy reading every bit of it. Happy reading!

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srini@newsline.in

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AVIATION OUTLOOK 2010 AVIATION OUTLOOK 2010

Aviation outlook: 2010 has begun on a promising note. The lows that the sector experienced in 2008-09 are being wiped away as domestic traffic has started growing. The expectation is that the sector will post an expansion of 15 per cent or more in 2010/11 with the industry returning to its long-term growth trajectory.

V P Agrawal, the Chairman, Airports Authority of India, details the ambitious development plans that include renovation of older airports, Ground Handling bidding, training ATC personnel in addition to making Chennai and Kolkata airports world-class.

22 MINISTER PATEL ON 2010……… P6 Civil Aviation Minister Praful Patel has had a long innings at the aviation ministry. He has seen the boom and has guided the sector through the low. Now that things are looking up, the minister is confident that in 2010, flying will once again become the preferred choice of travel for the people of the country. C R U I S I N G

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Dr Naseem Zaidi, the Director General, DGCA, speaks about how he wants to completely transform the DGCA from an organisation mired in opacity to one that is transparent, above board and at the cutting edge when it comes to regulating the safety environment in the Indian skies.

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AVIATION OUTLOOK 2010 AVIATION OUTLOOK 2010 Yashwant Bhave, Chairman of the country's first Airport Economic Regulatory Authority, has his hands full. In one of his rare interviews, he spells out the Authority’s plans.

CRUISING HEIGHTS

Trends 2010: After a turbulent couple of years, 2010 should be a more positive year for Indian aviation, provided the Indian carriers remain disciplined on costs, capacity and pricing.

R KRISHNAN

70 CARGO............................. P149 2010 has brought with it hope and opportunity. While carriers are looking at starting and expanding cargo services, the country could see a full-service freighter operation starting.

Air India’s fortunes: Air India CMD Arvind Jadhav points out that the national carrier will be able to overcome the hurdles and emerge stronger than ever.

Dr Dinesh Keskar, President, Boeing India, says the worst is over and things will only get better. 2010 will be a year of recovery, with 2011 as the year when airlines could return to profitability.

110 TIACA’S CLARION CALL............. P179 The International Air Cargo Association has made its exploratory foray into India and the country’s air freight sector should consider joining the association. Form IV (See Rule 8)

CRUISING HEIGHTS

1. Place of Publication 2. Periodicity of Publication 3. Printer’s Name Whether Citizen of India? (If foreigner, state the country of origin) Address

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New Delhi Monthly K. Srinivasan Yes Not Applicable

4C Pocket-IV, Mayur Vihar, Phase-I, Delhi-110091 K. Srinivasan Yes Not Applicable

4. Publisher’s Name Whether Citizen of India? (If foreigner, state the country of origin) Address

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5. Editor’s Name Whether Citizen of India? (If foreigner, state the country of origin) Address

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4C Pocket- IV, Mayur Vihar, Phase-I, Delhi-110091 K. Srinivasan Yes Not Applicable

4C Pocket- IV, Mayur Vihar, Phase-I, Delhi-110091 : 4C Pocket- IV, Mayur Vihar, the Phase-I, Delhi-91 1. Renu Mittal 2. K. Srinivasan

6. Name, Address of individuals who own newspaper and the partners or shareholders holding more than one per cent of the total capital I, K. Srinivasan, hereby declare that the particulars given are true to the best of my knowledge and belief. Date: 26 February, 2010 sd/K. Srinivasan Publisher

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Editor-in-Chief K SRINIVASAN Managing Editor

TIRTHANKAR GHOSH Consulting Editor Co-Ordinator Editor

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Kiran Rao, the Indian market is strong, asserts Kiran Rao, Executive Vice-President, Airbus SAS, and the only thing which the country needs to do is ramp up the infrastructure to catch up to the world-class level.

VARUN MALHOTRA

MRO — Difficult times ahead: At one point of time, almost all airlines in the country wanted a large slice of the MRO pie. But the recession and the fuel price hike upset the plans. There are still a few optimistic players.

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GH — On the backburner: The Ground Handling Policy has been a non-starter ever since it was announced. The issues that keep popping up could have been sorted out when the new GH policy was formulated and approved by the Union Cabinet in 2007. Cover Design: Ruchi Sinha

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All information in CRUISING HEIGHTS is derived from sources we consider reliable. It is passed on to our readers without any responsibility on our part. Opinions/views expressed by third parties in abstract or in interviews are not necessarily shared by us. Material appearing in the magazine cannot be reproduced in whole or in part(s) without prior permission. The publisher assumes no responsibility for material lost or damaged in transit. The publisher reserves the right to refuse, withdraw or otherwise deal with all advertisements without explanation. All advertisements must comply with the Indian Adver-tisements Code. The publisher will not be liable for any loss caused by any delay in publication, error or failure of advertisement to appear. Owned and published by K Srinivasan 4C Pocket-IV, Mayur Vihar Phase-I, Delhi-91 and printed by him at Nutech Photolithographers, B-240, Okhla Industrial Area, Phase-I, New Delhi-110020.

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Feel the magnificence of the

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art

From the classical to the medieval, from gothic to early renaissance and finally from high renaissance to mannerism and baroque styles of art, Italy has the best that the world can offer! o be in Italy and not tread its magical art trails borders on the sacrilegious! This is the country that gave birth to Christian art and the Byzantine legacy of mysticism and spiritualism that flowers in monasteries, churches and the medieval cities of Assisi, Siena and Orvieto. Trace the transition from the medieval to the modern, in Giotto’s Florence and the creative genius of Brunelleschi, Donatello, Masaccio and Sandro Botticelli, whose works are scattered across the length and breadth of the country. Marvel at the works of the renaissance period and feel the humanism and moral drama depicted in the masterpieces of Michelangelo, Leonardo, Raphael and Titian. While this Mecca of art and architecture has its epicentre in the magnificent cities of Rome, Florence and Venice, the tourist will stumble on sublime art even in rustic little villages! There are so many artistic treasures, spread over the whole country, that defining Italy as an open-air art gallery is hardly an exaggeration. Currently, such treasures of art and culture make Italy the first country in the world for its number of sites included in the UNESCO’s World Heritage List. Found almost everywhere and referring to every historical era, they are preserved and protected in hundreds of archaeological sites and over 3,000 museums scattered throughout the country. Tourists, visitors and academics admire and study these remnants — large and small — of centuries gone by and often take inspiration from it. Theatres and other buildings date back to Greek and Roman times; entire cities, roads and districts, once buried, have today been brought back to the light by patient and skilful excavations; temples, statues, coins, inscriptions, and objects of daily use. In Italy, an exceptionally rich store of memories awaits to

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5 remind us all of Europe’s glorious past. The imposing and often elegantly embellished Romanesque and Gothic cathedrals — built after the eleventh century — are found mainly in the Centre and North. The ancient religious architecture in the southern regions amounts instead to an enthralling crucible of Byzantine, Muslim and Norman elements. In all the regions, then, in every city and town we will find relics — from buildings to the personal affects — of a deeply rooted artistic tradition that is spread throughout Italy. Renaissance art was the great cultural movement which began in Italy in the 15th century and which profoundly influenced the history of culture and European civilisation as a whole. The renaissance culture placed man and the secular world again at the centre of the universe after the marginal position Man was afforded with respect to the gods during the difficult centuries of the medieval period. Those who exemplified it became icons of culture such as Leonardo da Vinci, Michelangelo Buonarroti, Masaccio, Botticelli, Piero della Francesca, Mantegna, Donatello, Raffaello, Antonello da Messina, Bramante, Correggio, Tintoretto, Giorgione - all artists, sculptors, painters or architects who became popular as the world’s greatest

exponents of artistic genius. Their works are the source of a constant attraction for tourists and academics alike, people who are curious to unveil secrets of that art which, even if produced today, would result as an expression of breathtaking creativity. For the arts and architecture, the renaissance is synonymous with masterpieces, inventive genius and creativity. Philosophers like Giordano Bruno and Tommaso Campanella, scientists like Galilei, scholars like Machiavelli, poets like Ariosto, musicians like Palestrina and Monteverdi: great men of the renaissance who, with their modern vision of the world and society that was shared and supported by a rich and enterprising bourgeoisie, succeeded in radically changing forever the way of thinking, living and creating. The great renaissance season left its magnificent marks everywhere in Italy, not only in the great cities like Florence, Rome, Venice, Milan and Naples but also in many other centres of Italy’s regions. Paintings, statues, churches, buildings, palaces and fountains: a sparkling series of signs through which the visitor can ideally reconstruct a civilisation that really did change the world.

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“We’ve set

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On 2009

On India Aviation 2010

2009 has been an eventful and tumultuous year for the Civil Aviation sector worldwide. We can draw satisfaction from the fact that the worst is over. Things are turning for the better, which is borne out by the rebound in air traffic figures from October 2009 onwards. I sincerely hope that things will stabilise in 2010 and flying will once again be the preferred choice of travel for people.

The India Aviation 2010 will be a very important milestone as we will be partnering France. France has a huge aviation sector and will be a meaningful partner, with its focus on Europe and the sub-continent. We have set the ball in motion for the development of the Indian aviation sector and soon we will be ranked third or fourth in the world. We are also committed to make aviation safer and cleaner with the co-operation of other countries like the US. This will be a show of the country’s aviation and the potential it holds in the future. It will also act as a stimulus in providing the much needed business opportunity to the stakeholders in the industry to tide over the current recessionary times.

On 2010

We hope things get better and there is a cautious optimism with these numbers. This revival may help airlines become sustainable with better loads and yields.

The aviation industry is on the road to recovery though not as quickly as forecasted before. Losses caused by high oil prices alone have been around Rs 10,000 crores in the Indian aviation sector. This has been further compounded by the economic slowdown, 26/11 terrorist attacks and various cost-cutting measures by both the corporate and the government sector. The sector has seen 30 per cent drop in air traffic though there has been slight improvement in the last 2-3 months. However, there is still a long way to go. There was a drop of 30 per cent in passenger load factor leading to losses in many top airlines in the world including British Airways. But last quarter of 2009 has again raised some hopes of revival in the country. We hope things get better and there is a cautious optimism with these numbers. This revival may help airlines become sustainable with better loads and yields. That is important for continued connectivity in our huge country.

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On the performance of Indian companies in the aviation sector Indian companies based in Bengaluru and Mysore have taken up major work for leading international aviation companies. Had India not notched up a faster growth in aviation sector and acquired a large number of aircraft, its capability in aviation engineering would not have been noticed. The offset clause of defence and civilian aircraft purchases has also helped foreign majors to look at us.

On Air India We are broadly looking at equity infusion linked to its monthly

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Praful Patel, Minister, Civil Aviation has been in the cockpit for the last six years. He has seen the highs and guided the sector through the lows. Now that things are looking up, the minister is confident, as he emphasised in this interview, that this year, flying will once again become the preferred choice of travel for the people of the country.

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ANNOUNCING THE EVENT: Civil Aviation Minister Praful Patel (centre) with Civil Aviation Secretary M Madhavan Nambiar (right) and Boeing’s Dr Dinesh Keskar (left) at a meet to announce India Aviation 2010.

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India has 0.02 trips per capita as compared to 0.1 of China and 2.2 of USA. With over a 300 million strong middle class, the demand is expected to increase by 8.5 per cent per annum till 2015.

performance parameters. This is not the total equity infusion being looked at for Air India. The GoM on the civil aviation sector, headed by Finance Minister Pranab Mukherjee has agreed to support Air India in its restructuring process. The ministry has initiated the measures to cut expenditure, increasing revenue and rationalising routes and also to reduce Air India’s high cost debt with low cost debts. AI was given a costcutting target of Rs 2,000 crore by March end but the target is unlikely to be achieved. So far costs have been cut only by Rs 700-800 crore. Air India has rescheduled the delivery of three Boeing 777-300 Extended Range (ER) aircraft beyond 2010 and 27 Boeing 787 aircraft beyond the contracted delivery period commencing April 2011.

On airport infrastructure I am happy that we are seeing more airport infrastructure coming up these days. In fact, one of the strong reasons for the growth of the aviation industry in the country will be airport infrastructure. While the private sector airports have their role to play, it’s the Airports Authority of India’s role that is crucial in opening up this sector. Development of 35 non-metros is going ahead as scheduled. The Airports Authority of India has been investing heavily over the last few years to strengthen the aviation infrastructure. It is not just the 35 non metro airports; but several other airports are also being developed and upgraded.

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One big area of worry ATF is the single largest element contributing to airlines’ costs. It accounts for 40-45 per cent of the operating cost of Indian carriers compared to global average operating cost of 25-30 per cent. A reduction of even Rs 1000/KL translates to a saving of Rs 300 crore. In one year, ATF prices have risen by 99.6 per cent while HSD and petrol prices rose by 14.9 per cent and 17.9 per cent, respectively.

The future potential The potential in India is huge, even for a basic issue like increasing aircraft penetration when compared to other Asian countries. While India has now become the 9th biggest aviation market, it still is one of the least penetrated markets. India has 0.02 trips per capita as compared to 0.1 of China and 2.2 of USA. With over a 300 million strong middle class, the demand is expected to increase by 8.5 per cent per annum till 2015. The $14 billion+ aviation industry is almost similar to Indian Railways ($18 billion). It provides substantial benefits to allied industries like tourism, hospitality, banking, commerce and industry; improved connectivity results in higher GDP growth; Rs 100 spent on air transport produces benefits worth Rs 325 for the economy and creates approximately 2,00,000 direct and 12,00,000 employment potential. India’s tourism needs to grow at a faster pace and air connectivity should match the pulse.

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M Madhavan Nambiar, Secretary, Civil Aviation, speaks out about the National Civil Aviation Policy and other issues in this exclusive interview.

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Is the Indian aviation reviving or was what we saw in the last quarter of 2009 a mere flash in the pan? Kindly elaborate. The aviation sector is showing sign of recovery and passenger traffic has shown positive growth in 2009. During the year 2009, passengers carried by domestic airlines were 445.13 lakh as against 412.71 lakh in the year 2008, thereby registering a growth of +7.86 per cent. In the month of January 2010, passengers carried by domestic airlines were 41.31 lakh as against 33.76 lakh in the corresponding period of year 2009 thereby registering a growth of + 22.7 per cent.

Photo: H.C. Tiwari

Nearly 14 applications for starting scheduled airlines was pending till three years ago. Have they all been rejected or have the applicants withdrawn their application because of the undue delay? None of the applications were rejected. Many of the applicants had revised their applications from Scheduled Airlines to Scheduled Air Transport (Regional Services) after the introduction of the category of Regional Airlines. Most of them have yet to start operations. Besides them, five operators were given initial NOCs to operate Scheduled Air Transport (Cargo) Services of which two i.e. M/s Deccan Cargo and Express Logistics Ltd. are at present operator permit holders.

Does this mean there is no space in the next five to ten years for any new entrant? Or, does the government believe that any new entrant can come in only by buying

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â&#x20AC;&#x153;We have responded to emerging situations expeditiouslyâ&#x20AC;? the license of an existing player which gives him huge unintended benefit as it happened in recent cases in India when two full services carriers bought an airline each even when new entrants were denied permission to start new airlines? It is not so. The decision to start operations is dependant on a number of factors. As the economy recovers, we hope to see a lot of new operators revive their permits and start operations. We are viewing the entire scenario with cautious optimism. In any case mergers and acquisitions are normal economic practices in all areas of business and they should be looked at as efforts to consolidate on healthy economic bases.

How much money is required to rehabilitate Air India? Will the money be paid back when Air India is still short of Rs 5000 crore annually in revenue to meet its expenditure? The government has approved the release of equity support of Rs.800 crore to Air India. The equity induction would, to some extent, ease the cash flow situation of the company and would mitigate borrowing from the markets at high interest rates.

Has Air India also made operational profits, which every airline in India has made except for Kingfisher during the OctoberDecember 2009 quarter? There has been significant revenue improvement for NACIL during October-December 2009. Load factors and yield increased from 63.3 per cent and Rs 3.08 /RPKM in Quarter 2 (Q2) of the

financial year to 67.4 per cent and Rs 3.28 /RPKM in Quarter3 (Q3), respectively. Revenue for Q3 was Rs 3,871 crore (including Rs 670 crores from Haj operations) against revenue of Rs.2,868 crore for Q2. NACIL has initiated various cost reduction plans which have led to reduction in cash losses from approximately Rs 420 crore per month in Q2, FY 10 to Rs 347 crore per month in Q3, FY10.

Even after the noise raised over liberal bilaterals granted by the Ministry of Civil Aviation (MOCA), some more have been granted to Qatar, Air Asia, etc. Further, to accommodate existing airlines like SpiceJet, IndiGo, Go and Paramount, which will complete five years in 2010, will it not be necessary to grant more bilaterals to foreign carriers in order to get rights which can be given to these new qualifiers like SpiceJet, IndiGo, etc.? So what happens then to Air India? From the latter half of 2008, the government has been cautious in granting bilateral traffic rights keeping in mind the worldwide economic recession which badly impacted all carriers worldwide and also the fact that there was overcapacity in the market. It is incorrect to say that bilaterals were granted to Air Asia. When talks were held with Malaysia in the latter half of 2008, the available capacity entitlements for the Malaysian designated carriers were merely redistributed in the available points of all to enable their second designated carrier to commence a daily service to Mumbai, Delhi, Chennai, Bangalore and Hyderabad. Though traffic rights were

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When talks were held with Malaysia in the latter half of 2008, the available capacity entitlements for the Malaysian designated carriers were redistributed in the available points to enable their second designated carrier.

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granted to Qatar, this exception was made as part of an overall strategy of the Government of India keeping in mind our relations with Qatar. Further, Indian carriers have been able to make use of the added capacity to their advantage. Only SpiceJet, Paramount and Go Air will become eligible for international operations this year. However this is subject to regulatory clearance from the DGCA. So far only SpiceJet has shown interest to commence international operations from the middle of this year. Their preparedness for the same is currently being evaluated by the DGCA. The question whether more bilaterals would be required is, therefore, redundant.

Is the foreign or overseas flight rights of domestic carriers sacrosanct as per policy or the policy can be suspended till further orders? As per guidelines, rights once granted have to be utilised within that same schedule in which it was granted. Failure to do so leads to a ban of two years on that route.

These responses are based on an overall long-term vision and hence cannot be termed as piecemeal. As a matter of fact, most of the issues that were inherent in the proposed National Civil Aviation Policy have already been acted upon. A final view on the need of a policy is still to be taken.

When is the DGCA revamp taking place and will it be made a civil aviation authority kind of body as there is in the US like FAA? Will the Indian air traffic controllers also be licensed and when is this likely to start? The matter is under active consideration. All aspects of this changeover are being examined before finally taking a view on the matter. As regards licensing of Air Traffic Controllers, there is a policy decision that Air Traffic Controllers should be licensed by DGCA. The rules are being framed and we hope to implement the decision at the earliest.

Is there a proposal to hand over smaller, unused and also sparingly used airports to the private sector under the PPP module? Not under consideration at the moment.

Your views on airport development in India and will AAI be able to do its job of modernising Kolkata and Chennai and 35 non-metro airports in the face of funds shortage? Indian airports have shown tremendous improvement in the last

So far only SpiceJet has shown interest to commence international operations from the middle of this year. Their preparedness for the same is currently being evaluated by the DGCA.

Do you think there is need for a new civil aviation policy or consolidation of what has already been announced piecemeal over the last three to four years? Civil Aviation is a highly dynamic sector, which requires continuous policy readjustments. During the last few years we have responded to emerging situations expeditiously and adequately as is borne out by the overall performance of the sector.

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OPTIMISTIC : AAI Chief V P Agrawal leads the way to a meeting as Civil Aviation Secretary Madhavan Nambiar and other follow.

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few years. Two new international Greenfield airports at Hyderabad and Bangalore have already become operational. They have been acclaimed nationally and internationally. The two Brownfield Airports at Mumbai and Delhi are being modernised through the joint venture route under the PPP model. A new Greenfield airport is being developed at Pakyong in Sikkim by the AAI. The Airports Authority of India has already undertaken the modernisation and expansion projects of Chennai and Kolkata airports along with 35 nonmetro airports. The AAI has a plan to modernise the airport infrastructure during the Eleventh Plan period and has projected a capital expenditure of Rs.12434 crores which is to be met from internal resources, commercial borrowings and government budgetary support.

Do you anticipate another boom in Indian aviation as the economy is poised for growth and GDP is expected to grow by 9 per cent again from 2011 onwards. What is the advance action plan the Ministry is taking and has taken? The aviation sector is showing a sign of recovery and passenger traffic has shown positive growth in year 2009. We hope that these early trends would be sustained and strengthened in the coming months, especially in view of the forthcoming Commonwealth Games.

Is there scope for our airports to reduce airport or aeronautical charges so that airlines can minimize costs and continue to offer low fares to passengers in order to keep Indian aviation flying? In terms of the Airports Economic Regulatory Authority of India Act, 2008 (No.27 of 2008) dated December 5, 2008, the Airports Economic Regulatory Authority (AERA) has been established on May 12, 2009 to regulate tariff and other charges for the aeronautical services rendered at major airports and to monitor performance standards of such airports. The authority shall look at a whole gamut of economic issues to ensure a level playing field for operators as well as regulate determination of tariff.

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Why has nothing happened on the

fuel price front? Is it at all possible to get ATF declared as a public good or declared good category to attract 4 per cent sales tax? Already there are rumours that it will not be part of the GST category thus allowing states to impose any sales tax they so wish to impose? State Governments have been requested to consider moderation of the rate of sales tax imposed on aviation turbine fuel (ATF) and align it with the ‘Declared goods’ rate of 4 per cent. The Government of Andhra Pradesh has reduced the sales tax on ATF. The Government of Rajasthan has also reduced the sales tax rates on ATF in case of the following: Airlines which establish a ‘Hub’ in the state; Registered Flying Clubs for their training flights; and, Airlines, which for the first time connect cities of the State having no air service, the exemption would be limited to such flights only. The Government of Maharashtra has also announced reduction of sales tax on ATF from 25 per cent to 4 per cent for flights from airports other than Pune and Mumbai. The Ministry is also taking the issue of high rate of sales tax on Aviation Turbine Fuel (ATF) in the North Eastern region with DoNER (Ministry of Development of North Eastern Region). Due to the efforts of the Ministry, the oil companies have started reviewing the ATF prices on a fortnightly basis instead of monthly basis so that the benefit of reduction of crude oil prices can be passed to the airlines.

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CO-OPERATION : IATA Chief Giovanni Bisignani having a word with DGCA’s Dr Naseem Zaidi, while Secretary Madhavan Nambiar looks on.

The aviation sector is showing a sign of recovery and passenger traffic has shown positive growth in year 2009. We hope that these early trends would be sustained.

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SLEEP WELL: ANZ designs Skycouch for ultimate comfort.

IT’S 2010!

he snowstorm in the US East Coast and Canada in mid-February cancelled thousands of flights and stranded thousands of airline passengers serves as a reminder that US travellers have few rights when their flights are delayed or cancelled. An airline’s only obligation is to get you to your destination eventually; it doesn’t owe you compensation for damages. If that’s the story there, how bad it is elsewhere. And we are in 2010!

SKYCOUCH AND PREMIUM ECONOMY SPACESEAT ir New Zealand’s (ANZ) new seats are likely to revolutionise sleeping in the sky — the changes live up to the media hype built by ANZ. Although business too gets a leg up, the big changes are in Economy and Premium economy. The most talked about is the new Skycouch. How could the airline do beds in economy without taking up too much space was the big question everyone asked. At best, the argument went, ANZ could, perhaps, allow for an empty row of seats to go with the couches. Well, that’s exactly what ANZ is doing, excepting its smashing good. The leg rests come all the way up, to be even with the seat, making a nice wide bed for couples. All the three seats together is less than five feet long. But it is pretty awesome for Economy. Those interested in buying a Skycouch will buy two seats at regular price, and the third at half price. Overall, there will be 22 Skycouches in the first 11 rows of economy where the rows of the seats are next to windows, so the cabin wall acts as a headboard of sorts.

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Premium Economy is also getting an upgrade, with ANZ’s new Spaceseat in a 2-2-2 layout (it’s currently 3-3-3). The new “Inner Space” seat is great for travelling companions who would like to spend time together. The “Outer Space” seats will offer more privacy for single travellers. The product will be on the new 777-300ERs that begin arriving in November 2010 (ANZ has ordered five of the type), and will first be used on flights 5 and 6 between Auckland and Los Angeles. Upgrades of the eight 777-200 aircraft will begin mid2011, with the airline predicting that “all Asian, North American and UK services to have the new product by around 2012”. The 747s won’t be seeing these upgrades, but the 777-300ERs are replacing those aircraft anyway. These changes are really innovative. So is ANZ. Which is why the Skycouch and Spaceseat “have been licensed to manufacturers Recaro (the seats were designed by the airline and built by manufacturer Recaro) and has the potential to generate significant license fees for ANZ in the future?

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BOEING: A DROP IN 2010 PLUS GREAT WINDOWS! oeing will again fall behind Airbus this year when it comes to commercial airplane deliveries. Reporting 2009 results and the 2010 outlook, Boeing stated that its commercial airplanes, business should deliver 460-465 units this year — 20 fewer than what Airbus is scheduled to deliver. Boeing delivered 481 aircraft last year, a year when Airbus handed over 498 airliners. Meanwhile, Boeing has unveiled the new-look interior of the 787. The interior is being flight tested on ZA003 which is dedicated to the “passenger experience” segment of the development and certification programme. Boeing took advantage of the composite primary structure to build in larger-than-usual cabin windows, which would normally require heavy reinforcement in a metallic aircraft. Using ceiling and advanced overhead bin design combined with sophisticated lighting, Boeing designers have also created the impression of a

UP FOR SALE: Airbus A320-214 N106US (S/N 1044) was auctioned recently.

A PIECE OF HISTORY

lmost one year after the famous US Airways 1549 New York Hudson River emergency landing, Airbus A320-214 N106US (S/N 1044) was put on auction recently. The auction closes March 27 and is open to the general public. Bids can be submitted online. The wreckage is currently stored in Kearny, NJ. While wings, vertical and horizontal stabilisers have been separated from the fuselage, the engines are not included in the sale.

IDEA: Light up the plane!

NEW LOOK: The interiors of 787 are cool and modern.

much larger overhead volume. The windows have electronic dimmers. Instead of shades, you are able to push a button and dim the window from clear to very dark. The flight deck is something else with large display screens with a 787 Dreamliner emblem on the ceiling.

WHAT AN IDEA, SIRJI! ir passengers can understand their jet with an idiots’ guide in plane English (pun intended). The simple explanations are part of zany new livery on aircraft operated by short-haul South African carrier Kulula. This pea green Boeing 737-800 — Dubbed Flying 101 — shows loos highlighted as the “mile-high initiation chamber” and another indicates where the nose cone is, for anyone in doubt. Nadine Damen, marketing boss of Kulula, said: “The idea is to demystify air travel.”

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ONE FREE FOR 17! ingapore Airlines completed “the world’s first multi-sector demonstration green flight” on January 31. Ten tons of fuel (and 33 tons of carbon emission) were saved on Flight 11, which flew from Los Angeles to Tokyo and then to Singapore with a Boeing 747-400. The fuel savings represent a six per cent reduction in consumption. To put that in perspective, after 17 flights, the 18th is “free” in terms of fuel.

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UPPING PRICES AND TESTING FREIGHTERS

hen Ryanair thought it could force Boeing to agree to another sale of 737-800s at rock bottom prices because of the downturn in the airline sector, the US aircraft maker effectively told the Irish carrier to get lost. Now, Airbus is sending out a similar message: orders may not be flowing as they did during the boom years, but that’s no reason to heavily discount. Instead, Airbus has announced that it has increased the list price of its products. Prices will go up an

W NOT A PENNY PLEASE! ontinental Airlines’s new Chief Executive Jeffrey Smisek, has said he will not take a salary or an annual bonus until Continental records a full-year profit. In a letter to Continental employees, Smisek said, “I am not asking you or

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ost people would regard hanging around for hours in an airport as something to be avoided. Anthropologist Dr Damian O’Doherty, 42, will be living for upto 18 hours a day for the next 12 months in terminals and departure lounges to observe passengers’ and workers’ habits. The exercise is expected to cost around £40,000 (Rs 2.5 crore) — financed by the taxpayer. The government-funded research will take place at Manchester Airport and is intended to investigate how airports affect people, with the aim of making them better places to visit or work. Dr O’Doherty told The Daily Mail:

anyone else to reduce their pay. What I am asking is that you join me in making Continental profitable again.” The carrier, like most airlines, has had trouble turning up a profit during a period of weak demand for air travel.

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average 5.8 per cent. Airbus says it is forced to act because of the increased cost of raw materials, commodities, and the strong euro compared to the dollar. But the issue really is, Airbus is increasing the prices because it thinks it can. Meanwhile, Airbus is now in the final stretch of its A330-200F freighter certification programme, with the aircraft undergoing the obligatory extreme weather condition trials. Airbus says that the testing is not for certification but to verify system performance guarantees to customers, and check the response of modifications introduced during the freighter’s development. Also, Airbus is pondering whether to launch an A320 family re-engining programme.COO (Customers) John Leahy told media at the Singapore Air Show that they will make a decision on the proposed upgrade this year. The upgrade will be offered as an option across the A319, A320 and A321 models.

“Some people live in airports and 30,000 feet in the air. They commute from place to place, have business meetings in an airport hotel and then fly off somewhere else. I call them the ‘kinetic elite’ — always on the go, fixing business deals on their laptops, at the same time talking on their iPhone and perhaps posting a Twitter to friends and family… I’ve been researching airports for five years and I just thought this would be the opportunity to experience airport life for myself… I enjoy sitting in the coffee shops watching the hustle of airport life but I am spending a lot of time shadowing project managers — I’m trying to think and act like one.”

365 DAYS AT AN AIRPORT

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Consign â&#x20AC;&#x2DC;protectionismâ&#x20AC;&#x2122; to the history books Willie Walsh, the iconic Chief Executive of British Airways, has been a no-holds barred crusader for aviation reforms for several years. Here, Walsh outlines his vision for the future. t British Airways, we are heading for a second consecutive year in the red â&#x20AC;&#x201D; an event that has never happened before. But I am not going to go into details of the financial woes of the industry. What I want to do is take a step back and look at the airline business in the general context of the transatlantic economy. How can air transport do more to sustain and bring further benefits to the economic relationships between the United States and the European Union? How can we benefit consumers through increased competition? And how can we grow to meet those economic objectives while at the same time meet our vital environmental objective of reducing greenhouse emissions? Transatlantic economy: The combined population of the US and 27 EU countries is around 800 million, or roughly 12 per cent of global population. The combined GDP of the US and EU is around $30 trillion, representing more than half of global GDP. So, the transatlantic economy is huge and extremely valuable. And the flow of trade and investments across the Atlantic are massive. It is calculated that in the first eight years of this decade, 57 per cent of all foreign direct investment from the US went to Europe. The top two countries for US overseas investment are not, as some might think, Canada and Mexico. They are the Netherlands and the UK. Investment in the other direction is just as significant, accounting for more than 70 per cent of all foreign investment in the US in 2007. And, perhaps, the most striking fact is that as economic development has powered ahead in developing regions in Asia and

The transatlantic economy is huge and extremely valuable. And the flows of trade and investment across the Atlantic are massive.

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South America, the links within the transatlantic economy have not weakened, but strengthened. Two-way trade in goods between the US and the EU totalled to more than $600 billion in 2007, a 47 per cent increase in just four years. US-EU Open Skies: The Stage One Open Skies agreement between the US and the EU represented a milestone in transatlantic aviation. It permitted any carrier from either side to fly to any airport they chose. The old Bermuda II agreement, which limited access to Heathrow to just two carriers from each side of the Atlantic, was swept away. The benefits of the new agreement were clear and immediate. Within one season of its coming into force, four additional American airlines and one more European carrier began transatlantic services to and from Heathrow. More than 20 new services a day, representing nearly 900,000 extra seats over the season, were made available to transatlantic customers. Some people had even argued that it would be impossible for new competitors to gain access to Heathrow. They were wrong. At British Airways, we took advantage of the new freedoms of the Stage One agreement in a further way by launching direct services from New York to Paris, our first non-UK destination from the US. So, customers on both sides of the Atlantic have already seen the benefits of increased competition from the first stage of liberalisation. And in stage Two, we need to reach out for much larger benefits by securing the big prize of a fully open aviation market between the US and the EU. Restrictive ownership and control requirements that prevent airlines in the US and EU from integrating and constrain their access to capital need to

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Let’s allow the benefits of a genuine open transatlantic aviation area to increase opportunities and wealth for citizens in all parts of the US and EU.

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be swept away as quickly as possible. With better access to capital, airlines can modernise their fleet, provide better products and services for customers and compete more effectively with the growing number of lower-cost long-haul operators from around the world. Protectionist measures that prevent true competition, such as the ‘Fly America’ policy, should be consigned to the history books. However wellintentioned, they breed inefficiency. High tariffs served to prolong and exacerbate the Great Depression. There are no comparable Fly UK or Fly Europe programmes, and such protectionist instruments really have no place in an open market economy of the 21st century. So let’s be open. Let’s be positive. Let’s allow the benefits of a genuine open transatlantic aviation area to increase opportunities and wealth for citizens in all parts of the US and EU. And let’s create a template for the rest of world aviation to follow. There are signs of liberalisation elsewhere, but nothing would give more of a spur to the industry’s Holy Grail of an open global marketplace than the creation of an open marketplace across the Atlantic. BA’s transatlantic operation: At British Airways, we have been serving the needs of the transatlantic economy for a very long time. Our forerunner company, BOAC, began civilian flights between London and New York in 1946, flying Lockheed Constellations… And we continue to innovate across the Atlantic. We started services from New York into London City airport, which is located right on the doorstep of London’s financial districts. This is a service that really breaks the mould. It is the first long-haul route ever

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operated to and from London City. And it is an all business-class service with just 32 seats and the feel of a private jet. It is the first service on which customers from the UK are treated effectively as domestic passengers on arrival in the US, having already cleared US immigration during a brief refuelling stop in Shannon in the west of Ireland. And it is the first service between the US and the UK on which customers in mid-flight can keep in touch with the ground by email and texts. It is the most time-efficient and productive means of travelling between the business capitals of America and Europe. ATI: As and when the global recovery takes place, the strengthening transatlantic economy will need strengthening air transport provision to sustain and develop it. You can cross the pond by ship, but the chances are your competitor will arrive ahead of you. It is our desire to improve provision for transatlantic travellers which lies behind the transatlantic joint business agreement proposed by British Airways and our partners in the Oneworld Alliance, American Airlines and Iberia. If approved, the agreement will bring substantial benefits to US-EU customers by offering an expanded route network, improved schedules and connectivity, greater access to discounted fares, fully reciprocal frequent flyer programmes and integrated corporate deals. Above all, it will provide customers with choice. The Star and Skyteam alliances already operate across the Atlantic with the benefit of anti-trust immunity. But surely a market of 800 million potential consumers deserve a choice of more than two network providers. If Star and Skyteam remain the only

Teaming up to beat the competition US government decision to support American Airlines and British Airways working together is a “kick in the teeth”, according to Virgin Atlantic Boss Sir Richard Branson. The plan entails both the airlines sharing costs but giving up four transatlantic take-off and landing slots. Sir Richard said the agreement would “blatantly harm competition and the consumer.” The US Department of Transportation (DoT) had stated it

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proposed granting immunity from antitrust competition laws to American Airlines and its “oneworld” alliance partners, including British Airways. The department said the proposed alliance would enhance competition in the airline industry “by creating competition with the existing Star Alliance and the SkyTeam alliance, which already have been granted immunity.” If approval is granted, the alliance partners — American, BA, Iberia,

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immunised alliances across the Atlantic, we could end up with an untouchable duopoly. I do not believe that customers would want that. Giving Oneworld regulatory parity with Star and Skyteam would mark a step change in competition in the USEU market — and consumers could only benefit. Concerns that may have existed in the past over access to London Heathrow do not bear scrutiny. The first phase of the US-EU Open Skies deal made Heathrow an open airport. As soon as it came into effect, the number of operators flying between Heathrow and the US more than doubled. Slots can be bought, sold or leased and such trades can take place between alliance partners. Star already possesses more than a quarter of the slots at Heathrow, far more than any other alliance at a competitor’s European hub. In July ‘09, we noted the DoT’s approval of Continental Airlines’ application to switch from one immunised alliance, Skyteam, to the other, Star. The department said that granting anti-trust immunity to Continental within the Star Alliance would benefit consumers and enhance competition. We agree. So let’s have more benefits for consumers and more competition by allowing Oneworld to compete on exactly the same basis. That is all we are seeking. We want the opportunity to demonstrate that we in Oneworld can offer better products, services and value than the established players of Star and Skyteam. We do not see how consumers could lose out from that. Let’s bring it on — and let customers decide. We want aviation to play its full part in increasing those benefits and

Finnair and Royal Jordanian Airlines “would be able to more closely coordinate international operations in transatlantic markets,” the DoT said. In the US, antitrust laws prevent businesses from co-ordinating prices and schedules. The European Commission must also approve the partnership, but the alliance can go ahead in roughly two months even if Brussels fails to take a call by then. For the record, it must be mentioned that BA has similar joint ventures with Qantas on Australia routes and with Iberia on

opportunities, but hand-in-hand with a global environmental approach that ensures we can be green as well as grow. Sustainable expansion of air transport’s benefits and opportunities can best be achieved by removing artificial restrictions on aviation relationships across the Atlantic, and by encouraging competition. In the last two years, we have started to make progress in removing restrictions. But let us be bold — and move faster towards the kind of crossborder liberalisation of markets and capital which are taken for granted in almost every other global industry. Let us embrace competition — and ensure a level playing-field for all airline alliances that serve the transatlantic economy. Fair and vigorous competition is the best guarantor of improved services for customers. Excerpts from the speech made by Willie Walsh some months ago at the International Aviation Club, Washington D.C.,USA.

flights from the UK to Madrid and Barcelona. The new deal will also embrace routes like Madrid-Miami, which Iberia and AA share. What does the deal mean? The deal means BA will put its code on around 120 new destinations, while AA will do the same on more than 140. Iberia is the biggest winner, with almost 200 new routes on which its code will appear. To Virgin Atlantic’s disbelief, US regulators said that just loss of four slots would ensure fair competition.

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WELCOME ABOARD: The first airline created as a result of the US — EU Air Transport Agreement that went into effect in March 2008 began operations between Amsterdam’s Schiphol International Airport and New York’s John F Kennedy Airport on October 15 with the inagural flight on this route by Open Skies airline. Dale Moss, Managing Director of Open Skies, and Consul General Marjorie Ames cut the ribbon opening the new transatlantic service and were joined by Marcel Lekkerkerk, Director of Aviation Marketing at Schiphol.

In the last two years, we have started to make progress in removing restrictions. But let us be bold — and move faster toward cross-border liberalisation of markets.

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“AAI is re-casting its financial plans”

Since an investment of Rs 20,000 crore is required for modernisation and upgradation of Delhi and Mumbai airports, the government has decided to modernise and upgrade these projects through PPP mode.

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What is the status of AAI’s finances? From a debt-free company it is now constrained to raise debts for modernisation of two metro airports, Kolkata and Chennai, besides 35 non-metro airports? Your comments on the fund-raising mission of AAI? Keeping in view the infrastructure requirements, AAI had made an ambitious plan in the XIth Plan amounting to Rs 12,434 crore for modernisation and upgradation of airports and air traffic services across the country to bring it at par with world class standards. The source of financing for this capital outlay was planned mainly through internal resources, budgetary support and partly through borrowing. However, in view of the changed economic scenario, AAI’s financial plans has also got affected like any other organisation/sector and forced to re-cast its financial plan for financing of its capital projects. According to the latest financial plan, AAI is required to borrow an amount of Rs 2,800 in the XIth Plan. In this regard, all the necessary steps have already been taken and has been arranged an amount of Rs 550 crore so far.

You think the PPP model has actually left out AAI in a greater challenging mood considering the more juicier airports in terms of revenue are no longer under its direct control? What about the revenue share from these? No. Since an investment of over Rs 20, 000 crore is required for modernisation and upgradation of Delhi and Mumbai airports, the government has decided to modernise and upgrade these projects through PPP mode. Further, in terms of OMDA (Operation, Management and Development Agreement), the JV companies at Delhi and Mumbai airports are paying revenue share at

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45.99 per cent and 38.7 per cent, respectively to AAI regularly.

While the old airport in Bengaluru is under HAL, Begumpet airport in Hyderabad is still with AAI. How can it be made productive? Can it be converted into a major flying training school or even for a major MRO hub as these are not commercial operations and hence should not invite any objection from any quarter? Simply what can be done to make Begumpet airport another revenue stream for AAI so that it can help AAI’s overall modernisation programme? With regard to the old airport in Bengaluru at HAL, as of now, no proposal for commercial development is in process nor has the Commercial Directorate received any Expression of Interest. Alternates considered for Begumpet airport and approved by AAI Board are: Integrated Aviation Academy on the similar lines as Singapore Aviation. Establishment of MRO facilities. As a site for conducting Aviation Expo and Convention Centre by utilising the air side facilities and part of the existing terminal building. Conversion of part of the existing Terminal Building for General Aviation operations along with hangars on air side. Part of the existing Terminal Building to be converted for city check-in facility with the express rail link to HIAL. Flying training activities. Continued use for the State Government, VIP, military flying and also as an emergency alternate airport to HIAL. Miscellaneous use of existing infrastructure in accordance with the market driven opportunities and requirements.

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V P Agrawal, Chairman, Airports Authority of India (AAI) on the development plans, renovation of older airports, Ground Handling bidding, academic plans for training ATC personnel and much more in this interview.

What is the money which is owed to AAI by various agencies â&#x20AC;&#x201D; be it airlines or any other body? If you can give us detailed break-up and total outstanding which we are told is above Rs 1,500 crore and which is enough to meet upgrade cost of at least four non-metro airports? The total debtors as on March 31, 2009 was Rs 1450.62 crore as against the revenue earned during the year 2008-09 for Rs 4185.95 crore which constitutes 126 days of revenue earned. However, AAI is its continuing efforts to realise dues thereby trying to reduce its collection period. The dues from major domestic airlines as on January 31, 2010 is: Air India-Rs 727.83 crore, GoAir-Rs 7.35 crore, Indigo-Rs 10.94 crore, Jet Airways-Rs 34.74 crore, JetLite-Rs 14.26 crore, Kingfisher Airlines-Rs 144.26 crore, Paramount Airways-Rs 6.88 crore, SpiceJet-Rs 12.60 crore â&#x20AC;&#x201D; making a total of Rs 958.86 crore.

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Photo: H.C. Tiwari

We understand that AAI has given out Ground Handling contracts to successful bidders in its airports in the four regions as well as specifically in the metro airports of Kolkata and Chennai. Can we have the details of the names of the successful bidders? Once it is done, what will AAI do with its own Ground Handling equipment? The award of license has been made on September 9, 2009 in favour of the JV consortium comprising M/s Bhadra International India Ltd with

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The issue of shortage of ATCOs has been addressed by AAI. AAI has recruited and trained 630 controllers during the last four years and has plans to recruit 338 more controllers by April 2010. READY FOR THE FUTURE: AAI Chairman V P Agrawal (third from left, front row) with his team.

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M/s Novia International Consulting APS, Denmark. The award of license is for 10 years extendable for a further period upto five years subject to satisfactory performance and revised financial terms of AAI. The licensee shall pay to AAI 32.5 per cent on the prescribed amount of GTO (Gross Turn Over) amount of Rs 211 crore per annum or on the actual gross turnover achieved during the year whichever is higher. Western Region (Ahmedabad, Goa, Pune Airports): The license has been awarded on December 7, 2009 to the consortium between National Aviation Services W L L, Kuwait, NAS Aviation Services India Pvt Ltd., Mumbai and DJ Aviation Services Pvt. Ltd, Mumbai. The award of license is for 10 years extendable for a further period upto five years subject to satisfactory performance and revised financial terms of AAI. The licensee shall pay to AAI 36.3 per cent on the prescribed amount of GTO amount of Rs 47 crore per annum or on the actual gross turnover achieved during the year whichever is higher. Northern Region (Amritsar, Jaipur, Srinagar, Varanasi and Lucknow): The license has been awarded on December 7, 2009 to the consortium between Indo Thai Airport Management Services, Bangkok, M/s Star consortium Aviation Services Pvt Ltd, Kolkata and M/s Skyline Merchantile Services, Kolkata. The award of license is for 10 years extendable for a further period upto five years subject to satisfactory performance and revised financial terms of AAI.The licensee shall pay to AAI 21 per cent on the prescribed amount of GTO amount of Rs 40 crore per annum or on the actual

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gross turnover achieved during the year whichever is higher. Southern Region (Trivandrum, Calicut, Coimbatore, Managalore, Trichy): The license has been awarded on December 7, 2009 to the consortium between M/s Bhadra International India Limited and M/s Novia International Consulting APS, Denmark. The award of license is for 10 years extendable for a further period upto five years subject to satisfactory performance and revised financial terms of AAI.The licensee shall pay to AAI 31.8per cent on the prescribed amount of GTO amount of Rs 126 crore p.a. or on the actual gross turnover achieved during the year whichever is higher.

Is there going to be a shortage of ATC personnel again, as fresh engineering students are not keen to take up the very stressful job of an air traffic controller? The attrition rates are high as has been the experience in the past few years. Can we have details of AAIâ&#x20AC;&#x2122;s academic plan for training ATC personnel, deployment and recruitment including campus recruitment, etc.? What are the new initiatives in training of ATC personnel? The issue of shortage of ATCOs has been addressed by AAI. AAI has continuously recruited and trained 630 controllers during the last four years and has plans to recruit 338 more controllers by April 2010. A longterm plan based on international norms and practices to meet the requirements is also being worked out. The response to AAIâ&#x20AC;&#x2122;s advertisement was overwhelming and the fear that freshly qualified

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engineering students are not keen to take up the stressful job of an ATCO is unfounded. The R&P rules have been amended to provide full pay even during training period and eligibility criteria has changed to enable Post Graduates (Mathematics/Physics/ Electronics) etc. to have opportunities to take up ATCO’s jobs. Sufficient infrastructure is available at CATC (Civil Aviation Training College), Allahabad, to meet the training requirement, of ATC Personnel. Additional Non Radar simulators are being installed for more effective training.

What is the status of licensing of air traffic controllers by DGCA and will such an initiative lead to exodus of ATCOs, like pilots some years ago to greener pastures? A task force has been formed by DGCA to work out modalities of ATCO licensing. ATCO licensing is as per international norms as followed by most of the ICAO contracting states and we do not believe this will lead to any exodus but will enhance quality of air traffic services and also enhance responsiveness and dignity in the controllers’ work culture.

What is AAI proposing to do with those airports which are hardly used? Is there any special plan for them to be brought under use in partnership with private enterprise or even industry chambers in those respective towns, etc? Airports are being developed, to attract airlines to have new connectivity. This, however, depends on airlines’ plans of acquisition of appropriate fleet and their strategy of operations. The recent trend of Government of India’s interest in restoring the connectivity in the North-East Region and AAI’s plan for reactivation of some of the nonoperational airports elsewhere is with a view to provide opportunity for new connectivity by the airlines to the nook and corner of the country. The Government of India is also seized with the matter of promoting even the NSOP (Non Schedule Operator) with smaller aircraft (20 seater types) to encourage operating to the airports in the North-East and elsewhere for improving air connectivity. Concept of regional airlines is gaining increased focus.

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AAI has carried out a feasibility study for reviving 32 non-operational airports and as per the recommendations, some of these airports are found to be having potential for revival. Accordingly, plans have been made to develop those airports with the participation of respective State Governments through MoU for providing required additional land along with certain concessions for a specified period so as to make them viable for development in phases. These airports are the assets of AAI for future growth of aviation. AAI is encouraging leasing many of the disused/ under-utilised airports, for flying club related activities, which are mostly by private partners. AAI welcomes any initiative by any of the private enterprises or industry chambers, or even State Government initiatives to develop these nonoperational airports. AAI, on request from the Government of Madhya Pradesh recently, has agreed to hand over three airports to the State Government.

Status of UDF and how many airports have been allowed to charge them and for how long? Will this move help relieve to what extent the financial needs of AAI in its drive for airport upgradation? As of now Government of India has allowed to levy UDF at Jaipur airport at Rs 150 for domestic and Rs 1,000 for international passengers for a period of 15 years This will help AAI to relieve its financial needs to the extent of approximately Rs 20 crore per annum. In addition to the above, AAI has submitted proposals to levy UDF at certain select airports where new terminal buildings are already completed or nearing completion to the Government/ AERA (Airport Economic Regulatory Authority.

Is there any move to conduct a fresh valuation of AAI in order to shore up its equity and enable it to raise or borrow money from the market? There is no move to conduct a fresh valuation of AAI in order to shore up its equity and enable it to raise or borrow money from the market. However, in general, the valuation of AAI helps in taking strategic view about the future of the organisation.

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AAI welcomes any initiative by any of the private enterprises or industry chambers, or even State Government initiatives to develop these non-operational airports.

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Successful airports’ upgradation

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Upgradation of two main airports — Delhi and Mumbai — might have gone away to private entrepreneurs under the PPP policy, but not to be outdone, our very own Airports Authority of India is leaving no stone unturned in pushing up the renovation of the other 35 identified airports. Devinder C Mehta takes a look at their progress.

To ensure that plans are on the fast track and that there is no loss of valuable time, AAI adopted the route of pursuing project planning and pre-award activities in tandem with the other activities.

hen the Low Cost Carrier concept made inroads in the aviation industry, the industry witnessed a sudden surge in the air travelling population. This phenomenon germinated the idea in the minds of the authorities concerned to take a serious look at the infrastructure, especially as most of the airports had terminal buildings of Second World War vintage facilities, barring a few airports, which over a period of time, had undergone some piece meal cosmetic changes. The Airports Authority of India (AAl), being the ‘Mainstay of Civil Aviation’ took upon itself the task of

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upgrading and modernising the airports. Gauged from any standards, it was indeed a Herculean task, mainly for the reason that the passenger growth at that particular time in the country’s civil aviation sector was somewhere over 20 per cent, which was easily amongst the highest in the world. It was slated to cruise far ahead of the passenger growth of countries such as China, France and Australia. By 2020, the number of air passengers in India was expected to

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touch 400 million. International traffic too, was witnessing substantial growth. Just when in the earnest way, AAI was bracing up and getting busy with the drawing boards, came the government policy of public private-participation (PPP). As a result of this policy, two of our main airports — Delhi and Mumbai — were taken away from AAI’s ambit. Notwithstanding the same, AAI turned to the second line of airports which got patronised as an outcome of the changed scenario in the aviation sector. Accordingly, AAI, in addition to Chennai and Kolkata airports, identified 35 other non-metro airports with the aim of turning these airports into worldclass ones. Development work at 23 other airports is also underway. To ensure that plans are on the fast track and that there is no loss of valuable time, AAI adopted the route of pursuing project planning and preaward activities in tandem with the other activities. This resulted in giving them the opportunity to be able to cut down the processing time for award of work, which would otherwise have started after the approvals were received. Thus, this ensured that work is not only getting started, but also awarded in the shortest possible time. The status of projects as on date is indicated below:

35 Non-Metro Airports

In the first phase of upgradation of 35 non-metro airports, nine have been completed. These

include airports in Amritsar, Aurangabad, Dehradun, Jaipur, Lucknow, Nagpur, Trichy, Udaipur and Visakhapatnam. Work is in progress in the remaining 26. These include Ahmedabad, Agatti, Agartala, Agra, Baroda, Bhopal, Bhubaneshwar, Chandigarh, Coimbatore, Dimapur, Goa (Dabolim), Guwahati, Imphal, Indore, Jammu, Khajuraho, Madurai, Mangalore Patna, Portblair, Pune, Rajkot, Ranchi, Raipur, Trivandrum, Varanasi.

Other 23 airports under development

Under this second phase where 23 airports were recognised for upgradation, work on 12 airports has been completed. These include Dibrugarh, Srinagar, Calicut, Kullu, Surat, Hubli, Belgaum, Cooch Behar, Mysore, Akola, Gondia and Pant Nagar. Work is in progress in the remaining 11. These include Rajahmundry, Vijayawada, Jodhpur, Cuddapah, Shillong, Tezu, Jaisalmer, Puducherry, Leh, Jorhat, Bhavnagar.

Upgradation at the Chennai and Kolkata airports is underway under the modernisation project and no serious impediments are envisaged in their completion. Whilst we are on the issue of modernisation and upgradation of infrastructure at the airports, it may not be out of context to mention that the terminal buildings get the full

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Communication, Navigation and Surveillance (CNS) infrastructure are the three major elements that provide support for efficient air traffic management.

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Upgradation at the Chennai and Kolkata airports is underway under the modernisation project and no serious impediments are envisaged in their completion.

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visibility of the air passengers and majority of them are unaware of what goes behind the scene with regards air operations. Therefore, it may be apt and pertinent if I were to take this opportunity and give a peak to the air travellers with regards to AAIâ&#x20AC;&#x2122;s responsibility in this direction. We are required to modernise and upgrade these systems too, thus, ushering in the latest and fast changing technology. Air Traffic Management (ATM) is not only crucial but also plays a pivotal role for any strategic player in global aviation. India being one of the strategic players, AAI dons the responsibility on behalf of the country. Thus, AAI is the only authority designated by the Central Government for providing air traffic services in the Indian airspace and the oceanic airspace delegated to India by the International Civil Aviation Organisation (ICAO). ATM can easily be referred to be the lifeline of aviation for the simple fact that it contributes immensely towards flight safety. To ensure proper and flawless co-ordination, the following augments have been undertaken: Automation system at all towers and approach control units serving the airports. System to be interfaced with main system at central ACC. Co-ordination and other ATC related functions through automated system. Flight data processing and Air situation awareness display based

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S P E C I A L on active FPL with electronic strip displays are essential features of the system.

ATC Procedures

RNAV/RNP procedures based on PBN to be implemented both in route and terminal approach areas. Procedure design to take into consideration environmental impact and noise abatement. Reduced separation, both in route and approach area, in a progressive manner to enhance capacity. PBN has been implemented at Mumbai and Delhi, as they are the two major airports handling the bulk of the arrival and departure traffic in India.

Benefits of PBN These procedures exploit onboard navigation capabilities, coupled with operational procedures to benefit aircraft and airspace users through: Improved airspace utilisation through enhanced airspace capacity; Improved management of air traffic leading to enhanced air safety; Enhanced safety to de-conflicting arrival and departure routes with predictable flight paths; Repeatability of flight path, resulting in minimised tactical radar vectoring, thereby enhancing operational efficiency of the controllers and pilots; Significant reduction in

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controller-pilot communication; Reduced fuel burn due to shortened flight legs as compared to conventional Standard Instrument Departures (SID), leading to significant environmental benefits in terms of reduced emissions; Reduced reliance on groundbased navigation infrastructure, since navigation guidance is obtained from navigation satellites. Communication, Navigation and Surveillance (CNS) infrastructure are the three major elements that provide support for efficient air traffic management. The infrastructure, being primarily ground-based, supports the system’s operations with aid Doppler VHF omni range equipment (DVOR) distance measuring equipment (DME), non directional beacons (NDB) and Instrument Landing Systems (ILS). All these aids/systems are required to be kept in operational readiness in accordance with the dictates of the International Civil Aviation Organisation (ICAO). The very prestigious Space Based Augmentation System ‘GAGAN’ project, which is in the final stages of completion, will replace the ground based support system.

GAGAN (GPS Aided GEO Augmented Navigation)

GAGAN overlay covers from Africa to Australia. Potential for extension of GAGAN services to neighbouring countries. Technology Demonstration successfully carried out and system likely to be fully operational by 2010.

GAGAN would provide precision approach and landing guidance up to Category I to aircraft hitherto not available due to terrain conditions precluding provision of ILS. In pursuance of the above and to keep pace / abreast with the other members of ICAO, we at AAI do posses the requisite expertise, be it in terms of men / material / equipment. AAI does have specialised units to meet the requirements of ICAO for both ground related and airborne tasks. Radio Construction and Development Unit (RCDU) is responsible for site finalisation & installation of radio / navigational / landing aids. Flight Inspection Unit (FlU) with a fleet of three aircraft is responsible for carrying out flight calibration and testing of facilities (inclusive of CAT III B ILS) so as to ensure they meet the ICAO-specified performance criteria. From the facts elucidated above, it may have been easily comprehended that upgradation / modernisation of infrastructure in the aviation sector is not restricted to just terminal buildings, but has a much larger connotation. Accordingly, it would have been seen that AAI has ventured in a big way to not only meet the aspirations of the air traveller but also, of the aviation fraternity at large, by constantly monitoring the systems and its need for replacement with modern / safe technology. Therefore, it may be apt to conclude that AAI is on the right track and has accomplished majority of the tasks planned and embarked upon despite the global economic melt down witnessed during the last fiscal.

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Radio Construction and Development Unit (RCDU) is responsible for site finalisation and installation of radio / navigational / landing aids.

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Tackling challenges the AAI way

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Beating the economic and environmental challenges is tough, and tougher still is the task to assure people that aviation growth is not adversely causing damage to the greens, rather improving the bottom-line for airlines, feels Ajay Bhaskar Joshi and M P Rajshekharan. o matter what the popular belief regarding fuel emission by airlines is, the fact remains that improved air traffic management helps reduce the carbon footprint, improving the bottom-line for airlines. The recent economic downturn has made the economic challenges tougher. Though the impact of aviation on environment is pegged at only three per cent, this sector has attracted more than a fair share of attention in this regard. The biggest economic challenge in aviation sector is return on investments. The global economic meltdown has made the challenge stiffer. IATA had stated in September â&#x20AC;&#x2122;09 that $80 billion will disappear from the industry's top line. According to a study, passenger load factor dropped to 70 per cent in September 2008 compared to September 2007. Thus, cost cutting is a major tool to overcome the economic challenges. Impact of aviation on climate is not due to CO 2 emission alone. Other green house gases such as NOX compounds, ozone, methane, water, contrails and particles are emitted along with CO 2. With these compounds released directly in to the atmosphere, their potential harm to the earthâ&#x20AC;&#x2122;s atmosphere is much greater than terrestrial fossil fuel combustion. This is because of the larger residence time required for the latter. The emission in aviation has approximately twice

Reducing the running time of the aircraft's engines to minimum possible can help in meeting both the economic and environmental challenges. This would require efficient operations.

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the warming potential than the same emission on the terrestrial surface. Reducing the running time of the aircraft's engines to minimum possible can help in meeting both the economic and environmental challenges. This would require quick departures and arrivals and efficient flight profiles. The agency that can help aircraft operators in achieving these is Air Navigation service provider or Air Traffic Control or Air Traffic Management. The Air Traffic Controller is a key professional to help the cause of environment and airline.

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Over the years, many technological advances and improved processes and procedures have helped in meeting these challenges. Though concepts like, â&#x20AC;&#x2DC;Gate to Gate flights are still far from being realised, many other advances have been made in this field. In India, the Airports Authority of India has aggressively implemented these improvements. Some of them are: 1999 - Secondary radars were installed at Delhi, Ahmedabad, Nagpur and Mumbai enabling ATCs to provide direct routings. 2003 - EMARSH route structure - Six parallel routes over Bay of Bengal, Indian peninsula and

Arabian Sea were introduced. Due to these, the airspace capacity doubles and due to direct routings, the aircraft spend less time in the air, burn less fuel and emit less CO2. 2004: Reduced Vertical Separation Minimum â&#x20AC;&#x201D; This technique safely reduces the vertical distance between aircraft in upper airspace by adding additional flight levels. It is estimated that the introduction of RVSM has resulted in the removal of four days worth of CO 2 emissions per year. 2006: Two Rwy operations were introduced at Mumbai and Delhi with simultaneous use of two nonparallel runways for arrivals and departures. This significantly reduced delays and hence fuel consumption for departures. 2008: RNAV STARs and SIDs introduced. These ensure less track miles, efficient climb and descent profiles. In addition to these, the key personnel involved in all these procedures i.e. the air traffic controller can make huge difference in his/her individual capacity to the economic and environmental cause. Consider this; the global average air transport flight time for one flight is 97 minutes. There are 40 million operations per year that cost $40 bn in total. If just one minute can be saved per flight it would save over $4 bn annually. If the fuel burn can be reduced by one kg, it reduces emission by four kg. Hence saving just one minute per flight will reduce total atmospheric emissions by more than 10 million tones. Air traffic controllers can make a big difference to fuel efficiency by assisting aircraft to fly

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It was estimated that in one year alone, the controllers in Mumbai can help achieve total savings of 1406 hrs in a year. Thus, the total fuel burns saved/year would be 3,373,920 kg.

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The question is do the controllers think and care about these economical and environmental issues whilst they are engrossed in seemingly routine but actually exceedingly dynamic and stressful work?

more direct routes and reducing the amount of time before take-off and landing. The question is do the controllers think and care about these economical and environmental issues whilst they are engrossed in seemingly routine but actually exceedingly dynamic and stressful work? Does his or her mind factor these issues whilst taking and executing complex decisions in split seconds? Is he/she conscious that the clearances being delivered to the multitude of flights are affecting the economy and environment? Is the controller aware about the difference he/she can make? The answer is an emphatic “Yes”. Do the controllers work with these issues in mind? The answer is again an emphatic “Yes”.

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It is obvious that controllers do not function with these as the prime objective of their work. The primary objective of the controller is that a safe, orderly and expeditious flow of air traffic flows always. But subconsciously all controllers are aware about the difference their work can make to economy and environment. In fact the fulfilment of these self actualisation and esteem needs motivates the controllers more than anything else. A controller is thus always looking to reduce the time of a particular flight and clearing the flight to optimum flight levels. RADAR is a true good friend of controller in this cause. Since the introduction of Secondary Surveillance Radars in India, direct routings have become more of a norm than exception. A controller

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is always aware about the position of a flight, can reduce separation between two flights and this enables a controller to issue clearances for direct routings. Controllers more often than not initiate direct routings. Of course once pilots are aware about the possibilities of direct routings, they always request controllers for the same and again, in some way or the other, are always granted one. For example, the route from Delhi to Pune within Mumbai Area Control airspace is SG - AKTIV BBB - PUN. The total distance is 196 NM. After the direct routing the flight routes from SG to AKTIV to PUN, the distance is reduced by 33 Nm to 163 NM. Thus four minutes are saved on each flight and saving achieved per flight is $400 and the emissions are also reduced.

From Mid East/Europe to Goa, Cochin etc P574/W15 BISET - GUNDI UDULO - GGO The direct routing of BISET GUNDI - GGO saves 2 mins

From Europe to South India G208/R461 BVR - BBB - MABTA - BBM The direct routing of BVR BBM saves two minutes

From Hyderabad to Jeddah W28/A451 ATAPO - BBB - BISET The direct routing of ATAPO - BISET saves five minutes The Air Traffic Controllers Guild (I), Mumbai ran a campaign over a period of two months (July and Aug 2009) at Mumbai centre to encourage controllers to initiate more and more expeditious

routings. The controllers were encouraged to issue direct routings and record them. The ATCG (I) is an association of Air Traffic Controllers in India. It takes more than a keen interest in professional matters in addition to welfare of controllers. The sample data so collected was used by ATCG (I) to predict savings achieved for a year. The figures were stupendous. It was estimated that in one year alone, the controllers in Mumbai can help achieve total savings of 1406 hrs in a year. Thus, the total fuel burns saved/year would be 3,373,920 kg and the total emission saved/year would be 13,495,680 kg. Financially this would mean savings of 84348 mins i.e. $8,434,800 per annum. The figures seem huge but sustained all year round efforts can help in achieving those. These efforts have to be seen in the light of ATCO's complex task requiring high levels of expertise and skills pertaining to cognitive domains. It should also be noted that these efforts are made regularly in spite of unfavourably heavy workload by initiatives of controllers. Day in and day out controllers not only in Mumbai but all over India willingly accept additional stress and workloads to reduce flight times. I again reiterate, Air Traffic Controller is a key professional to help the cause of environment and airline. Some more technological advances like RADAR integration, creation of more sectors to reduce workloads can help in surpassing these predictions. The good news is AAI has already embarked on an ambitious project of integrating RADAR systems all over the country and providing seamless RADAR coverage over all of the continental airspace of India. Recruitment and training of controllers is also in full swing which will enable to create more sectors and hopefully more direct routings. â&#x20AC;&#x201D; Ajay Bhaskar Joshi is a DGM (ATM) at AAI (Mumbai) and M P Rajshekharan is AGM (ATM) in Mumbai.

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The good news is AAI has already embarked on an ambitious project of integrating RADAR systems all over the country and providing seamless RADAR coverage over all of the continental airspace of India.

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Towards a global

ATM system

A brief outline on the Airports Authority of India's current challenges and future Indian air navigation system framework that is being planned to cope with the demand in an efficient manner. ndia as a state and the airspace managed by the country are strategically located at the confluence of major airways connecting various states across the globe. The Himalayan mountain range in the north, vast Indian ocean in the south, Bay of Bengal in the east and Arabian Sea in the west makes this airspace a natural choice to fly over. The total airspace under the jurisdiction of India is about 2.8 mn sq nautical miles which include about 1,76 mn sq nautical miles of oceanic airspace. There are four FIRs which share a common FIR boundary with 12 adjacent states. India has registered a phenomenal rate of air traffic growth in the recent years, which is sudden and unprecedented in the history of civil aviation. In terms of number of aircraft movements, 10 per cent

The total airspace under the jurisdiction of India is about 2.8 mn sq nautical miles which include about 1,76 mn sq nautical miles of oceanic airspace.

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growth in the year 2002-03 reached 23 per cent in the year 2007-08. Similarly, in terms of passengers, 9 per cent growth in the year 2002-03 has reached 23 per cent in the year 200708. Even though there has been a reduction in traffic due to global recession, the recovery is expected very soon. August 2009 recorded a growth of 28 per cent over the previous month in terms of aircraft movements and it is expected that the trend will continue on the road of recovery. Considering the current trends and the forecasted growth and to foster the growth to boost the economic activity in the country, Airports Authority of India (AAI) has drawn out an ambitious programme to augment and modernise CNS/ATM infrastructure, across the country in alignment with ICAO global plan initiatives and regional guidelines.

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Enhancement of safety, capacity, efficiency and environmental protection are the primary objectives. While some of the initiatives have already been implemented, certain activities are being taken up as a long-term perspective. The implementation programme includes an efficient ATM system that is ably supported by a strong and robust CNS infrastructure consisting of digital data link communications, satellite-based navigation, new technology surveillance system and satellite-based situational awareness interfaced with integrated ATM automation network, System Wide Information Management (SWIM) and Separation Management systems. The new CNS/ATM system concept is networking of various systems and collaborative decisionmaking. The system supports network-centric real-time data exchange for collaborative decisionmaking by integrating various stakeholders and components of aviation activities such as human, information, technology and procedures. As India manages one of the largest oceanic airspaces where conventional communication such as VHF and radar-based surveillance are not possible, satellite-based surveillance through ADS-C and direct Controller Pilot communication through satellite datalink (CPDLC) based on ICAO FANS-1A, has already been implemented at Mumbai, Chennai, Kolkata and Delhi FIRs, which covers the entire oceanic airspace to ensure positive communication and surveillance capabilities for safe and efficient ATM services. India is one of the few countries in the world to have implemented such extensive ADS/CPDLC system covering the entire oceanic airspace. In respect of radar surveillance framework, about 70 per cent of the

continental airspace including the oceanic airspace adjacent to land areas is already covered under radar surveillance. The oceanic airspace in Bay of Bengal, Arabian Sea and Indian Ocean areas are fully covered under ADS-C/ CPDLC. Additional radars are under implementation to ensure 100 per cent overlapping radar surveillance cover throughout the entire continental airspace. ADS-B is being planned to fill the gaps and supplement the radar cover in the en route airspace and inaccessible areas. The surveillance sensors will be networked and integrated to support application of uniform level of separation standards, procedures and dynamic sectorisation. ADS-B is a radically new technology that is redefining Communications- NavigationSurveillance in air traffic management today. ADS-B is already proven and certified as a viable low-cost replacement for conventional radar. ADS-B uses conventional Global Navigation Satellite System (GNSS) technology and a relatively simple broadcast communications link as its fundamental components. The target date for implementing ADS-B is 2012 as per ICAO regional plan. The AAI has already carried out trials of ADS-B in Chennai region during 2004 and the results were very encouraging and the authority is committed to implement ADS-B as per ICAO regional plan.

Ground surveillance To enhance ground safety/surveillance capabilities, advanced surface movement guidance and control (ASMGCS) system has been implemented at Delhi, Bengaluru and Hyderabad airport. Similar system is under implementation at other busy airports: Mumbai, Chennai and Kolkata.

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ADS-B is a radically new technology that is redefining CommunicationsNavigationSurveillance in air traffic management today.

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Datalink communication The major step towards the digital data link communications is the "Dedicated Satellite communication network" connecting all the airports through a network that will serve for both voice and data exchange using a dedicated transponder for CNS/ATM requirements in the Indian communication satellite, INSAT 3C and 4B. The first phase of implementation connecting 35 airports have been operationalised and at different stages of implementation in respect of other airports. This will further enhance the communication network across the airports and ATS units. Implementation of AMHS (ATN), networking of DATIS, DVOLMET, AIDC and Digital Data link-based clearance delivery system are already in progress at various stages.

Satellite-based navigation

The first phase of implementation connecting 35 airports have been operationalised and at different stages of implementation in respect of other airports.

In a major step towards implementation of satellite-based navigation to support various phases of flight operation, India has developed a space-based augmentation system called GAGAN. The system has been jointly developed by AAI and ISRO (Indian Space Research Organisation). Technical Demonstration System (TDS) and Final System Acceptance Test (FSAT) has been successfully completed in August 2007. GAGAN signal in space is available for flight validation. Flight inspection has been carried out and results have been found to be satisfactory. GAGAN Final Operational phase (FOP) has already been launched in September 2009 and is expected to be completed soon. The system will be commissioned by 2012-13.

GBAS (Ground Based Augmentation System) The Ground-Based Augmentation System (GBAS) is a safety-critical system that augments the GPS Standard Positioning Service (SPS) and provides enhanced levels of service. It supports all phases of approach, landing, departure, and surface operations within its area of coverage. The current Instrument Landing System (ILS) suffers from a number of technical limitations such as, VHF interference, multipath effects (for example, due to new building

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construction at and around airports), as well as ILS channel limitations. GBAS is expected to play a key role in maintaining existing all-weather operations capability at CAT-I/II and III airports. GBAS CAT-I is seen as a necessary step towards the more stringent operations of CAT-II/III precision approach and landing. The most important operational benefits of GBAS is that one GBAS Ground Station will be able to support multiple runway ends and have more stable signal with less interference from preceding aircraft. AAI has planned to implement GBAS at two of the busiest airports i.e. Delhi and Mumbai to support satellite-based navigation in terminal approach control areas without relying on ground-based navaids.

PBN (Performance Based Navigation) implementation The concept of Performance Based Navigation is to exploit the on-board navigational capabilities of aircraft to navigate with required level of positional accuracy as derived from GNSS/IRS/DME-DME sensors for efficient air traffic management functions. ICAO Global Plan Initiatives encourage states to implement PBN procedures with the objective of enhancing safety, efficiency and capacity. The consistent high growth rate of civil aviation in India associated with the emergence of new airlines having fleet of new generation modern aircraft necessitated the need for rapid upgradation of facilities, procedures and infrastructure. Considering more than 80 per cent of the airline fleet is RNAV capable, implementation of PBN procedures became the natural choice for optimising airspace utilisation and enhancing airspace and airport capacity by taking advantage of airborne capabilities and GNSS. The AAI has commenced work on development of PBN procedures in 2006-07 with the primary objective of achieving effective and efficient utilisation of TMA, thus providing operational benefits to airspace users. This finally culminated into implementation of RNAV arrival and departure procedures at international airports in Mumbai, Delhi and Ahmedabad in August 2008. In the first phase, Performance

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Based Navigation procedures (RNAV1 SID/STAR) have been implemented at Mumbai, Delhi and Ahmedabad terminal approach areas from August 28, 2008. RNAV-1 SID/STAR procedures for Chennai TMA, have also has been implemented from October 22, 2009. Procedures are under development for implementation at other terminal approach areas and in en route airspace. Some of the benefits seen by the users of the airspace after PBN implementation at these airports are: Structured flow traffic in the TMA, thereby reducing the need for frequent communication with ATC. De-conflicting of arrival and departure flows has enhanced safety and improved efficiency. Almost 30 per cent reduction in RTF communication, thereby reducing controller workload. This has promoted efficient management of air traffic and airspace.

PBN implementation roadmap For sustained effort in implementing PBN procedures at all airports and airspace in India, PBN implementation roadmap of India has been established with the objective to accrue quantifiable benefits to the stakeholders in terms of fuel savings, reduction in emissions, capacity enhancement and improved access to the airport. PBN implementation is planned in three phase, short term (2008-2012), midterm (2013-2016) and long term (beyond 2016). A brief on the objectives that are planned to achieved in various phase are:

ATM automation Automation system plays a very critical and key role in the Air Traffic Management system. Flight plan/radar data processing system, airspace situation awareness track displays, automatic co-ordination and

hands-off, controller decision support tools, flow management tools, conflict detection and safety alert tools, route conformance warning, etc. constitute an integrated ATM automation system for the controller to efficiently handle the traffic with enhanced safety. Integrated automation system is in place at Mumbai, Delhi, Bengaluru and Hyderabad. Implementation plans are in progress for other ATC centres as well. Automation system for 35 remote towers is also under implementation. These systems will be interfaced with main system at central ACC. Networking of radars and ATM facilities are under implementation. Subsequent to the implementation of networking the radars and ATM systems, the existing 11 en route centres will be amalgamated into four centres initially and then ultimately two centres with multiple sectors for operations.

Central Air Traffic Flow Management system An efficient ATM system should be flexible to enhance the capacity to meet the demand in an efficient manner without adverse impact on safety and in a very cost-effective manner for airspace users. Keeping in view the current and future growth of traffic and to ensure safe and efficient flow of traffic through various airports and airspace, the AAI has taken initiatives to implement the Central Air Traffic Flow Management system integrating various stakeholders in the system to programme various operational constraints strategically and tactically in such a way that the demand and capacity are optimally balanced through a collaborative decisionmaking process.

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Automation system for 35 remote towers is also under implementation. These systems will be interfaced with main system at central ACC.

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Leh

Kullu Shimla Amritsar Chandigarh Dehradun Ludhiana Pantnagar

Passighat Dibrugarh Raxaul

Lucknow

Agra Jaipur

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Jodhpur Udaipur

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Deesa Kandla Ahmedabad

Jamnagar Porbandar Keshod

Varanasi Jhansi Khajuraho Indore

Rajkot

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Bhopal Jabalpur

Chakulia

Bilaspur

Khandwa Bhavnagar Surat

Gondia

Bhubaneswar

Aurangabad Latur Nanded

Pune

Behala

Jharsuguda Nagpur

Baramati

Zero

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Akola Juhu

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Guwahati Patna Dimapur Bagdogra Tura Imphal Muzzafarpur Shillong Barapani Gaya Kailashahar Balurghat Malda Jogbani Kamalpur Khowai Asansol Agartala Ranchi Kolkata Turial

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Cooch Behar

Hadaspur Sholapur

Warangal

Hyderabad

Visakhapatnam

Kolhapur

Vijayawada Donakonda

Belgaum Goa

Cuddapah Hubli

ALL AIRPORTS Tirupati Chennai

Mangalore

Hassan Vellore

Mysore Pondicherry

Calicut

Coimbatore Trichy Madurai

Trivandrum

UNDER MODERNISATION

The Airports Authority of India (AAI) has set up an ambitious programme to upgrade and modernise airport facilities across India. This is apart from the major revamp effort at Chennai and Kolkata. By the end of 2010, the face of airports across India will be completely different-squeaky clean, modern and efficient.

MODERNISING ACROSS THE COUNTRY

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Ahmedabad Bhuj Porbandar Rajkot Surat Vadodara Akola Aurangabad Pune

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(Civil Enclave) Goa (Civil Enclave) Bhopal Indore Jabalpur Bhavnagar Baramati Kolhapur

Latur Nanded Sholapur Raipur Khajuraho

Cuddapah Hyderabad Visakhapatnam (Civil Enclave) Tirupati Vijayawada

Coimbatore Madurai Tiruchirrappalli Mangalore Mysore

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Pantnagar Lucknow Udaipur Srinagar Leh Varanasi

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Dibrugarh Dimapur Guwahati Imphal Agartala Barapani

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irports Authority of India (AAI) is the largest airport operator and manages 124 airports across the length and breadth of the country. In addition, it is also the sole authority responsible for managing Indian airspace. To meet the unprecedented growth of the aviation industry, the AAI has embarked to create “World Class Airports” to ensure that ultimate comfort is provided to air passengers transiting through our airports. In the five-year plan, it has envisaged to invest more than Rs 12,000 crore for 53 airports in addition to Kolkata and Chennai airports. The work at hand entails all functions of aviation management: updating ATM procedures, CNS equipment, terminal, cargo buildings, apron, taxi tracks and runways. In 2010, AAI’s determined effort of providing world-class airports would get translated into reality, as most of the projects would be completed before the end of the year. As the third largest land-owner in the country after the Railways and Defence, AAI has the enormous task of not only safeguarding its estates but ensuring gainful utilisation to generate revenue from nonaeronautical avenues to adequately augment earnings, especially in the changed scenario where four major profit-earning airports have been hived off. The need and responsibility has, therefore, increased manifold. The present revenue generated from this source is to the tune of 20 to 22 per cent of the total earnings while the range the world over at leading airports is between 45 to 50 per cent. There is then ample scope for AAI to exploit this resource to its advantage and the modernisation process is a step towards achieving that.

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Chennai gets a makeover SHAPE OF THE FUTURE: Artist’s impression (left and bottom of next page) of the Chennai airport’s airside and exterior once it is completed.

The new domestic terminal will occupy 67,700 sq m of space as against the existing facility spread over 19,250 sq m, and by end-2010, it will be able to handle 10 mn passengers against the existing 4.74 mn.

Owned, managed and controlled by the Airports Authority of India, the Chennai Airport is undergoing a Rs 2,000 cr makeover. R Krishnan looks at what the makeover would entail. hennai Airport is 100 per cent owned by the Airports Authority of India (AAI) which has been mandated by the Union Government to develop and modernise them. AAI is working overtime to see that this airport continues to rank among the top airports in India. This could turn out to be true in the case of Chennai which was always historically seen as ahead of it’s newly grown-up southern cousins: Bengaluru and Hyderabad. Chennai is also different from these Greenfield airports as its existing airport at Meenambakkam is spread over 2,000 hectares and

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more land has been acquired both from the public and the defence to extend its airside facility and expand the domestic and international terminals. Unlike the shutdown airports — HAL airport in Bengaluru and Begumpet airport in Hyderabad, the Meenambakkam airport had always been the beacon of air services in southern India. AAI is now spending over Rs 2,000 crore to completely revamp it. At the same time, the Tamil Nadu Government has mandated and even got an assurance from the Union Government that AAI will be responsible to build a new Greenfield international airport at Sriprembudur, about 25km from Guindy where the Raj Bhawan is situated. In November 2008, AAI launched its Chennai Airport modernisation. The project has since been revised upwards to nearly Rs 2,000 crore. Fund shortage, then, has not constrained the project execution and work is well underway at all important sections, be it the laying of the travelator, expansion and building of new domestic and international passenger terminals,

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extension of the main runway and building of the bridge across the Adayar river and to extend the secondary runway so that Chennai Airport is able to sharply increase the aircraft movement each hour â&#x20AC;&#x201D; an indicator of how busy the airport is in comparison to other similar airports. As per work which is being done, the new domestic terminal will occupy 67,700 sq m of space as

against the existing facility spread over 19,250 sq m, and once ready by end-2010, it will be able to handle 10 million passengers against the existing capacity of 4.74 million. The peak hour passenger capacity will rise from 2,000 to 3,300 passengers. Three more aerobridges are being built to take the total to six. The number of check-in counters will rise to 62 from 58 and of these seven such counters will be for e-ticketing. Following modernisation and upgrade, Chennai airport will have six baggage conveyor belts of 70 meters each as against only one now. A new car park facility is being constructed that will provide space for 1,200 cars and taxis against only 600 now. In the expansion work of the international terminal building, terminal space area will be increased from the present 42,300 sq m to 59,300 sq m and the passenger handling capacity will be increased from three to four million. The peak hour passenger capacity will be increased from 2,150 to 2,300 passengers. One more aerobridge will be added to take the total on the international side to six. There will be a very sharp increase in the check-in counters on the international side reflecting the rising importance of Chennai as an important gateway for foreign airlines as well as domestic carriers flying international. The check-in counters will increase from the present 42 to 72 while the existing four baggage conveyor belts will be

The AAI is planning to build more night parking stands that can easily accommodate either seven Boeing 747s or four A380s. C R U I S I N G

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SPARKLING: Inside the present terminal.

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Unaffected by downturn, Chennai is on top

Emirates has shown keen interest in considering Chennai as a hub once the modernisation and expansion project is completed.

n the last four years, Chennai has witnessed a phenomenal increase in the aircraft movements. From a total of 69,055 aircraft movements comprising 47,900 domestic and 21,155 international aircraft movements in 2004-05, it rose to 99,775: 76,208 domestic and 23,567 international aircraft movements in 200607. In 2007-08, the aggregate aircraft movements rose to 115,865 comprising 88,175 domestic and 27,690 international. In the next year (2008-09) after the full impact of the sharp rise in fuel prices was felt and airlines began to shrink capacity and slash network/flight frequencies, there was only a marginal rise in the aircraft movements with the aggregate movement rising slightly to 115,964. However, in this rise, domestic aircraft movement actually saw a drop to 85,512 while movement of international aircraft rose to 30,452. In the first two months of the current fiscal, 200910, the total aircraft movement stood at 18,875 comprising 13,680 domestic and 5,195 international aircraft movements. The above figures need to be seen in the context of passenger movement or traffic. From 6.78 million passenger traffic handled in 2005-06 made up of 4.17 mn domestic and 2.61 mn international, the total passenger traffic rose to 8.97 mn in 2006-07 comprising 6.08 mn domestic and 2.90 mn international. In 2007-08, when the aviation industry saw a boom, the passenger trend traffic rose to 10.66 mn comprising 7.25 mn domestic and 3.41 mn international passengers. In 2008-09, when the industry virtually

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collapsed everywhere and seat factors were at their lowest globally, the total passenger traffic handled at Chennai Airport fell to 9.84 mn with the domestic component falling to 6.12 mn that is even lower than the 2005-06 figure while international passenger traffic rose to 3.66 mn. In fact, the phenomenon was universal and other metros too witnessed the drop. Chennai Airport revenues, however, have been rising consistently. They rose from Rs 189.84 cr in 2004-05 to Rs 275.32 cr in 2005-06, to Rs 364.52 cr in 2006-07, Rs 499.09 cr in 2007-09 and to Rs 533.74 cr in 2008-09. A very significant part of this rise in revenue was the consistent rise in non-aero revenues as well as cargo against the rise in aero revenues. In fact, aero revenues which continued to exceed non-aero revenue in 2005-06, 2006-07 and 2007-08, fell below non-aero revenue in 2008-09. More importantly, the cargo revenue notwithstanding, the economic slowdown has had its effect. That the AAI controlled and managed Chennai airports has done very well is evident from the figures that have been released showing the target fixed according to the MoU signed with the Government and what it actually achieved. As against the MoU target of collecting Rs 100 crore in traffic â&#x20AC;&#x201D; that is landing and parking, Rs 350 crore from non-traffic (including PSF and cargo) and Rs 131 crore as operating costs â&#x20AC;&#x201D; the actuals for the fiscal year 2008-09 was Rs 98.8 cr, Rs 434.93 cr and Rs 129.88 cr, respectively.

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modernised and length extended. Besides, there will be a sizeable increase in immigration/customs counters, both at the arrival and departure area. The Chennai airport revamp plan also includes increase in the number of parking stands for aircraft as well as special night parking facility for wide-body aircraft like the Boeing 747 and Airbus A380. There are 60 parking stands available, which include 18 for night parking, today. While 10 more parking stands have been built and could get ready soon, the AAI is also planning to build seven more night parking stands that can easily accommodate either seven Boeing 747s or four A380s. Chennai Airport has two runways. The primary runway is 3,900 meters long while the secondary runway is 2,085 meters long. To this secondary runway, AAI is adding another 1,032 meters, which has necessitated building a bridge across the Adayar river to accommodate the additional laying of 1,032 meters of the secondary runway. While 832 meters of this will be over land, the remaining 200 meters will run on the bridge over the Adayar river. The bridge which will be 200 meters long and 447.5 meters wide will be the first major bridge in the country capable of handling the weight of an Airbus A380 aircraft. The AAI has acquired 127 acres of land to complete the work on the expansion of the secondary runway. The advantage of the secondary runway will be felt once the expansion is complete since it can be used without any payload

penalty. The bridge construction alone will cost Rs 190 crore and is likely to be ready by September 2010. It may pointed out that Chennai has already been notified as the alternate airport for A380 in case of any emergency. By December 2010, the secondary cross runway will be complete and Chennai airport will be able to use both the runways. To ensure completion of work on the primary runway, a notam has been issued for its closure for certain hours everyday for three months. The plans, however, for building a parallel runway has been dropped for the present because of certain logistical difficulties. Normally, airports all over the world have parallel runways provided the terminal building is situated in the middle of the two parallel runways. However, this is not possible in Chennai as the terminal building which has always been present on one side of the runway cannot be shifted to the middle. Nor is there enough land available to build another parallel runway along with the necessary terminal buildings for seamless passenger movement inside an airport as one sees in Dubai or even in Hyderabad and Bengaluru. Also, the Tamil Nadu Government is very keen to have a Greenfield airport for which Sriperumbudur has been identified. It has also decided that AAI should build it in partnership with the State Government undertaking like TIDCO which incidentally partnered with Tata Industries to set up the Titan Watch factory in Hosur. Asked for his comment, AAI

Chennai has already been notified as the alternate airport for A380 in case of any emergency. By December 2010, the secondary cross runway will be complete and Chennai Airport will be able to use both the runways.

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WORLD-CLASS: Artistâ&#x20AC;&#x2122;s view of the interiors of Chennai Airportâ&#x20AC;&#x2122;s new terminal.

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THE PRESENT: Ticket counters at the airport.

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There is not enough land available to build another parallel runway along with the necessary terminal buildings for seamless passenger movement inside an airport as one sees in Dubai or even in Hyderabad.

Chairman V P Agrawal said, “The existing Chennai Airport will certainly not be closed down should AAI building a new Greenfield airport at Sriperumbudur. Unlike what happened in Hyderabad and Bengaluru, AAI may seriously consider converting the existing Meenambakam airport in Chennai for domestic operations while the new one to be built at Sriprembudur could be used for international operations.” Industry representatives told that AAI should not repeat the same story that happened in Hyderabad and Bengaluru, where the new airport developer ensured that that the old airports would be closed down. Seen from this context, it will be great opportunity for AAI to run two consecutive airports in Chennai. Should that happen then the domestic as well as the international airports in Chennai run by AAI could become bigger than any other airport in India in terms of operational freedom. British Airways, Lufthansa and a number of other international carriers have discussed the possibility of allowing crew change in Chennai and, therefore, use the night parking stands. There are also a number of

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CREATIVE VISUALISATION: Artist’s impression of the Chennai Airport, which would be fully modernised soon.

cargo carriers who want to use Chennai as a base. Recently, even Emirates showed keen interest in considering Chennai as a hub once the modernisation and expansion project was completed. When fully expanded, the Chennai Airport will be able to handle annually 24 million passengers and it will then become necessary to build another airport which Sriperumbudur is supposed to do. Already 5,000 acres of land has been identified and AAI has paid $600,000 to ICAO to prepare a feasibility report. This, after AAI conducted its own study. Come 2010, Chennai Airport would be fully modernised. South India then would have all its four capital city airports to be the most modern in the country in addition to the expansion of India’s first fully private airport in Kochi.

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Cargo takes centrestage in

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AAI plans Responding to the India growth story, the AAI has launched an ambitious programme to upgrade and enhance the cargo operations in its airports. he Airports Authority of India has chalked out plans to enhance cargo operations at its airports. With two major airports â&#x20AC;&#x201D; Delhi and Mumbai â&#x20AC;&#x201D; no longer under it, AAI was bound to take stock of the changed ground realities and review the policy of cargo operations. A review was also necessitated due to the changing market forces: many industrial townships and states with surplus agricultural products demanded availability of air cargo facilities from the nearest airport to not only save transportation time but also cut costs. This opens up new vistas for AAI. During 2008-09, all operational Indian airports together handled 16.97 lakh tonnes of freight (11.49 lakh tonnes international and 5.48 lakh tonnes domestic) registering a negative growth of -1.0 per cent when compared to the corresponding period of 2007-08. The Compound Growth Rate over the past five years indicates that international and domestic cargo has been increasing annually at the rate of 10.6 per cent and

7.9 per cent, respectively which accounts for 9.7 per cent compound growth rate for total cargo traffic at all Indian airports. The share of Chennai international cargo in India's total international cargo was 19.1 per cent and with this volume of cargo traffic, Chennai Air Cargo Terminal was the third busiest air cargo terminal in the country during the year 2008-09. The Compound Growth Rate over the past five years indicates that loaded and unloaded cargo have been increasing at the rate of 9.1 per cent and 17.4 per cent, respectively which accounts for 12.9 per cent compound growth rate for total international cargo traffic. Though cargo freight marginally declined by half per cent at Kolkata during 2008-09 when compared to 2007-08, it has been able to maintain more than nine per cent annual escalation in freight in the last five years. The other airports, Coimbatore, Amritsar and Indore have been

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MOVING ON: The Elevated Transfer Vehicle.

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The share of Chennai international cargo in India's total international cargo was 19.1 per cent and with this, Chennai Air Cargo Terminal was the third busiest air cargo terminal during the year 2008-09.

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performing reasonably well. A total of 6,330 MT of cargo was handled at all other airports of AAI during 2008-09 against 6,295 in 2007-08, thereby registering a marginal increase of over one per cent. Cargo forecast International cargo is expected to grow by seven per cent and domestic cargo by two per cent during 2009-10. The composite cargo growth rate in India is expected to be around five per cent in 2009-10.

State-of-the-art Centres for Perishable Cargo have been established at Delhi, Mumbai (both with JVC), Chennai, Kolkata, Amritsar and Trivandrum airports.

Plans and initiatives The AAI had established Integrated Common User Terminals for processing of international export and import cargo at four airports: at Kolkata in 1975, Mumbai in 1977 (now with JVC), Chennai in 1978 and IGIA in 1986 (now with JVC). AAI has also developed cargo handling facilities at Nagpur (1997, now handed over to the Maharashtra government), Guwahati (1999), Lucknow (2000), Coimbatore (2001), Indore (2007) and Amritsar (2007) to handle international cargo and courier consignments. State-of-the-art Centres for Perishable Cargo have been established at Delhi, Mumbai (both with JVC), Chennai, Kolkata, Amritsar and Trivandrum airports. Cold storage facilities: This facility has been established at Coimbatore, Lucknow, Guwahati, Amritsar, Goa, Ahmedabad, Bagdogra, Jaipur and Bhubaneshwar airports. Future plans: In order to streamline and promote air cargo operations at AAI-managed airports, on the anvil are:

Policy on development of airports To boost the export of perishable product, AAI has developed a new policy for establishment of Centre for Perishable Cargo (CPC), in consultation with APEDA (Agricultural and Processed Food Products Export Development Authority) and Ministry of Agriculture where drastic reduction in the processing fee have been instituted. Where such a facility is run by Central/State Government by leasing of land/space, a nominal license fee per annum would be charged for seven years and no royalty would be collected by AAI. A policy has since been formulated

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S P E C I A L wherein, domestic airports will be to developed for handling international cargo, by leasing space/land to interested organisations through open tenders on AAI's commercial terms i.e. applicable license fee + highest percentage share of Gross Turn Over (GTO) in June, 2006. AAI has embarked on an ambitious programme for the city side development of non-metro airports through the Public Private Partnership (PPP) mode. The development of cargo operations form a part of the city side development of the non-metro airports. Compliance of Statutory Dictates For the safety of passengers and aircraft, the government has decided 100 per cent X-ray screening of export prior to its loading on aircraft, for which necessary latest X-ray machines have been deployed at all the airports by AAI from January 1, 2004. In accordance with government directives to introduce Electronic Data Interchange (EDI) in the export and import trade activities, e-com has been established to facilitate transmission of import/export messages electronically among the community partners viz. Customs, Custodian, Airlines, Banks, Exporters, Importers, etc. at Chennai and Kolkata airports. Bar Code System for automatic data capturing has also been established in export and import sections at Chennai Airport and with the upgradation of hardware, the same will be implemented at Kolkata airport, to eliminate human intervention and updating the data in real time for faster movement of cargo. To reduce congestion at airports

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and to increase the cargo capacities, the civil aviation ministry has issued directives to all airport operators to reduce the free period to 72 hours from five working days granted to exporter/import/airlines for clearance of cargo. On its part, AAI has also upgraded and installed cargo handling equipment at cargo terminals that can be broadly classified into one of the following categories e.g. transportation equipment, weighing equipment and material handling equipment. The AAI has also positioned stateof-the-art cargo handling equipment at metro air cargo terminals: ETV: Elevated Transfer Vehicle is used to optimally utilise the vertical space at the cargo terminal. AAI established its first semi-mechanised integrated Air Cargo Terminal with Elevating Transfer Vehicle (ETV) at Delhi Airport on May 1, 1986, which is now managed by JVC. Subsequently, two of modern three-level ETV have been installed at Chennai Airport which can accommodate 178 pallets and containers and can store 356 MT of export cargo at any given time. ETV has also been installed at Kolkata in September 2008 at a cost of Rs 8.70 crore with a provision to store 70 ULDs to accommodate 140 MT of export cargo. AS&RS: The Automated Storage and Retrieval System is used for automated storage and retrieval of import consignments at the cargo complex. Automated storage cranes are used to pick up bins from in/out conveyor station on the air side and stacking them in empty slots of the storage system. Similarly, it can deliver and pick up bins in the

examination area from in/out conveyor systems. Under normal condition, the stacker crane is fully automated and all movements are controlled by a server. In addition, fork lift, scissor lift, lazy bed rollers for idle ULDs, cargo offloading ramp, special trolley for car cases, X-ray machines, etc. have also been positioned at the cargo terminal. Simplification of procedures With an aim to make all clearances user-friendly, many steps have been introduced by AAI. Among them are: Risk Management System (RMS): Star importers are allowed to clear their cargo on self declaration of imported cargo. This speeds up the movement of cargo. Clearance of built up ULDs at Chennai: With a view to decongest the air cargo terminal, AAI has implemented movement of shipper loaded ULDs. Special Economic Zones (SEZs): The government is paying special attention to decongest the already crowded air cargo terminals and in this direction, special emphasis is being given to set up SEZs in the vicinity of international airports where 100 per cent export-oriented industries like garments/ electronics/leather goods, gems and jewellery, etc. may be located. In these SEZs, all imported inputs are to be permitted by Customs free of duty. AAI is leaving no stone unturned to ensure that the desired degree of transformation in air cargo is carried out smoothly. The initiatives would bring about changes necessary to accelerate the growth of the air cargo industry in the country.

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AIDING FASTER CLEARANCE: The Automated Storage and Retrieval System at a cargo terminal.

AAI has upgraded and installed cargo handling equipment at cargo terminals that can be broadly classified into categories like transportation, weighing and material handling.

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Fly right or don’t fly Federal Aviation Administration (FAA) Administrator Randolph Babbitt believes that the way forward is by 'refocusing on professionalism' and a continuous upgrading of best practices. cursory look at the news channels or print media today would validate the fact that the aviation has been hit with a wave of bumps we can label quite appropriately as an extreme need to refocus on professionalism. And, perhaps, we even need to develop a better understanding of professionalism. The overshoot of Minneapolis (Northwest Airlines flight that overshot the Minneapolis airport by 150 miles) is a very sad example. As a pilot, it doesn’t matter much whether they were using their laptops, or re-enacting the LincolnDouglas debates — what they did was wrong and they lost total situational awareness and that’s why their Airman’s Certificates have been revoked. There is no substitute for situational awareness. They knew a lot better and they were trained a lot better. And they ignored it. But especially in the context of our push for professionalism, this whole incident is extremely disappointing. The passengers aboard that airplane sat comfortably because they assumed that the people up front were paying attention. Being distracted by compound problems is always a risk in the cockpit, which is why the captain and the first officer are trained and professional paid positions. You get paid to be a professional. That’s actually the definition of the difference between being a professional and an amateur. But I think that this is a sign of a much bigger problem. I can’t regulate professionalism. With everything we know about human factors, there are still those who just ignore the common sense rules of safety. At the top of the list is something every pilot has heard over the years from their flight instructors: Remember to first always fly the airplane.

The national airspace system is not a video game with a reset button for when you make a mistake. We need to be reminded that it’s a privilege — not a right — to fly in it.

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I wish this were the only instance of a loss of focus, but it’s not. Listen to the cockpit tapes from the accident in Buffalo (a Colgan Air DHC-8-400, operating as Continental Connection flight 3407, crashed during an instrument approach to runway 23 at the Buffalo-Niagara International Airport, Buffalo, New York on Februarty 12, 2009). Same problem, the one thing those two were supposed to do is the one thing they didn’t: pay attention. Juxtapose that with Captain Chesley Sullenberger. There was not one second of less than total concentration. That crew was the epitome of professionalism and a textbook case of focus by everyone, including the controllers. That is an example of being in the game especially when the stakes are so high. The national airspace system is not a video game with a reset button for when you make a mistake. And occasionally we need to be reminded that it’s a privilege — not a right — to fly in it. The foundation of that right is all of us obeying the rules that make it safe. Our highways and railways are set up on the same principle. Fly right or don’t fly at all. When you see examples like this, it makes you wonder. But the good news here is that the system is dominated and operated by professionals like you who recognise that we all must deal with the bumps and that we all must step up. Just the other day, I learned that 22 per cent of all trucks that get pulled over are not in compliance with the rules. Aviation’s non-compliance is just a tiny sliver of that because we all recognise that when it comes to safety, “close enough” is never good enough. It’s got to be that way. With as many bumps as we have, the good news is actually very good: almost always, we’re paying attention to the

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right things at the right time. As you know, this Administration wants to get rid of any bumps on the path to air traffic modernisation. NextGen (USA’s ‘Next Generation Air Transport System’) is important here, and it’s important internationally. We have no plans to go it alone. Towards that end, we are placing a heavy emphasis on establishing a seamless weave between NextGen and SESAR (Europe’s ‘Single European Sky Air traffic Research system’). But it’s clear that we need consistency and focus to make this happen. This is a global industry, and it takes a global view from each of us to make things fly right. I think that first and foremost, we need to work as a team. We need to share flight plans, develop common procedures. We need systems that allow our pilots to fly into each other’s airspaces. We need to share data. There has to be a consistency in the rules. And as global partners, we must work together to determine the need for new rules. It’s also clear that air traffic modernisation can’t be an intercontinental competition. We have to work together to make sure that what’s on the drawing board is a good fit for the system too. That’s why the goal in our modernisation efforts needs to be in the payoff: NextGen and SESAR must deliver operational efficiencies. If nothing else, the dollar cost of fuel, the social cost of carbon and our focus on being green are proof enough that NextGen and SESAR need to be hand-in-glove each step of the way. And we are talking with other authorities around the globe about their plans for the future. A few weeks ago I was in Japan and China… and both of those countries are devising their future programmes — CARATS (Comprehensive Assessment and Restructure of the Air Traffic Services) in Japan and CNATS (NextGen Air Traffic Management System) in China. So, the energy in making sure we are harmonised is evident in every corner of the globe. We’ve already begun transitioning to NextGen with the introduction of performance-based navigation, and with the acquisition phase of ADS-B (Automatic Dependent Surveillance — Broadcast). There are R&D

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activities for continuing operational improvements between now and 2018. The interest in this program is keen at the very highest levels in the government. And the interest is keen from our international partners as well, government and industry alike. But even at that, the toughest part about harmonisation remains commitment. We, both here and with our partners abroad, need to keep our focus. Part of that focus must be the continuous export of best practices. Safety, SMS, new procedures, new ways of getting things done. Those are the kinds of things that can’t be proprietary. The point is simple. If any of us tries to go it alone, quite clearly, we’re not going to go as far as we need to. Without partnership, we simply can’t get there from here. Globalisation of the world is here. Our industry must be in step with that movement. As long as we recognise our place in the equation for bumps in the road — and there will be bumps — I’m confident.

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Excerpts from a speech made by Randolph Babbitt at the Washington Aviation Club some months ago

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HUNDRED PER CENT SECURITY IS THE IDEA: ‘Close enough’ is never good enough.

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raditionally, Indian airport infrastructure has lagged demand, both in terms of the ability to meet the growing traffic with minimum capacity and basic amenities, and also in terms of high quality of service to the passengers. Domestic traffic alone is forecasted to reach 160-180 million passengers in 2020 (from 80 million in FY 2009). Airport investments have, thus assumed a sense of urgency like never before. Recognising these challenges, the Ministry of Civil Aviation, allowed privatisation of Delhi and Mumbai airports and also moved to Greenfield airports at Bengaluru and Hyderabad. These airports created a wave of enthusiasm among travellers, because of perceptible shift in airport services. Around 11 new Greenfield airports and up to 35 non-metro airports are

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awaiting upgrades, requiring a staggering investment of $30 billion. The policy on airport infrastructure concluded that to meet this quantum amount of investment, infusion of private investment would become inevitable. In any infrastructure sector, the ability to package projects to woo investors is a key criterion to the privatisation process. Airports having long gestation projects require long term policy support from the government. One of the primary concerns of the investors is regulation of tariffs for aeronautical services, which form the biggest chunk of revenues for airports, and thus represent the most important factor in deciding its viability. When the four airports were privatised, the quantum shift in the level of investments and quality services offered, meant that these tariffs were no longer adequate to

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service the airports. The agreement provided that a new economic regulator — Airports Economic Regulatory Authority (AERA) would be established to rationalise the aeronautical tariffs. Due to absence of any economic regulator at the bidding stage, operators bid is based on their best educated guess on economic tariff levels. In the interim period, the winning airport bidders were allowed to escalate their airport tariffs for inflation, besides charging a shortfall charge called “User Development Fees” (UDF). However, implementing UDF has been a challenge for the airport operators. Faced with intense pressure from the industry and public perception, airports had to defer the increase in airport charges and settle for a less-than-sufficient UDF. With the advent of AERA in late 2009, Indian airports are now hoping that the situation will turn for the

better. AERA's objectives are refreshingly comprehensive — “to create a level playing field and foster healthy competition amongst all major airports (government owned, PPP-based and private), encourage investment in airport facilities, regulation of tariff of aeronautical services, protection of reasonable interests of users and operation of efficient, economic and viable airports”. AERA is in the process of framing the regulations and guidelines and has initiated a consultative process to firm up the positions of various stakeholders. While economic regulation is meant to be independent in the process, it cannot be indifferent to the policy objectives of the government. Balancing the interests of the investor and consumer, it is fraught with challenges and risks. There are pressures demanding

We may be happy seeing the newly-furbished Delhi and Mumbai airports, but the fact remains that in India, around 35 non-metro airports are awaiting upgradation while 11 new Greenfield airports are scheduled to come up with an estimated investment of US$ 30 billion. Challenges, like they say, are aplenty, writes Satyan Nayar.

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â&#x20AC;&#x153;T3 will be truly of international standardsâ&#x20AC;? P S Nair, CEO, Delhi International Airport Limited, is confident that the new terminal â&#x20AC;&#x201D; T3, coming up at the airport, will provide an entirely new experience to passengers using it. In this interview, he outlines his future plans for the airport.

Are you happy at the way T3 has shaped up? T3 is going to be truly of international standards in every respect. I am confident that passengers travelling through T3 will have an entirely new experience.

There are reports that domestic too will move to T3 and the present domestic terminal will an exclusive terminal for general aviation. In that case what happens to your plans for an LCC terminal? We have planned to shift full scale domestic carriers along with

One of the primary concerns of the investors is regulation of tariffs for aeronautical services, which form the biggest chunk of revenues for airports.

populist measures. However, in long run, it would be detrimental not only to the airport operators, but the entire aviation sector as well. Airport investments would suffer, ultimately leading to sub-optimal capacity creation and poor service quality levels. Some of the important areas of concern for the airport investors are as follows: Differences with concession agreements and existing understanding Reconciling concession agreements and the common understanding of the bidders with post-facto regulations will be a daunting exercise for the regulator. Even the definition of aeronautical services has varying interpretations under the AERA Act and the concession agreements. While Ground Handling and Cargo services are considered non-aeronautical according to the agreements, they are considered otherwise under

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What are your plans for the cargo complex that you are setting up with CELEBI? Our JV with CELEBI is currently in the process of upgrading the integrated cargo terminal facility for international cargo operations. Concurrently, the JV is also focusing on process improvements in the Service Standards front. international airlines to T3, leaving stand alone LCCs at T1D. For general aviation, we have recently commissioned exclusive terminal/lounge facility at T1D.

There were some reports that the commercial in T3 will be unparalleled. Are you satisfied with the way it is shaping up? I am confident that T3 will offer unparalleled and unique shopping experience to the passengers.

the Act. Further, the financial models of the winning bidders (including tariff assumptions) and their master plans has been approved by the ministry at various stages. While on paper, any regulatory act or law can prevail over a contract, AERA should not set the airport investors worse off than their contract. Regulatory decisions that seek to alter the conventional understanding of the airport investors, or which goes against the spirit of agreements signed with the government, will have a severe negative impact on the future investments. Such regulations may set precedents for future decisions and any errors in the initial set will have a cascading effect. Further, if the outcome of the regulations negate the policy incentives offered by the government, investor appetite in the sector will abate, which will work more seriously against maximisation of consumer welfare, than any short

TRULY WORLD-CLASS: Work in full swing at T3 in Delhi.

Many of the airlines are complaining about huge hike in rates on moving to T3. What is the real story? If you are referring to space rentals at T3, the fact is that we have maintained status quo in the rate the airlines have been paying for far inferior, 24 year old facility at T2. As for Aero charges, the charges will be subjected to AERA hairsplitting.

term incentives offered to them by way of reduced prices. Cross subsidisation from non aeronautical sources Airports also have nonaeronautical sources of revenues including retail outlets, food, duty free etc. In some countries, the aeronautical tariffs are set off fully or partially by non-aeronautical revenues (called single/hybrid till). The argument for this dwells on the fact that non-aeronautical revenues, as discretionary sources of spending, are dependent on the traffic that â&#x20AC;&#x153;airlines bringâ&#x20AC;? and therefore, should subsidise the aeronautical charges. This argument is fraught with several problems. First, this forced crosssubsidisation is an economically perverse incentive for inefficient asset maintenance and reinvestment. In a capacity constrained system, if the airport operator cannot fully recover economic costs of investing in an

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While on paper, any regulatory act or law can prevail over a contract, AERA should not set the airport investors worse off than their contract.

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â&#x20AC;&#x153;CSIA to be one of the worldâ&#x20AC;&#x2122;s bestâ&#x20AC;? Sanjay Reddy, MD, Mumbai International Airport Pvt Ltd (MIAL), outlines his vision for the future.

In the last four years since MIAL took over operations at CSIA, it has been our concerted effort to develop the nonaeronautical opportunities as part of an overall thrust towards enhancing passenger comfort and convenience.

What is your roadmap for 2010? I ask this with regard to three areas: Commercial, Improved traffic flow and reclamation of land. Commercial - With the process of airport modernisation now firmly underway, Indian airports are now geared up to fully exploit the commercial opportunities. At the same time, the aviation sector has turned the corner after a difficult year and passenger traffic is rising steadily. Hence, there will be an added impetus on commercial revenues that will accrue from non-aeronautical sources such as retailing, advertising and ground handling to generate profitability. In the last four years since MIAL took over operations at CSIA, it has been our concerted effort to develop the non-aeronautical opportunities as part of an overall thrust towards enhancing passenger comfort and convenience. In 2010, we will further fine tune our offerings in areas such as Duty Free, Food and Beverage and brand retail. Improved traffic flow - Since taking over operations at CSIA, MIAL has initiated regular measures to improve efficiency of operations. It has been an ongoing effort on our part to focus on enhancing the infrastructure and facilities at CSIA to handle the increasing passenger traffic. In fact, CSIA has set a benchmark in handling monthly passenger traffic and continues to remain the busiest airport in India with a consistent growth in passenger traffic in the last few years. December 2009 recorded a staggering 2.53 million passengers passing through CSIA. The total passenger traffic recorded for the year 2009 was 24.8 million. As a result, the infrastructure at CSIA has had to necessarily keep pace to support this growth. For MIAL, this has translated

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into managing more Air Traffic Movements (ATMs), more parking bays, more ticketing counters and more passengers passing through CSIA thereby leading to more facilities. In line with this, in the last four years of operation, major infrastructural enhancements at CSIA on the airside such as the commissioning of both rapid exit and parallel taxiways has helped facilitate increased and faster aircraft movements. These have also helped reduce runway occupancy time for aircraft landing and take-off. This improvement in the efficiency of aircraft movements between the runway and terminal areas, has in turn contributed to helping reduce congestion. In 2007, within just a year of taking over operations at CSIA, MIAL opened a new domestic arrival terminal at 1B as a result of which 65% of the domestic arrivals shifted from Terminal 1A to 1B. Terminal 1B in itself, international terminals 2 B & 2 C and terminal 1A has been refurbished considerably over the last few years resulting in expansion of capacity to meet the increase in traffic. In the year 2010, the cross-runway

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system at CSIA will continue to be upgraded to enhance operations so that it can cater to increased aircraft movements. Reclaiming of land with other users like Air India, etc. and status of work undertaken by HDIL - CSIA is the most constrained airport in the world due to paucity of land. As many as 276 acres of airport land is occupied by unauthorised slums. Since taking over operations of the airport, MIAL has initiated several steps to unlock land which is needed for increasing the airport capacity. Considerable progress has been made in this direction with support and co-operation from the Ministry of Civil Aviation and the Government of Maharashtra.

How do you cope with the inevitable growth in traffic now that Navi Mumbai looks sometime away, thanks to the environmental tangle? MIAL is in the process of implementing a Master Plan targeted at transforming CSIA. A key element of the master plan is enhancing the capacity of the airport to handle more passengers and cargo. In line with this objective, a brand new integrated terminal is being constructed at Sahar. This terminal will cater to both domestic and international passengers and will have a capacity of handing 40 million passengers per annum. In addition, the airside infrastructure is also being upgraded. MIAL will significantly enhance the efficiency of the cross runway system at CSIA by building four parallel taxiways and 11 Rapid Exit Taxiways to reduce runway occupancy and increase capacity.

What sort of optimisation can we see in the cross runway operations? Also are there any plans for a parallel runway once the hangars etc are cleared. One of the most complex and unique infrastructure projects ever undertaken in India, the modernization of CSIA has seen its own set of challenges and opportunities in the last four years since MIAL took over operations. This project is unlike any of the other

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international airports anywhere in the world. To begin with, CSIA finds itself in a unique position in that it is a highly constrained and landlocked airport with under 2000 acres of land, of which 276 acres is occupied by slums. This is in sharp contrast to airports in India and overseas where space is definitely not a constraint. In fact major airports around the world which handle lesser traffic have between 5000 to 10,000 acres of land available for expansion. CSIA is equipped with a Cross Runway system, designated as 09/27 (Primary Runway) and 14/32 (Secondary Runway), with both intersecting each other at a common point. In the last four years of operations, it has been a constant focus on the part of MIAL to make optimal use of the existing crossrunway operations to augment capacity, enhance efficiency of operations and handle the growing increase in passenger traffic at CSIA. After conducting a detailed feasibility study, the option of building a parallel runway has been ruled out on account of the already identified space constraints and paucity of land. Meanwhile, currently as a part of the overall modernization process of CSIA, MIAL has undertaken a complete reconstruction of both the runways. This upgradation is aimed at creating an efficient Airside infrastructure, which is the core of an airport.

How many parking bays do you have by the end of 2009? The number of parking bays at CSIA is: Domestic - 49; International - 43; and, Cargo - 5.

Finally, MIAL has consistently done well in passengers surveys undertaken by agencies like SITA. What are the innovations on the cards for passengers? The passenger surveys over the last few years have been a reaffirmation of our vision to transform CSIA into one of the worldâ&#x20AC;&#x2122;s best airports that consistently delights customers.

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MIAL is in the process of implementing a Master Plan targeted at transforming CSIA. A key element of the master plan is enhancing the capacity of the airport to handle more passengers and cargo.

â&#x20AC;&#x201D; Interviewed by K Srinivasan

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ENJOY IT ALL: The Kingfisher sports bar at Bengaluru Airport.

Mumbai and Delhi airports are providing 38.7 per cent and 45.99 per cent of their revenues respectively to AAI. This flow of money represents more than 50 per cent of AAI’s current profits.

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aeronautical asset, the rational economic behaviour would be to squeeze the asset to the maximum extent possible, leading to poorer service quality. It is best illustrated by Heathrow Airport, UK, a country that is supposed to be a ‘poster boy’ of efficient regulation. Under the Single Till approach, the operator is finding it economically expedient to pay the penalties of GBP seven million for poor service quality rather than invest in aeronautical assets, whose increased returns are frittered away by negative crosssubsidisation from nonaeronautical revenues Aeronautical and non-aeronautical sides of an airport are subject to different risk-return profiles. Keeping the two revenue sources separate ensures that airports are able to spread their volatility risks over different revenue sources. The intrinsic hedging lowers cost of capital, and increases investor interest. Mumbai and Delhi airports are providing 38.7 per cent and 45.99 per cent of their revenues respectively to Airports Authority of India (AAI). This flow of money represents more than 50 per cent of AAI's current profits which manages over a hundred airports from this account. It is a clear case of de-facto cross subsidy where a sizeable chunk of revenue goes towards meeting the aeronautical expenditures of other airports.

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When compared with international examples, Indian airports have a long way to go to catch up on the non-aeronautical revenues, and thus, scope of crosssubsidies is fairly limited. Encouraging development of nonaeronautical services would, therefore, largely be governed by the ‘push’ provided to concessionaires by airport operators in the form of incentives, which cannot be encouraged in single till approach. Opposition to single till system has even come from the mature airport regulators — from UK and Australia. Impact of revenue share As seen above, operators at Mumbai and Delhi airports have bid steep revenue shares to secure the development rights. Revenue share has no consideration for lower tariffs for consumers or increased service quality. It affects the viability of airport operations and eliminates incentives to

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Bengaluru’s encouraging growth trends Bengaluru International Airport Limited has reported an upward trend in traffic figures since July 2009. Led by Marcel Hungerbuehler, CEO, the airport has reported 2.45 mn passengers in the last quarter, the highest-ever since its opening in May 2008. n the latter half of 2009, domestic carriers stabilised with higher traffic numbers which they did not achieve a year back. This, according to the airport, is a positive sign which indicates the traffic growth. This growth is expected to continue hereafter. The continued growth would result in new markets being opened by airlines in the near future. The number of passengers handled was: 9.3 million (January — December 2009), while cargo handlings in the same period amounted to 161896 tons. The airport saw current daily air traffic movement of 280 flights. Commented Marcel Hungerbuehler, CEO of BIAL, “In the last quarter Airport Service Quality (ASQ) which is a world graph of airport performance standards, the Bengaluru International Airport was rated as high as 4.17 on a scale of 1-5, comparing it to the best airports in the world. More importantly, the online as well as physical feedback received from passengers has been positive as well as encouraging.” Towards the second half of the year, efficiency and processes peaked with:

Focusing on cargo has been part of Air India’s revival plan. Before the global downturn, the cargo division contributed around half to the national carrier’s total revenue.

invest in aeronautical assets due to diminished returns. Therefore, regulator should seek to allow partial or full cost pass-through of revenue share to the airport users. Calculation of cost of capital Cost of capital is a function of risk, inherent in the business, and it typically reduces as business matures and risks are better understood. The overall framework, within which

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Flight punctuality of over 85 per cent, within 15 minutes of the scheduled time of departure. Availability of key airport resources at the Bengaluru International Airport averaged 99 per cent. Baggage delivery: six minutes for the arrival of the first baggage on the belt. Domestic passenger average wait time at check in: 2.5 minutes. International passenger average wait time at check in: four minutes. Cargo also showed an upswing

business operates, evolves. Therefore, for an industry like airport, which is still at its nascent stage, it is expected to remain on a higher side. Revenue share arrangements by virtue of senior claim to airport cash flows increases cash flow risks for the debt and equity investors. As a result financial institutions impose premiums on cost of debt, resulting in sub optimal debt. Cost of equity is also higher in this sector compared to

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BIAL: Bengaluru Airport becomes wi-fi friendly.

from June 2009, in comparison to 2008, with an increasing growth rate of 1.8 per cent in June to 20 per cent in December. These figures show indications of the market recovering from the slowdown that prevailed earlier in the year. In addition, two new freighters, India Post and Deccan 360 were added to the domestic cargo operations in 2009. LOOKING AHEAD The future at the Bengaluru International Airport looks positive with new airlines, new frequencies and increased traffic numbers. The airport is looking at the addition of four new routes (three international and one domestic) every year. The airport is also looking at the addition of two new international carriers every year. The focus will be on connecting Bangalore to China, Africa and US. The increased focus across airlines is to tweak frequencies in line with yields and projected demand to create a sustainable operation. Increased aircraft capacities and

other regulated sectors due to several risks associated. Risks include variations in traffic, cost of capital, capital expenditure, and operating expenditure, volatility in nonaeronautical revenues, changing security environment and unanticipated interruptions in airport operations. Current capital structure of airports is biased in favour of equity/quasi-equity. However, this is a

hence new passenger demand for BIAL in the near -to- midterm will primarily come from airlines based in Asia and Middle East. The airport has been approached by a number of airlines for slots in 2010. Leading the pack are Air China with the Shanghai — Chengdu — Bangalore route and Qatar Airways that has expressed its intent to begin operations from Bangalore in summer of 2010. It has plans to deploy an A321 daily, arriving from Doha. Air Asia from Kuala Lumpur is also scheduled to being operations in April 2010. Flights like Lufthansa and Air France that had reduced frequencies have expressed reinstatement of the same. While on the other hand, airlines like Oman Air, Sri Lankan Airways, Malaysian Airlines and Tiger Airways are looking to increase weekly frequencies. Freighters FedEx, Aryan Air Cargo and Quikjet have also expressed intention to begin operations from Bengaluru airport.

reflection of the market realities rather than the desire of airport operators. Extent of financing available to an airport is limited. Further, last few years have witnessed a severe financial shock worldwide, which has also impacted banks’ liquidity. It is therefore not appropriate to compare the airport sector's capital cost with other infrastructure sectors, which are more established.

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Current capital structure of airports is biased in favour of equity/quasiequity. However, this is a reflection of the market realities rather than the desire of airport operators.

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What is the status of the Kaw Committee recommendations? The Kaw Committee was set up to look at strengthening and restructuring of the DGCA in particular keeping the tremendous growth in air traffic and the requirement of regulatory framework in mind. The Kaw Committee had made a large number of recommendations, most of which were technical in nature and have been acted upon. The

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recommendations were pertaining to procedures, i.e., simplification of procedures, how to expedite the transaction processes, pertaining to some rules, issues of air safety, accidents and investigations. We took stock of the recommendations implemented and discovered that a large number of them have been implemented in one form or the other. One of the key recommendations of the Kaw committee regarding the

Photo: H.C. Tiwari

Quietly but most efficiently, Dr Naseem Zaidi, in just about a year, has completely transformed the DGCA from an organisation mired in opacity to one that will be transparent, above board and at the cutting edge when it comes to regulating the safety environment over Indian skies. In this exclusive conversation with K Srinivasan and R Krishnan, he speaks about this and other issues.

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strengthening and restructuring of the DGCA was setting up of several new Directorates in this organisation. So, they took a stock of what is available in the DGCA and what more needs to be done. For example, the committee suggested that the organisation now needs to transform into an IT-led organisation. Most of its functions should be IT-driven. So, a division of IT has been created and posts have been sanctioned. They also said that DGCA would be exercising its safety oversight functions over air space and ATM. Thus, there should be a Directorate of ATM and Air Space, which has now been created. Posts have been sanctioned; Director ATM has been approved and further processes have taken place. All this has been done last year. The third area was training. The committee said that since the DGCA is a technical organisation where

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for DGCA portion.

Is it some sort of a precursor to the Central Air University — a recommendation of the Kaw Committee? It (the academy) may finally evolve into some academic courses also. I can’t say it’s a precursor, but it is most definitely more oriented towards onjob work and may diversify.

Will it just be for you people or also for the airlines? Of course, they would be welcome. The airline content would be on how to ensure compliance relating to safety, compliance of regulation relating to security and likewise aerodrome operator, ensuring the safety of aerodromes. So, they would also be invited and it will be mixed group of stakeholders’ kind of thing. We have, thus, set up a Division of Information Technology, a DGCA Training

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DGCA more transparent” skilled people are needed, there is a need for them to be constantly refreshed, upgraded and exposed to international practices. So, a DGCA training academy has been set up and two dozen new positions have been created. We have now appointed a full time Deputy DG and Director for the training academy. Now there is a larger proposal of setting up an Indian Academy of Aviation Management and Research. There will be an autonomous society set up by Airports Authority of India, which will have airport sector, DGCA and BCAS. All of this is housed at NIAMAR in Delhi and the entire building is now being shifted. We have got an allocation of Rs 10 crore

Academy, a Directorate of ATM and Aerospace and the Directorate of Research and Development, which was also one of the recommendations and has now been transformed into Directorate of Aircraft Engineering. Kaw Committee further suggested that since DGCA is not engaged in hardcore research and development, this department can now be transformed into aircraft engineering directorate. You might be aware, that the aircraft, which were being designed earlier, are now being engaged in type certification, validation of types, design organisation approvals, etc. Now, we have two big offices, one here, headed by Deputy DG and one in Bengaluru that has a full time Deputy DG. Another thing that Kaw Committee

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A DGCA training academy has been set up and two dozen new positions have been created. We have now appointed a full-time Deputy DG and Director for the training academy.

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recommended was that the certification process of aeronautical products — how to develop and promote the aeronautical products of the country. They cannot be exported unless they are certified by FAA or by European Regulatory Structure. So, now we have set up one bilateral aviation safety programmes with FAA and they are visiting us to undertake technical assessment of our certification capabilities. As a first step, they have selected the certification process of life raft so that process is going on in Bengaluru. They are visiting us in April or May to assess how capable we are to undertake a small certification project like life raft. Once they are sure of our capabilities, then our other products including the aircraft manufacturing will be certified by FAA. So that is another important task that has flown out of Kaw Committee, which we had implemented last year. I must clarify that all these initiatives, is a one-year initiative and this organisation has done it — not individually but collectively — with the support of the government.

We have already hired about 60 people on shortterm contracts and 150 additional people will be hired in next three or four months for which approval can come any day.

When will this academy actually take off? As far as operational part of this concept is concerned, there is an MoU, there is a proposal, there is a government order and we have operationalised our integration into that proposed academy in the past few weeks already. We have already conducted a couple of courses at NIAMAR and we have decided that all our future courses, as far as DGCA is concerned, will be conducted in NIAMAR. They are going to provide us accommodation and our officers are going to get trained there. We are contributing Rs 10 crore to the main building, a state-of-the-art building and money has already been allocated. I think in the next one year the building should come up.

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process being one of those along with certain financial procedures. Therefore, they assessed as to what is going to be the short-term, mediumterm and long-term requirement of the staff and last year in January, we took this on as one of the key projects and in last May, as you are already aware, we got over 550 positions created. That was one important aspect. Then we got into the rule-making process, we had consultants, we finalised our rules and submitted to the government in October. Now the DoPT has finalised those rules. All our requisitions have gone to UPSC. So, the process is going on, but it will take minimum one year to get into shape. However, in the meantime, we have already hired about 60 people on short-term contracts and 150 additional people will be hired in next three or four months for which approval can come any day. Thus most probably, by mid this year, we will have about 200 short-term contract people working with DGCA and that will keep us in satisfactory state of affairs. In the meantime, there is tremendous push being given at the USPC level, to start our recruitment process in fast track. From the career management point of view, and from the viewpoint that we will have so many people from one recruitment process and to see their future prospects, we are trying to phase it out. Half of them will be in the year 2011 and half of them in 2012. We are already in advanced stage in getting this phasing done.

It was also said that the DGCA would be shaped along the lines of the FAA. One of the recommendations of the Kaw Committee was that this organisation is understaffed. While the traffic has grown by leaps and bounds, the number of technical staff has shrunk. This has shrunk for a variety of reasons — recruitment

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come from AAI. There is criticism about that. Apart from that how are you going to prevent attrition? After all this is skilled manpower, will they not move towards better opportunities? It’s an interesting question. When I said that we had hired about 60 people, those are pre short-term contracts that have not come from AAI. However, when the FAA team was visiting and we were short of time, we resorted to a process known as secondment process. Short of the fact that we don’t pay to them directly — they draw their salary from their organisation but we came out with a regulation and under that process we hired about 40 people in cabin safety, under our flight inspection, in the ATMs and our aerodromes. They are still working with us along with all those who had come from airlines, airport authorities of India, private airports, etc. Coming back specifically to the ATM staff, I should clarify that the people whom we have taken in our ATM Directorate, are not large in number — around six people, chosen after a lot of screening. Likewise, we have about five persons working in aerodrome Directorate. So, as you can see the number is not so large enough to affect the working of the AAI.

Another crucial issue is certification of Air Traffic Controllers. Who will certify and what is the issue that is holding up this process for over two years? I’ll soon explain the process to you.

REGULATING AVIATION: The headquarters of Federal Aviation Administration (FAA).

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The amendment to the Aircraft Act was undertaken. Thereafter, there were two sets of rules required to be made. One was the rule for licensing of ATCO and the second set of rules was for certification of CNS equipment. The rules for ATCO licensing after tremendous deliberations are ready and will be sent for government approval pretty soon. However, the rules for CNS certification are under process because it requires lots of consultations. Once rules are notified, then the ATCOs of the AAI will be subjected to licensing by my organisation, for which we have set up an ATM Directorate. We are hiring people and strengthening the directorate. Their training institute will have to be certified by us. This is very voluminous work. But the work is going on a solid footing. Our license will be based on international standards as ICAO parameters.

But with so many big airports coming up, particularly in the Gulf, there is a fear that they will migrate once the licenses are granted. You know, aviation is a global business and it operates more or less in a market situation. So, you cannot really stop people from moving from one part of the world to another. We had a shortage of pilots, so foreign pilots moved in. In the process, we trained our own people, and now our people will move in and gradually, the foreign pilots will go out. Likewise in the ATM business, if our ATCO wants to quit and go, well it is a global market. However, what we will try to ensure is that at no point in time, there should be lack of training facilities in the country. We should attract more and more people in to ATC profession. We should have more and more training capacities available in the country so that we not only cater to AAI, but we train manpower, which can be utilised in the country.

But with the salary structure being what it is overseas you are bound to loose good people. Have you thought about this since this is something that needs attention? The first issue that you have raised that in future there might be a sudden shortage of ATCO, well; this will require a careful thought process. However, I must add that we should have adequate training facilities for ATCOs. And as was being mentioned,

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we should have enough ATCOs. And I must also clarify that we have already been approached by some reputed organisations of the world to set up training facilities to train Air Traffic Controllers. CAPA is setting up an aero farm and in their proposed farm; one of the components will be training of ATCOs. These ATCOs, when they come to us after being trained, we license them and then they are available to either go to Airports Authority or anywhere in the world. Not only CAPA, there are other people also already preparing to invest. I am getting a lot of queries that they want to come to India. There are many things they want to come for: pilots, aviation personnel, and aviation managers.

Are you authorised and is your license valid? Answering your second question first, I should clarify that under the International Regulatory System, there is a process called validation of licenses. A license issued by a contracting state, is mutually recognised. Thatâ&#x20AC;&#x2122;s why, we are validating the licenses issued by say America, Brazil and likewise our licenses issued will also be acceptable to all the contracting states, subject to their local laws.

We are validating the licenses issued by say America, Brazil and likewise our licenses issued will also be acceptable to all the contracting states, subject to their local laws.

One way to remove the opacity and corruption in the DGCA is to ensure digitalisation. How far have you moved on that? In the past one year, our efforts have been directed to make this organisation more and more transparent. Going back to my website, everyday we are coming out in the open with our new initiatives. Let me take the examination process as an example. We have complete transparency in the examination system. We have a complete annual calendar, pre-scheduled and prenotified. We have a schedule for generation of computer number. We have a schedule of generation of roll numbers; review of rejected list and time bound declaration of examination. Now, nobody has to come and work in an opaque environment. Everything is upfront on the website. The checking process is extremely confidential and secret and is done through optic measurement system. So, there is little scope for human error. That is already on now, in the past one

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year or so. No human intervention. You write an exam and there is a confidentially hired organisation, they undertake our optic measurement and result is declared on the website. This is for Pilots, maintenance engineers and dispatchers.

Have the complaints come down?

Another step that I took was to start an open house in June and that system is institutionalised. The number of people visiting us, for information, for the redressal of their grievances, is one of the measurements of the success of the scheme. We measure the pulse by the number of people meeting me with complaints. The number has been drastically reduced to three or four per open house. We had started with 150-200 people! The whole house used to be full. Another area of complaint was medical. When I took over, more than 30,000 files were lying on the floor. You come and find your own file. We have introduced a modern system of record management â&#x20AC;&#x201D; a compacter system. We have outsourced the management of records. We have bar coded all the files. We have introduced a system of speed post. No person is required to come here and collect his or her medical records. You file your application and within ten days your records will reach one of the 16 medical centres in time. I used to get several dozen people complaining that his or her record is not available or has not reached the concerned person. Now, nobody comes and that there is no personal handling of records. While the area for improvement are still aplenty, I would say that the major areas of examination, licensing and medical have been satisfactorily addressed and the larger complete IT solution, which is our project on IT, is in an advanced stage of approval. Now, we are coming out with bids. It is a big project in terms of value, between Rs 250-300 crore. It will result in total digitalisation of the DGCA. This is all in-house. We have named it SPEED, it is a 16-month project.

What about the restructuring of DGCA? There is one component left from the Kaw Committee recommendations â&#x20AC;&#x201D; restructuring of DGCA. ICAO recommended, FAA recommended and Kaw Committee also considered this

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aspect. We had set up an ICAO-sponsored feasibility study, in which the ICAO policy states that the DGCAs around the world should transform themselves into civil aviation authorities so that they have financial and administrative flexibility and they can work in a focussed manner. The government approved one feasibility study. We gave that study to ICAO. Their consultants came in October and the report will be given to ICAO soon and will reach us by March end. They are recommending that it should be transformed into a civil aviation authority — Civil Aviation Authority of India. There are about 40 civil aviation authorities. So that is a major restructuring.

Will you still be under government supervision? I must qualify that nobody is 100 per cent independent. We will be very much under the oversight of the Ministry of Civil Aviation. We will be financially generating our own revenue, what we generate now goes to the consolidated fund of India.

What did the FAA say?

An ICAOsponsored feasibility study, states that the DGCAs around the world should transform themselves into civil aviation authorities so that they have financial and administrative flexibility.

FAA had said that the organisation needs more financial and administrative flexibility. For example, when we will have the Civil Aviation Authority, we will have the freedom to hire our own officers except the top people — all others will be hired by the authority. Well, once the report comes, and then the processing will start, whatever be the time frame, maybe a year or two.

Quite surprising that the YSR accident report was uploaded within days… I must clarify, reacting to your earlier opaqueness; in the past one year, I have taken a decision, subject of course, to seek the approval of the government for publication as that is under the Act, that all accident reports will be uploaded on our website. I must also clarify that the day the YSR crash report came; it was uploaded the very same day.

What about action on the report?

The present system is that all the recommendations that are generated are stored in a database; they are classified Directorate-wise, agency-wise and are then pursued by our existing Directorate of Air Safety. Secondly, the

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recommendations that are generated from the permanent investigation boards which are set up with different airlines and AAI, their recommendations are also stored in the database. Then, as per the present mechanism, these recommendations are reviewed with concerned agencies to see the state of their compliance. And the only method available is to ensure effective monitoring. That process is being adopted.

What’s the action taken in the present case? For example, regarding the question of emergency locator transmitter, we had a meeting with all operators who have not installed ELT and we have given them time to file their action plan, deadline being March 31. We have made it very clear that if you don’t have ELT, then we will be free to take appropriate legal action.

What is the status of the Aviation Regulations Advisory Panel? You know the last time the de-regulation process was started was in the early ’90s when the entire sector was opened up and in those days the regulations were quickly framed to deal with the deregulated process. In these last two decades, technology has improved, traffic has grown and there are so many regulatory trends and practices. One of our tasks is to always keep our regulations updated — matching with technology and practices. Secondly, we have also been receiving representation from the industry in which they have been asking us to make our regulations more reasonable, striking a balance between safety and operation of the aviation industry. Now, we have set up seven working groups covering sectors like airlines, aerodromes, dangerous goods, aircraft engineering and air safety and these working groups have a mix of people from industry and our DGCA organisation. So, we have set up a steering group under my chairmanship, which is coordinating the efforts of the seven working groups. They have the best professionals from the industry and DGCA. Last month, I held a review. A lot of work is taking place in which they are proposing how to make these regulations simple, procedurally good and friendly. I hope by the end of March 2010, I would have the recommendations from these groups to make changes in these

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regulations. What I have asked them is to let us know what regulations are coming in the way of promotion and development. Which regulations are required to be made more appropriate from the safety point of view and which need to be deleted, modified, amended and revised. All this voluminous work is going on in consultation with the stakeholders. I hope to have these reports by March-end or early April. Then the process of examination of those regulations will start.

We want that in the very first detection of alcohol, minimum penalty should be suspension of license. We want to transition into a very, very strict regime. My objective is zero tolerance.

Discretion has often come in the way of many developments. In this context, a number of airlines will fulfil the five year rule; they will have the right top fly overseas. It is a cabinet decision, DGCA has to give the approval. Now, if there are no rights available to particular countries and fewer slots, what use is this reform if discretion comes into play? There are two broad sets of regulatory regime. One is the economic regulation and one is the safety, efficiency and security regulation. As far as the economic regulation of air transport sector is concerned, it is vested in the government. Kaw Committee had made two specific recommendations, which should be assigned to the DGCA from the economic regulation point of view. Those are under process. The larger question of economic regulation is vested in the government. And government has laid down certain norms. And now, whichever airline fulfils those norms, it would be for the government to consider their cases as per the policy. As far as the DGCA is concerned, once we get the in-principle approval from the government, we will provide our best cooperation to move the process on a speedy track, so that our airlines are able to fly. As far as economic regulation is concerned worldwide, it is handled by the government. It is not unique for India.

You had recently spoken about 100 per cent pre-flight testing of pilots. What is the reason for this decision? Based on the feedback from safety experts and also keeping in view the trends of people who are detected alcohol positive, we thought that the time has now come to increase the detection or breath analysis test from

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random to 40 per cent and then to 100 per cent detection. Second aspect is to make the penalty for alcohol positive personnel stricter. Right now, if somebody is detected, he is grounded and after sometime he is reinstated. We want that in the very first detection of alcohol, minimum penalty should be suspension of license. We want to transition into a very, very strict regime. My objective is zero tolerance.

You also had instances of pilots and air hostess quarrelling at thirty thousand feetâ&#x20AC;Ś In that respect, I would say that in the past month or two, as you might have read, there has been an increased trend of unruly behaviour of passengers. Passengers quarrelling amongst themselves, quarrelling with cabin crew and flying crew, smoking, tampering with smoking devices, alcoholâ&#x20AC;Ś all these things are on a high. So, I have got ICAO unruly passenger rules on this issue and soon I will be more or less ready with my aviationspecific unruly behaviour rules which we will process after due approval.

How will you publicise it?

At present, for example, when you travel, you get a feeling that you are liability as per the Warsaw Contract. They donâ&#x20AC;&#x2122;t give you the full convention. So, we will say that unruly behaviour is as per Rules XYZ. It will be on the website. We will need to make passengers aware. There are various methods to make them aware. One is the reference to what the rules are. We will write to airlines. We will try to display it on the websites.

Are you satisfied with the pace of progress in the DGCA? Yes, I am quite satisfied. However we have along road to go. And post ICAO-ESOP audit, post IASA, I have a road map which has about eleven components to move forward and we are working on the basis of that road map.

What about the people in the DGCA? Has the mindset changed? I have noted that change and they are now quite positive and cooperative and wiling to take the process forward. I am noting the collective feeling, that the next generation is quite willing to take the process forward in a transparent, positive and cooperative manner.

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Yashwant Bhave is India’s first Airport Regulator. Low profile, soft-spoken and intense, in this exclusive interview with K Srinivasan and R Krishnan, Bhave spells out his assessment and what the Airport Economic Regulatory Authority’s plans are for the coming months.

What is the status of Airports Economic Regulatory Authority (AERA) as it stands today? Our first initiative was to have the regulatory philosophy and framework established so that it becomes a guiding factor in our future deliberations. White paper has already been issued. We have got good responses, about 27 responses from nearly all the stakeholders — airlines, IATA (International Air Transport Association), APAO (Association of Private Airports Operators), ACI (Airports Council International) and some of the chambers also. So, now we should be in a position to bring out a consultation paper with our tentative positions to the extent that we can formulate and frame them. May be in another fortnight’s time we would be able to do it.

The basic objective of regulations for AERA — tariff for aeronautical services, amount of development fees at various airports, monitoring the performance standards, etc. — how do the responses gel with each other ? They gel because the White Paper asks exactly these points. For example, what should be our regulatory philosophy in terms of Single till/Dual till? Since this is a specific issue we need to make up our mind. IATA goes for Single till, ACI goes for Dual till. Well, it is not so black and white. For new airports it may be possible to go for Dual till. Frankly, it is too early or should I say do not know as of now.

We would like you to elaborate?

Dual till means that when you have an airport, it has aeronautical as well as non-aeronautical (revenue) streams. How does a till work out? Till in the classical sense means the drawer, the bank. So, Single till means only one drawer in which all the money comes. Dual till means two drawers where different heads of money go like in the non-aeronautical and aeronautical streams. Under the Dual till, revenues from these two affinities

go into separate drawers or accounts. They are not combined for the purpose of calculating the rate of return or the tariff. Revenues are separated and so are the costs. Obviously some costs are clear and independent and some costs are joint. Then comes the issue of how you decide joint costs? For this there is an allocation principle. In the Dual till, the basic problem arises in the allocation principle but which is acceptable. Now in the initial stages it may happen that the aeronautical revenues are quite robust and nonaeronautical revenues are not robust. It is not a straightforward thing that Single till is better or Dual till is better. But you have to have a philosophy. Now, UK has Single till, after much deliberation on the subject. There is a theoretical deliberation also, purely from the economic point of view, that Single till is not good in congested airports. Why? Because the tariff does not intervene with the economic state/city value. Compared to Single till, the rates of aeronautical charges will increase. To give you an example, in 1999, when a study was made in Heathrow (Heathrow was on Single till and is still on Single till) on the assumption as to had it gone on Dual till, what would have happened? The study showed that the aeronautical charges would have increased by 35 per cent. The study was not pursued thereafter and it was decided to retain Single till.

So it is not a situation that what you collect is yours and what I collect is mine. No. That is a regulatory philosophy for which we have asked for comments. The second issue, which is a very important issue, is about standards from passenger’s point of view. What are the standards? There are two issues. One is setting of standards and second is monitoring of standards. Setting of standards, under the AERA Act, is the job of the government. They have asked us to suggest standards.

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White paper has already been issued. We have got good responses, about 27 responses from nearly all the stakeholders — airlines, IATA, APAO, ACI and some of the chambers also.

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ON THE SPOT: Yashwant Bhave on his rounds of the Delhi airport.

What are the standards? There are two issues. One is setting of standards and second is monitoring of standards. Setting of standards, under the AERA Act, is the job of the government. They have asked us to suggest standards.

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This is a consultation issue as to what should be the standards and whether it needs to be objective/subjective, etc. There is another issue relating to inventory. The third issue that we have highlighted is the debt-equity ratio, whether we take it as normative or actual, because the weighted average cost of capital is impacted. Fourth is depreciation and fifth is the extended agreements at four places .Of course, we cannot take a review today. But the Act says we have to take it up in our Board and consider it. And we will certainly consider it. But to what extent our overall philosophy would take these agreements in view would be determined only at the time of the individual tariff determination. You can’t have a regulatory philosophy only for these four metro airports - Delhi and Mumbai under a different PPP and Hyderabad and Bengaluru in a different category. We cannot have two separates by which I mean one set for Mumbai and Delhi and another separate set for Bengaluru and Hyderabad…

You mean to say separate for Brownfield and Greenfield? That’s an interesting observation. What is brown and what is green? How do you define? I’ll give you some of the problems. Does Greenfield mean that it has actually been set up in a new area i.e. set up from scratch. That is the traditional definition. Somebody may say what is this Greenfield about? You close one airport. You had a captive six million passengers there. That was diverted. So in what way is it

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Greenfield? Then in Delhi, T3 is coming up. Why is Delhi Brownfield? Entire terminal is coming up on green area! By the same definition it is a Greenfield! So, we cannot leave regulations to, I would say, interpretation differences.

So you want to get that right first… Whether we can do it or not, I do not know. What we say is we must have logic. Another point, suppose individual airport was one million and somebody is expanding it there or in a new location but to several times of that (original capacity), then you call it Greenfield. This could be a possible definition. By that logic, Bengaluru, for example, was Greenfield. Now they have announced expansion - thrice. Suppose we say, for argument’s sake, if it is going to double, you call it Greenfield. Would Bengaluru still be Greenfield? All I am trying is to highlight these issues: Greenfield/ Brownfield. Now if you go by normal process a Greenfield airport after expansion should be a Brownfield. For the moment, it might probably be best to not make this distinction and take each as an economic entity.

But costing makes all the difference. Bengaluru and Hyderabad had to build a brand new runway while it was already there in Delhi and Mumbai. You see here, one of the parameters of the regulations is to ensure the economic viability of the airports. So, we have to go deeper - not defining

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brown, green, part brown, virtual green, virtual brown, black, red. Economic viability has to be established. Whether brown or green, it has to be established. So, we have to go one layer deeper and find out what is the basic objective?

Experts both in government and outside agree that the government is good at creating structures, not maintaining them. For example, Airports Authority of India’s (AAI) costing will be much less for a similar job done in a PPP model where the private sector is the operator. How will AERA operate under such circumstances? I am told that ICAO (International Civil Aviation Organisation) is now coming to a view of internal benchmarking. I am nobody to agree or not agree, because they are experts (ICAO). I am aware of this situation. If somebody says, look at the facilities created at say Rs 1000 per sq ft and exactly the same facilities are created at say Rs 5000 per sq ft then that would probably go into the realm of gold plating. Let me give some sort of a perspective on gold plating. Gold plating necessarily involves a timing horizon. For example, when you build a house, you go for electrical wiring which could be either aluminum or copper. Aluminum may be half or onethird the price of copper. If I have money I will put copper. Why? While the energy travels at the same speed, copper is long lasting. Hence, the timing horizon. But if I have no money, I will go in for aluminum which may also last for about seven or ten years. I will then see and decide. The issue is does that tantamount to gold plating? May be or maybe not. If I have money, I’ll use higher category things, if not, lower like. And I may state here that even that lower memory itself may be enough to last a few or say 10 years. However, if I am thinking of the next 20 years then it would be different. So, is that gold plating? Hence, when we say gold plating, the timing horizon which is the most crucial part needs to be kept in mind.

Is this is not an issue where AERA has to regulate. Why should passengers be asked to pay more because airlines when asked to pay more pass on those charges to passengers? What I am saying is that these

issues have a dimension that needs to be deliberated upon, which fortunately will come in the public domain and we can discuss. What has happened so far I cannot comment on it? Therefore in any regulation, any capital expenditure (Capex) made, needs to be made after consultation. Forget gold plating, low cost carriers will have a different expectation from airports, than full service carriers. These problems came in T5 in Heathrow. But I will tell you the sequel to it. T5 was broadly made for BA. T5 was absolutely glistening. Now they are saying T2 and T4 should also be done well. I have just been there. They are of course a bit congested no doubt, but they are perfectly all right. So airlines feel that T5 is glistening so people will prefer that (competing airlines to same destination). So people’s expectations are also shifting (constantly). It is natural. That is why I am saying that everybody should be consulted, that is the most important part.

At present 12 airports handling more than 1.5 million capacity come under AERA and the definition of such an airport is that it has an annual passenger throughput of over 1.5 million. Can we compare throughput and capacity and do they mean the same? First, it is a straightforward case where there is 1.5 million capacity. We have twelve. Second, are there any airports, which have a capacity of more than 1.5 million but today are less than 1.5 million? This is another issue. Government is looking into it. We have asked the government to let us know which and where such airports are. We will notify them for the purpose of removal of any doubt.

What about ground handling, a policy which the government has consistently postponed its implementation. It is purely ad hoc even as in several airports JVs have been signed and are awaiting for a proper environment to function. Now in these big airports, ad hoc is not possible. Cargo is one of the three things, which is very, I would say, vexatious. Second is ground handling and third is fuel. We are coming out with the clear-cut policies about what we want to do in our consultation paper.

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One of the parameters of the regulations is to ensure the economic viability of the airports. So, we have to go deeper — not defining brown, green, part brown, virtual green, virtual brown, black, red. Economic viability has to be established.

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What about fuel? Will there be a

common carrier principal and has any regulatory authority anywhere in the world done that? Not to my knowledge.

Will you recommend it? We may recommend anything but the point is that the cost is determined by the regulator. Now whether he regulates ATF or not, I don’t know.

In ATF you have a 15 per cent margin net of cost, you play around in that. Reliance can give it cheaper than IOC but they can’t in Mumbai or Delhi, because they can’t use the carrier. That unfortunately is an issue for the competition commission. Not mine. So that issue does not lie in my framework. I can ask them to look at it, I cannot determine it. But regardless of whether they do anything or not, what will be the philosophy in these three matters - cargo, ground handling and fuel - needs to be seen. Normally, these things are farmed out and airlines have agreements on these issues and we do not regulate airlines. Either the airport itself is a ground handler/provider. We need to have some policy depending on different structures.

Cargo is one of the three things, which is very, I would say, vexatious. Second is ground handling and third is fuel. We are coming out with the clear-cut policies about what we want to do in our consultation paper.

When AERA was set up, the IATA Chief said that “AERA’s role must be to ensure that India’s aviation infrastructure meets cost efficiency and service level targets with changing policies in line with ICAO principles. Even though India has a seat in ICAO, many of these principles are being allegedly ignored in Delhi. There is a big gap to be covered with little or no transparency in differential pricing

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practices. Air navigation service providers charge twenty per cent more and landing charges are higher by 33 per cent more”. He just rubbished India. How do you deal with this situation? I had a detailed chat with the DG of IATA when he had come here as well as when I had gone to Geneva. What I could see is that transparency and consultation are two paramount factors. Both are related. Differential pricing vis-a-vis the international airports is one issue. Second, other pricing compared to Kuala Lumpur, Singapore, etc. is another issue. Now, I will not go to the second issue, for the main reason that I don’t know their costs. Whether state subsidy, is given to them or not, I have no idea. Nobody publishes such accounts like BAA does.

IATA had done a study about two years ago… I know their report also. I have not taken any view because it is not my immediate charge. But for argument’s sake, if somebody can enlighten me, I will be happy… Changi Airport or Kuala Lumpur Airport or Dubai Airport, what is the direct or indirect state support to those airports, in terms of fees, etc.?

Why not ask IATA?

It is for the government to ask. I don’t want to join issues with any outside party. I know whatever I have to do.

But his comment was in the context of your office being set up. I am happy that he said so and what I could get from his discussion is that his paramount concern is

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EVERYTHING OK?: (Left) Yashwant Bhave, AERA Chief with Sanjay Reddy, MD, MIAL; (right) Yashwant Bhave, soon after his appointment, conducting a check at Mumbai Airport.

If somebody says that Malaysia should be the same as Delhi or Hyderabad, then I don’t know how far we can match that and on what parameter will it be possible. We don’t know all the facts. So these are issues which are difficult to compare.

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consultation and he actually mentioned it that day. I am aware of that debate. He said that for eight years India has not increased airport charges. The point is, you could have increased airport charges for eight years but you did not. In the peak time you did not increase. So, both the views are there. But, any way whether you increase or not increase, you did not consult or you did not have effective consultation. So, that is certainly the case and we would at least like to hear everybody and then make up our minds as to what is the best thing possible. Second, there is something which is more important than comparison. For one, I don’t know what costs have gone there. In Dubai, fuel is very cheap so airlines don’t mind. All these issues are outside our control and outside the ministry’s control also. Third, in costrelatedness it is important that costs associated with an airport needs to be taken into account. Now if that is so, then each airport will have to be looked at as an economic activity and accordingly fix the price. Having said so, the transparency and consultation has to be done and the Capex of reasonableness has to be established. These are the principles. If somebody says that Malaysia should be the same as Delhi or Hyderabad, then I don’t know how far we can match that and on what parameter will it be possible. We don’t know all the facts. So these are issues which are difficult to compare - perhaps, even within. Another factor which one would need to keep in mind is different management structures here and capital structures. All the four private airports today have 26 per cent of government including that of the State Government. We assume when our representatives had gone there, some master plan was approved at some level. Costing was broadly approved. Now, in many places there is the State

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Government. Andhra Pradesh has given Rs 313 crore as loan and Rs 107 crore as grant aid for the new Hyderabad International Airport. The state has a very important and close role in price fixation, capacity, award of tenders, etc. Unless he says that the State has completely reneged on its role, which I cannot say because everybody is governed by CAG, the courts and parliament. So, I don’t want to make that inference. The next is Cochin, which is a very interesting example. In Cochin International Airport Limited (CIAL), the Kerala Chief Minister is the Chairman. If they say we have to expand they can and, of course, we can prescribe in what manner they have to do the consultation. It cannot be a situation where one just writes a letter and says, ‘Come after seven days’. It has to be an effective and meaningful consultation and needs equality of information between the participants. But when the CM is the Chairman, the state is a shareholder and all key people are there - who are also users not just investors - and there could still be a prima facie presumption that not all interests have been represented. Not that it would be so, but one may presume. For instance, AAI is 100 per cent government-owned. Now they may consult, may not consult, we’ll find out. When their regulatory asset base is fixed, these issues will come to the fore.

Worldwide, non-aeronautical revenues subsidise aeronautical charges. And to subsidise aeronautical charges, non-aeronautical charges are increased. So, I end up paying Rs 100 for a cup of coffee. What is your view on this? Aeronautical versus nonaeronautical, Single till or Double, etc. is becoming more and more vexatious. Normally, non-aeronautical charges should subsidise aeronautical. Now, what the charge should be doesn’t

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come in the purview also. But consider a situation: in Dual till, what do you do? In Dual till you take aeronautical assets, aeronautical services, nonaeronautical assets, non-aeronautical services. The airport operator has to be given a fair rate of return which is what a regulator has also to ensure. So what should be or what is the return? It could be 12 per cent, 16 per cent, or 20 per cent. It all will depend on many issues.

Terminal construction is a very large cost. Cement, steel all local material — nobody imports cement or steel, at least in India. What is imported is the equipment. So, the cost in India can be quite different and in my view substantially lower than internationally prevalent.

But what about nonaeronautical? Even non-aeronautical, I am not controlling. I am not supposed to control. I am prescribed power only for aeronautical and what is aeronautical is also defined. In non-aeronautical, suppose he makes a loss. I am not concerned. Suppose there he makes profit in terms of 30-35 per cent return on equity, well then you will say, look why will I pay him Rs 100 or Rs 200 for coffee? He’s making 30 per cent, he’s gone outside this thing (subsidy). So, this is a vexatious problem in a Dual till. Unless there is a commonsense that he will plough back some of that amount as well. Second, the government has given a concession for the entire airport and allowed him to exploit some part for commercial purposes. Now, it is a sovereign function that the government has allowed him to exploit so that the airport gets built and becomes viable. Now, would a Dual till without any mechanism of ploughing back be okay in such a situation? I have not made up my mind at all but these are issues which will come up. In Single till, to some extent they are muted. All costs are in one till. Incidentally I forget, in Hyderabad or somewhere, the coffee was costing very high. But then I think they saw the profile and changed it and their footfall increased. It is common sense.

People are being priced out, what do the airports want? The ACI is strongly for Dual till. IATA is strongly for Single till. You see, as a general principle it may suit them, but I’ll give you another instance. Basically, the assumption is noncommercial subsidises commercial. It depends on the life cycle of an airport. Take the situation of an airport, whether it’s Delhi or Hyderabad, I

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don’t know I haven’t gone into figures, but assuming that the infrastructure cost of the non-aeronautical is not able to be recovered through the tariff in Dual till. What does it mean? It means in the initial years it is conceivable that in Single till, the charges maybe higher than in Dual. But it is not at all advisable to keep on thinking of this because you have to have some framework (what is established today will be giving benefits ten years later). That is called fixity of regulat ory regime.

Why not look at different airports here and abroad - weight of aircraft, CAT1-2 or 3, the way ATC is done, ILS is fixed these are common expenses. The airside can be standard, international oriented. But, non aeronautical is different from airport to airport. If you know the aeronautical side and airlines want a higher fare and pay less, all the focus is on the aeronautical cost. So why should we pay more in Delhi and Mumbai for services that cost more than a Delhi-Mumbai AC Train ticket ? The Act does not permit me to do anything about that. Your first observation that aeronautical is internationally-oriented, is not strictly true. For example, runway cost is a very large cost. Terminal construction is a very large cost. Cement, steel all local material — nobody imports cement or steel, at least in India. What is imported is the equipment. So the cost in India can be quite different and in my view substantially lower than internationally prevalent. But it is not clear if they can always be comparable.

Is it not necessary to also look after the interest of passengers or should AERA be focusing only on 10 airlines and a few airports? I cannot even today, fix the flight kitchen prices. I’ll give you an example. People had come to me that they are charging me this, that, etc. in cargo. Now cargo I can, but not other services. Flight kitchen I cannot, unless government has a right or the power to declare the service as an aeronautical service. If they declare the flight kitchen as an aeronautical service that means it will come in the Act. Then I will go about in the same manner.

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Breeze in. Breeze out.

From Chennai and Kolkata.

Artistâ&#x20AC;&#x2122;s impression of the upgraded Chennai airport

Artist's impression of the upgraded Kolkata airport

CREATING WORLD-CLASS GATEWAYS IN THE SOUTH AND EAST.

Travel across the world, or make a world-class connection. Airports Authority of India is there to hold your hand and fulfil your dreams. Airports Authority of India Committed to provide comfort and convenience to air travellers around the country.

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he An-148 aircraft is a highwing monoplane with two turbofan jet engines mounted in pods under the wing. This arrangement protects the engines and wing structure against damage from foreign objects (FOD). A built-in auto-diagnosis system, auxiliary power unit, high reliability, as well as the wing configuration allow the An-148 to be used at poorly equipped airfields. Modern flight and navigation equipment, multifunctional displays and a fly-by-wire system enable the An-148 aircraft to operate day and night, under IFR and VFR weather conditions on high density air routes. The An-148 cockpit features five 15cm by 20cm (6” by 8”) LCDs built by Russia’s Aviapribor and fly-by-wire flight controls (using technologies developed for the An-70 cargo transport). The main landing gear rotate into wells in the aircraft’s belly, the legs being covered by partial doors. The sides of the tires are exposed to the air in flight like in the Boeing 737.

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Here are a few highlights: The An-148-100 regional aircraft is the main model of the An-148. It seats

70 to 80 passengers in a single class seating layout. The aircraft is also configurable in a multiple-class layout which can carry fewer passengers, typically with four abreast Business Class. Antonov claims direct operating costs will be 25-30 per cent lower than an Embraer 170. Up-to-date piloting-and-navigation and radio-communication equipment with the use of multi-functional indicators and of electric remote control systems make it possible to use An-148 100 on any air routes, under simple and complicated meteorological conditions, in day- and nighttime, including on routes with dense traffic, with a high level of comfort ensured for the crew. Avionics system ensures landing in conditions corresponding to ICAO category IIA standards. Flight safety is provided by high quality aircraft equipment, namely, reliable and effective engines and avionics, and also with special characteristics of the aircraft design and systems, including the following: AI-450-MS engine fitted on APU consists of two-shaft turbine engine with compressor, air bleed system and mechanic power take-off system to

Russia’s hi-tech and

highly competent workhorse

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“THE GROWTH IN INDIAN AVIATION EPITOMISES THE ECONOMIC PROGRESS OF THE COUNTRY”

may take few years before it will be allowed to fly for commercial purpose.

DR SIDDHARTHA BOSE, CHAIRMAN OF HINDAVIA AERONAUTICAL SERVICES PVT LTD, EXPRESSES HIS OPTIMISTIM ABOUT THE INDIAN AVIATION SECTOR, IN THIS INTERVIEW, AND PROPOSES TO OFFER AIRCRAFT FROM THE RUSSIAN FEDERATION TO INDIAN BUYERS.

Are you targeting air cargo players from India? If so, what has been the response? AN 148 has a cargo version and we will surely propose our cargo aircraft to Indian buyers. Antonov planes are well known for their cargo planes. The aircraft such as AN 12, AN 124 are among them.

What is the state of the Indian aviation market? Signs of upturn have emerged and it is now confirmed that the deepest recession in Indian aviation industry is more or less over. We have overcome the worst downturn. Indian airlines carried a record 44 million passengers in 2009 and Market expects that number to increase by 10 to 12 per cent in this year. Last month, some of the Indian private carriers reported net profits in the final quarter of 2009. With India’s economy under recovery, private carriers should post a combined profit of $250-300 million in the next financial year as media is reporting. The growth process in Indian aviation sector epitomises the economic progress of the country. The future is bright. What is the USP of the Russian aircraft that could attract Indian buyers?

alternating current generator drive. APU could be operated under the temperature conditions from -60 to +60°C on ground and from lowest Arctic to highest tropic temperature during flight at every flying height of the aircraft. D-436-148 three-shaft bypass turbojet engine consists of a fifteenstage compressor, an intermediate housing, an annular combustion chamber, a five-stage turbine, a reverser arranged in an outer (ventilation) housing, and separation fixed-area discharge nozzles of the engine primary and secondary flows. The engine is provided with technical control systems, that optimise engine running on every flight segment, therefore improve engine reliability

The Antonov An-148 is a twin-engine family of commercial aircraft capable of accommodating up to 85 passengers being manufactured by companies of Ukraine and the Russian Federation. It is ideal for regional routes. It can take off and land on unpaved, remote airports with minimal ground handling facilities. It has high safety features and comfortable seating layout while its high wing prevents runway debris ingestion into engines. Tell us about the Russian aircraft that you deal in? We understand that Sukhoi is bringing a civilian aircraft? The An-148-100, a 80-85 seater jet aircraft with a vrange 2100km, is the basic model offered to airlines for operation at day/night and adverse weather conditions. For takeoff and landing operations the An-148 aircraft family requires prepared runways between 1,750 and 2,100 metres long. As far as I know the Sukhoi has yet to receive Type Certification from the Russian Aviation Authorities and it

and reduce fuel consumption that is highly important during operations. An-148 aircraft intended for operation from relatively short runways with concrete or dense unpaved surfaces.The landing gear features a tricycle configuration and consists of a nose landing gear, right and left main landing gears and a number of

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You work closely with the Russian Design Bureau to provide the ultimate aircraft for the Indian market. What kind of suggestions do you get from potential Indian buyers? I think safety is the main concern for any passenger. Obviously, the cost of flying from one point to another point is also a concern which a fuel efficient aircraft can contribute to the cost factor, the buyers are also looking for competitive price of the aircraft. Hindavia will be taking part in India Aviation 2010. Which aircraft will you show to Indian customers? We are pleased to announce our participation at the show and we are bringing AN 148 aircraft. We will have daily demonstration flights during the exhibition.

mechanical, hydraulic and electrical devices. In India, the marketing and sale of aircraft manufactured in the Russian Federation for the civil aviation sector is managed by Hindavia Aeronautical Services Private Limited. It is Hindavia’s endeavour to make a case of potential use of the Russian made state-of-the-art aircraft from the Tupolev design bureau, Ilyushin design bureau, Antonov design bureau and Enics UAV design bureau for the Indian aviation market. Aircraft manufactured in the Russian Federation are the backbone of Russian civil and military services for decades. They are safe and real work horses of Russian domestic and some international airlines.

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Trends projected for

Indian aviation in

2010

MARCHING AHEAD: Nikos Kardasis, CEO, Jet Airways.

CONTINUING THE GOOD WORK: Aditya Ghosh, President, IndiGo.

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After a turbulent couple of years, 2010 should be a more positive year for Indian aviation, provided the Indian carriers remain disciplined on costs, capacity and pricing. Kapil Kaul, CEO - South Asia, CAPA (Centre for Asia Pacific Aviation), shares the projected themes by CAPA for the year ahead.

SUCCESSFUL STRIDES: Sanjay Aggarwal, CEO, SpiceJet.

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he following key themes will dominate the Indian aviation scene in 2010:

Domestic Traffic

Domestic traffic is expected to post an expansion of 15 per cent or more in 2010/11 as the industry returns to its long term growth trajectory. This is higher than the expected increase in capacity of just under 10 per cent, which should assist carriers in achieving higher load factors and improved connectivity. It will be important for airlines to maintain capacity discipline and to keep control of costs, especially since fuel prices remain unknown that a constant threat to the industry. Airlines should not allow growth to distract them from focusing on continuously restructuring their operations and profitability;

JOB WELL DONE : Jeh Wadia, MD, GoAir.

The airline industry will return to profitability, although it will be sometime before the accumulated losses of recent years are reversed.

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FLYING HIGH: Jet aims to reduce its interest burden.

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LCCs

The domestic market may become almost entirely low cost, as Jet Airways and Kingfisher Airlines' transaction takes place largely on an all Economy model. However, the lead performer in the market is expected to be IndiGo which has maintained the best focus on operational performance and costs;

Jetâ&#x20AC;&#x2122;s management is currently top heavy and there needs to be a reshuffle to ensure that the key executives remain closer to the frontline and more intune with daily issues faced by the staff.

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International Traffic

International traffic (which has remained positive even during the downturn, particularly outbound travel) is expected to growth at 1012 per cent. Yield in both Economy and Premium classes are expected to be firmer. Premium volumes and revenue overall are likely to recover faster ex India as opposed to inbound.

Financial Performance

The airline industry will return to profitability, although it will be sometime before the accumulated losses of recent years are reversed. The private carriers (i.e. excluding Air India) are expected to achieve a combined profit of $250-300 million in 2010/11

Yields CAPA expects that domestic

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yields will increase by 5-7 per cent in 2010/11 and possibly by as much as 10 per cent in Q3 of next year, which will be most profitable. Maintaining yields will be the key and it was the loss of focus on this parameter that has contributed to the industry's current difficulties.

Jet Airways

The airline is expected to achieve a full year profit in 2010/11. The key objective for the airline is to de-leverage the balance sheet and reduce its interest burden. There also needs to be strategic clarity regarding its LCC strategy. The dual Jet Konnect and JetLite brands create operational inefficiency as well as confusion within the market and it is expected that these will be combined in 2010/11 following the resolution of ongoing legal differences with the Sahara Group. A private investor or public listing may be considered for JetLite in

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2010/11; Jet's management is currently top heavy and there needs to be a reshuffle to ensure that the key executives remain closer to the frontline. The rapid growth of the last 5-7 years and the attention required for international expansion has resulted in management becoming more distant from the daily issues faced by the staff. The current acting

LOWEST COST STRUCTURE: IndiGo has a positive brand image in the industry.

IndiGo has a clear leadership position in terms of operational consistency. It has the lowest cost structure in the industry, a positive brand image; huge supplier credits and is reportedly debt free.

CEO, Nikos Kardassis, who was instrumental in Jet's early success, is known to be a people's CEO, and this will be an important quality. He will need to move quickly to reengage the staff. Furthermore, a new challenge is emerging with the transition to low cost services on domestic routes the group now operates quite different airlines, one a premium, full service international airline and the other a domestic LCC under the same management team. These are different businesses and require different organisational and management structure. Jet Konnect and JetLite need LCC cultures, which the airline does not currently possess, and developing one, from within a

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legacy airline is a major challenge. However, if this can be achieved over time, having separate management teams for full service and low cost business models could prove to be much more effective.

Kingfisher Airlines

Kingfisher is expected to achieve profitability in its domestic operations in 2010/11. The key requirement for the carrier is to achieve and maintain discipline in pricing, capacity and costs. Productivity improvements are necessary as the focus is on increasing commercial effectiveness in passengers and cargo sales. Restructuring its cost base will need to be more aggressively packaged than has been seen to date and to ensure that this is

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GOING STRONG: SpiceJet will play a more strategic role in 2010.

SpiceJet is expected to post a full-year profit in 2010-11, although poorly planned or premature international expansion could jeopardise this.

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implemented requires the appointment of a dedicated CEO and COO. Management reorganisation is critical. At the balance sheet level, the carrier, like its peers, must induct additional equity and reduce the interest burden.

SpiceJet

The LCC is expected to post a full-year profit in 2010/11, although poorly planned or premature international expansion could jeopardise this. With some stability now restored in the market with traffic and yields returning, there is an opportunity for the carrier to address some its weaknesses in middle management. The board also needs to play a more strategic role and this may require the induction of independent directors with specific domain expertise.

IndiGo

IndiGo has a clear leadership position in terms of operational consistency. It has the lowest cost structure in the industry, a positive brand image; huge supplier credits

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and is reportedly debt free. However, the challenge in 2010/11 will be to maintain this position and to continue its standards of operational excellence. It will need to retain talent and build upon its corporate culture as the airline grows further. The airline has shown discipline to date and it will need to continue to do so in the face of intense competition from the three big airlines.

GoAir

Domestic market growth in FY 2010/11 should allow G0Air to achieve stable financial performance in the year ahead. At present, the airline does not plan to induct additional capacity until Q3 of 2010/11; however, positive market

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FLYING THE GOOD TIMES: Kingfisher is expected to achieve profits in 2010.

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Kingfisher is expected to achieve profitability in its domestic operations in 2010/11. The key requirement for the carrier is to achieve and maintain discipline in pricing, capacity and costs.

conditions may see the airline bring this forward. Go Air needs to continue the excellent work done over the last 12 months and further improve operational performance with focus on cost reduction program.

Consolidation

Consolidation of airline operators is both desirable and inevitable in the existing market scenario. SpiceJet will be a key player and is likely to be involved in any development. Jet Airways will be open to opportunities which would allow it to once again dominate the domestic market.

Cooperation The airlines must continue to

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lobby the state and central governments to have ATF designated as a declared good in order to reduce the sales tax. This major impost is a significant barrier to industry viability and growth. The Federation of Indian Airlines and the Indian Association of Private Airport Operators must cooperate to reduce the high structural costs faced by the industry.

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Indra brings air safety and

security to Indian skies irports Authority of India recently awarded two major contracts to Indra Sistemas, a major European company which has deployed air traffic management and surveillance systems in over 80 countries during the past 30 years. The supply of MSSR Mode-S secondary radar systems at 9 locations and installation & upgrade of tower automation systems at 38 airports will provide India with one of the most modern and safe air traffic management systems in the world. Indra Sistemas is the premier Information Technology company in Spain and a leading IT multinational in Europe and Latin America. It is ranked second in Europe in its sector by stock market capitalization and invests heavily in R&D. In 2009, revenues increased to â&#x201A;Ź 2,550M, of which a third came from the international market. The company employs more than 29,000 professionals and has clients in over 100 countries. The radar system to be deployed is Indra's IRS- 20MP/S MSSR radar. This Mode-S radar is the latest generation of Indra's Secondary Surveillance Radar (SSR) technology, with a track record of over 30 successful years. More than 85

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of these full Mode S capable systems have already been contracted internationally in China, Indonesia, Mongolia, Thailand, Turkey, and most recently, Oman. Indra's radar equipment will go into nine India locations; Bellary, Bhopal, Vizag, Chennai, Jodhpur, Porbander, Katihar, Jharsuguda, and Kolkata. With more than 70 radars of the previous generation still in operation around the world, the IRS-20MP/S is the smart choice for safety and reliability conscious civil aviation authorities. What will AAI's IRS-20MP/S MSSR equipment do? The AAI-procured systems will have both conventional SSR and Mode S surveillance capability to interact with all suitably equipped aircraft, plus the capability to provide Enhanced Surveillance and Mode S data link functions. With these features, AAI will enhance India's air traffic safety systems and be well positioned to absorb future capacity increases as airlines offer more service to Tier I, II and III cities. These functions are also an important element of the evolving eco-friendly CNS/ATM infrastructure of worldwide harmonised air traffic management. In addition, the Airports Authority of India selected Indra to supply 32 Tower and six Approach Automation Systems for airports throughout India. This was the single largest contract for supply of Automation Systems in the world during 2009. In total, 38 fully capable dual ATM systems will be delivered. Each will have the capability to grow into larger

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scale ACCs, APP and Towers Systems and each will have the capability to accept ADS-B, ADSC, Multilateration, as well as Primary and Secondary Radar Mode-S inputs as flight frequency increases over the next 5-10 years. The Aircon2100 automation system is a direct result of over 25 years of sustained evolutionary development and refinement. It has been deployed in so many countries that today, 1/3 of the world's air traffic is managed by some version of Aircon. The system is extremely scalable so as to allow rapid system expansion in the face of massive % increases of flight movements so typical of India's explosive civil aviation growth story up to 2008. With the global recession's effects starting to wear off, these high growth rates are sure to return. Indra is committed to being a full ATM product line provider worldwide. ATM Indra is the world leader in Advanced Automation systems. Indra has received contracts worth over Euros 100m to develop the next generation FDPS system for Europe. Indra designed ATM systems have been chosen by several leading European national service providers as the platform of choice for the development of their next generation national systems. Indra has delivered and supports over 100 FDPS systems and over 50 major full featured ATM systems around the world. Secondary Radar: Indra's IRS-20 MP/S Mode S MSSR is enjoying world wide success and was the pre eminent MSSR radar by sales in 2009. It is the MSSR of choice in China and in India, where over 30 have been ordered. Primary Surveillance Radar (PSR) 2-D and 3-D: Indra has deployed a newly

designed, cost effective, 3-D PSR in North Africa; and is delivering the advanced solid state ASR-12 (2-D PSR) to Tunisia. AIS and AMHS: To enhance its capability for message handling and Aeronautical Information Systems, Indra has completed the acquisition of the German based company, Avitech. This will add a large existing world-wide customer base for these systems, and enhance Indra's role in this expanding market throughout Asia. NavAids: To further enhance Indra's capability as a full service, turnkey ATM system provider, Indra acquired Interscan Navigation Systems (INS), of Sydney, Australia. INS developed the world's first DME and DVOR, and has subsequently become one of the world's leading NavAid suppliers. During 2008 and 2009, Interscan continued its long record of success in Asia with NavAid sales in Indonesia, China, Mongolia, New

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Zealand and Australia, adding to Interscan's existing installations at over 1000 sites, in 40 countries. ADS B and Multilateration: Multilateration products are currently deployed at the Barcelona International Airport and elsewhere, and ADS-B systems have been delivered in Morocco and Switzerland. INDRA SISTEMAS IN ASIA Sistemas, S.A., a major international company with over 29,000 employees, headquartered in Madrid, Spain, is a world class supplier of integrated electronic systems for defense and civil applications such as radars and nationwide Air Traffic Management (ATM) Systems. Within only four years of having made a corporate decision to increase its presence in Asia - particularly for Air Traffic Management ATM - Indra is proud to have very successful results in the regional market. Proven, state-of-the-art, reliable equipment providing excellent value, and supported by an Asian network of six offices, over 700 people and a regional production and spares capability, all contribute to customer confidence in Indra throughout Asia. Indra is growing, not only geographically, but also in product range. By expanding its product inventory, Indra aims to become the leading ATM system supplier in Asia. Indra ATM Offices can be found in Beijing, New Delhi, Bangkok, Hong Kong, Manila and Sydney. For further information in Asia, please contact: James Gardiner, India Liaison Office, New Delhi (jgardiner@indra.es) For further information in Asia, please contact: James Gardiner, New Delhi office jgardiner@indra.es

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FIREWALKERS INC

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

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The right stuff, all the time, on time Get your copy today. Call 91-120-4145555 or SMS SUB CH at 53030

India’s best known aviation monthly from Newsline Publications Pvt. Ltd.

FIREWALKERS INC

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

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â&#x20AC;&#x153;Recipe for survival: Manage costs with revenue enhanced earningsâ&#x20AC;? The present conditions will only see the fittest surviving and prospering in the aviation business, points out Arvind Jadhav. Air India, he says, with its core competencies in various aviation-related fields, infrastructure and manpower, will be able to overcome the hurdles and emerge stronger than ever. RD Tata, the visionary that he was, had embarked on aviation because he was a keen aviation enthusiast. Many decades after he left the aviation industry, we still vividly recollect his contribution to make Air India one of the world's premier airlines. It was a glorious era that Air India had then enjoyed under his stewardship. In fact, it is a benchmark set for all airlines in India including Air India, because in that era, Air India was regarded as one of the best airlines around the globe. Indian aviation has come a long way since the fifties and sixties when the industry catered only to the elite. The economic growth witnessed by our country, after the introduction of economic reforms in the early 90s, resulted in a significant increase in the per capita income for every Indian. India has made major strides in all fields of economic activity â&#x20AC;&#x201D; be it agriculture or the manufacturing and services sectors. These economic developments helped in spurring growth in the aviation sector also. More and more people took to air travel both within the country and outside. The airlines also played a vital role in the economic growth of the country, through expansion of network, connecting cities, and meeting customers' needs. The airline

The airline industry now has become a mode of travel for one and all. The air travel has also become more affordable with the advent of the low cost carriers.

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industry now has become a mode of travel for one and all. The air travel has also become more affordable with the advent of the low cost carriers. After witnessing robust growth in 2005, 2006 and 2007, the airlines registered negative growth in the years gone by for a variety of factors, which included, the economic meltdown resulting in a significant drop in number of passengers, spiraling cost of ATF, etc. Most airlines worldwide are today reeling under huge losses as these have not been able to cope with the operational and nonoperational costs involved in running an airline vis-a-vis depleting revenues. In their struggle for survival, most airlines world over have resorted to rationalisation of routes, reduction in capacity deployed, reduction in fares to lure passengers, retrenchment of staff, etc. While we have witnessed a semblance of resurgence in recent months, we cannot be euphoric because the growth recorded in October/November/December 2009, which are traditionally good months for the industry, is being compared to the same months of the previous year, when the market had taken a severe beating due to economic meltdown. We will, perhaps, have to wait a little longer for real growth to materialise. As a matter of fact, the International Air

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Transport Association (IATA) has projected a net loss of $5.6 billion for the aviation industry in the year 2010. In the wake of the robust growth in years 2004-2007, almost all airlines in India had placed huge orders for new aircraft, with latest passenger amenities that could match the best globally. Air India had also placed an order for 111 new aircraft; 68 from Boeing and 43 from Airbus. With negative growth recorded in the past year, all airlines have slowed down the pace of capacity deployment. The induction of new aircraft has had a salutary effect. Our flights to Tokyo which were incurring losses are now making money â&#x20AC;&#x201D; thanks to deployment of new B777s on this route. We are moving ahead with our plans on the Engineering Maintenance, Repairs and Overhaul (MRO) ventures with Boeing and Airbus. Air India's Engine Overhaul Facility at Mumbai and Aerostar Asset Management based at Sharjah, UAE, have created an Engine MRO brand called, The A Team. This strategic alliance is engaged in providing engine repair and management solutions to all airline operators of the Gulf region. There is so much business coming in that our engineering personnel have had to gear up to increase productivity. As regards the future plans of Air India, it is being positioned as a premium carrier, while Air India Express will be its low cost arm. We will focus on dominating the domestic and regional market in the short and medium term, as a strategy. Our international market depends on identification of a hub in India, which will give us a competitive edge. We have proposed to set up a primary hub at Delhi Airport, when the new terminal is inaugurated. Consequently, we will mount more services to and from Delhi. Most of our operations will be with the

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state-of-the-art aircraft Boeing 777s, Boeing 787s, Boeing 737 New Generation and the Airbus A320 family aircraft. We will be increasing our domestic and international connections along with connectivity to destinations in the East and the West. Introduction of the latest generation Passenger Service Systems (PSS) this year, will enable us to move to a single code in our flight operations. The present difficult market environment is offering a platform where only the fittest will survive and prosper in the business. As aviation in India is facing excess capacity, less traffic, low yields and increased cost of operation, only those who can manage their costs well with enhanced revenue earnings will be able to survive. However, considering the core competencies in various aviation-related fields, infrastructure and manpower that we have in Air India, I am confident that we will fly past these turbulent clouds and emerge stronger than ever. And this will be the best tribute that Air India can pay to its founder, JRD Tata. From a recent speech delivered by Arvind Jadhav, Chairman and Managing Director, Air India, at the 105th birth anniversary celebrations of JRD Tata, the founding father of Indian aviation and Air India.

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PROVIDING MOTIVATION: Civil Aviation Minister Praful Patel at a meeting with top airlinesâ&#x20AC;&#x2122; CEOs and officials.

We have proposed to set up a primary hub at Delhi Airport, when the new terminal is inaugurated. Consequently, we will mount more services to and from Delhi.

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“Huge prospects for choppers in India” R K Tyagi has completely rejigged and energized the profitable public sector helicopter company. Here he discusses the potential of the rotor wing aircraft, issues facing the industry and how to overcome them. am often asked about the prospects of the Indian helicopter industry. The answer in one word is "huge". Let me outline a few points. And the reasons are pretty simple: We are the seventh largest country in the world, with seven mega cities. Our total land area is over three million sq km. Our land borders are over 14,000 km and our population is over 100 crore. There are 618 districts in the country. 59 per cent of land area is under threat of moderate to severe seismic hazards. The entire Himalayan belt is considered prone to great earthquakes of magnitude exceeding eight on the Richter scale. India has a long coastline of 8041 km which is exposed to nearly 10 per cent of the world’s tropical cyclones. It’s a huge task to provide services in a country of this magnitude. Just look at some of the events of the last few years: 10 major earthquakes have resulted in over 20,000 deaths in the last 15 years. Over 40 million hectares are prone to floods. There were seven major terrorist attacks in 2008. 13 of 28 states are affected by Maoist violence. 76 districts are seriously affected by Naxalite menace. For operationally-ready disaster management services around the country, we require a minimum of 80 helicopters. Over a 100 helicopters may

It may also be in our interest to earmark 8 to 10 helicopters specifically to handle law and order in some of the States worst hit by Naxalite or Maoist terror.

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be required to meet the challenge of law and order. It will be in our interest to provide funds for a District Magistrate/Deputy Commissioner to have a regular helipad and helicopter to attend to issues in the district. It will not only help in the superior delivery of government service but vastly help in emergency search and rescue missions and also in the maintenance of law and order. It may also be in our interest to earmark 8 to 10 helicopters specifically to handle law and order in some of the States worst hit by Naxalite or Maoist terror. In this context, it would be important for the government to persuade the Airports Authority of India to support helicopter operations and maintenance facilities including night landing facilities and hangars, etc. at the smaller airports. As far as the mega cities are concerned, the government should consider allowing the police department in these metros to have a helicopter fleet on the lines of New York Police Department or the LA Metropolitan Police. There can even be a centrally-funded scheme to help state governments to maintain a fleet of helicopters for use of medical/law and order emergencies. I am often asked what Pawan Hans Helicopters Ltd (PHHL) is doing in this context. Let me outline what we have been dong in the last few years. We are a major helicopter operator with 35-chopper fleet. Most of these helicopters are located in different parts of the country including North East, Kashmir and the west coast. At the moment, there are 18 surface helipads and two rooftop helipads in the country. I am delighted to inform you that

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the government has decided to support Pawan Hans set up a heliport and helipad as a first step. We are setting up two heliports in Delhi: at Rohini and the Commonwealth Games Village. Apart from that, the proposed heliports include those at IGI Airport, Nariman Point, Navi Mumbai (in Mumbai) and the Hadapsar Gliding Centre, Pune. All these efforts will come to a naught unless we have new trained pilots to handle these requirements. At the very minimum, we require close to 30 trained pilots each year and have an output of 4-5 pilots from the HAL Academy in Bangalore. At Pawan Hans, we are proposing to set up an institution at Pune. We hope to see 10 pilots graduate at the beginning 2011. We will also be able to get ten more pilots once the Gondia Flying Academy begins operating and the first batch is ready to fly by 2011. Pawan Hans is committed to furthering every cause to enhance and improve helicopter services in the country. Here are some of the milestones achieved so far: One helicopter deployed for power sector for hotline washing in Kanpur. Three Dhruv helicopters deployed for paramilitary forces i.e. BSF. Initial construction activities started on Heliport at Rohini in Delhi. 10 helicopters will be inducted by PHHL in one year (by February 2011). Delivery starts in April 2010. Pawan Hans Helicopter Training Institute started in Mumbai. Separate corridors for helicopter operation in Delhi and Mumbai approved by DGCA. Bangalore, Chennai and Hyderabad next in line. Awareness programme on Safety Management System, Heli-Tourism Medivac carried out. The tragic accident involving the Andhra Pradesh state government helicopter ferrying the late Andhra Chief Minister YSR Reddy and the subsequent investigation have also brought into sharp focus the need for us to learn from this tragedy. Some of the steps that are urgently required to be taken include: Need for satellite-based flightfollowing system. System of online updating/SMS of weather conditions to flight planners/ operators.

Compendium of the entire helicopter related CARs and publication on website without further/cross references. Need for independent and professional checks of flying crew. All helipads (temporary or permanent) used for VIP flying need to be audited for safe operations. Exclusive National Search and Rescue (SAR) Board for land/ onshore search in future. Need for National Helicopter Academy to provide support to operators on training, auditing, safety/quality control setup, maintenance and operational issues. Structured courses for Pilots/AME/VIPs on the capabilities and limitations of the helicopters they are flying. Unfortunately, the helicopter business in India is not a widespread well-organised institution. There are 268 machines and 62 commercial operators. 80 per cent of the entire business in the country vests with operators who have more than five helicopters and Pawan Hans is the leader with 35 machines. Most of the others have either one or two machines. With such a minuscule fleet, one of the first casualties is safety and maintanence. After all, what is the incentive for a single aircraft operator to adhere to the parameters of safety. Tragically, these result in avoidable accidents.

Unfortunately, the helicopter business in India is not a widespread well-organised institution. There are 268 machines and 62 commercial operators.

(Excerpts from a presentation made by Pawan Hans Chairman R K Tyagi at a recent helicopter conference.)

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total recall READY FOR TAKE OFF: The flying car ‘Terrafugia Transiyion’ has been booked by Rajkot Baron.

‘Escape in the flying car’

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The flying car’s design allows the aircraft to fold its wings and drive on any surface road after it lands at the airport. It will be able to fly up to 500 miles at a stretch at 115 mph.

ajkot baron Subhash Shihora is flying high, quite literally. As probably the first Indian to have booked the flying car, Shihora is set to create a history of sorts. CEO of Urok International, a consultancy firm, Shihora is among a select few across the world to have booked ‘Terrafugia Transition’, a twoseater car that can transform itself into a plane in 15 seconds. The Rs. 1.5 crore ‘car that flies’ will be out on the roads sometime in 2010, courtesy Terrafugia, a Massachusetts-based firm. But Shihora, who is not new to the world of ‘aviation news’ (he recently sued Deccan for Rs. 21 crore for not being allowed to board their plane despite having tickets), is not waiting. He has already taken some flying lessons and intends to go to Bengaluru for further training, that will help him get a licence to fly the car. The flying car’s design allows the aircraft to fold its wings and drive on any surface road after it lands at the

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airport. An earlier flying car — the Aerocar of the 1950s, which is still flying today and featured recently on James May’s programme ‘Big Ideas’ — requires the wings to be removed and stowed separately when not flying. The petrol-run ‘Terrafugia Transition’ , equipped with a 100 bhp engine, will be able to fly up to 500 miles at a stretch at 115 mph. For Shihora, that would mean just a threehour ‘drive/flight’ from Rajkot to Mumbai, whenever he wants to. Frequent traveller that he is, it would also mean no more long waiting or driving. And since the ‘flying car’ can be parking in the garage of his house, he also does not need to book a hanger at the airport. Carl Dietrich, who runs Massachusetts-based Terrafugia, said: “This is the first really integrated design where the wings fold up automatically and all the parts are in one vehicle.” The company’s name is derived from the Latin for “escape from the Earth”. And this is one escape that a lot of people around the world would be avidly looking for!

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And they floated into matrimony…

DEFYING GRAVITY: (Right): Snippets from the wedding. (Below) This specially modified Boeing 727-200 aircraft created history when it hosted the world’s firstever weightless wedding.

hey flew like Superman and floated upside down to say their wedding vows, as Zero Gravity Corporation hosted the world’s first-ever weightless wedding. Noah Fulmor and Erin Finnegan were married on June 20 among family and friends on board a specially modified Boeing 727-200 aircraft, G-Force One, operated by Zero Gravity Corp, or ZERO-G , a company offering weightless flight experiences. In keeping with the uniqueness of the occasion, the bride wore white, and earrings resembling tiny planets, the groom a tuxedo and cuff links shaped like spacecraft, and the wedding party attended in blue jump suits. Finnegan and Fulmor, who live in New York City, are self-professed space fanatics — as children, both wanted to be astronauts. Finnegan attended space camp, while Fulmor volunteered at a local planetarium. Today Finnegan works in animation

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Officiating at the ceremony was Richard Garriott, a secondgeneration US space traveller.

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production and Fulmor is a legal secretary. “It was weirder than I expected. ... I’ve been to a lot of boring weddings, so I wanted to do something different,” said Finnegan, with wires keeping her hairdo from unravelling. “I’ve waited my whole life for this ... what I remember most was the feeling of weightlessness, both physically and emotionally,” Fulmor said. Officiating at the ceremony was Richard Garriott, a second-generation US space traveller and ZERO-G cofounder, who is also a registered notary. He told reporters, “I know first-hand the added thrill microgravity will play in their already joyous event.” Planning a zero-gravity wedding comes with its share of technicalities. The couple had to make sure that the marriage would be legal, for instance, fortunately the airspace over Cape Canaveral is covered by Florida law. The wedding is uninsurable, though, and figuring out the best zerogravity hairstyle was a challenge, Finnegan said.

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EPCH House, Pocket- 6 & 7, Sector - C, LSC, Vasant Kunj, New Delhi-110 070, India Tel: +91-11-26135256 (6 lines) Fax: +91-11-26135518/19 E-mail: epch@ vsnl.com Website: www.epch.com

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FLYING WONDERS: (Right) Etihad’s growing female pilot community (Left to right) Rebecca Hillyard; Shereen Al Mazroui; Shareefa Al Bloushi; Rose Omari; Salma Al Baloushi and Hamda Al Qubaisi; and (below) Salma Mohammad Al Baloushi and Aisha Hassan Al Mansouri, the first female cadet pilots at Etihad.

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To complete the Etihad pilot programme a cadet has to undertake 930 hours in the classroom and 205 hours flying experience.

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women in their flying machines ames Hogan must get a medal for this achievement. The Etihad CEO launched this programme some three years back and in this period it has become a huge success. The programme, called Emirati cadet pilot programme, has grown considerably since it was launched in January 2007 and now boasts 45 UAE nationals who are currently training to become fully qualified pilots with the UAE’s national airline. And wonder of wonders, two women are now among the graduating class: Aisha Al-Mansouri and Salma Al-Baloushiare the first women to win their wings in the programme, which is run by Horizon International Flight Academy for the Abu Dhabi headquartered airline. Of the two ladies, Aisha AlMansouri wanted to become a pilot after her zero gravity experience at an airshow at Al Ain. In a conversation, she said: “I love being up in the sky

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and know instantly that I want to become a pilot.” Her colleague, Salma, had no idea that she would be a pilot one day. In fact, she was studying to be a nurse, “but something just didn’t feel right,” she confided to a reporter. “I didn’t have a real passion for what I was doing and I decided to follow my childhood dream of becoming a pilot.” To complete the Etihad pilot programme a cadet has to undertake 930 hours in the classroom and 205 hours flying experience in single and multi-engine aircraft as well as Etihad’s state-of-the-art simulators. The class of 2009 was the second to complete the course. More recently, Etihad welcomed the 100th cadet pilot to its flying programme: another woman, Shareefa Al Bloushi. She became the sixth female Emirati cadet pilot to join the programme. About five per cent of the pilot strength worldwide comprises women pilots. That’s about 5000 out of a lakh pilots.

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WINNING IMAGES : 1. Alex Marttunen a 11-year old, found a top of the broken bottle which was thrown as trash but this insect has made its home into this broken bottle; 2. Anthony Avellano, (12) captured a banana slug at Redwood National Park, California; 3. A lonely ladybug captured by Julia Kresse, (15); 4. Asleepy butterfly with lots drops by Patryk Majchrzak, (16); 5. Prerona Kundu, (11), tried to show going-to-be lost amphibians, such as frogs are endangered but they are a very important part of an ecosystem; 6. Dominican lizard clicked by Chad Nelson, (12); 7. Orang utan - taken by Vinzent Raintung, (8); and, 8. A yellow caterpillar nourishes itself on yellow plant by Clémence Bonnefous, (7).

Sharpshooters of a different kind

irbus’ initiative — “See the Bigger Picture” where children from six to 16 years were invited to take photos of biodiversity and upload on Airbus’ created site, www.seethebiggerpicture.org — has ended. The competition has ended and eight talented winners have emerged. The effort was meant to stimulate and raise awareness on biodiversity among children, families and educators around the world. Among the photos were animals, colourful insects, flowers drenched in pollen, vast landscapes, harsh winter morning and glowing evening sun: that was the glimpse of biodiversity, captured by children for the competition. Commenting on the competition, Tom Enders, CEO and President, Airbus, said: “The standard of entries from every corner of the world has been extremely impressive and a great reminder of the variety of living species we have around us. At Airbus, we are working with the Convention on Biological Diversity (CBD) and using our global outreach to raise awareness of the need to preserve the variety of life on earth.” The eight talented winners were chosen from 2,350 entries in 99 countries. Children of Airbus employees were also encouraged to enter and three prize winners were selected from those 247 entries. In addition, 20 children were also awarded honourable mentions for their impressive entries and of these, two were Indians.

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The eight talented winners were chosen from 2,350 entries in 99 countries. Children of Airbus employees were also encouraged to enter

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Flemingo offers the best in

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lemingo International Limited was incorporated in 1997, in the British Virgin Islands (BVI). From modest beginnings with its first duty free outlet in Tanzania, Flemingo now operates 70 Duty Free outlets across two continents. Flemingo's shops are based at Military Bases, Airports, Sea Ports, Free Zones, Down Town Diplomatic Duty Frees and at UN complexes. Flemingo has revolutionized the duty free business in India in the last six years. Prior to Flemingo's entry into the Indian duty free industry, the business was almost non-existent. The business in India had been the monopoly of the Government (India Tourism Development Corporation Ltd) for almost 30 years when in 2002 Flemingo Duty Free won various tenders and moved into the field. Flemingo today operates with diversified operations including Perfume & Cosmetics, Liquor & Tobacco, Boutiques, Fashion & Accessories, Local Destination products, Food & Confectionery, and General Merchandise. Each product offering is based on the needs and expectations of the traveller in the specific market. Flemingo offers the best prices in the region with a huge range of products to select from. Since 2002,

we have built a pan-India presence in order to offer Indian travellers a true experience of Duty Free Shopping. It is due to Flemigo's efforts to deliver and serve in the best possible manner that the company has been able to achieve swift success in just a

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decade. The ever growing global presence and the repeated renewal of Flemingo's concessions across the globe is clear indication of the level of service that is offered and the fulfilment of the commitments that are made before taking up the project.

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“Good times await Indian aviation

industry”

The worst, they say, is over. Things will only get better from here on, says Dinesh Keskar, President, Boeing India and Vice President of Boeing International, to R Krishnan and K Srinavasan.

Is the global aviation out of the woods or will it take some more time? Also, how is the aviation scene emerging in the Americas, Europe, Gulf and Middle East, South East Asia and Far East? Global Aviation is not yet out of the woods. U S contributes the most to the world air traffic and its GDP growth has not yet recovered. Since GDP growth has a direct correlation with the growth of passenger traffic, we need to tread cautiously. However, what we are seeing is that China and India are recording significant advance in traffic growth. This is also largely true of Asia and Pacific. But in Europe, it is at best a neutral scenario. We expect the aviation traffic in India to grow between 8 and 10 per cent in the current calendar year 2010 on top of the record domestic traffic, which grew to 43.8 million in 2009. I see 2010 as a year of recovery, with 2011 as the year when airlines could return to profitability. In 2012 we expect to see a rebound in demand. The timing and strength of global economic recovery is forecast to vary across regions, with Asia leading, the Americas coincident, and Japan, some parts of Western and Emerging Europe lagging. Emerging markets are leading with growth accelerating to strongest since late 2007 in fourth quarter of 2009. China continues to play a pivotal role as enormous domestic stimulus supports commodities’ exporters and Asian manufacturers. Globally, over the past 30 years, through both tough and good times,

traffic growth has averaged more than five per cent per year, demonstrating the resilience of the market. In spite of the economic turbulence, air travel has shown strong resilience due to the continued dependence of people and businesses around the world on timely, reliable and efficient air transport. In line with average growth trends, Boeing foresees a global passenger traffic growth of 4-5 per cent and cargo growth of 7-8 per cent for this year. We expect this growth trend to continue as economies recover.

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How is the aviation scene shaping up in India, which nearly became the favourite of both the manufacturers — Airbus and Boeing -- and also airlines between 2005 and 2007, before the global recession hit everyone badly, and specifically the aviation industry? It is indeed true that the aviation scenario in India became very positive four years ago. The Indian market has been good for both the manufacturers. Record orders were placed and Boeing was the beneficiary with customers like Air India, Jet Airways, SpiceJet and Indian Air Force. We received an order for a total of $25 billion. However, after this positive development, the world went into an unprecedented recession that nobody predicted and to further complicate matters, the oil prices hit a record $147 per barrel in July 2008. Because of that, the world aviation losses went up to $11 billion in 2009. Airlines in India suffered disproportionately higher losses to the tune of $2 billion in the last fiscal year.

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Record orders were placed and Boeing was the beneficiary with customers like Air India, Jet Airways, SpiceJet and Indian Air Force. We received an order for a total of $25 billion.

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Boeing has been fortunate with no cancellations because our customers planned well when they ordered the airplanes. Jet Airways and SpiceJet, with predominantly Boeing planes have shown profits in the fourth quarter...

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However, in spite of such a difficult scenario in India, Boeing was fortunate that it did not suffer any cancellation. Looking back, the last three years have been very difficult for commercial airlines in India. But in the recent months, Indian air carriers displayed resilience and sound strategy and the markets are now turning positive. The fundamental reasons for this turnaround have been a stable fuel price regime at least for now, management of overcapacity and control of operating costs by the airlines. With the Indian economy posting a GDP growth of not less than seven per cent during these hard times, it has been a real shot in the arm. This is evident from an upbeat business confidence in India that hints at a possible compound traffic growth rate of 10 per cent. The domestic passenger traffic in 2009 reached 43.8 million passengers, the highest ever in Indian history. These are encouraging signs and the long-term underlying fundamentals that drive commercial aviation, the economic growth, world trade and tourism, further liberalisation in aviation, and ever improving new aircraft capabilities, remain strong. In July 2009, Boeing released its annual Current Market Outlook for India, projecting the countryâ&#x20AC;&#x2122;s need for 1,000 new commercial airplanes worth nearly $100 billion over the next two decades. Major airlines in India are incorporating a fleet mix of Boeing family of airplanes like the 737, the 777, and the game-changer 787. The first flight of the 787, the most fuel-efficient commercial jet airplane in its category, was indeed a very significant milestone for Boeing and the aviation industry across the world.

Is the revival of aviation industry in India only on the surface or deep down? The revival of the Indian aviation industry looks real, which is evident from the record number of passengers carried in the last quarter of 2009. The year 2009 as a whole was a new benchmark in Indiaâ&#x20AC;&#x2122;s aviation history when a record number of passengers were carried. The yields went up by 20 per cent and the load factor rose by 15 per cent in December 2009. This is a clear indication that the revival is real. We hope the fuel prices will remain in check and India will continue to carry record number of passengers

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Other than the stable fuel prices, management of overcapacity and control of operating costs by the airlines, there is a need to strategically address the rising market demand for low cost travel or low fare travel by increasing the number of low cost carriers. That and the sturdy GDP growth of over seven per cent have brought about business confidence in India leading to a possible compound growth rate of 10 per cent.

Returning to profitability globally as well as in India â&#x20AC;&#x201D;when, how and current status? IATA predicts that revenue improvements in 2010 will be at a much slower pace than the demand growth that we are starting to see. Profitability will be even slower to recover and airlines globally will lose an expected US$5.6 billion in 2010. In 2010 India will carry a reasonable number of passengers with reasonable yield paving the way for profitability to return in say two to three years. The India markets started to look up in the last quarter of 2009. This is due to the cautious optimism in the business growth and a growing GDP. The domestic passenger traffic in 2009 reached 43.8 million passengers, the highest ever in Indian history. These are encouraging signs and the longterm underlying fundamentals that drive commercial aviation, the economic growth, world trade and tourism, further liberalization in aviation, and ever improving new aircraft capabilities, remain strong.

Aircraft order cancellation and deferral by Boeing compared to competition as a consequence of recession. Has the situation changed? Will Indian market bounce back again like it was in 2005-2007 period when GDP was up at nine per cent average annually? Boeing has been fortunate with no cancellations because our customers planned well when they ordered the airplanes. Further, our customers, Jet Airways and SpiceJet, with predominantly Boeing planes have shown profits in the fourth quarter of 2009. We value our relationship with our customers and are closely engaged to understand their ground realities and partner them through the tough times. Boeing attempts to balance the supply of airplanes with market demand.

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Many carriers around the world are responding to tough challenges caused by the global recession. Therefore deferring, converting or cancelling orders are a natural part of this business. India is a growth market and for the long term it will remain a key to both aircraft manufacturers. India is given priority status within Boeing and we are taking key strategic steps to ensure we understand and partner our customers and stakeholders. We are strategising closely with customers and suppliers to drive costs down at various stages of the value chain. To do so, we leverage tools such as Lean+ and Six Sigma to drive operational efficiencies. We also work with the customer in areas such as route optimisation, flight scheduling and crew management so as to help them make adjustments that optimise yields in times of reduced demand.

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The demand for air travel continues to grow within India’s young population. With Indian communities spread around the world, people travel to visit friends and family.

Will the Indian market be driven by only expanding domestic market or even internationally as some more Indian carriers will qualify government rules to be eligible for overseas flights in 2010? Your comments. The demand for air travel continues to grow within India’s young population. With Indian communities spread around the world, people travel to visit friends and family. International visitors arrive in India to do business, and Indian workers travel outside the country to work in construction and other industries. India also has a thriving tourism industry, with both recreational and historical destinations. With that in mind we expect Indian market to grow by eight to 10 per cent. The international market is hard to predict because of many contributing factors. We see domestic carriers add roughly about 20 aircrafts a year to meet the growth in the near term. Boeing is yet to deliver about 85 planes to Indian carriers. Indian carriers have seen profits only in the fourth quarter of 2009. When we see a trend of profitability and the airlines realise that there will be a lead time required in ordering new aircraft, we think fresh orders may be needed by Indian

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carriers towards late 2011. The fact that some more Indian carriers will qualify for overseas destinations in 2010 may not alter the scene much though there will be a rise in demand for carriers.

As a result will there be new orders for more wide body aircraft? Or alternatively, will the manufacturers have to wait for new order flows? We see 2010 as a year of recovery with 2011 being the year airlines will return to profitability, and 2012 when we expect to see a rebound in demand and aircraft orders. Our strong backlog — nearly 3,500 airplanes — will help us work through this period. Our backlog is highly diverse by geographic region, by airlines business model and by airplane model. Boeing has been a supplier of wide body aircrafts to India since the 60s. In the recent times Boeing got firm orders to deliver 73 wide body aircraft to Indian carriers. Air India has ordered 27 Boeing 787s and 23 777s, of which 17 777s have been delivered. Air India will get the first 787 in the second quarter of 2011. Jet Airways has purchased 10 787s and 13 Boeing 777-300 ERs and have taken the delivery of 10 Boeing 777-300ERs. Boeing has been the mainstay of wide body aircraft for India right from the days of Boeing 707 and then with Boeing 747s. Now the mantle is taken over by Boeing 777s and soon to be followed by Boeing 787s and 747-8s. Today we have the right products and services around the wide bodies represented by the 777s and 787s, which will become the real game changers.

Your views on MRO and considering the number of aircraft as well as plans for new MROs, is it going to be over-capacity in MROs as well? What is the world practice on MROs and how many MROs are there in China, Europe etc. Is it the case of one big MRO or few smaller MROs? Share some info on Boeing MRO with Air India in Nagpur. The key reason why airlines in India got into serious trouble was overcapacity. That needs to be avoided in MRO business. Typically, an MRO needs a fleet of around 200 aircrafts. The majority of Indian aircrafts are relatively young or new and therefore do not need much maintenance immediately. Further, as an industry we

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Fraport – Airport Operations from Austria to Xi’an.

The Company Fraport AG is a leading player in the global airport industry. Following its initial public offering (IPO) Fraport has become the second largest listed airport company in the world, by revenues. Fraport’s expertise is based on more than 80 years of aviation history at Frankfurt am Main, Germany. Frankfurt Airport (airport code = FRA) is located about 12 kilometers from downtown Frankfurt. A renowned pioneer for decades, FRA serves as Fraport’s home base and as a showcase for the company’s know-how, technology, products, and services. With outstanding connectivity to all five continents of the globe, FRA is a intermodal hub with one of the largest catchment areas in the world and direct access to the German high-speed railway network. FRA is strategically situated in the heart of Germany and the European Union. Airlines can profit from high utilization rates and traffic yields.

Range of services The company prides itself in being a leading-edge provider of integrated airport services. Besides managing FRA, Fraport AG and its subsidiaries provide the full range of planning, design, operational,

commercial and management services for airports around the world. Fraport AG serves as a neutral partner to the world’s major airlines: offering a complete package of aircraft, cargo, passenger and other ground handling services. Outside Germany, the company has ground services op-erations in Austria. Other areas of Fraport expertise include cargo and ground handling, real estate development, airport retailing, IT services, intermodal concepts, environmental management, hub management, training, etc.

Fraport worldwide Through investments, joint ventures and management contracts, Fraport is now active on 4 continents. Fraport served some 78.2 million passengers in 2008 and handled 2.1 million metric tons of cargo (airfreight and airmail) at the Group’s airports. Fraport, which bids for airport management projects worldwide, was awarded a 30-year concession for operating, managing and developing Indira Gandhi International Airport (IGIA) in India. Together with state-run Airports Authority of India (AAI) Fraport AG has formed “Delhi International Airport Private Limited (DIAL)”. Fraport is the nominated “Airport Operator” and an Airport Operator Agreement

concluded with DIAL – under which it will be utilizing its extensive airport expertise developed over the past 80 years to assist with the operation, management and development of IGIA. Currently Air India offers three weekly passenger ﬂights and Lufthansa offers daily passenger ﬂights from Frankfurt to New Delhi. From April, Air India plans to provide daily connections.

Fraport AG Frankfurt Airport Services Worldwide 60547 Frankfurt am Main, Germany E-mail: marketing@fraport.de Internet: www.fraport.com www.frankfurt-airport.com Contact: Ansgar Sickert Vijender Sharma Fraport Airport Operations India Pvt. Ltd. Paharpur Business Centre Suite 302 21, Nehru Place New Delhi – 110 019, India Phone: +91 11 4120 7355 (AS) +91 11 4120 7334 (VS) Fax: +91 11 4120 7558 Mobile: +91 99 1038 2806 E-mail: ansgar.sickert@fraport.in vijender.sharma@fraport.in

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don’t have enough aircrafts yet in India to increase the number of MROs in the medium and large airplane category. We might run the risk of overcapacity in this capital intensive industry. Also keeping in mind that an MRO can be a competitive business, there needs to be a careful market analysis to ensure adequate profitability. Hence, it is crucial that we don’t repeat the problem of airline overcapacity by creating too many MROs. A balance of supply and demand is very important in any business. Boeing is fully committed to build a Greenfield MRO in Nagpur and will invest up to USD 100 million. This world class facility, built on a 50 acres land, with the help of Air India will primarily cater to the new 777s, 787s and 737-800s. The first 787 delivery to the country will take place in 2011. Therefore we plan construction late this year to ensure we are ready in time to support the 787 fleet that will arrive in the years to come.

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Boeing’s offset obligations are effectively utilised for partnerships with the Indian aviation industry to create sustainable value for both. With renewed vigour, Boeing is expanding its resources and expertise and is partnering with Indian industry.

Boeing’s offset for its sales to Air India and how is it benefiting the Indian economy and what kind of sectors? Due to its experience Boeing is well versed with offset obligations across the world and is moving successfully in India. The Government of India remains focused on improving Indian aerospace industry through reforms, liberalisation, and critical infrastructure investments needed to sustain growth. Boeing’s offset obligations are effectively utilised for partnerships with the Indian aviation industry to create sustainable value for both. With renewed vigour, Boeing is expanding its resources and expertise and is partnering with the Indian industry to develop a robust supply chain in research, technology, and manufacturing. Some of the partners include HAL, BEL, TAL Manufacturing Solutions Ltd, Wipro, Infosys, HCL Technologies, TCS, and InfoTech Enterprises. I would like to emphasise that offset is just a catalyst to our plans of partnering India for the long term.

Since you took over Boeing India and all its sub-heads, can you tell us what kind of offsets are you working on — value and likely total impact? We currently have an offset obligation of US $2.3 billion. This obligation is because of the large Air

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India deal that took place in 2005 and also because of the sale of the P8I earlier last year. We are ensuring we utilise the offset obligation to partner the Indian industry and help grow a mature aerospace supply chain.

Comment on Boeing 787, likely delivery schedule and whether it adheres to all the promises etc. What will be Air India’s benefit when it begins to fly Boeing 787 in terms of routes connected and economics etc. The first 787 to India will be delivered to Air India in 2011. The Dreamliner will be able to serve multiple routes efficiently with a single aircraft type. This simplifies airlines’ fleets and provides enormous value to our customers as simplicity and commonality are the keys to their lower cost strategy for the future. The Dreamliner offers 20 per cent fuel efficiency and a 60 per cent lower noise foot print - a huge benefit for communities around airports. Today, passengers can hardly tell what kind of airplane they are on when flying. But the 787 will be distinctly better with more space, bigger windows and an overall much better cabin environment. In addition, the 787 is an environmental leader, with its clean, quiet engines and recyclable materials. The 787 is practical proof that Boeing cares about the environmental impact of its products. We are on schedule to deliver the first 787 to ANA by the end of this year.

What about the other 777 series?

The Boeing 777 family provides new strategic growth opportunities for airlines today. The market-leading 777 family consists of two new passenger models, with the ability to fly point-topoint non stop to bypass crowded and busy hub airports, plus a freighter model. Twice as many intercontinental flights flown on twin-jets-especially the 777-as on three and four-engine airplanes combined. This is not just because economics are better with a twin; it’s also because of their reliability in getting passengers where they want to go on time without interruptions. We are proud to have 30 Boeing 777s flying with Air India and Jet Airways with nine more to join their number. Air India operates one 777-200, three 777-200ERs, eight 777-200LRs and nine 777-300ERs; it has six more 777-300ERs on order. Jet Airways

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TOWARDS WORLD CLASS: Dr Dinesh Keskar with Civil Aviation Minister Praful Patel, Civil Aviation Secretary Madhavan Nambiar and DG, DGCA, Dr Naseem Zaidi at the announcement of India Aviation 2010.

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currently operates six 777-300ERs. Worldwide surveys of thousands of passengers flying long-range routes in first, business and economy classes consistently reveal an overwhelming preference for the 777. The surveys show that more than three out of four passengers who have flown aboard both the 777 and the Airbus A330/340 airplanes preferred the Boeing 777.

The 747 and larger airplane market is forecasted to be about 740 airplanes over the next 20 years. The Queen of the Skies continues its remarkable run as the world’s most recognised and popular airplane icon.

As there has been a delay in deliveries of 787, how is Boeing proposing to meet its delivery commitments after all these delays? We have disappointed our customers and ourselves by not meeting our commitments. The delays came about through a number of factors involved, not the least of which is the inherent challenge of bringing an all-new advanced technology airplane like the 787 Dreamliner to market. Parts shortages and travelled work from throughout our production system to final assembly in Everett, the IAM strike in 2008 and unanticipated design issues have all contributed to delays in the program. We are learning lessons as we go, and we are re-drawing the lines across our production system and adjusting where necessary to bring the most value to our customers over the life of the program.

Has the sun set on the original Jumbo Boeing 747? Is any airline planning to buy the jumbo? Are there any plans for new versions of Jumbo? The 747 and larger airplane market is forecasted to be about 740 airplanes over the next 20 years. The Queen of

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the Skies continues its remarkable run as the world’s most recognised and popular airplane icon. In early February, 2010 the 747-8 freighter — the biggest plane the company has ever built — completed its first flight. At 250 feet, or 76 meters, in length, the plane is about 18 feet longer than the 747-400 jumbo jet. It lists 76 orders for the freighter and 32 for the 7478 passenger jet, with the vast majority from customers outside the United States. Boeing has recorded 108 orders from 11 customers around the world including Cargolux, Lufthansa and Korean Air. The jets would be much quieter and more fuel efficient and would have lower emissions than 747-400 models. In 2009, we manufactured and delivered the last 747-400. Shortly, the 747-8 Freighter will take to the skies for the first time and enter service by the end of 2010. The New 747-8 Intercontinental and Freighter work in today’s infrastructure making them the most versatile jumbo jets. Both versions of the new 747 feature GE’s 787-technology GEnx engines, an upgraded flight deck and a redesigned wing while meeting Stage 4 and QC2 noise requirements and offering lower trip costs. In addition, the New 747-8 is the perfect airplane for multiple applications: its flexibility allows airlines to use it in hub-to-hub or hub-to-point operations or even in point-to-point high-density markets when the demand in such markets warrants its use.

Can you shed some light on the weight of the 787? We continue to work our weight reduction plans aggressively, with our current estimates indicating that we still have some work to do to get where we need to be. As we’ve said many times before, weight is an issue for every new airplane at this stage. We have had the opportunity to weigh completed flight test airplanes which — despite the added weight of test equipment — will help validate our estimating tools for what is the world’s first predominantly composite commercial jetliner. We’ll put Line #7, the first customer airplane, on the scales later this year.

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“Indian market recovered more strongly than others” The market in India, asserts Kiran Rao, Executive Vice President, Marketing and Contracts, for European plane-maker Airbus SAS, is strong and all that the nation needs to do is ramp up the infrastructure, in this interview with R Krishnan and K Srinivasan.

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How do you look at the global aviation scene at the moment? When we look around the world we all know that there is a relationship between GDP and air travel. Globally we see that the world has started to recover from the second half of 2009. We put all the statistics together and what we saw was that air travel has also started to recover by the second half of 2009 and by December we started to see year on year that the traffic was up by 2.5 per cent and the freight was also up by about 10 per cent. So, worldwide we have seen that there has been a Ushaped recovery. However, obviously each market is slightly different and if we look at The Americas, if we look at Europe, if we look at Asia, if we look at India- each of these markets have a different behaviour in terms of their recovery. UK, for example, came out of recession by a very small amount just some time back. So, worldwide, yes, there are variations in different markets but the important thing to say obviously for the market that we are talking about now is that the Indian market recovered more strongly than any of the other markets that we saw. We have been through these recessions before we’ve been through the various cycles before. Airbus, I

READY FOR EXPANSION: Civil Aviation Minister Praful Patel and Airbus’ Kiran Rao.

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believe, has prepared itself well in advance of the downturn of 2008. We had a strong backlog; we have seen the production increase gradually year-onyear. We have reached the highest number of aircrafts produced last year with 498 aircrafts. Recession is one thing and new airplanes still have a part to play, as they are, much more efficient than older aircrafts. So, worldwide we have seen the fleets decreasing for older planes. We’ve seen the worldwide fleets for new aircraft increasing but overall we have seen the fleet of aircraft remain entirely static. So, what is happening is the older generation of aircraft have been taken out of the market quite quickly and been replaced with much more fuel efficient and modern airplanes.

the Boeing airplanes of equivalent wide-bodies, the 200 LR, has completely the wrong economics for the market. It is an airplane that has too high a trip cost, too high a seat-per cost and the 300ER has a very nice seat-per cost but they can’t find the right level of passengers to come on the airplane in their route network. So, what is proven from this whole exercise of wide bodies into India is that the A330-200 was absolutely the right size, the right economics, the right range and right performance. So, we have a winner there, I think, on the widebodied market-friendly A330 and we have a clear winner on the narrowbodied market with many more 320s being delivered than the 737.

Indian numbers are getting better,

So, the MCLR (Medium Capacity Long Range) is important in that sense. The days of big aircraft are over! Correct. But in that specific market, where we had new airlines starting operations in new markets, opening up new routes in a downturn, The A330 was the right size aircraft for the airlines. Now everything has to mature and grow and then over time we have to see the markets evolve, but what we saw going through 2006-2009, is that the A330s have proven to be the best wide-bodied aircraft in the market.

domestically much more than internationally. That directly affects your narrow body as opposed to the wide bodied. How would you view that? India is a little bit more complicated in terms of the number of aircraft. We have had a lot of orders in 2005 when a lot of new airlines like Deccan, Kingfisher, Spice, IndiGo came up between 2004-2006. We started going into international markets with the 330s and the 777s, which came from Boeing. So, it was a very complicated scene and if I sat and listened to all the pundits going through the last two years, everyone told me that someone’s going to go bankrupt. Jet’s going to go, this is going to go and that is going to go. But actually they all survived through the downturn. Narrow body, single aisle and twin aisle aircraft is quite a good story from the Airbus’ point of view. When we look at the Indian market again, specifically, we delivered an awful lot of A320s, about 27 A320s in 2009. When we look at the wide-bodied, we didn’t deliver any in 2009, but we did deliver in 2006, ‘07 and ‘08. When we look at the fleet, what actually happened is, very significantly, the A330s, for which they have 12 aircraft flying, everyone of those 12 aircraft have been kept in service because the 330 has the right size, the right economy, they are a great success in India. They are flying with Air India, Jet and Kingfisher. The airlines have appreciated these aircraft very much. They have talked to us about getting some more airplanes quickly, as the market recovers. What we have seen is

Is the revival on the surface or deep down? No, I don’t think so. The aviation market is not something that will grow nicely year-on-year and everything works our perfectly. We’ve been through the recession. The airlines had a tough time and there is no doubt about that. The airlines are starting to see signs of recovery themselves. The general marketplace in India is strong like it is in China and as long as that economic activity continues, then we have a solid base for the market recovery in India.

The talk about GDP and traffic growth has really no correlation. Three years back the growth had no connect with the GDP. When the GDP went to five per cent two years back the market collapsed; at 7.5 per cent there has been a surge. If it goes to nine per cent as envisaged in two years will there be huge orders from India again? When we look at GDP on traffic growth we base our correlation on many, many years of data. But the

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The aviation market is not something that will grow nicely year-on-year and everything works our perfectly. We’ve been through the recession. The airlines had a tough time and there is no doubt about that.

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boom that we saw in air travel between 2005-2010 — in that very specific time period — I don’t think you can adapt all the correlation and say everything works in a very nice linear fashion. What’s going to happen in that very short period of time, where all the airlines came in very suddenly, all ordered lots of airplanes, market shot up and everything happened. I don’t think we can put all the mathematics and correlations of the past in to that five-year period and say that it’s an exact fit — it is not. It was a very specific time period where we saw a lot of activity and so I don’t believe all the mathematics worked as it would in a general period.

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In 2010, I am already starting to see the airlines talking about the future again and I believe in 2011 we will start to see airlines in India seriously considering expansion again. One of the important things we have always said is that infrastructure in India needs to catch up.

There was a lot of activity and then considerable contraction. Will there be expansion again? We will see and I think I have always said it. We saw 2009 as the year when we had to reorganise the delivery stream. 2010, I am already starting to see the airlines talking about the future again and I believe in 2011 we will start to see airlines in India seriously considering expansion again. One of the important things we have always said is that the infrastructure in India needs to catch up. Now I believe it has caught up in a lot of places. There are still one or two hotspots, shall we say, that need to be ironed out but if we take the new airports and runways coming and Delhi coming online. This year, we’ve already got Hyderabad and Bangalore well-established with their new airports and others are coming along. Infrastructure has caught up with the air travel system and now what we will see now is the economy will go forward in a positive sense. Air travel will catch up and in the longer period what we will see is a better correlation between GDP and air traffic in India. We saw too many bounces up and down.

PE investors have stayed away from the aviation business, not just India but globally. Once profitability returns, do you see them coming back? Yes, I think so. When we look at the markets in India, when we first started in 2004-05, when everybody came in, obviously the ride was pretty bumpy. Now we have come through it, people will be a little more cautious but at the end of the day let’s just take some of the basic numbers. 1.1 billion people, GDP growing, lot of

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activity. India’s not going to be any different to China or Asia or any other part of the world. You need all that economic activity when you have all those people getting wealthier, then people are going to want to travel. The rail system is good in India but it can’t cope with the distances in terms of the value of time. It’s been a rough ride — no doubts about that — but the fundamentals are there and when we look at air travel, year-on-year we look at ourselves in those difficult times and say, well we will never get out of it, it’s only downhill from here, etc. But when we’re in the opposite we only say, it can go up. But if we step back and look at it over a period of time, in 10-15 years’ time, all this will look like a little blip on a curve that has a trend line of about six to seven per cent traffic growth.

So, the market will continue to be, if I can say, sexy! It will stabilise. It will not be as exciting as it was in 2004-06. It will become more of a mature market — that is what I am trying to say and then it will follow the trend that we see everywhere else in the world. We had a fantastic and exciting time selling lots of airplanes. But all that selling was also because nothing was really sold for the 10-15 years before that. So, there was a huge amount of pent-up demand that needed to be satisfied. And all that demand was held back and suddenly like opening the cork from the wine bottle, everything came rushing out and probably came out a little bit too fast and so now we have got to go back to a more gentle stream of aircraft induction, traffic growth, yield rising, cargo rising, that sort of thing. So, the picture I’m trying to paint is that we had a period of time in the 90s and early part of 2000 when nothing happened. Then everything happened and we went through a difficult financial spot and now it will be a cautious but well-managed recovery and growth going forward. I think that is the way to summarise it.

What’s the status on deferments and options? Let’s go from a little bit of hype to a little bit of reality check. We delivered 27 Airbus airplanes into India last year. I don’t know what Boeing delivered but we delivered more than Boeing. All the aircraft were financed; all the aircraft were well accepted. There

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were cancellations and deferments but that is nothing unusual related to the rest of the world. Let’s just look at the aircraft themselves. The A320 is very well recognised not just in India but worldwide to be the aircraft which is the most suited airplane for the low cost market. It is also happens to be the best airplane for the other markets as well, but the Indian market which is being driven down the low cost route, there’s no better aircraft than the A320 because it has the right number of seats, it has the best fuel-burn, it has the right comfort level, it has the biggest bins, turnround time, etc. So it’s got all the right attributes for the Indian market. And it’s proven because we have about 70 per cent of the market share with our aircraft in India. As for the A330s, we did not defer a single A330, if my memory is correct. We might have moved by a couple of months one or two planes here and there but all the 330s were taken by the Indian customers and they are doing a good service in India, whereas the 777s may have been delivered into India but I can tell you they are only draining the airlines of their cash because 777 is too high in trip cost for 200LR or too big an aircraft for a market that’s still in its infancy.

We have done a lot of work to build up the business plan for the JV. There were few issues that had to be resolved regarding the shareholding, etc. That has now been resolved and we are back on track with Air India to get this thing up and running.

What is the plan of the JV: EADSIndian Airlines MRO in Delhi? I think we have made good progress on that. We have done a lot of work to build up the business plan for the JV. There were few issues that had to be resolved regarding the shareholding, etc. That has now been resolved and we are back on track with Air India to get this thing up and running. I’m not too concerned. We had a few issues to resolve. I think that’s all now been done and it’s just a question of time.

Who is the Indian partner apart from Air India? For now the Indian partnership is Air India, ourselves through EADS and now we’re currently working with Air India to find a technical partner through the MRO network which is being run by the Airbus system.

What about Jupiter?

He is not part of the MRO network

Boeing’s offset programme is $100 million that they are investing in Nagpur, what’s the Airbus offset programme?

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Again we must not mix up what Boeing has said and what Airbus has said. Airbus is committing sizeable amount of money to the project. I don’t want to go into the details of it. The business plan has to run with the investments that we’ve talked about. The whole thing looks profitable and with a solid technical partner we will find a very good business plan going forward to set up an Airbus MRO in India.

Why do you need a technical partner, you have the expertise... Airbus does not maintain airplanes. We build airplanes but do not have a maintenance facility to maintain them. So, we have what’s called the MRO network. We have around 15 partners round the world that help us to conduct maintenance on Airbus airplanes all round the world. Of those 15 partners, one of them will be selected to be our technical partner in this Indian MRO joint venture.

What about your offset commitments in India as part of the deal with Indian Airlines? I think it has moved very well. We’ve done an awful lot of work in India, whether it’s buying engineering services or whether it’s setting up our engineering centre or training centre. We’ve done so much stuff building those with HAL. Actually it’s not the question of meeting the offset, it’s the question of overshooting the amount of offset and how do we handle all the additional work we are doing in India.

What was the original commitment? To be honest, I’ve completely forgotten the original numbers. All I can say is that we are more than comfortable with what we have done in India and we will overshoot the offset requirement by a long shot.

Apart from offset, is India ready for more complex services with Airbus? Today, we have to look everywhere in the world to see what is the right thing to do in a given country. We can’t simply put production lines in places just because it looks good in the newspaper headlines. We have to very carefully evaluate it — what is the right thing for that particular country. What we have decided for India is that the engineering services that India can

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provide Airbus, is actually the best way forward for us to work with India and for India to work with us.

You would mean software…

No, not software. The work we are doing in Bangalore is very high-end engineering. It’s not simply doing little engineering drawings or whatever it is. It goes beyond manufacturing. This is very high-end stuff. The first one which is the lead project is to develop, what we call, virtual testing of airplanes. So, for the moment they’re working on the flight management systems of new aircraft and they will develop the flight management system virtually in a computer. Then all the testing, before the airplane goes on its first flight, of that system will be conducted in Bangalore so that we know that the system is perfect. We will take that estimate and then go into all the other systems in the aircraft and ultimately end up with many systems and we have already started working, I think, on the airconditioning system as well. There are many systems of the aircraft, which, after being designed, obviously in different parts of the world, will be put together virtually and tested virtually in our facility in Bangalore. So that’s one thing that is being worked on. The plan is, of course, we have reduced the cost and time that it takes to fly that airplane. By testing everything virtually, connecting everything together in a virtual way and then running the whole system through will make sure that the airplane is thoroughly tested before it gets into flight. The next thing that we are doing is that we are developing the tools that will be used by our engineers in the different parts of the world for both structural analysis and aerodynamic analysis. For development of those tools and that’s also being done in Bangalore. We had a very strong wrapup. We started with 20 people a couple of years ago; we are getting close to 200 in terms of engineers. We have 150 with a target to go to 200 and we are going to increase that over time. We have taken a much bigger facility than when we opened and we’ve got room for expansion. You know EADS has moved its innovation department into the Bangalore facility. There’s going to be a lot more happening. If you look at EADS and Airbus in terms of procurement, we

are moving those people in as well. We are exploiting and finding the right balance of what India can contribute to Airbus’ growth. I think from the days when it was just me sitting in my little office, now there are so many people in Airbus in India, I don’t even know who is there and doing what. It’s such a big market for us.

Can you elaborate on your relationship with HAL and what is the major outsourcing with respect to the A350? Let’s talk about HAL. The relationship has been there for many years, building the doors. We produced something like more than thirty-eight 320s every month, and each one of those aircraft — a good proportion — I think it’s something like 14 or 16 sets of those doors, come out of HAL. You see it’s only just the door, but the door is a complicated piece of equipment that has to be put on the airplane and Airbus has been doing that. Lots of people are talking about it — about $100 million here and whatever it is. We have been doing this stuff and not just talking, for many years, before the orders came in and we’ll be doing it for many years after the orders have been placed, because we recognise that India has a lot to offer. Now, one of the things we need to do is to start looking at the 350. A lot of engineering services — we talked to people like Infosys and others who are working with us — there’s a lot of engineering work again. What does India do best? India is a model of high- end engineering resource at the right price and the right quality at the

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GREAT PLANE TO FLY IN: The A 380 has been getting wow reviews around the world.

The relationship with HAL has been there for many years, building the doors. We produced something like more than thirty-eight 320s every month. You see it’s only just the door, but the door is a complicated piece of equipment

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right time. So, we are working with many Indian subcontractors on airplanes like the A350 but we are also doing it ourselves in the engineering centre in Bangalore. But in terms of hardware, I don’t think there is any discussion at the moment between Airbus and HAL.

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The first flight of the A 350 will be in 2012 and we are well on track. We have sold 505 airplanes. We have a good spread between the A350-800, 900 and 1000. The 800 and 900 are direct competitors to the Boeing 787s.

What is the state of the A350 as of now? The first flight will be 2012 and we are well on track. We have sold 505 airplanes. We have a good spread between the A350-800, 900 and 1000. The 800 and 900 are direct competitors to the 787. The 787s, as you know, were sold to Air India but as they are discovering the aircraft that they bought and the aircraft that is actually being produced are two very different things. Just to give you an example — the A380 when it went into certification and flew, yes it took a little bit longer than expected for the production but in terms of what we said to the customers when we sold it, well we are within one per cent of the fuel burn. If Air India gets the 787 within five per cent of what they bought, they’ll be lucky. The aircraft is 22,000 lbs overweight compared to what they were sold at. And fuel burn is about five per cent compared to what they were bought at. So, they have missed all the performance guarantees. Our latest aircraft, which we just introduced into the flight test programme, would be A330-200 freighter, came out one ton lighter than what we promised our customers. So, again we don’t just talk about it, we do things and get them right. Any lessons that we learnt on the production side of the A380, has been transferred on to the A350. So, we will be on time with the aircraft and it will be a much better airplane than the 787 and it will be a generation beyond the 777s.

You said there are lessons learnt from the A380. Also Flight International in a recent issue said that close to 40 per cent of those who use the big bird feel it’s the best aircraft they have used… On the A380, the main issue of course was the ramp up — ability to having certified the aircraft more or less on time; we didn’t have the industrial ramp up, which was the main issue. Anyway that’s been solved.

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In terms of the hardware of the aircraft there was nothing wrong with the A380. It is a very solid aircraft that has not just proven itself technically but let’s just take a look at some of the other attributes. We talked about traffic flows decreasing through the downturn. Most airlines around the world saw their load factors going down. But if you speak to Singapore, Emirates and Qantas what they said was — yes they also saw the load factors going down over this very difficult economic period — but there was one aircraft were they saw the load factors going up. And it was reported between 90-100 per cent on their A380 flights. Singapore was well above 80 per cent and so was Qantas. And we have got a lot of data on that. You can see that the A380 actually reversed the trend and the airlines that bought the aircraft (noticed the load factors go up). If you take a route flying out from Singapore to Tokyo, ANA had the dominant share of the market. Singapore came up with the A380 and everyone’s load factors went down. On the specific A380 flight the load factors went up and on the 747 the load factors went down. So, what happens is, and it happens all over the world, when people go through the check-in in the reservation system, they ask is that a 380 or is that a 777 or 747. If the ticket seller says it is not (then they ask) which flight is the A380? All the airlines are telling us this. So, people are specifically choosing to fly on the A380.

What is the reason: novelty or what?

You need to come and fly with me one day on the aircraft on Singapore or Emirates. When you fly on the airplane, you have a much nicer environment in terms of the quality and noise. Noise is a huge factor. Noise level on the A380 is 50 per cent of that of a 747. You have a wider seat. You have much more space around you. You have lot more elbow space and the stability of the aircraft of that size etc. All those things combined give you a feeling of well being on the aircraft and you don’t have the same level of fatigue when you arrive on the other side. It’s genuinely nice to fly on the A380. I am going out to Singapore next week and the offices booked me on something, and I said no, no, make sure it is the 380. I don’t want to fly anything else. For myself or whether it is my friends

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or relatives or your friends or relatives or yourself, you’ll also see that when you go on a flight and you know there’s a 380, you’ll automatically (fly it). The first time you’ll want to try it and having tried it, you will go back on it again. Take the dimensions of 747 economy class, you are flying in a 17” seat. If you fly on an A380 in economy class, you are flying in a seat which is 18 ½” wide. 1½”wider with elbow clearance, armrest clearance, bigger bins, nicer atmosphere, more modern interior. Once you have done it, for the same ticket price you will say, I am going to fly in this one or that one. It is what the airlines have seen as well, if you go to the Singapore Airlines website and I’ve tried this myself, they give you an option on the say London Singapore (route). You click on it and it will then give you one 777 flight and two A380 flights. The 777 flight will be at a slightly lower fare compared to the A380s. That is the difference. People are willing to pay 10 per cent more. Now if you run the airline economics with 10 per cent more per seat and 10 per cent more load factor, your profitability just goes out of the roof compared to any other airplane. So it has, what we call it, the A380 effect and also, as we coined the phrase, which says, only an A380 can compete with an A380. So, sounds like good marketing kind of stuff, but it is reality. You go up there and do it yourself or you ask a man on the street to do it, I guarantee you; if they know there’s an A380 on that route, they will chase the roof down to make sure they are on it.

When is Vijay Mallya going to fly the A380? We’ve had lots of discussions with him — all of them, of course, have to be private and confidential but the A380 is going to be an important part of that leap going forward.

With Boeing’s huge orders for the 787 they have the first mover advantage over the A350… Huge, but decreasing by the day. Well, the first mover advantage, I would say, has been lost because they were first supposed to be flying in 2007 and we are now in 2010… And I doubt they’ll fly their commercial service this year. So, by the time the get really going it’s going to be 2011. We are coming in 2013 so that first

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mover advantage, I think, has been lost by then.

What have you learnt from the turbulence at Airbus in the three years that the A 380 programme went off course? Be close to your customer. As long as you are open you discuss everything, they understand the issue. We didn’t have a single cancellation on the A380. I think Boeing has close to 100 cancellations now on 787. We understood that there were issues with delay and delivery of the aircraft. Each time there was a delay on the A380, each one of us would we would be there with our customer to discuss this. I had a great time I remember. When I had to go, I had to talk to Vijay Mallya and he would always be in a fashion show or a nightclub and I had to sit and tell him about the A380 delays. But still we were always there and always explained what was the problem. We always listened to what the problems were with the airlines and we offered them solutions because of the delay in aircraft. We spent time with them.

The A330 Air France crash. What impact has it had on the aircraft? How many changes are you making on it? First, the A330 crash is under investigation, so, I can’t say much about it. But when it came to the reputation of the aircraft or when it came to our trust with the airline, nothing was lost. Obviously, they asked questions. The questions were all answered and the aircraft has flown 14 million hours since it went into service. 3 ½ million flights --- it’s a very big and reliable airplane and the professionals in the airlines know how to handle the situations.

What role have you played in designing the A350? Oh, I’m not the design engineer, I’ve worked on the concept of the A350. It was a great one-year where I stopped coming to India to sell our airplanes and I worked on the concept of A350 and I thoroughly enjoyed it. And what I told Air India is everything I learnt about MCLR was transferred into the design of the A350. So, the next time we do a campaign with Air India, they will have no choice but to buy the A350 because all the lessons that we learnt went into that.

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EFFECT OF RECESSION: Airlines, that made big plans for setting up an MRO, went out of the queue due to massive fuel price hike and the worst economic recession. (Above) an Air India Express737 in the Mumbai hangar.

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MRO: Few makers and fewer takers At one point of time, almost all airlines in the country wanted a large slice of the MRO pie. But the recession and the fuel price hike upset the plans. There are, however, still a few optimistic players but the question that is being asked is: Will they be able to sustain themselves? R Krishnan reports n the first cycle of the aviation boom back in 2005, every airline in India wanted to set up an MRO (Manintenance, Repair and Overhaul) as it believed that running an airline merely was not enough. Even the global big boys in this line of business were keen to set up shop in India. Besides Air India and Indian (before they were merged with disastrous consequences) which had their own engineering facilities for airframe and the former even had an engine shop, one heard of Jet Airways thinking of setting up an MRO. Then

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came Capt G R Gopinathâ&#x20AC;&#x2122;s Air Deccan with big plans for an airframe and components MRO. But soon Air Deccan became history when it was swallowed by fellow Kannadiga Vijay Mallya and his Kingfisher Airlines. At the time of the AI-Indian merger in 2006-07, the economy all over the world and especially in India was kicking and one even heard the Ministry of Civil Aviation projecting a figure of not less than 800 aircraft dotting the Indian skies in five years from then â&#x20AC;&#x201D; say by 2011. Even a stunted airline like GoAir thought it could make it big by setting up an

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repeat clients for major maintenance jobs. At the same it was understood, that the MRO business would begin to kick three or four years down the line — say 2010-2011. Shift in 2008 happened when came the double whammy. First, the massive hike in fuel prices followed by the worst economic recession the world economy had witnessed since the great depression of 1930s. Big banks and financial institutions in the US disappeared. So did big airlines. Can one imagine that an airline like Japan Airlines Limited (JAL) is now gasping for breath — requiring $15 billion — not unlike the $2.5 billion that Air India needs to keep alive. Even before the recession had set in, earlier stars like Deccan and Sahara ceased operations and were taken over by Kingfisher and Jet Airways, respectively. Unfortunately for them, soon after the takeover came the recession which meant fewer air passengers and the resultant excess capacity. We are now in 2010 and the total number of aircraft with various scheduled airlines in India just over 381. These numbers are enough for one-and-a-half full-fledged MRO. It was just before the recession that the GMR group began operations of its Greenfield airport in Hyderabad in March 2008. As part of its business plan it had a well thought out idea to set up a MRO for airframe. This was soon after Lufthansa Tecnik first tied up with GMR and later quit India on seeing signs of recession. But the GMR group stood its ground and is now on way to make its presence felt in the MRO space. It has tied up with Malaysian Airlines engineering company and has got the contract to service or perform major maintenance of the SpiceJet fleet. It has also signed a MoU with Jet Airways to provide MRO services to the latter’s fleet for ten years. In a way GMR feels it has already got 60 per IT'S A MATTER OF FACT: Though airlines are stepping back from setting up MRO facilities, the fact cannot be denied that setting up cent of its an MRO in India leads to reduced costs, lower time leads and saves customer base foreign exchange, and also creates huge employment opportunities.

MRO and accordingly signed an MoU with Singapore Airlines Engineering Company (SIAEC). In these four or five years, the fleet strength of GoAir has somehow got stuck at less than 15 and the MRO has disappeared in the clouds. SpiceJet’s bosses — in the initial stages of its operations — had big plans which included an engineering facility for at least minor repairs. The combined strength of Jet Airways along with Jetlite (formerly Air Sahara) enthused it to think of an MRO and towards which its promoter Naresh Goyal had told a gathering in Delhi that it would be possible to set up one provided it had at least 250 aircraft as captive customers. But this did not happen and soon Jet went out of the queue of potential MRO-walas. Then, another small-time player Paramount Airways thought of tying up with Embraer but later found another partner for setting up an MRO in Chennai or even Madurai. So, on paper, India would have had not less than 10 big MROs without counting the branches of Air India and Indian Airlines’s main MROs in Mumbai and Delhi. The fact that all the carriers were flying their aircraft to overseas MROs was not lost on anyone. This was largely true of Indian and Jet besides others who started their fleet with leased aircraft and, not necessarily with new flying machines. The first exception came when Kingfisher Airlines began getting brand new planes like Air Deccan followed by IndiGo and others. Thus, in a way, it was well understood that a full-fledged MRO could not be started immediately as there would be no

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We are now in 2010 and the total number of aircraft with various scheduled airlines in India is a little over 381. These numbers are just enough for one-and-a-half full-fledged MRO.

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has a mixed fleet of 41 aircraft and assured and will soon get others to five Boeing 777s. It has on order make a decent business of its MRO in 111 aircraft comprising 10 A380s, Hyderabad. But it will be worthwhile 25 B787s, 25 A350s, 23 A320s, 10 to exercise caution as further B777s, eight A330s. Thus by 2017, increases in customer base or aircraft Etihad will have 157 aircraft. for servicing may be hard to come by. Five years — after the big talk of Dubai’s flag carrier, Emirates, set setting up MROs by every airline up in 1985, has 139 aircraft on date player — it seems will not be anywhere which is a mix of Boeings and near what was Airbuses. It now has estimated. plans to grow its Will the MRO fleet with orders for business in India more than 168 succeed easily or will aircraft that include it progress haltingly? 53 A380s, 70 A350s, The possibility of the nine B777s, 15 B747latter happening is 8Fs. Besides its LCC greater as with the version, flyDubai, airline business, the has six B737 NGs MRO business may flying and has on also get fragmented order 54 more such if too many MRO aircraft. shops chase too few Qatar Airlines, aircraft. If anyone founded in 1993, thinks of getting currently operates a overseas business, mixed fleet of 57 such an eventuality Airbus types and also appears to be nine B777s. It has next to nil. The only placed orders for 80 gainer could be one A350s, 30 B787s, 26 WHAT'S THE FUTURE?: Air Works with the first mover A320s, 18 B777s CEO Fredrik Groth is apprehensive advantage provided he and five A380s — or about MRO business in India. has forged a foreign tie159 more aircraft. up for steady supply of aircraft from Gulf Air operates a 36-aircraft fleet airline customers both within and and has on order 24 B787s and 20 outside India. A330s. Oman Air has also planned Without the assurance of a steady sizeable acquisition. flow of aircraft requiring major While these numbers add up to maintenance, it could render most over 530 new aircraft (includes some businesses unprofitable. Over the general aviation), the existing fleet years, the MRO business has begun to adds up to nearly 300. Estimates focus on clients within five hour or less suggest that after replacement, the flying distance from the relevant MRO fleet size of all these airlines put unit. For India, it will mean the Middle together will not be less than 800 East on the west and South East Asia aircraft. In view of this, Emirates in on the east. But these two regions Dubai, Etihad in Abu Dhabi and already have well-established MROs. Oman Air in Muscat have planned In the case of the Gulf, three major major MROs. It is not that they don’t MROs (existing ones) are being have any facility now. They do, but refurbished and expanded in a big way what is being planned is going to be with an eye on third party business. super-size. Of these, the Abu Dhabi one is specifically targeting third party Let’s look at the Gulf carriers and clients as is Oman. Of late, Emirates their expansion plans. also feels that it should expand its facility which it is doing at the Jebel In just over five years, it is believed Ali free zone where the new Dubai that airlines in the UAE and the airport is coming up. It will focus on rest of the Middle East may take third party MRO service contracts. their tally of narrow and widebody Earlier, Dubai-based MROs largely aircraft flying with the airlines to looked after fleet from within the UAE over 800 on a realistic estimate and and rarely attended to third party 1000 if its optimistic. work. But now the dynamics is As per fleet flying and firm orders changing and it is also getting ready to placed, Abu Dhabi’s flag carrier, look for business Etihad, that started in 2003, today

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Over the years, the MRO business has begun to focus on clients within five hour or less flying distance from the relevant MRO unit. For India, it will mean the Middle East on the west and South East Asia on the east.

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QUESTIONS ARE MANY: Will India be a suitable place to set up an MRO and will planes from other countries come to it?

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from outside. On the eastern side, the expertise and business acumen of the Malaysian Airlines Engineering venture and SIA is well known. If one looks at India from these destinations, it is within a radius of less than five hours flying time. The question is: Will the aircraft from these countries come to India or will Indian carriers continue to go there? It is precisely here that the attempt by many to get into the MRO business in India seems to suggest that most business models may not take off — and for obvious reasons — due to the fragmented market. Now that the recession is nearly

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Indian aviation industry has a potential for doing MRO business worth $1.07 billion by 2013 and go up to $1.6 billion by 2018 as against $420 million in the MRO business during 2008-09.

behind us, it will be interesting to take stock of what happened in 2009 and then move forward from there. In early 2009, it was reported that the Indian aviation industry had a potential for doing MRO business worth $1.07 billion by 2013 and go up to $1.6 billion by 2018 as against $420 million in the MRO business during 2008-09. But then a year back the aviation picture was still hazy. However, the last quarter of 2009 ending in December and its continuation well into 2010 suggests that these estimates may need to be revised upwards — at least for the short term. But, on the other hand, it may be pointed out that nothing major has happened warranting change in estimates made earlier. For instance, at the height of the recession that began mid-2008 and continued well into the later part of 2009, all the airlines in India reduced their capacity and even deferred the orders they had placed except Air India. The increase in passenger traffic,

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both domestic and foreign, however, does not warrant any immediate increase in aircraft acquisition plans. For one, the reduction in the network will have to be revisited. This will be preferred by utilising the existing aircraft more since during the peak of the recession, there was a sharp fall in aircraft utilisation. Incidentally, Air India Express which also got higher loads than Air India saw a sharp fall in aircraft utilisation per day to less than 9.5 hours. This meant, (i) no immediate need for largescale aircraft induction, and, (ii) further delay in the need for major checks. As for widebody aircraft of Air India, all the new Boeings will not be up for any major check in the immediate future and as for B787s they will be delivered only from April 2011. So, there can be no question for any major maintenance for quite a few years. In any case, Air India has its own facilities to take care of its needs. Despite such a situation, Air India is going ahead with its MRO JV with Boeing in Nagpur where the aircraft manufacturer is expected to spend the entire capital expenditure of $100 million to set up a facility in the proposed airport-related SEZ. The MRO, however, will be operated and managed by Air India. The facility will have two major hangars and lines big enough to hold a Boeing 747 each. Boeing’s MRO will only look after its own 50 aircraft which it is progressively selling to Air India and comprises — eight Boeing 777-200 LRs (already delivered), 15 Boeing 777-300 ERs ( nine delivered and three more to be delivered this year) and the remaining Boeing 787s or the Dreamliners will commence deliveries from April 2011. Even the three B 777300 ERs which have been deferred by two years may join the fleet two years from now. Besides the Boeing MRO (for airframe) in Nagpur, Air India has its own facilities in Mumbai (including one for engine), a minor unit in Trivandrum to meet Air India Express needs and it is planning one more in Hyderabad on a smaller scale. This was essentially an Indian Airlines project which the engineering section of Air India wants now to be upgraded to meet the major maintenance needs of B777s as well. Apart from the above facilities, the Indian part of Air India has signed a JV agreement with EADS for setting up a big MRO (valued at not less than $40 million) in Delhi.

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The economic recession which hit airlines in India forced potential MRO units to quit except some optimistic ones who are reassessing their plans.

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It is now decided that the Delhi MRO, which was to be set up by Air India (formerly Indian) in a JV with EADS and Rajeev Chandrashekar’s Jupiter Aviation has been scrapped and a new JV is being formed. Jupiter Aviation will no longer be part of any JV which Air India or Indian sets up with EADS. Therefore, if all goes “well” Air India will end up with five MROs of varying sizes resulting in sub-optimal operations for owned fleet of 111 aircraft — and if one includes old aircraft — a total of 137 aircraft comprising 50 wide-body and the rest narrow-body planes. It will be a spectacle to watch with Air India Boeing 777s and 787s being treated at Nagpur, its Boeing 737-800s being maintained at Mumbai and Trivandrum while its Airbus fleet at Delhi and Hyderabad. In the above context, what GMRMAE have done is really smart and all care should be taken to convert the recent MoU signed with Jet Airways into a bankable agreement. This is also true for the SpiceJet deal. If one recalls what we said in the beginning — the Middle East and South East Asia alternative — then the picture, perhaps, is complete. After losing the SpiceJet deal, Fredric Groth, CEO, Air Works, has begun tours of the Middle East to market his Hosur MRO facility after it received EASA certification. It already has DGCA certification. Air Works is now trying to get Kingfisher on board. But between 2007 and 2009, the fleet size of Kingfisher shrunk from 87 to 69. It’s anyone’s guess as to what could be the potential. It is interesting to note here that recently Arvind Jadhav, CMD, Air India, told a press conference, that the airline would soon separate and hive off its engineering unit and transfer 8000 engineering workers to the unit which will be a separate SBU. Besides Air India, Boeing and EADS-backed MROs, there are Air Works, Indamer, Max Aerospace, Hamco a non-starter and Duke Aviation MRO whose facilities are coming up in Nagpur adjacent to the Boeing MRO. Incidentally, the Boeing MRO will not be ready before two

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years. In the case of Duke, work is progressing and it could soon announce opening of some facilities in the second half of 2010. Down South, the Cochin International Airport Limited is also in the process of setting up an MRO for narrow body aircraft and has carved out the area within the airport premises and is also on the look out for a JV partner. Jupiter Aviation which has been allotted 900 acres of land in Hassan Karnataka is planning to have its own MRO either at Hassan or near Devanahalli Airport or BIAL. Incidentally, HAL which has a JV agreement with Pratt Whitney for an engine MRO has also been allotted land near BIAL for a MRO. The economic recession which also hit airlines in India forced potential

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MRO units to quit except some optimistic ones who are reassessing their plans. The question is: has the time come? Perhaps, not yet, but as stated, the first mover advantage should be seized immediately and fully exploited. On the other hand, since all airlines are in deep financial trouble, there is no guarantee that money will be paid for maintenance jobs done on time unless liberal credit is allowed. As it is, we know that AAI is owed more than Rs 1500 crore by airlines and others in various charges. The main culprit is, however, Air India. As for oil companies, it has been a perpetual problem with airlines not paying up unless confronted with a ‘no fuel supply’ threat. Even if the charges for engineering and major maintenance may not be like the fuel bill, these nevertheless could become issues in the future.

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The Ground Handling Policy (GHP) has been a non-starter ever since it was announced. Airlines — specially LCCs — have among other things protested that handing over ground handling to third party providers would rob them of their USP. Surely, all these issues must have been discussed when the new GHP was formulated and approved by the Union Cabinet in 2007, reports R Krishnan.

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REASONS, REASONS: Airports simply are ill-equipped to deal with militant trade unions and political lobbying that has seen GHP in a limbo!

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f the government had summoned courage to implement the twice postponed two-year-old Ground Handling Policy (GHP), perhaps the business plans of new players could have begun to unfold and that of airlines with really no right to self handle in the six metro airports could have begun to fold up. After postponing twice, the new policy was to have come into force from January 1, 2010. But following protests by domestic airlines — that third party ground handling would lead to sacking of a few thousand airline employees engaged in ground handling, jack up costs at a time when they were cutting every available corner to stay alive — the GHP has been postponed yet again. In October 2007, the Union Government announced a new

GHP. It said the policy would not be implemented for one year — till December 2008 — to give time to domestic airlines to make way for an alternative arrangement. Thus, it was to become effective from January 1, 2009, by then only the following companies were to be permitted to provide ground handling services at six Indian metro airports — Delhi, Mumbai, Kolkata, Chennai, Bengaluru and Hyderabad — (i) Airport operator that is either Airports Authority of India (AAI) or the private operator managing the relevant metro airport in a Joint Venture (JV) with a known ground handling agency, (ii) Air India which has already tied-up with SATS; and (iii) Private GH agent. Of the six metro airports, four are being managed by private entities — Hyderabad and Delhi by

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After postponing twice, the new policy was to have come into force from January 1, 2010. But following protests by domestic airlines, the GHP has been postponed yet again.

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OWNER’S PLIGHT: What will happen to the JVs and the hefty fees that ground handlers have promised airports?

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a consortium led by the GMR group, Mumbai by the GVK group and Bengaluru by a consortium led by Siemens AG. As for Kolkata and Chennai airports, they continue to remain under the AAI which is spending over a billion dollars for their upgrade and modernisation. Recently, AAI appointed Bhadra International, a unit of TDI in JV with a Danish company, to provide ground handling services in Chennai and Kolkata. AAI has given out GH contracts to new agencies in the four regions — namely western, southern, eastern and northern regions, respectively. However, expect for Chennai and Kolkata (as they are part of the six metro airports) — where airlines are barred by the new policy of no self-handling (but is yet to be implemented), no such bar has been imposed in non-metro airports. Considering the rapid pace of

and a third independent ground handling company selected by competitive bidding subject to security clearance. Consequently, there will be a maximum of three ground handling companies that will operate at a given airport. Hence, any ground handling agency or company that was operating at the six metro airports but not meeting the above criteria had to close shop by December 2008. However, this did not happen and implementation of the new policy has already been postponed twice. It is also learnt that the government postponed the GHP implementation for the third time because of the dire financial straits of domestic carriers suffering from the after effects of the economic downturn. Further, there was also an issue of labour and what to do with the surplus GH staff at various airports who may be either permanent or contractual

urbanisation in non-metros, there is a high probability that cities like Ahmedabad, Coimbatore, Trichy, Goa, Nagpur, Thiruvanathapuram, Chandigarh, Amritsar, Jaipur, etc. would become important business propositions. In a way, as a result of the new arrangement and induction of new GH agents by AAI, one could — for the first time — get to see a sea change in GH facilities in these airports. As per the GHP details, apart from the concerned airport operator, be it AAI or the private operator, ground handling services can also be provided by the ground handling subsidiary of the national carrier Air India or its JV

staff of the airlines. Secretary, Civil Aviation, M M Nambiar had said on the postponement that “we need to talk to all stakeholders including airport developers and airlines and make sure that the new GHP is the best for everyone. We will review it thoroughly before taking any further action”. At present, the GHP allows the domestic airlines to carry out on their own jobs such as passenger check-in, baggage and cargo handling, cleaning and refuelling aircraft, etc. Under the new GHP all these and much more will be provided by the new ground handling agency contracted to perform third party work.

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There was also an issue of labour and what to do with the surplus GH staff at various airports who may be either permanent or contractual staff of the airlines.

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SETTING THE RULES: AERA will have to lay the policy on the issue, but who will obey its diktat?

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The economy has kick-started and passenger loads are coming back. This recovery may see carriers expanding their network, induct newer aircraft and re-induct aircraft that were temporarily leased, etc.

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However, with the revival of the Indian economy and with 7.5 per cent GDP along with a rise in passenger loads, perhaps, the government may have to re-look at its policy of postponement and not the policy per se. After all, the new yet-to-beimplemented GHP could not have been framed or received cabinet approval without proper debate. Those wanting development of a strong airport infrastructure believe that the new GHP should be implemented as it is one of the important ingredients of a new airport’s business plan. Those who are airline backers feel that the already bruised domestic carriers, due to falling passenger loads, yields and rising fuel price, need a breather for some more time before the implementation can be announced. Now that the economy has kickstarted and passenger loads are coming back, they may all want this breather to continue till they are able to recover the losses sustained over the last two years. This recovery may see carriers expanding their network, induct newer aircraft, re-induct aircraft that were temporarily leased, etc. In short, the airlines may want to convey a message: ‘Please hold back the new GHP for some more time till we get back on our feet again’. As for airports, a revival of airline business would mean more money for them once again. In any case, the airports had hiked the aeronautical charges.

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The issue once again is whether the GHP story will follow the chicken and egg route. Under the proposed new GHP regulation, airlines are not allowed to self-handle at these six metro airports as many of them do today. While domestic airlines have been allowed to do self-handling at non-metro airports, no foreign carrier has been allowed to do self-handling. There is already a murmur of protest about the special treatment for metro airports when security is an equally important objective at non-metro airports as well. Is the revenue stream of AAI which is struggling to raise funds for its own airport modernisation not important? Then, why allow more players including self-handling at non-metro airports. A Centre for Asia Pacific Aviation (CAPA) study showed that domestic airlines objected to the new GHP as they felt awarding their ground handling job to third party Ground Handlers would lead to (i) loss or dilution of control over service quality as airlines feel the first point of interface between passengers and airline staff is at the check- in counter/gate and induction of a third party on airlines’ behalf will dilute its USP; (ii) airlines stated that they are not too concerned about the impact of outsourcing ramp activities but were not willing to trade their USP like ontime performance which they fear could happen as one could not expect the third party GH provider to treat all

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the airlines as their own respective staff do; (iii) while airlines doing selfhandling could cut cost on their own self-handling, this may not be the case when a third party is doing the job leading to rise in costs; and, (iv) limiting the number of ground handlers to three is limiting competition. Incidentally, what an airport operator or a ground handler can charge for various ground handling services is now an important matter awaiting examination and resolution by the newly set up Aviation Economic Regulatory Authority (AERA). Independent Ground Handlers have stated that they will make huge investments in GH equipment to enhance service quality and efficiency.

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If India is to have international standard GH, then it is an investment that will have to be made. Introduction of international best practices will lead to greater efficiencies.

If airport infrastructure is expected to suck in a few billion dollars in investment then it will be a total distortion if such investment is not made in ground handling, a very crucial aspect of airport management, that includes a drastic reduction in down time or turnaround time for aircraft and thereby increase the rate of aircraft movement. This aspect, then, of airport revenue stream cannot be wished away. But the ground handling agencies which have been shortlisted have also complained that they are being forced to charge higher rates for the services they are providing or will provide to airlines because of the high revenue share they have committed to the airport operators. Not surprisingly, the airport operators do not agree with this argument as they point out that they had to agree to a very high revenue share with the Union Government to get the concession from the government in the first place.

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According to a CAPA study, GH agencies point out that with the investment they are making in stateof-the-art equipment, service quality and efficiency will actually improve. They have argued that what currently constitutes ground handling in India is not up to global standards. While what is being offered now may seem cost effective and cheap, it however does not conform to the global safety and security standards. In this context, it stated that there is need for significant increase in capital outlay in using airport compliant tractors as opposed to farm tractors as are often used at Indian airports. If India is to have international standard ground handling, then it is an investment that will have to be made. Introduction of international best practices and software-based resource allocation systems will lead to greater efficiencies in the utilisation of equipment. At one time, last year, Mumbai Airport had listed an inventory of more than 90 ground power units which was more than three times for an airport of its size. It is not known if this position has changed. As for traditional agencies â&#x20AC;&#x201D; be it airlines or otherwise â&#x20AC;&#x201D; there is over-staffing and the fear of job losses and the resulting airport unrest are what has been bothering policymakers after announcing the ground handling policy. An important trend for ground handlers in the context of the Indian market is the rapid growth of Low Cost Carriers (LCCs) and similar subsidiaries of full service carriers. Today, LCCs account for nearly 60 per cent of the domestic market share or even more. When their negotiation position increases it will not be surprising that they may even demand competitive bids from potential GH agencies. At present, since the airlines are allowed self-handling and in the case of LCCs, it is beneficial since it ensures a quick turnaround of the aircraft. The LCCs will not want this compromise by a third party agency providing ground handling and also the cost at which it will be provided. Should this cost rise, it could crack the LCC model. But were these issues thought through when the new GHP was formulated and approved by the Union Cabinet in 2007? This mystery has still not been solved and the policy remains in a limbo.

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The logistic service sector in India needs to keep pace with the change, and adapt to the needs and expectations of the now more and more aware customers.

e are in the third month of 2010 but the black days of 2009 still haunt the air cargo sector. The mood was ideally captured during the 36th Air Cargo Agents Association of India (ACAAI) convention held in December 2009. Sunil Arora, Chairman of the Convention Committee, while welcoming the delegates, had pointed out that while on the one hand, the convention was being held at Goa with its golden beaches — indicating warmth and hope — on the other was the hard fact of the global recession. Arora went on to say that though the industry was still in the clutches of the downturn, “we are looking ahead with a very optimistic approach for the full revival of the economy and particularly the air freight business. The logistic service sector in India needs to keep pace with the change, and adapt to the needs and expectations of the now

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more and more aware customers”. ACAAI President J Krishnan was more forthright. He said that a “decade of exuberant growth and heady profits have slipped away — and slipped away suddenly. Grand visions and erudite forecasts of the unending growth story for the past decade have parted ways to a more grim reality that has set in.” The picture was grim, said the ACAAI Chief: “Be it among forwarders, carriers, custodians of the whole supply chain, all stands diluted. Truly it is the worst of times.” He was quick to issue a note of optimism when he mentioned that power of human ingenuity can never be underestimated: it has the capability to accept and climb out of a crisis. “Quick to observe, absorb and adapt to this changed scenario, our very presence during this flux also makes it the best of times.” Optimism is being reflected in 2010. Data released by the Airports Authority of India (AAI) shows that during 200809, all operational Indian airports

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It’s time to take-off

READY FOR EXPANSION: Capt Gopinath and DIAL’s MD Kiran Kumar Grandhi take a look inside a Deccan 360’s freighter.

If 2009 saw a fall in air cargo around the world — and India was no exception — 2010 has brought with it hope and opportunity. While carriers, low-fare and full service, are looking at starting and expanding cargo services, the country could see a full service freighter operation starting sometime in the second quarter of the year, reports Tirthankar Ghosh.

together handled 16.97 lakh tons of freight (11.49 lakh tons international and 5.48 lakh tons domestic) registering a negative growth of -1.0 per cent when compared to the corresponding period of 2007-08. Compound growth rate over the past five years indicated that international and domestic cargo had been increasing annually at the rate of 10.6 per cent and 7.9 per cent respectively, accounting for 9.7 per cent compound growth rate for total cargo traffic at all Indian airports. The AAI also forecast that international cargo was expected to grow by seven per cent and domestic cargo by two per cent during 2009-10, while the composite cargo growth rate in India was expected to be around five per cent in 2009-10. The AAI manages 126 airports, which include 11 international airports, 89 domestic airports and 26 civil enclaves at military airfields, is upbeat. V P Agrawal, Chairman, AAI, talking to CRUISING HEIGHTS some time ago

had pointed out that the “past one year has indeed been challenging and exciting”. Agrawal has been in the forefront of the organisation and steered it through the economic recession managing to implement a few of the planned projects of upgradation and development of airports. He said, “In this period (the last year) the seed of modernisation that we had sown started to germinate and the projects at 21 airports (nine non-metro and 12 other airports) were completed.” Now that the situation was looking up, AAI was geared up to tackle growth. Agrawal said that the AAI had planned out major projects in two of the metro airports under its command: Chennai and Kolkata. The AAI was also moving ahead to create Centres for Perishable Cargo (CPC) at Delhi, Chennai, Hyderabad, Mumbai, Amritsar and Kolkata: something which the country lagged behind in. Agrawal went on to mention that though “perishable cargo had not

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Optimism is being reflected in 2010. AAI forecast that international cargo was expected to grow by seven per cent and domestic cargo by two per cent during 2009-10.

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shown any appreciable growth, the present facilities were yet to be utilised to its full potential and would meet any future requirements for handling of perishable cargo at the airports”. With the major upgradation process underway, the air cargo growth that AAI was looking forward to in 2010 was around six per cent. Agrawal said, “As per our study and projections, there will be cargo growth of six per cent in the year 2010-11.” He went on to say that a growth of eight per cent on the international sector and six per cent on the domestic sector had been worked out till 2016-17 when the total tonnage (in thousand metric tonnes) of cargo moved would be 2,790 MT. The optimism of the AAI has rubbed off on other operators too. While Air India has chalked out a comprehensive plan to ramp up cargo operations (see Air India story in the Cargo section), others have moved too. Jet Airways, for example, has decided to increase its revenue share from cargo operations to 9.5 per cent of total global sales in two years from the eight per cent now. According to Jay Shelat, Jet Airways’ Vice President, Cargo, the demand in both local and international markets has been showing a growth (see Jay Shelat’s interview elsewhere in the Cargo section). In fact, there has been a revival of sorts in the air cargo plans of the domestic carriers. Along with Jet Airway’s cargo plans, Kingfisher Airlines launched a new door-to-door express cargo delivery service. While low-fare carrier SpiceJet has an established cargo section, GoAir is also planning to relaunch its cargo services under the brand name GoCargo. In fact, GoAir had stopped its cargo services last year. On the other side, express movers like Fedex, which launched domestic services towards the end of last year, is betting on the India growth story. The international ocean and air freight forwarder recently announced that it had opened two new offices in India —

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NEED TO UTILISE PROPERLY: Facilities available at perishable cargo centres of airports need to be utilised to their full potential, so that appreciable growth can be achieved.

the country being a key component of the company’s global expansion. According to Fedex, India presents tremendous potential in terms of market growth, capacity and expansion. There are others too like Fedex. The government-run Container Corporation of India (CONCOR), which had decided to set up air freight stations some time ago, has decided that two air freight stations of the total seven planned would be set up by April this year. In fact, CONCOR has tied up with Cargo Services Centre for air cargo handling, warehousing and cargo security services. Private operators too are ready to fly high. One of the rare outfits that braved the recession is home-grown express major Blue Dart. Anil Khanna, Managing Director, Blue Dart Express had commented way back in May, 2009 in an interview to a financial daily that the outlook for the air express industry in 2009 could be described as extremely challenging. “These are tough times...We believe that these inconsistencies will bottom out with the revival of the economy.” But the company kept to its expansion plans, conceived in 2007 and opened a new warehouse at the Hyderabad airport in December and is well ahead in its plans to set up another at Delhi airport. In

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addition, the company is all set to improve and enhance its existing aviation network, especially in the NorthEast region of the country. However, it is holding back as far as inducting more freighters in its seven-strong Boeing fleet. With the $625 million domestic express cargo market forecast to grow at 20 per cent over the next five years, Capt G R Gopinath, who started his Deccan 360, had been looking around to expand but had stopped short because of a lack of funds. He has decided to sell 25 per cent stake in his Deccan 360, now the markets had revived and the valuation of his enterprise had reached around Rs 800 crore. Deccan 360 boss had abandoned talks in September 2009 due to low valuations. According to insiders, privy to the talks with European and US investors, Deccan 360 plans to hire 5,000 staffers in the next five years and also appoint 100 franchisees. Freight forwarders who had a bad 2009 are keen to break out. According to Bangalore-based Sesh Kulkarni, President of UT Worldwide, and a prominent member of the Bangalore Air Cargo Club (BACC), 2009 gave most companies a good chance of introspecting and knowing the strengths of their teams. “As we embark on establishing the difference between the chalk and the cheese, it will create a flutter in the trade and it would be interesting to see how companies will deal with cheese internally and how companies will identify cheese externally knowing very well that cheese (quality) is always in short supply.” However, having done the differentiation, 2010 will be a ‘Year of Hope’ and “we are particularly very excited as there is some sanity which is building around in the system. While not everything has fallen in place, but the strength of Indian domestic economy and the course corrections done by various countries and industries has brought to the front — some realistic expectations. We think that 2010 will be a better year than 2009 and we foresee growth,” said Kulkarni. He went on to add, “I would attribute

2010 as a year of reinvention both for business and business practices. Our industry is not very matured on all these fronts, but I guess, the writing is on the wall, and the companies which are here to stay, will have to look at this.” A step further, Jude Fonseka, CEO, Deccan 360, observes that the yields have already improved on some sectors as much as 25 per cent. “This is due to two reasons” he says, “the capacity has been pulled creating pleasure on yield upwards and generally markets have pricked up as well.” He adds, “Our prediction is both domestic and international sectors will move upwards but on international it will be lane specific for a while.” Perhaps, the most optimistic of the lot is Capt Mukut Pathak, whose ACE is ready to start operations in three months. Speaking to CRUISING HEIGHTS, he projected, “What we feel about the market is that in the months of January, February and March 2010, there will be more consolidation of rates. The yields will improve. The overcapacity which is in the market would even out and then from the month of April 2010 onwards, we will hit the lean season. In that lean season, we do not expect the yields and rates to fall as it did in 2009. The real rise will be seen from July-August 2010 onwards and we expect that January-March 2011 onwards we will reach the same point we were in 2008. If you look at the last 10-12 months in the air cargo industry, the drop in air cargo has been so severe that it has gone down to the levels of 2005. So, the industry has to first recover, go back to the peak of 2008 and then the real rise will start.” ACE’s launch comes at a very crucial juncture. While the second phase of growth would connect the Far East, North Africa and Australia/New Zealand, the third phase would see ACE furthering its operations to the Americas. When that does happen, ACE would become a global cargo carrier. However, some experts have pointed out that ACE could face challenges in the first few months of operation if it does not offer something different from the others. Capt Pathak takes that in his stride: “We will provide flexibility, reliability and above all with expertise. We will be bringing in superior service levels to the market — and mind you everything will be done by Indians.”

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The real rise will be seen from July-August 2010 onwards and we expect that January-March 2011 onwards we will reach the same point we were in 2008.

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Towards better supply chain management What needs to be done to insure that the supply chain develops “temperature control integrity” to allow for cargo such as perishables and pharmaceuticals to move without any spoilage, discusses D J Ghosh. s world trade explodes, and manufacturers explore new sources of supply, long held tenets of supply chain management will increasingly be challenged. Globalisation, which began to take root in the 1980’s, has caused the supply chain paradigm to radically shift as companies scour the world for the lowest manufacturing cost. Armed with new management tools such as lean manufacturing, just in time inventory (JIT), Six Sigma, Kaizen (the science of continuous improvement) and SCOR (Supply Chain Operations Reference), the latter with its top-down supply chain assessment methodology, the supply chain industry will attempt to squeeze new efficiencies out of longer and longer supply chains. While these tools will improve the performance, these strategies may also stretch the system to the breaking point, and leave very little room for failure. And as research has shown, failure can be very expensive. Polls of financial executives around the world have regularly identified supply chain risk, more than any other, as having the greatest potential to disrupt their revenue driver. Furthermore, this research has revealed that companies adversely affected by supply chain disruptions have experienced 33-40 per cent lower stock returns relative to their industry peers, along with significant drops in sales growth, higher costs and an increase in inventories. The ill effects of a supply chain disruption don’t disappear quickly. “Like a heart attack that cuts off the blood flow” says Professor Vinod Singhal of the Georgia Institute of Technology, “a supply chain glitch

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cuts off the flow of information or supplies. And, similar to a heart attack, it has lasting effects on a company’s health”. So, what is the role of Air cargo? While air cargo companies have long touted their ability to move higher value products more quickly over longer distances, as compared to ocean carriers, their record leaves a lot to be desired. While aircraft do move cargo quicker over longer distances, much of this benefit is neutralised by long delays on the ground. It is as if one party gets the message, and the others don’t. Furthermore, outside the supply chains of integrators like FedEx, UPS and DHL, there is very little “end to end” visibility for both the shipper and the final consignee. The story doesn’t get much better for cargoes requiring temperature control and monitoring. According to Samrat Barari of Scalable Systems of New Jersey, an IT provider of temperature track and trace software, traditionally, logistics meant that goods arrived at the right destination at the right time. In today’s world it also means arriving at the right temperature. The industry is grossly underinvested in the electronic logistics systems that provide route information, booking and insurance information, temperature tracking and monitoring, environmental monitoring, billing and EDI. Furthermore, the research has indicated that most air cargo companies lack the environmental control and transfer ease, that are hallmarks of the ground and ocean carrier “cool chains”. The 20 per cent of the time that the cargo spends in the air, its temperature averages 15-20 degrees Centigrade, while the 80 per cent that it waits in

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storage or on airport tarmac, it is exposed to normal weather conditions. The only way now available for air cargo companies to insure seamless cool chain integrity, is through specialised temperature controlled containers, such as those marketed by Envirotainer. Other than that, they are left to the mercy of the various suppliers in the chain. Most supply chain textbooks will advocate the need for strong leadership from the top management and the need for teamwork to implement any new supply chain initiative. They will stress the need for continuous improvement of both processes and practices, while discussing how the new culture needs to become part of the organisation’s DNA. They will examine the importance of rewards in implementing such a system. However, for the air cargo carriers, airports and other service providers who support the trade, the incentives for them to participate in any “grandiose” supply chain solution for the shipper is very simple. What kind of a long term commitment are you willing to make to allow us to invest in the expensive assets and technologies that will create a more reliable and cost effective supply chain? Will you put the money where the mouth is? How can we improve upon our historically low operating margins, if any? In an industry rife with “short term” thinking with a penchant for even shorter term contracts this is probably the most important question for a new supply chain. When this question was posed to a panel of ocean shippers at the recently concluded Air Cargo/Sea Cargo Americas convention in Miami, the vote was split. Representatives from Kraft Foods and Southern Wine & Spirits of America strongly agreed that “long term contracts” were required to provide the necessary stability for the industry, which they hoped would eventually provide cost benefits. However, not everyone on the panel agreed, demonstrating a divergence in shippers’ views. To make matters worse, the top 20 global air cargo forwarders are notorious for offering contracts as short as six months with their partner carriers. In return, they expect them to finance aircraft worth hundreds of millions of dollars over 1015 year periods with very little contractual support. Contrast this

with the contracts between the railroads and the coal mines, where revenue optimisation specialist Jamison Graff of JDA Software Group says that “contracts of 100 years are quite common”. The new supply chain needs new investments to insure long term improvements and sustainability. As air cargo carriers increasingly become independent financial entities, separate from their passenger counterparts, and accountable to either private or public investors, their financial health will continue to be of paramount importance. Key to insuring their viability is carefully planned capacity improvements and enhancements based on very realistic forecasts and commitments from shippers and forwarders. Increasingly, air cargo carriers’ contracts with their financiers and leasing companies will need to mirror their contracts with their shipper/forwarder partners. The financial stability that such a model will create, allows the carriers to improve their offerings, provide newer aircraft, while controlling their costs. Larger, global shippers will need to drive the “long term contract approach” and impress upon their forwarder partners to do the same. The current “status quo” is unacceptable. All partners need to share the risks and rewards of the new supply chain.

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The columnist is President, American Friendship World Air Cargo Corporation

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Europe-APEC relation becomes stronger in 2010 With soft recovery in the last quarter of 2009 and in the beginning of 2010 in the air cargo sector, how will the Europe - Asia-Pacific air cargo business relationship harmonise and grow? Dirk Steiger provides a clue. he entire world's supply chain has been grievously damaged by the effects of the economic crisis. Air cargo is a small part by volume, but makes up about 40 per cent by value. Even if business continues to normalise we do not expect a full recovery to previously already achieved figures. Despite the fact that January 2010 figures have seen very aggressive growth compared to 2009, we do not believe that such an extreme will continue throughout the year. However, with a decent growth rate (CAGR â&#x20AC;&#x201D; Compound Annual Growth Rate) of less than four per cent over 2009, European airfreight providers will likely see a better business climate throughout 2010 because of the 2009 slowdown of sales seems to end. Especially, those involved in traffic between Europe and Asia-Pacific will see a highly robust business demand development with a lot of opportunities to grow above average. In 2010, the Asia-Pacific region (APAC) with a total of 2.7 million MTO will be the largest market for the European air freight industry. Exports are expected to grow by 7.4 per cent as compared to 2009, thus reaching approximately 1.5 million MTO in volume. Similar to previous years, the relation of exports and imports to and from APAC is relatively even. However, in 2010, the scale will tip in favour of exports, as the economic recovery and outstanding economic growth of the region will NEW ERA OF RELATIONSHIP: Cargo generate sectors in Europe and further demand Asia-Pacific region are for inbound air coming closer with their freight. At only recovering figures in 2010.

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European airfreight providers, those involved in traffic between Europe and Asia-Pacific will see a highly robust business demand.

about 1.2 million MTO, air freight imports from APAC will be about 20 per cent below air freight exports from Europe to the region, thus reversing the relation as compared to 2008. After the tremendous 20 per cent decline in air freight volume shipped between APAC and Europe in 2009, the trade lane is expected to be the driving force to recovery for the European market. More than 70 per cent of European exports to the APAC region are contributed by engineering (31 per cent), chemicals and pharmaceuticals (17 per cent), hi-tech (13 per cent) and fashion (11 per cent) industries. The strongest growth rate is expected for engineering at around 11 per cent, mainly driven by the growth needs of the Chinese market and related to technology-transfer (especially construction-related electrical

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apparatuses and machinery). Chemicals and pharmaceutical products at over a quarter-million MTO (about 17 per cent) of export volume, add a relatively strong growth potential around six per cent for 2010. The import volume in this area is significantly lower at only 42 per cent of exports at estimated 1, 07,000 MTO in air freight. However, this equates to a relative growth around seven per cent as compared to 2009 volume. The air freight demand for European hi-tech products (mainly optical instruments and telecommunications equipment) is expected to grow by approx. nine per cent to reach a volume of 186,000 MTO. Imports from APAC region are expected to show less growth of only three per cent, a volume of 3, 24,000 MTO. Two-thirds of hi-tech imports from APAC region comprises of computers, optical equipment and semi-conductors. The automotive industry is expected to show a significant reduction in air freight export volume from Europe to the APAC region. This is mainly due to the previous sharp drop in unit sales in the region and relating to the reduced likelihood of demand for spare parts, etc. Nonetheless, its share of air freight volume is expected to remain around four per cent. Imports are expected to remain stable at around two per cent of air freight demand (19,000 MTO), equating to four per cent growth. Air freight demand for

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fashion is expected to grow by 4.7 per cent to reach total volume of over 5,00,000 MTO in 2010, two-thirds of which account for fashion imports from the APAC region. With an estimated 3,42,000 MTO, fashion will be the most important and largest contributor to European air freight imports, with a growth rate around six per cent. The news flow of the past months emphasised a trend towards temperature controlled air cargo. Many airports worldwide announced plans to build temperature-controlled facilities with appropriate customs handling to enable cool-chain without temperature breaks to accommodate for sensitive goods, e.g. some medical products and other perishable goods. While perishables, with an estimated 28,000 MTO in 2010, only represent two per cent of European air freight exports to the APAC region, they make up eight per cent of imports, i.e. three-times the export volume. This imbalance will complicate air freight capacity planning enormously. Perishable goods will show in both, export as well as import, solid growth rates of five per cent and six per cent, respectively. For labour legislation we unfortunately cannot prove yet that climate will change significantly in 2010. Instead the trend of turning fixed into variable costs will continue. This will likely be for asset heavy aircraft/airport operators the only chance for strict cost control. Despite that we will also expect some very interesting mergers and acquisitions throughout the year, increasing the level of global competition. All labour divided parties in the air cargo chain must however change a couple of things to benefit from rising demand: reliability of service, keep commitments and promises (no more excuses) and implement a concept to reduce emissions. Even the most conservative political parties see this with highest priority. This cannot be done or even implemented by a single party, so think what you can do to improve partnership. The columnist is Principal and Managing Director, aviainform GmbH, a leading global supplier of international air transport market information.

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to lift big The boom in the cargo industry seems to have spurred Air India into action. Though restructuring and rejuvenation are demanding exercises in terms of finances, the national carrier is chalking out ambitious plans for its air cargo services, reports Tirthankar Ghosh. n a move that can only be interpreted as strong rays of hope, air cargo carriers in India are gearing up to ramp up overseas operations. To begin with, the increased industrial capacity and the growth of the Indian economy has prompted Air India to rejig its air cargo plans despite the financial constraints it is going through and come back phoenix-like. While senior Air India officials gave out the impression that the carrier’s financial worries would be over once the hiving off process starts. In fact, Arvind Jadhav, Chairman and Managing Director, Air India, announced plans sometime ago that would help the

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A NEW HOPE: Air India cargo is all set to rejuvenate itself in the year 2010.

carrier strengthen its financial position. Among the plans is the separation of its cargo handling operations into a profit centre. The separation, according to Jadhav will bring in much needed revenues for the carrier through lower operating costs and improved efficiency. “These (hiving off) moves,” said Jadhav, “will bring in additional revenues of Rs 40,000 million per annum”. The CMD went on say that though the carrier would not be in profits in 2010; it would be able to see through the year without much difficulty. The separate cargo handling unit, which will be under the defunct Alliance Air, has been conceived primarily to offer better services to customers. “This will be a single unit spread across the

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Focusing on cargo has been part of Air India’s revival plan. Before the global downturn, the cargo division contributed around half to the national carrier’s total revenue.

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country, enabling greater efficiencies,” said Jadhav. The hiving off process has started a restructuring exercise in the carrier and the division headed by Anita Khurana, Head, Special Business Unit, AI’s Cargo, has chalked out expansion plans. Talking to CRUISING HEIGHTS, Khurana mentioned that Air India had planned to increase the belly capacity of its aircraft. She elucidated that that with more wide-body aircraft getting inducted into the fleet, AI’s belly capacity for cargo would go up in due course. Khurana also said that AI would operate existing freighter aircraft for more number of hours to boost revenue from the cargo business. Cargo, both domestic and international, contributes around eight per cent to the revenues of National Aviation Company of India (NACIL) or the merged entity of Air India and Indian (Airlines). The cargo chief emphasised that AI’s cargo unit would take care of both national and international markets. The new cargo unit will have a fleet of eight aircrafts: six Boeing 737s and two A310 Airbus aircraft. Incidentally Air India had, in September last year, put an end to cargo flights to Europe and Japan, in reply to competition from aggressive Middle Eastern carriers. Those flights, obviously, would be restarted by the first half of this year. In the context, Khurana said that AI was planning to re-start its international freighter operations in about a couple of month’s time. Last year had been a tough one for most freighter operators and AI had to discontinue then. But thee were hopes that the market which had picked up in the last few months would continue making it conducive for AI to launch freighter services again. The Europe and Far East markets are the ones AI was exploring, she pointed out. Additionally, the carrier sees cargo potential on its routes to Germany and the USA. Focusing on cargo has been part of Air India’s revival plan. Before the global downturn, the cargo division contributed around half to the national carrier’s total revenue. Separating the cargo unit, it was forecast, would bring in four times

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more revenues. In fact, Air India had converted six of its older aircraft B737-200 into freighters in the hope that it would corner between 25 and 30 per cent of international cargo. Jadhav had said in a press conference in August last year, “Our focus is to generate revenue through allied businesses like cargo, engineering and ground handling.” It seems now that the move to hive off cargo handling when it starts operations in April this year — would be the first off the block in the revival plan which has been broadly divided into zero to nine months, 9-18 months and 18-36 months. The plan envisages operational efficiency, product improvement, organisation building and financial restructuring. Meanwhile, Air India still continues to nurture its cargo ambitions — not without reason. It did quite well on the domestic front. According to Khurana, the domestic market had been very robust in the last year. Despite the global recession, AI had done very well in the domestic front. It carried

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161 more than 80,000 tonnes of cargo in April-December ’09 — a 3.5 per cent growth over corresponding period last year.” The present financial crisis in the carrier did affect Air India’s cargo operations and Khurana said that “to some extent, it is true. But, we are hoping that with the creation of the cargo SBU with effect from April 2010, we would be in a better position to actively pursue what we have planned.” As for the future, Khurana was optimistic and said that she would like to presume that AI continued to witness the double-digit monthon-month growth that it had seen during the last quarter of 2009 to carry on in 2010 also. However, she put in a word of caution: “It is too early to celebrate - yet!” Travelling back in time, she told C RUISING H EIGHTS that “Air India is the biggest Indian cargo operator. We were also the first to start hub operations in the country. Though we were a little late as far as foreign competition is concerned, we are still pretty much in the race. The

global slowdown has taken most of the carriers and the cargo industry two years backwards, so there is not much we have lost out on.” Khurana, however, hoped “we will not have to catch up much from now on. Once the SBU set-up is in place, we will exert more attention on developing ramp handling activities and to improve our service delivery to our customers. By April 2010, our customers would be able to book, issue airway bills, track and trace their consignments on our international AI coded flights also through the Internet, which will provide us a competitive edge over most of our competitors. This facility is already available on our IC coded flights.” While others may have planned to start writing off Air India cargo, Anita Khurana is up and ready to go. “Air India Cargo,” she declared, “is well poised to take on the challengers of the new decade and become a leader in the India market.”

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The present financial crisis in the carrier did affect to some extent. But, Air India hopes that with the creation of the cargo SBU, it would be in a better position to actively pursue what it has planned.

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“We offer almost 1.500 tonnes of cargo capacity per day at present” Anita Khurana, Head, SBU-Cargo, Air India, on the carrier's mission to increase belly capacity, resuming its international freighter operations and much more. FUTURE READY: Air cargo stalwarts discuss the future.

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How many freighters would you have from the ten odd freighters that you have now for the scheduled cargo opertions? There would not be any increase in the number of freighter fleet for now.

You have recently said that AI is planning to increase the belly capacity of aircraft. What is the capacity now and what do you expect it to go upto and in what time frame? What I had meant by increasing belly capacity, is that with more wide-body aircrafts getting inducted into the fleet, our belly capacity for cargo will also go up in due course. We offer almost 1,500 tonnes of cargo capacity per day at present, which would grow by about eight per cent year-on-year within the next five years with the induction of wide body aircrafts.

The cargo operations — under the Alliance Air brand — is scheduled to start sometime in April. By then how many freighters would you have from the ten odd freighters that you have now? There would not be any increase in the number of freighter fleet for now. We are actually leasing out two A310 freighters and at an opportune time when the market picks up, we would be looking to induct more freighters. We are working out the business plan for that.

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Air India cargo had stopped/discontinued some services to international destinations. Will they be restarted? If so, which would they be? Yes, we are planning to re-start our international freighter operations in about a couple of month’s time. Last year had been a tough one for most freighter operators and we had to discontinue then. But we are hoping that the market which has picked up in the last few months would continue making it conducive for us to launch freighter services again. Europe and Far East markets are the ones we are exploring right now.

Air India cargo’s domestic operations continue. How is it doing? What is the tonnage that you are doing? Does this include the tonnage lifted by India Post? Domestic market has been very robust in the last year. Despite global recession, we have done very well in the domestic front. We have carried more than 80,000 tonnes of cargo in April-December 2009 — a 3.5 per cent growth over corresponding period last year. Though the growth has been

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ANCHORING GROWTH: India Post has been a major contributor in last yearâ&#x20AC;&#x2122;s growth figures.

primarily due to India Post carriage, I wouldnâ&#x20AC;&#x2122;t contribute all the growth to it. Our loads on our line flights have also been encouraging.

also. But we need to exercise extreme caution and learn from recent experience. It is too early to celebrate.

Most India-based carriers are going ahead to ramp up cargo operations? Do you feel that Air India has lost the competitive edge it once had and will continue to do so in the face of the competition from others? Air India is the biggest Indian cargo operator. We were also the first to start hub operations in the country. Though we were a little late as far as foreign competition is concerned, we are still pretty much in the race. The global slowdown has taken most of the carriers and the cargo industry two years backwards, so there is not much we have lost out on. We hope we will not have to catch up much from now on. Once the SBU set-up is in place, we will exert more attention on developing ramp handling activities and to improve our service delivery to our customers. By April 2010, our customers would be able to book, issue airway bills, track and trace their consignments on our international AI coded flights also through the Internet, which will provide us a competitive edge over most of our competitors. This facility is already available on our IC coded flights. So, I would like to add that Air India Cargo is well poised to take on the challengers of the new decade and become a leader in the India market.

Has the financial crunch that Air India is going through affected cargo operations? How do you plan to tackle that? What kind of projections in air cargo do you see in 2010 and beyond? To some extent, it is true. We have not been able to aggressively pursue our business plans. At one point, we were exploring the option to induct more freighters, which we had to put on hold, due to the financial position of the company and also the global meltdown. We are hoping that with the creation of the cargo SBU (Special Business Unit) with effect from April 2010, we would be in a better position to actively pursue what we have planned. Look at the Indian market, there are numerous freighters operating to this country. It is also unfortunate to mention that the market leader as far as cargo is concerned is not with any Indian carrier, which we need to reverse in due course. When all foreign carriers can see the huge potential in India, why is none of the Indian carriers taking a cue from it and leverage on this opportunity that is available to us? Looking beyond, I would like to think optimistically and presume that we continue to witness the double-digit month-on-month growth that we saw during the last quarter of 2009 to carry on in 2010

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Has the financial crunch affected cargo operations? To some extent, it is true. We have not been able to aggressively pursue our business plans. At one point, we were exploring the option to induct more freighters...

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Technology and policies are essential factors To achieve a sustainable growth and to survive in this highly competitive world of air cargo, the industry needs to be controlled by new rules, and of course, technology will be the key, Zarksis B Munshi points out. ir cargo industry and the world economy, in general, are recovering slightly and slowly from the unprecedented turmoil that has affected badly right from the last quarter of 2008. Resultant impact left all the links in supply chain reeling under deep financial and operational crisis. Capital and fixed costs intensive airlines were very acutely affected, while forwarders, truckers, warehouse operators and airport as well sea port operators too, faced the brunt. The crisis set back air cargo industry by almost 17 to 20 per cent and as a result knocked off about two years of growth. Last November, IATA report stated that although major airlines have generated profits in the third quarter and passenger and cargo volumes have climbed back to late 2008 levels, the air transport industry is still expected to see a net loss of $11 billion in 2009. Thankfully, from October 2009 onwards, there are indications of the air cargo industry being back on a long winding road to recovery. International cargo demand was up 0.5 per cent over the levels in October 2008 — a significant improvement over September’s 5.4 per cent decline. No doubt, worldwide economic indicators are upbeat and especially so for the Asian countries which have shown earlier and stronger economic revival, but the economic turmoil has left a long lasting impact by way of capacity rationalisation. Freighter fleets have been decommissioned, at least temporarily, frequencies lessened,

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Asian countries have shown earlier and stronger economic revival, but the economic turmoil has left a long lasting impact by way of capacity rationalisation.

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aircraft types down graded — all these steps leading to a capacity crunch and resultant firming of air freight rates. This coupled with oil prices slowly inching upwards can again easily turn away the increasingly cost wary shippers towards sea freight. Air cargo industry has always exhibited a strong directly proportional co-relation to the GDP and inversely proportional corelation to the oil prices. Assuming that there will not be any large scale disruptive political and natural calamities, worldwide economy is projected to grow at about 3.2 per cent. As a result, the worldwide air cargo industry should grow at five to six per cent. Asian, Intra Asian, Middle Eastern markets will definitely show higher growth of eight to 10 per cent. Indian air cargo industry is relatively well placed and will continue to enviously out strip the growth in most other markets. Riding on the back of increased consumerism, large domestic market, kick start and revival of industrial production, government spending and capital investments (both public and private), the Indian GDP will grow at seven to eight per cent in 2010. Resultant air cargo traffic growth should be between nine to 10 per cent for domestic air cargo. International cargo market for India too will grow by similar margin in 2010. Significant portion of this growth will come from Intra Asian trade which has been increasing at very high rates. To get a perspective air imports into India from key Asia increased over four fold — from 40,000 tonnes in 1997 to around

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2, 00,000 tonnes in 2008. By 2012, Indian international air cargo traffic is slated to be about 1.82 million tonnes. Indian air exports namely comprises of garments/textiles, pharmaceuticals and perishables. Other smaller but growing segments of air exports are industrial chemicals, auto ancillaries and electrical goods. On imports front, the main stay comprises of capital goods, specialty chemicals, industrial electronics and electricals, and telecom equipment. For sustaining the growth in Indian air cargo industry, all stake holders will have to work in a focused and coordinated manner. Government policies for assisting garments and pharma industry will boost air export. While for the perishable industry, availability of suitable warehouses and domestic transportation facilities with temperature control, cut back in cargo hand over and processing delays at airports will play an important role. Also, growth in Indian air cargo industry will be driven by improvement in services to secondary airports like Ahmedabad, Hyderabad, Trivandrum and Amritsar. As industries move out of metros, these locations have benefited. Airports like Ahmedabad and Hyderabad are now served by scheduled operators with direct flights to Europe, Far East and Gulf. The operation of various renowned carriers offering Envirotainer services, Freighter operations, and Wide body capacity is providing a much needed impetus to the growth of air cargo in these regions. In the course, liberalising investments from suitably qualified investors in infrastructure projects, green field airports, existing airport modernisation and airlines is a must take step. Government must increasingly rationalize the taxation on input costs, namely Aviation Turbine Fuel. Current high levels of taxation lead to an inevitable cost burden being passed onto the Indian exporters and importers. On the part of airport authorities, especially those under private operations, they should maintain a competitive and economically viable tariff for terminal handling, X-ray, Demurrage (a charge required as

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TECHNOLOGY IS THE KEY: As far as air cargo is concerned, India needs to be technologically advanced.

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compensation for the delay of a ship or freight car or other cargo beyond its scheduled time of departure), landing, parking and navigation etc. Facilities for cold storage, X-ray, odd sized cargo handling, shipper built units etc. need to be strengthened. In summary, Indiaâ&#x20AC;&#x2122;s relatively stable political scenario and vibrant as well as resilient economy will propel the growth of air cargo industry in 2010 and beyond. Nevertheless, the task of survival in this highly competitive industry is not going to be easy. Key differentiators for those who can survive and thrive will be reduction of cost, innovation and value addition in services, empowerment through use of technology and a proactive approach towards new emerging business opportunities.

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The columnist is National Head, Airfreight, AFL Dachser Private Ltd

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“India has been a bright spot” Ram Menen, Emirates’ Divisional Senior Vice President Cargo, predicts that perfect 2007-08 conditions will be seen only by the end of next year. The air cargo sector in India, he told CRUISING HEIGHTS, holds immense promise.

How has 2009 been for you? It was a very challenging year. The first eight months were very bad but the last six months started showing a slight growth. In the last quarter of 2009, the economy started rebounding. We were optimistic that it would be back on track from January 2010. We had practiced at industry levels for a challenge and that had been done very quickly. We had three good months in the last quarter of 2009 and we are expecting now, especially from my point of view, from around January 10 to January 25, the way the loads pick up heads to the way for rest of the year.

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Would you be able to come up to the growth of 2007-08? A perfect 200708 condition will be seen by the end of the next year and not before that.

And are we still on that fast track of growth? We are on track. We are still on positive growth but look at the subdued condition and what it was in the last quarter… I am expecting the last two quarters or the second half of this year to be stronger.

But, would you be able to come up to the growth of 2007-08? A perfect 2007-08 condition will be seen by the end of the next year and not before that.

Despite the tough conditions, carriers from the Middle East have been increasing services to and from India. India has been a bright spot for us during the course of the recession. India was a lot more insulated than the other regions and we were happy to bring more capacity to India.

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The capacity increase was a pre-planned effort.

How did you counter 2009? What was your strategy? All we did was we adjust our freight capacity a bit in 2008 before the crisis hit us. We sold three of our A310 freighters and then we also had a contract on 747 freighters in the beginning of the year but we cancelled that in October last year. Having done that we also took on two brand new 777 freighters. What we did was tailor

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UNMATCHED: Emirates SkyCargo remains in a secure financial positional despite the global financial crisis.

according to the market requirements. So, we also slowed down our lift on freighters.

How many freighters do you have now? What is the total capacity that you lift? We have eight freighters at the moment. 35 per cent of our (cargo) business is on freighters and 65 per cent is on passenger aircraft and if you look at the passenger belly these are very cargo-friendly. Our A330200s carry a large amount of cargo. We have a very large capacity to deliver through passenger planes. What we do is the supplement that with the freighters.

Is the business with India and China a one-way affair? China is a very big market for us. Business with China and India has been more directional. These are very good markets for us (from the Middle-East).

Despite the problems in Dubai! I think the problem was very much exaggerated. Look at the Dubai Airport. There is a recovery from its last year's performance. They have shown 9.2 per cent growth in passengers and we got 2.5 per cent growth in cargo. To me, this growth in itself is a big achievement.

You have held a position saying Dubai is the centre of the world. No, I have said that it is the centre of the universe.

Do you still hold that view? I do. Dubai has geocentric advantages. It's within an eight hour flying radius of important stations. We are able to touch about 1.8 billion people. In its geocentric position, we are between east and west but we also touch north and south. Don't forget that Africa is a growing continent, and definitely, for me, is the next frontier. Also the stuff that was going to Africa â&#x20AC;&#x201D; from the US â&#x20AC;&#x201D; instead of going through Europe, now goes through Dubai and that makes more sense, because it's closer. However, it is not only Dubai, but Abu Dhabi, Doha have the same advantages and infrastructure to handle the kind of distribution that is needed.

On one hand, you are saying that 2010 will be rather subdued at least for two quarters. No, subdued in comparison to the last quarter of 2009 but it will be positive compared to the same period last year.

What does this optimism stem from? Do you feel that manufacturing will be going up? The key to that growth is consumer buying and the automobile industry is again coming back. The automobile industry is a huge consumer of, semiconductor chips, etc., for example. If we look back in 2008 when the air cargo industry was in

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some sort of a cleft, (you will have noticed) that was the same time when the automobile industry was also in a cleft. We have almost 25 per cent or more than that of business from the automobile industry.

And as far as India is concerned… For us, the Indian traffic has been stable and we have had growth. For us India, and also Sri Lanka and Indonesia were the bright spots. China, slipped for a while, but it started coming back in the last quarter of 2009 strongly.

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What about the Cochin airport? Cochin is much more integrated and privatised project, hence the position is much better.

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What is the top demand that India must address on the roads to air cargo maturity? First of all, air cargo depends a lot upon land transportation: the roads, the trucking and the distribution part of it and these parts need improvement. From the air cargo side, the facilities at the airports should be modernised. At Mumbai Airport, if you go around the old cargo village area, it looks like the dog's breakfast. In Delhi, they have taken a very different approach — that's an interesting one — and what they are also doing in Bangalore. These are the areas that still need to be focused on.

What about the Cochin airport? Cochin is much more integrated and privatised project, hence the position is much better.

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How do you see the business five years from now in India? In India, the cargo sector is going to be very strong. India has been concentrating on services for such a long time, now you are looking at industrialisation. I feel that Deccan 360, Blue Dart, etc are making domestic air cargo operations more viable. You have a lot to move domestically and a lot of the movement will be time critical. Air cargo and its environment have become a very critical part of the supply chain management.

Is there one thing you could change about doing business in air cargo, what would that be? Air cargo business is a business which will continue to grow regardless of what has happened and what is going to happen. The transportation part has become a very critical part of the supply chain management and also the management strategy. You use transportation to reduce costs. (Your inventory should be sourced in such a manner that) your first batch goes by air, second batch by sea and air and the third batch totally by sea. So, by the time the first pack is delivered, the second one arrives and by the time the second one is delivered, the third one arrives. That allows you to not to depend on ground transportation so much. Time and money are critical and because time is going to be very critical, air cargo will continue to grow. Overall, we will continue to grow.

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Upgradation is the key to survival India is set to emerge as a cargo hub, due to its geographic location between South East Asia and European Union nations, but infrastructure bottlenecks are a cause for concern. Once these are worked out, there is sure to be a visible improvement in the services offered by the freight forwarding industry, writes Christoph Remund. he aviation industry is playing a prominent role in world economic activity. An integral part of global supply chains, air cargo provides faster, frequent and dependable transportation to even remote locations to deliver a wide variety of products. With increased liberalisation and enhanced competitiveness in many segments of Indian industry, the air cargo industry has grown significantly in recent years. Asiaâ&#x20AC;&#x2122;s economies, particularly India and China will remain the centre of gravity for trade. Being an emerging economy, air freight offers a good opportunity for growth potential in India. There are two reasons for this. Firstly, the size of the domestic market is getting larger. Secondly, India serves as a major sourcing and supply hub, the market potential in India is evident with the growth forecasted at nine to 11 per cent until 2012. India is set to emerge as a cargo hub, due to its geographic location between South East Asia and the EU nations. Analysis from Frost & Sullivan finds that the total air cargo (domestic and international) was about 1.77 million tonnes in 2007-08 and is expected to grow at a compounded annual growth rate of about 8.3 per cent by 2013. According to a recent Ernst & Young report, in India, only one per cent of the cargo is moved through air as compared to the global average of two per cent, thus there

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Indian economy will remain the centre of gravity for trade. Being an emerging economy, air freight offers a good opportunity for growth potential in India.

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definitely exists a huge potential. The air cargo market in India has grown at a healthy rate in the last decade and is expected to maintain a high growth rate till 2025 before stabilising. However, Indiaâ&#x20AC;&#x2122;s economic development will require the support of dedicated cargo cities with multi-modal interchanges, state-of-the-art cargo terminals, cold storage facilities and electronic data interchange systems. Regulatory restrictions, inadequate infrastructure and security hazards are some of the constraints hampering the growth of this industry. As a result of the underdeveloped trade and logistics infrastructure, the logistics cost of the Indian economy is over 13 per cent of GDP, compared to less than 10 per cent of GDP in Western Europe and North America. In the present scenario, airports are finding it increasingly difficult to cope with rising volumes of air cargo. A significant change and decongestion in this sector would greatly enhance the quality of trade in the express and logistics industry. Some of the other issues hampering the market are â&#x20AC;&#x201D; shortage of skilled manpower, complex tax laws and inefficient use of IT. Markets like Europe have welldeveloped logistics infrastructure which consists of airports, railways, roads and sea ports along with adequate road and rail connectivity, warehouses, competitive ground handling services, lack of freighter

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friendly airports and MROs (Maintenance, Repair & Overhaul). Currently, there is no industry level platform, and each segment of the air cargo industry has its own EDI system, thereby fragmenting the EDI change process. The various segments need to be integrated and a uniform standalone system needs to be put in place urgently. Not only will this increase the level of efficiency, it would also reduce problems faced due to multiple data entries, thereby decreasing costs and delivering a high level of performance. Big strides can be made if the freight forwarding fraternity, aviation personnel, and the various government agencies come together to arrive at solutions. In the recent past, India has witnessed the launch of some good infrastructure projects and some have also been implemented Additionally, in India, there is room for technology to play a greater role in the supply chain. Issues like complete visibility of the supply chain are very critical in developed markets which focus great deal on maintaining a lean and agile supply chain to reduce costs. In addition, the setting up of dedicated air cargo villages, which can boost the economy and generate employment opportunities, can be planned around major airports, which will entail the establishment of an integrated cargo infrastructure. The cargo villages should be designed as a one-stop solution, providing forward and backward linkages, so as to give a thrust to the cargo industry. The villages should comprise airline terminals, forward bonded terminals and dedicated centres for the movement of special cargo such as perishables, valuable cargo, pharmaceuticals and restricted articles. India has more than 20 international airports and more are on the cards. Currently, India is upgrading its major airports, which account for 93 per cent of the total international and 84.4 per cent of the total domestic freight handled. The move is intended to satisfy international standards and provide world-class airports for business and the tourist industry. Once the infrastructure issues are addressed and the new cargo airports are made

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operational, the market will witness tremendous growth within the next five years. In India, international cargo traffic is concentrated in the three key international gateway airports — Mumbai, Delhi and Chennai. Additionally, Bangalore could be developed as a hub owing to the increasing trade with ASEAN. The new Bengaluru International Airport has the potential to become another airport hub in the South. However, to become a real cargo hub the Bengaluru International Airport Ltd needs to do more than link its cargo services. Airport infrastructure will need to be modernised and new infrastructure built inside the airport terminal itself to boost capacity. The Rajiv Gandhi International Airport in Hyderabad is another example of good airport planning. The world class infrastructure of cargo handling at the airport will boost the economic and industrial activity in the state. In March 2008, it became India’s leading air cargo facility as far as infrastructure goes. Outside of the South, Delhi International Airport is constructing a third terminal, to have a capacity of 34 million passengers by the time it opens for the nation’s hosting of the Commonwealth Games in 2010, and Mumbai International Airport, which services the second most populous city in the world and the financial capital of India, is currently undergoing modernisation. There are opportunities galore and a huge potential is waiting to be explored in the air freight and cargo sector and once the obstacles are cleared… the sky’s the limit!

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MODERNISED AND WORLD CLASS: Rajiv Gandhi International Airport is an example of good airport planning.

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The ‘King’ is loading cargo now! Kingfisher has started its cargo services, Kingfisher Xpress. With same day delivery across 18 cities of the country, the launch comes at a very crucial time, reports Tirthankar Ghosh. he king of good times — that’s how Kingfisher founder and liquor baron Dr Vijay Mallya would like to describe himself — believes that this is the right opportunity to ramp up its cargo services. For over four years now, it has been ferrying cargo and with the recession almost over, he has opened a new front. Those in the know say that the ramping up of the cargo services is a direct reply to erstwhile partner-turned-express operator now, Capt G R Gopinath. Whatever the reason, Kingfisher has started its express services (sector) with its likenever-before idea of same day delivery across 18 cities of India. Kingfisher Xpress, the newly launched door-todoor cargo delivery service by Kingfisher Airlines, promises its customers the same delivery by air with a money-back guarantee. Coming as it does into a crowded market, Rajesh Verma, Executive Vice President, Kingfisher Airlines believes like his boss that Kingfisher is on the right track. Said he: “The market has started reviving and we see great potential in this business. We have the biggest domestic network in the country which can help us to reach out and meet customers’ expectations and demands.” Kingfisher Xpress is offering flexible shipping options like Door to Airport (DTA), Airport to Door (ATD) and Counter to Counter (CTC) services. Verma pointed out, “This product is designed to deliver till the

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As the air cargo sector is slowly coming out of the doldrums and there is a forecast of 20 per cent growth, it is no wonder that along with the new, existing players have started adding muscle.

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last mile within a given time frame. Our huge network connecting to 65 airports with over 350 flights a day will help us to achieve this objective.” As the air cargo sector is slowly coming out of the doldrums, trade pundits are forecasting a 20 per cent growth in the $625 million domestic express cargo market. It is no wonder that along with the new, existing players have started adding muscle. There is bound to be competition in the market but a confident Verma affirmed, “The competition is there in the market, but none of our

NEW JOB-A NEW BEGINNING A Kingfisher Xpress plane is ready to fly.

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competitors have the reach and sectors Kingfisher Airlines has. This is our own product and we will fly on our own aircraft. Others have limited destinations mainly the metros with just one frequency. Our network will be our greatest advantage.” His confidence stems from the fact that “we already have a cargo division functioning for the past four years with our airport to airport product… At present there is no company which offers service of same day delivery with money back guarantee.” The promise of the Kingfisher Xpress, same day service is that consignments would be picked up from the doorstep and delivered at the recipient’s doorstep on the same day. This service will offer a pick up facility in the six main metropolitan cities of India — Mumbai, New Delhi, Bangalore, Hyderabad, Chennai and Kolkata — with guaranteed same day delivery in up-to 18 cities of India namely, Bagdogra, Bangalore, Chennai, Coimbatore, Delhi, Kochi, Goa, Guwahati, Hyderabad, Indore, Kolkata, Mumbai, Raipur, Ranchi, Lucknow, Nagpur, Pune and Srinagar. Verma said that Xpress “is designed to deliver till the last mile within a given time frame. Our huge network connecting to 65 airports with over 350 flights a day, will help us to achieve this objective.” Speaking about the same day service, Prakash Mirpuri, Vice President-Corporate Communications, Kingfisher Airlines said that “Kingfisher Xpress has been conceived with a view to serving the unmet needs of users who are looking for a solution which ensures that their

shipment reaches the recipient’s doorstep on the very same day.” For the moment, Kingfisher has not created a hub. Said Verma, “No we have not created a hub. We have hubs at all metro stations which will help us to consolidate one gateway point. At Mumbai, for example, we have pickup and delivery points at seven locations in the city but Andheri (in south Mumbai) will be the hub for Mumbai which will consolidate for all pick up and delivery points.” As for loads and tonnage expected everyday, Verma said, “We have just started and it will take some time before the market gets to know about this product but we are confident that we will create a name in this category. For the time being we are going to focus on domestic destinations. We do have Kingfisher international flights where we accept cargo but we do not deliver to the last mile.” Kingfisher is planning big for the future. As Verma said, “We may think of freighters if the market demands.” For the present, it has set up a dedicated helpline that will function round the clock for the convenience of shippers and offer full support via its website and support teams. Verma said that according to estimates, “Cargo — specially domestic cargo — is going to move upwards in the next five years due to various steps taken by the government to increase manufacturing, consumer goods and other related industries in the country. The infrastructure is improving and the forecast for GDP growth in the next five years is between 7-10 per cent, which will help industries.”

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Kingfisher has hubs at all metro stations which will help it to consolidate one gateway point. At Mumbai, for example, it has pickup and delivery points at seven locations in the city but Andheri will be the hub.

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Technology comes as a saviour As the world economy seemingly heads towards a stimulus induced recovery, the beleaguered airline industry has some reason to cheer. And one of the reasons, for sure, is rising technological advancements in cargo sector, writes Mathew Joshua. he industry wide net loss for the year 2010 is projected to be $5.6 billion as against a whopping $11 billion in 2009. Perhaps a sign of times that an estimated loss in excess of $5 billion is looked upon as an encouraging prognosis!! While high fuel prices triggered the downward spiral in 2008, the downside of a full blown recession send the industry hurtling to a bottomless pit in 2009. According to IATA, air cargo volumes fell 10 per cent in 2009 with an average load factor of 49 per cent and a loss of 3.5 years of growth. Nevertheless, the cargo industry should see volumes touch the 2007 levels in 2013, thanks to the improving external situation. The cautious optimism, since the dark days, has been ignited by the performance in the last quarter of 2009. Air traffic — both passenger and cargo — has picked up, albeit slowly; and with the forecast of a two per cent growth in global GDP in 2010, there is no reason why this momentum cannot be sustained in the current year. Assuming fuel prices, the biggest cost element, hover around an average of $75 per barrel for TECHNOLOGY the full year, ADOPTION IS VITAL: a seven per Technology is the key to inculcate best practices cent increase in the airline industry. in cargo traffic is a reasonable expectation. Emerging economies like China and India will drive growth of the air cargo industry in the near future. The flip side of this encouraging news is that the yield, a result of demand and supply, is unlikely to pick up

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The yield, a result of demand and supply, is unlikely to pick up significantly because of one single factor — capacity.

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significantly. This is largely because of one single factor — capacity. It is widely believed that the 1,550 freighters that are operating globally, is around 100 more than what the ideal number should be. With more wide bodied aircrafts set to be delivered in 2010, excess capacity is seen as the biggest immediate challenge to health of the air cargo industry.

With pressure on profitability, cargo carriers world over are increasingly looking at cost optimisation options. This is bound to have a defining impact on the IT strategy of airlines in 2010. Before recession set in, the annual IT spend ranged, typically, between two and 2.5 per cent of the airline revenue. During the year 2007, in absolute

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numbers this was around $11 billion. The spend declined during the succeeding two years due to the double whammy of high fuel cost and economic downturn that spooked the airline industry. Since the industry is set to continue making a loss during the year, 2010 does not appear to be any different although the rate of decline in IT spend may be not be as drastic. Nevertheless, the legacy systems that have outlived their utility and are costly to maintain have to be phased out and smart new generation products have to be put in place by airlines. Not only will this bring down the cost of operations, but also shore up efficiencies in an industry where customers are becoming increasingly discerning. The downside is, however, the seemingly large CAPEX spend and the slow ROI. A forward looking CFO would, however, see an outlay in such IT infrastructure as a meaningful investment rather than a mere cost head. Proactive businesses invest time, energy and

Photo: H. C. Tiwari

resources into new ways of doing things, the need for which would not have been felt during better times. IBS’ award winning cargo management solution, iCargo, is one such product. Within a short time since launch, iCargo has become a leading IT solution for air cargo management in the world. With over 20 customers in five continents, the

solution is now being viewed by the global airline freight industry as a proven alternative to the expensive legacy systems that they have been using for the past decades. iCargo provides a unified enterprise-wide solution to help manage the entire cargo business of airlines — from cargo sales, inventory, pricing and reservation to revenue accounting and management. What could really tilt the balance in favour of airline companies going for new IT solutions is the emergence of hosted service or offering products on a ‘Software as a Service’ model. SaaS works on a ‘pay as you use’ basis wherein customers are spared the large upfront costs for using the software. This is a win - win model. While the airlines can convert CAPEX into OPEX by amortising costs over the period of the contract, the solution providers can have an assured revenue stream even if the external situation takes a turn for the worse. IBS, with four data centers around the world and a 24x7 global help desk, is a member of a select band of aviation IT product companies that offers its newgeneration solutions on a hosted basis. I see this model driving the growth of airline IT products in the year 2010 and beyond. Good times or bad, some simple truths hold good. In an increasingly competitive market with IT solution providers vying for the same pie, smart operators look to add value to their airline customers. Collaborative innovation will be the key. The transactional model of customer engagement has to give way for transformational engagements. Keeping customers at the heart of business is fundamental. 2010 will be a difficult year for the airline industry, but perhaps not the Annus Horribilis that 2009 was. IT solution providers to this industry would do well to get the pitch right, innovate and create opportunities. There is nothing more naïve than closing the lid and waiting for the storm to pass. The key is to dance in the rain and make it count. The views expressed in this article are personal and may not reflect the views of IBS Software Services.

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IBS’ cargo management solution, iCargo has become a leading IT solution for air cargo management in the world.

The columnist is Head, Corporate Communications, The IBS Group

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Express movement â&#x20AC;&#x201D; steady, despite the hurdles

As the economy gears up and the manufacturing sector takes rapid strides, the express sector is witnessing the beginning of a fresh spurt of growth. Saddled with infrastructural and other constraints, the express industry wants the government to come forward and facilitate effective functioning of its delivery services so that it can achieve the maximum results, reports Tirthankar Ghosh.

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recent article in India Knowledge@Wharton summed up the state of the logistics industry in India in just two words: inefficient and expensive. The article noted that industry players and analysts maintained that logistics costs in the country were among the world's highest. Quoting a report by KPMG, the article said that logistics accounted for 13 per cent of the GDP, much higher than in the United States (estimated at nine per cent), Europe (10 per cent) and Japan (11 per cent). R K Saboo, Chairman of the Express Industry Council of India (EICI), is aware of the situation. Representing a cross section of members drawn from international and domestic express companies, Saboo made it clear that till infrastructure was provided within the country for the express industry to work, the situation would not improve. He pointed out: â&#x20AC;&#x153;While the

Logistics accountes for 13 per cent of the GDP, much higher than in the United States (estimated at nine per cent), Europe (10 per cent) and Japan (11 per cent).

ATTENTION REQUIRED: Infrastructure and government's concern are the momentum for the growth of the express industry.

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express industry is poised for a significant leap forward in the coming years, we are faced with challenges that need the kind

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attention of the Government of India. The broad issues are regulatory, amendment to the Indian Post Office Act, customs- related barriers and infrastructure-related concerns. The amendment to the Indian Post Office Act that was proposed earlier has been a matter of deep concern for us in particular. We would like the Department of Posts to enter into a dialogue with the express industry before any amendment is proposed. In fact, the express industry and Post can go together and complement each other in their approach.” India's spend on logistics activities, said Saboo, was higher than that of the developed nations. The key reason for this was the relatively higher level of inefficiencies in the system, with lower average trucking speeds, higher turnaround time at ports and high cost of administrative delays. Saboo then went on to mention that the 'Express Delivery Services' industry provided services which included integrated door-to-door transport and quick delivery of timedefinite shipments of documents, parcels and merchandise goods. In a series of photos, Saboo provided examples of the infrastructure — or

rather the lack of it — at the country's major airports. Pointing out the potential of the market, Saboo said that size of the global express market was around $175 billion; however, the size of the Indian express industry was small (less than $ 2 billion). It has been, however, estimated to grow at around 2.5 times the GDP. The sector had been growing at around 20-25 per cent prior to the global slowdown. Coupled with the decrease in the international trade, the sector was predicted to grow at around 1015 per cent, which would put it amongst the fastest growing sectors in India. The optimistic conditions notwithstanding, the express industry was no exception to the economic slowdown and the industry saw a dip in revenues during the latter part of 2008 and up to the first half of 2009-10. The situation eased from August '09 and the sector has been registering positive growth ever since. According to Suresh Raj Urs, General Manager, DTDC, express, especially aircargo, has a good future in the country or else new players would not continue to eye this space. The prime movers for growth have been telecom, IT, pharma and specialised agro business. The markets are maturing and so is the express industry. “In a matured market, time to deliver right product and right time becomes a key differentiator otherwise even the best product or service will not survive if it is not available on the shelf when the buying decision is being made,” said Urs. While IT has been the backbone of the express business transactions, pundits predict that the sector will continue to see more value additions emanating from that space. Customers have already started using the real time information to plan their business processes accurately. In addition, the ecommerce segment holds great hopes for the express industry. While the penetration of the business is still small, the speed at which the country is moving and embracing new technology will only translate into more business for this sector. With the right IT integration and delivery mechanism, express companies that invest now will reap the benefit when the market matures

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With the right IT integration and delivery mechanism, express companies that invest now will reap the benefit when the market matures in the next few years.

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The encouraging start to 2010 could become better if government facilitates effective functioning of express delivery services and trade opportunities in the country.

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in the next few years. “Overall 2010 has begun well and anything well begun is half done. The industry can expect a growth any where in the 20 per cent bracket and that's really an impressive number when it happens,” said Urs. The encouraging start to 2010 could become better if the basic infrastructure is improved. A symposium on the express sector in the country — “Facilitating Trade and Global Competitiveness: Express Delivery Sector in India” — last year, brought forth a flurry of complaints about infrastructural constraints. The meet was timed with the release of a study by ICRIER on the express services in the country. The study called for greater support from the government to facilitate effective functioning of express delivery services in the country. Pointing out the findings of the research, Dr Rajiv Kumar, Director and Chief Executive, ICRIER, mentioned that the government needed to facilitate better trade opportunities. “While the country gets into free trade agreements with nations across the world, it is essential for the government to give a serious thought towards inter-state agreements for assisting the industry to build a single integrated market.” The ICRIER study found that the global slowdown has had an impact on Indian manufacturing and the country's service sector. It also pointed out that express service providers should now be termed as logistic service providers facilitating Indian trade. In fact, said Dr Kumar, India needed to learn from the experiences of other countries. Perhaps, what was important is that the study found that express operators in the country were often treated merely as courier companies. Instead, these operators should be treated as logistic service providers facilitating Indian trade considering the kind of activity they perform in the 3PL and 4PL areas. The express industry in the country, it was urged, must learn from the experiences of other nations. In the EU, the difference between express and logistics was getting blurred and logistic clearances were done faster than express clearances in India. China's example was cited. The country was in the process of designing a postal act that will

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reserve letters in the domestic market and has completely opened up the external trade sector in its bilateral agreements. After the bilateral agreement with the US, China has allowed selfhandling, single window custom clearance. This has prompted US companies like UPS to shift its hub from Philippines to China. India also needs to evaluate its negotiating position in the WTO and FTAs: its current position is that the country cannot undertake commitments in courier services since the regulatory regime is evolving. However, commitments in the WTO do not

AT YOUR SERVICE: The Indian express industry provides value-added, door-to-door delivery.

prohibit a country from ushering in domestic reform whereby partial commitments can be carried out in courier services. The commitments would also provide security to service providers and ensure that the country will not roll-back on the FDI regime and will facilitate investments in the logistic chain. On the other hand, it will enhance India's bargaining position.

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TIACA’s clarion call

BUILDING RELATIONS: (Centre) Daniel C Fernandez, Secretary General, TIACA with Trustee Members, TIACA (on the left) Madhav Kulshreshtha, and (on his right) Sanjiv Edward, Associate Vice PresidentCommercial, Delhi international Airport Pvt Ltd.

The International Air Cargo Association has made its exploratory foray into India and the country's air freight sector should consider joining the association for only then would the industry get the opportunity to have a say on the international front, reports Tirthankar Ghosh. he India growth story has been causing a ripple effect around the world. The air cargo sector has been the one of the first to be affected. So, when Daniel C Fernandez, Secretary General, The International Air Cargo Association (TIACA) came, the message that emanated was simple: India’s air cargo sector had arrived. The growth in the air cargo industry in India has attracted the attention of global trade associations like TIACA that are keen to promote their membership in the region. Perhaps, more than ever, the Indian

air cargo sector could do with TIACA’s membership. As the country’s economy moves ahead and makes its place among the top, the air freight sector — long relegated to second-rung status after passenger — would need a strong voice internationally. What TIACA would like to do is assist policymakers in effectively addressing security issues around the world. Given its membership across the air cargo supply chain and its international focus, the association is uniquely positioned to address issues such as international harmonisation, security protocols for international cargo and best practices. Today, in addition to Air India,

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The air freight industry is increasing complexities in cross-border trade. Today, the industry has to distinguish between regional and global issues and approach them on a common platform.

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Delhi International Airport and Traxon India, the number of members from the country does not cross a dozen. In comparison, the Middle East has 40-odd members. Initial hesitation had, perhaps, stopped organisations from becoming members. In addition, many in the industry believe that TIACA and similar international organisations are bodies that do little except hold meetings and seminars. Trade bodies are often groups funded by the companies from the industry that they serve and their sole purpose is to promote the sector through publicity and lobbying for the improvement of the industry. These associations are also networking facilitators with members from across the world. Fernandez hastened to correct the notion. “We have been involved in networking,” he said, “and, in fact, we are the top networking group in the industry worldwide. That’s why most of our members have joined the organisation so that they can access to those networking operations. However, we feel we can do more for the industry.” TIACA’s mission, said the Secretary General, is to advance the interests of the air cargo industry and further the expansion of world trade. Members of the association comprise CEOs, directors, heads of cargo and general managers who understand the importance of being part of a strong, global industry association and, in particular, the numerous networking opportunities TIACA provides to meet other industry leaders from around the world. Indeed, TIACA is shaking off these negative connotations to let the air cargo industry around the world know why membership is a very good idea indeed. Fernandez went on to mention that in the last few years the association had developed and strengthened contacts with similar organisations like FIATA, IATA, etc. “A lot of good work has been done by FIATA, IATA and all the other organisations,” he said, “and we are not going to supplant that…Instead, we are working very closely to complement and support each other for maximum impact. We have identified those areas and one of them is security. Our representatives in Washington and Brussels regularly attend meetings and we are truly encouraged by the progress that we are starting to see happening.”

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TIACA, said Fernandez, was committed to initiatives and policies that promote the highest standards of operational security and safety in the worldwide air cargo industry. Security and safety are inherent in the very nature of air transport and have, for many years, been subject to the most stringent international regulation by ICAO and other inter-governmental authorities. What the association and its members could do was bring their views to international forums. “I think that is what TIACA can bring to the table,” emphasized Fernandez. “We are a platform because our membership is so varied… it makes us unique. We form a perfect platform to bring different parts of the industry together to discuss different issues and we bring different flavours to issues.” The idea was simply to smoothen the flow of cargo traffic around the world. Said Fernandez, “After all, if there is a problem in one section of the supply chain, then the whole supply chain is disrupted. Our committees comprising the members do not air airlines’ views or freight forwarders’ views but those of the industry which is very powerful and the people in Washington and Brussels know that that is the industry speaking in one voice.” He also added that “we feel it is important to continue doing things that are important for the industry. What we are doing is take the industry view to the people who are in charge of setting the regulations that govern the industry. In that we are becoming more active than we were ever before.”

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ISSUES ARE SAME: Issues related to cargo sector are varied but common. There is a need to bring these issues on a common platform and address them.

Acknowledging the fact that TIACA had taken a long time to come to India — in fact, it will take quite a while before the association has a firm foothold in the country — Daniel Fernandez said, “One of the issues that I would like to address is how the Indian industry perceives the security and environment issues and include those in the views that we want to put forward in Washington.” With inputs from different parts of the world, it will enable the government regulators to have a more balanced view of the security situation, the environment, etc. As for India, Fernandez said that while “TIACA has been in the region, we are not very well known in this part of the world. We want to be better known in several markets in this part of the world and India is one of them. So, we are finding the best way we can to address them.” On his visit, the Secretary General held several meetings with leaders from the industry “to see what impact we can make in this region”. The trip by Fernandez was to gain an insight on a first-hand basis. As he put it: “It is a listening trip and an exploratory one. We want to talk to first hand players and find out what the issues here are”. These issues, he pointed out, were common to those in “our part of the world and I want to see how we can use the resources that we have for the benefit of our members, for the benefit of our industry or gaining the knowledge that we feel is important to us to bring our work to this part of the world. We have had preliminary

discussions and there are many things that we could bring,” he said. Impressed with the people he had met on his short trip, Fernandez said that India held the potential. “India is a big market for the industry and we are just scratching the surface,” he said. TIACA needed to make a connection and that means having a presence here… having meetings here. There is lot of things that we can do, but first we must know what the issues are.” The top people in the association are keen to begin in India, “I think we would love to have an annual general meeting in Delhi or probably in Mumbai” but it will not be just yet. As Daniel Fernandezput it, “I think we can look forward to that in the next couple of years. But first of all we need invitations from the local bodies and we would welcome that.” Is the Indian air freight community listening? As members of TIACA, companies in India can enjoy a host of benefits, including the opportunity to expand international business contacts and complimentary admission to its annual executive summit. Perhaps, what is more important is that the association will serve as an able supporter at a time when the air cargo industry is facing change and challenges. And when it comes to setting standards and improvements for those operating in the air cargo industry, trade associations can facilitate progress by informing industry decision makers on the issues faced by its members. Associations can be a vehicle to set industry standards allowing airlines to operate under simplified processes with a high level of efficiency. Considering the industry changes that are expected to take place in the coming decade, all the stakeholders must be aligned and use the same standards. Added Madhav Kulshreshtha, a Trustee Member of long standing, “There is no doubt that the air freight industry is witnessing rapid change and increasing complexities in cross-border trade; today more than ever, the Industry has to clearly distinguish between regional and global issues and approach them on a common platform, along with all stakeholders. TIACA, is perhaps one such organisation, with members ranging across all segments of the industry and the globe, that offers such a platform”.

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As members of TIACA, air cargo companies in India can expand international business contacts and complimentary admission to its annual executive summit.

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Express eyeing a bright future! Due to global competitiveness, all major global express players have established their presence in India in this segment. What is coming further and how the Indian express industry is going to compete with the world, writes Anil Khanna. he organised Indian Express industry, comprising of the air express segment pegged between Rs 1,250 cr to Rs 1,500 cr and the ground express segment between Rs 1,500 - Rs 1,800 cr, is estimated to have grown at around 15-17 per cent over the past decade. The prospect of the express industry is primarily dependent upon the growth in GDP and world trade. The industry was on a slow track in the backdrop of the global economic downturn; however, it has bounced back and recovering fast in line with the sentiments of the domestic industries. According to IATA, air freight traffic jumped by almost a quarter in December as a positive end to a difficult year, showing that the economic recovery is picking up steam. The growth in our economy is fuelled primarily by domestic consumption and not by foreign trade as is the case with many other economies like China. According to a study conducted by the ICRIER and IIM (Kolkata), despite the global slowdown, the industry will manage to grow between 10 and 15 per cent in the next two years. The Indian express industry provides value-added, integrated time-bound, door-to-door delivery of documents, parcels and merchandise good. It supports industries like electronics, telecommunication, IT, banking, retail, auto-components, textiles and apparel, gems and jewellery and pharmaceuticals. In order to maintain competitiveness, companies operating in these industries mostly outsource their logistics requirements to service

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The growth in our economy is fuelled primarily by domestic consumption and not by foreign trade as is the case with many other economies like China.

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MARKING ITS PRESENCE: To facilitate trade, Blue Dart has taken up dedicated space in airports for cargo clearance.

providers and concentrate on their core-competency of manufacturing and marketing. Further, the opening up of banking, insurance, telecom and retail sectors would boost the demand for value added express services in India, as these are the major user industries. Due to global competitiveness, all major global express players have established their presence in India in this segment. To facilitate trade, many express companies and their councils have taken up dedicated space in airports for cargo clearance.

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Civil aviation is the fastest growing arm of India's transport infrastructure. The government is playing a critical role in augmenting facilities for the sector. It has taken a number of measures to improve the airport infrastructure for the country. It has drawn up a plan to modernise 37 non-metro airports. Several measures have been taken to lure private investments in airports, especially major airports such as Delhi, Mumbai, Bangalore, Hyderabad and Cochin. It has also allowed 100 per cent foreign direct investment (FDI) in Greenfield

airports, maintenance, repair and overhaul (MRO) organisations, pilot training and technical institutes etc. In addition, Nagpur is being developed as an air cargo hub. To handle express/courier consignments, a dedicated courier terminal has been established at Chennai Airport. As the express delivery industry is largely dependent on air transport, it has hugely benefited from these modernisation programmes. A Logistics Performance Index worked out by the World Bank shows that India was ranked 47 amongst 155 nations, nine ranks below from its 37th position in 2007. This shows that we still have a long way to go and India with such a huge potential needs to gear up for global

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competitiveness. In fact, for this growing industry the challenges are many. Air cargo traffic has increased manifold and the government's open sky policy and liberal air service agreements have led to the presence of a large number of foreign players, which has resulted in traffic congestion and delays at a majority of the airports. Although airport modernisation has facilitated the express industry, there are still some areas of concern. One problem area has been the adequacy of space and allied facilities made available to the express delivery service industry. There is no uniformity in the usage charges of equipment in privatised airports. Warehousing facilities are small and congested and there are hardly any cold chain facilities, needed to reduce wastage. The domestic terminal does not have covered space for storage of cargo; in the rainy season and extremely hot conditions, consignments get damaged. These are genuine concerns, which should be taken into account in the airport privatisation master plan. The master plan should estimate the expected growth in cargo traffic volume and allocate space accordingly. Since the high cost of infrastructure will increase the already high logistics costs in India, space should be provided for cargo facilities at concessional rates. The government should also ensure that private developers bring down the charges for using equipment as this affects the global competitiveness of the industry. Similar analysis holds true for the Road Express Industry as well. It is estimated that 70 per cent of the freight transportation in India is through roads, while National Highways constitutes merely two per cent of the total road network in India. Owing to the poor road conditions and check-post delays, trucks in India travel for 20 days a month on an average compared to 25 days in developing countries. The delays would range from five per cent of time taken in a journey to a high of 25 per cent. Due to inadequate road infrastructure, resulting in lower average trucking speed, commercial vehicles in India average 250-300 km per day, whereas their counterparts in

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NEED TO BE MORE EFFICIENT AND QUICK NOW: The demand for express services is going up every passing year.

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developed nations travel more than double the distance. Truck drivers face delays at check-posts and onroad for filling in forms, checking of documents and physical checking of vehicles, drivers and consignments, and in the collection of highway tolls and taxes. Such on-road stoppage and other expenses amount to an average of 15 per cent of total trip expenses. These problems need to be addressed very effectively. Moreover, construction of more transportation hubs and logistics SEZs should be initiated to create more common, shared facilities for transporters. Fuel prices are also a concern as they account for a significant part of the operating expenses. The rising fuel prices, the volatile crude oil market, inflation and the global economic downturn were some of the

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Continued investment in e-governance and infrastructure projects through public and private partnerships (PPP) will provide sustained development.

challenges faced by the industry in the years 2008 and 2009. The Postal Bill is an area of apprehension as well. The proposed amendment in its current format is regressive, not in tandem with the best global practices and would adversely impact the growth of trade and commerce in the country. The amendment, if passed in its current format, would annul a 30-year old business employing over one million people, and would negatively impact thousands across the country who have worked hard to set up infrastructure and build the business. The proposed ground handling policy would also significantly impact the quality of air express, airline

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operations and render the business untenable. A review of the policy to exclude air express, airline operations is required because of the special needs of this segment that are completely different from the passenger segment and because of the significant role air express plays in trade facilitation within the country and across border. A holistic view of the logistics landscape in India has to be taken to initiate some drastic reforms in this sector. Let's have the future outlook of the industry. The government has taken up the issue of infrastructural challenges seriously. It is playing its part by drawing up robust plans for developing and upgrading infrastructure â&#x20AC;&#x201D; both air and ground, such as the modernisation of airports, development of highways and roads etc. Continued investment in e-governance and infrastructure projects through public and private partnerships (PPP) will provide the much needed direction and sustained development in India. PPP in infrastructural projects and other such areas will accelerate development and propel the express industry to perform better. With the General Sales Tax (GST) soon to be introduced in India, the 3PL market is poised to reinvent itself and companies that quickly adapt to the changing scenario will not only differentiate themselves, but also successfully capture this major growth opportunity. The demand for express services is going up every passing year. This coupled with the advancement of technology and infrastructure and commitment of private players in this sector to offer quality services to customers, the express industry is all set to reach new heights. The opening up of the Indian economy to foreign investments is expected to attract more companies into the country, thereby adding momentum to market growth.

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The columnist is Managing Director, Blue Dart Express Ltd.

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Jet announces ‘Boarding Card Delights’ programme IN keeping with its endeavour to continually offer its guests a number of value additions across a range of categories, Jet Airways has announced its special ‘Boarding Card Delights’ programme. This initiative enables all guests travelling on Jet Airways, Jet Airways Konnect and JetLite to avail a range of special offers and attractive discounts against their boarding cards, from renowned programme partners. ‘Boarding Card Delights’ currently has 15 established brands as programme partners, across five categories — retail, hotels, dining/restaurants, lifestyle and car rentals. To avail this attractive offer, guests need to present their Jet Airways/Jet Airways Konnect/JetLite boarding cards, at the various partner establishments/outlets. Boarding cards generated through the Web, SMS and Kiosk check-in will be accepted along with the respective photo identification. The programme is applicable until April 30, 2010. Jet to fly non-stop to Johannesburg: JET Airways will commence daily nonstop flights from Mumbai to Johannesburg from April 14, 2010. The launch of the new route, using an Airbus 330-200 aircraft, will mark Jet’s maiden foray into Africa. Nikos Kardassis, CEO, Jet Airways, said, “Given the strong linkages between India and South Africa, and the large number of people of Indian origin living in and/or working in South Africa, we believe that there is untapped potential and this new route promises to serve the needs of our discerning corporate and leisure flyers. South Africa’s reputation as a leading tourist and business destination and the fact that it will play host to the 2010 FIFA World Cup also presents a huge opportunity for Jet Airways.”

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WELCOME DELIGHTS: Jet lays out the red carpet for its passengers.

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Fly non-stop to London, courtesy Kingfisher EFFECTIVE from March 28, 2010, Kingfisher Airlines will start daily non-stop flights from New Delhi to London Heathrow using a wide-bodied aircraft, A330-200. Configured in two classes — Kingfisher First and Kingfisher Class, the spacious full-length wide-bodied twin aisle cabin of the A330-200 has gone to great lengths to make flying a pleasurable experience. Bookings for inaugural flight and for subsequent flights have already started.

New Series of 5 solution by Ramco Aviation RAMCO Aviation has announced version 5.2 of the Series 5 M&E / MRO Aviation Solution. Continuing to simplify the processes by which people interact with IT systems, version 5.2 expands the centralised graphical planning board, providing planners with full visibility into materials, manpower, tools and ground time constraints. Series 5 also provides centralised data entry for maintenance technicians, thus eliminating the need for technicians to remember several screens. “We are very proud of the Series 5 product and the newest advancements in usability and functional additions delivered in version 5.2. These concepts will continue to be perpetuated in our products throughout the Series 5 lifecycle,” said Jim Fitzgerald, President, Ramco Global Aviation Solutions.

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SpiceJet voted as India’s best LCC SPICEJET, for the second consecutive time, has been voted as India’s best low fare airline by the readers of Outlook Traveller, as part of the Third Outlook Traveller Annual Readers’ Survey. The airline faced competition from GoAir, IndiGo, JetLite and Kingfisher Red.

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Helicopter emergency medical services require betterment

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HAVING rich experience in the aviation industry spanning 17 years, Amit Agarwal has joined Kingfisher Airlines as Senior Vice PresidentCorporate Development and Planning. In his most recent assignment as Managing Director for Revenue Management, Pricing and Network at Delta Airlines, he would be responsible for directing and managing projects impacting various aspects of airline revenue, technology logistics and resource allocation. Prior to Delta, he was with Continental Airlines and American Airlines.

THE helicopter emergency medical services that currently exist in the form of fragmented services across the country fall way short of meeting the requirements. In many cases helicopter resources, if not available within the state, take as much as 24 to 48 hours to arrive at the scene. The helicopter deployed by the Army to facilitate evacuations, is not an Air Ambulance and therefore cannot offer any specialised medical treatment within the “Golden Hour” for trauma, obstetric or medical emergency. For all these reasons, India needs to have dedicated civilian helicopter resources to meet the growing number of emergencies. Dr G Sairamanan, Critical Care from Chennai, said, “The ‘Golden hour’ is the first hour of the medical event wherein the human body system goes haywire and immediate reversals are required to prevent irreversible damage” Helicopter Emergency Medical Services (HEMS) helicopter is more NEED OF A SAVIOUR IN than an Air Ambulance, having an Air born ICU and ‘GOLDEN HOUR’: trauma care equipment on board with HEMS Helicopter Emergency trained personnel following international protocol of Medical services (HEMS) is the need of the nation. HEMS units. AVM Sridharan, V M (G), President of the Rotary Wing Society of India (RWSI), advised, “It is therefore important that a city like Delhi, which is hosting the Commonwealth Games this year, puts into place a HEMS network. This will require trained personnel including aircrew, paramedics and technicians, as well as infrastructures comprising Public Use Heliports, Roof Top Helipads, and Refuelling Facilities.” Responding to this need, service provider for India, OSS Air Management, announced that OSS was ready to import Agusta HEMS helicopters, especially modified for Emergency Medical Services into India. The specially fitted Agusta HEMS would enable healthcare organisations and government departments to reach out with HEMS in the country using the OSS helicopter as their carrier.

CISF unit of CSIA Mumbai gets ISO 9008:2001 quality certification THE Central Industrial Security Force (CISF) unit of the Chhatrapati Shivaji International Airport (CSIA), Mumbai has been given an ISO 9001:2008 certification for providing quality security services at CSIA. The certificate was handed over by Shri Ganpathy Varadharaj, Country Manager for India & Sri Lanka Lloyd`s Register Asia to Shri J S Negi, Sr Commandant CISF Unit, CSIA Mumbai, at a well attended function at Terminal 1A at CSIA. Shri Negi, while attributing the certification to the collective efforts of all the officers deployed at CSIA said, "This recognition has come at a time when CISF staff at CSIA has been performing an uphill task in the wake of an increase in passenger traffic in the last few years, combined with an increase in terror threats and alerts as well." CISF provides security coverage to 57 airports across the country and the CISF unit deployed at CSIA Mumbai is amongst the few units to become an ISO 9001:2008 certified unit.

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The security procedures and its documentation adopted by CISF at CSIA have been found to meet ISO standards by a team of auditors. The Quality Management System (QMS) of CISF unit, CSIA has been approved by Lloyd’s Register Quality Assurance (LRQA) to the QMS standards BS.EN ISO 9001: 2008.

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QUALITY SERVICES: CISF constables on duty at an airport.

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Emirates doubles frequency to Italy EMIRATES has doubled its frequency to the Italian capital - Rome. The airlines’ 12 times a week service to the Italian capital becomes twice a day and supplements double daily flights to Milan and a daily flight into Venice. Passengers travelling between Dubai and Rome will now have the choice of a morning and afternoon flight seven days a week, bringing greater flexibility and convenience. Salem Obaidalla, Senior Vice President — Commercial Operations, Europe and the Russian Federation, Emirates, said, “We have been strengthening our services to Rome since October last year, gradually building up to the double daily, which kicks off now. We know Rome is a powerful tourism magnet with historical gems but it is also an important business centre. We’re confident the extra flight will be a success.”

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Afridi to play for Fly Emirates XI

Etihad is ‘best long-haul airline’ ETIHAD Airways has received ‘Best Long-Haul Airline’ award at this year’s Business Travel Awards held at the Grosvenor House Hotel in London. The judges, comprising senior buyers and leading business travel journalists, recognised Etihad’s remarkable growth during 2009, which included addition of eight new routes to the Etihad network. Peter Baumgartner, Chief Commercial Officer, Etihad Airways, said, “It has been another strong year for Etihad, and the award shows that our continued investment in product and service is the right focus for us and for our customers. We are delighted to be recognised by our peers in this way.”

ALL-ROUNDER Shahid Afridi will be the star attraction of the Fly Emirates XI — a team of amateurs who juggle cricket with busy jobs, in the inaugural Emirates Airline Twenty20 tournament to be held on March 19 and 20 in Dubai.

Lufthansa names its first two A380s WHAT’S in a name? Everything. This is what Lufthansa feels. Up till now, it has been a closely guarded secret, but with the completion of the painting of the first Lufthansa Airbus A380, its name can now be revealed: it is “Frankfurt am Main”. While Lufthansa’s second A380, which will be called “München”. “We are looking forward to accepting delivery of our new flagship, which will open up an entirely new dimension in air travel for our passengers,” said Karl Ulrich Garnadt, a Lufthansa German Airlines Board member, adding, “The choice of names underlines the central importance of our two major hubs.” The first delivery will take place in May. But before that, a competition to find a catchy nickname for the Airbus A380 was launched on February 8, 2010 at lufthansa.com/a380 under the motto “Be part of it”. Entrants stand a chance of becoming a millionaire as the winner will receive one million Miles & More award miles. Visitors to the website also have access to exclusive films, photos and reportages that offer fascinating insights into a wide range of topics relating to this new aircraft.

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Shahid Afridi said, “It is going to be a tough challenge, but I am looking forward to it immensely. I always enjoy my time in Dubai and am very excited about playing in the first ever Emirates Airline Twenty20 tournament.” In addition, South Africa’s domestic T20 champion Cape Cobras, winner of England’s T20 cup Sussex and Surrey Lions will be the other parties in the four-team event.

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Austrian, Amadeus in ‘full content’ agreement Lufthansa’s premium lounge completes one year

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ALMOST a year ago, on February 16, 2009, Lufthansa Group opened its Senator and Business Class Lounge at Chhatrapati Shivaji International Airport, Mumbai for First and Business Class passengers of Lufthansa, SWISS and other member carriers of Star Alliance. The lounge has received excellent response in one year from Indian and overseas customers. “Our customers’ response to this fine lounge experience has been tremendous,” said Axel Hilgers, Director of Lufthansa South Asia, adding, “That we invested in this lounge despite tough economic times underscores our commitment to further strengthen our leading position in this core market.”

PREMIUM SERVICES AT PREMIUM: Lufthansa's premium lounge is celebrating its first birthday.

AUSTRIAN Airlines and Amadeus have signed a long-term “Full Content” agreement till end of 2014. Effective March 1, 2010, travel agencies worldwide will have guaranteed access to the full range of Austrian Airlines fares and inventory through Amadeus, with no surcharge. The agreement ensures that Austrian Airlines’ schedules, fares, last seat availability and associated inventory available through Amadeus will be the same and under the same conditions as in all other direct or indirect sales channels, distribution systems or websites worldwide. Amadeus is one of the most important distribution partners of Austrian Airlines. Speaking at the occasion, Rakesh Bansal, CEO, Amadeus India, said, “Our association with leading operators such as Austrian Airlines recognise the crucial importance long term content agreements have for operators and travel agencies.” Christina Debbah, Vice President Global Sales & Distribution, said, “With this new agreement, Austrian Airlines will have competitive and cost effective distribution by using Amadeus as a partner both in Austria and in our international markets.” Iberia, Amadeus extend agreement: The airline in Spain and the EuropeanLatin American market, Iberia and Amadeus, have agreed to extend their full content agreement until 2014. The agreement guarantees travel agents worldwide access to the entire range of Iberia content through Amadeus. On this occasion, Rakesh Bansal, CEO, Amadeus India, said, “The extension of our long lasting partnership with Iberia is reflective of our commitment to bring full content access to our travel agent partners and cost efficiencies to Iberia. This agreement is a critical part of Amadeus’ strategic initiative to secure long-term efficient access to the content of key airlines worldwide, ensuring functional and content parity with all other distribution channels.” “We are delighted to extend our commitment to the travel industry with this agreement,” said Manuel López Aguilar, Executive VP Commercial and Customer, “Travel agents can feel sure that they will continue to have efficient access to the complete range of our offer through Amadeus for the next five years.”

BA’s programme receives maximum entries from India BRITISH Airways (BA) has short listed the final 70 entries for its flagship Opportunities Grant programme, where the airline will give away over Rs 11,20,35,000 in flights to small and medium-sized enterprises (SME) in India. India, with one of the largest SME communities in the world, generated one of the highest levels of applications across all markets and more than any other country in Asia. The scheme is part of the airline’s commitment to help India’s SME community and stimulate local business. Successful winners will be awarded 10 return BA Business Class Tickets to be used in Club World or Club Europe between March 01, 2010 and February 28, 2011. The winners are also eligible for the Regus Prize, which consists of five Regus Businessworld gold cards valid for 12 months. Judy Jarvis, Regional Commercial Manager, South Asia, BA said, “The interest and level of applications for the Opportunities Grant has been fantastic. Applications have come in from almost every business sector - from across the country, and not just from the main metros. Each short listed application has put forward a compelling case to grow through travel and this is exactly what we had set out to achieve when we rolled out the programme across India last year.”

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Gastronomic satisfaction on board REALISING the importance of keeping their passengers’ palates and stomachs satisfied, Cathay Pacific has launched a new brand ‘Best Chinese Food in the Air’ for First Class and Business Class passengers, featuring dishes from the famed Yung Kee Restaurant. The ‘Best Chinese Food in the Air’ concept was launched in 2000 with the aim of continuously enhancing the range and quality of Chinese food served on Cathay Pacific flights and, at the same time, promoting Hong Kong’s position as one of the world’s gourmet capitals. The latest promotion marks the fourth collaboration between Cathay Pacific and Yung Kee to introduce some of the restaurant’s highly regarded dishes to passengers from February 1 to April 30, 2010, including Braised Goose and Taro in YUMMY!: Cathay Pacific serves delicious Chinese Plum Sauce; Steamed Sliced Chicken with Jinhua dishes to its passengers. Ham and Bamboo Shoot; Abalone with Goose Liver Roll; Sautéed Prawn in Kung Po Sauce and more.

Singapore Airshow 2010 wraps up on a high note AS the global aviation industry emerges from a very challenging year, Singapore Airshow 2010 continued to be a choice platform for trade visitors and aviation enthusiasts as more than 112,000 visitors attended the Airshow. Trade day visitorship exceeded 41,000 from 122 countries / regions, with an increased percentage of overseas trade visitors this year, while the two public days were also well-received with over 71,000 visitors thronging the grounds. To improve visitor experience at the show, efforts were made to ensure greater ease of access to and from the airshow venue. From public transport provisions to the management of security clearances, the visitors were appreciative of the greater efficiency at the Arshow. Jimmy Lau, Managing Director, Singapore Airshow & Events (SAe), said, “We have received good feedback on the improved arrangements with regards to crowd management on the two public days. This is what we have been working hard to achieve and we are very glad that everything went smoothly.” THE GREAT SHOW: Visitors, the previous day, were treated to an Singapore Airshow 2010 continues to be a choice array of airshow carnival activities, ranging from the platform for trade visitors family-oriented cultural and sports showcases to and aviation enthusiasts. the spectacular flying displays.

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SA unveils new cabin products SINGAPORE Airlines (SA) has introduced new cabin products on its Boeing 777-200 aircraft. The carrier plans to refit 11 planes to provide more space, comfort and convenience for passengers. A new ‘contemporary look’ has been designed for the Economy cabin, with seat covers designed by Givenchy, soothing colours and softer fabrics similar to those used on the airline’s Airbus A380 and Boeing 777-300 aircraft. Business Class passengers can enjoy lie-flat leather seats featuring a control panel, which allows travellers to select the most comfortable setting from a number of present options. The carrier also announced that improvements were being made to its award-winning in flight entertainment system, with screen sizes set to increase in Business and Economy cabins before the end of 2010.

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WELCOME GUESTS!: With new cabin products, Singapore Airlines is alluring more passengers.

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FedEx Trade Networks expands globally FEDEX Trade Networks has opened six new freight forwarding offices across Europe, Middle East, Africa and Latin America as part of its global expansion plan. The new operations are located in Brussels, Belgium; Manchester and London, UK; and Mumbai and Chennai, India. In Latin America, the company opened the office in Mexico City, Mexico. The addition of these offices to the company’s existing infrastructure provides its customers with enhanced freight forwarding services between and among India, Europe, Latin America, AsiaWORLDWIDE EXPANSION: Customers can now enjoy Pacific and North America, as well as intraenhanced freight forwarding regionally, with the additional benefit of local and services with the introduction global expertise. of global expansion plan. “We listen carefully to our customers,” said Fred Schardt, President and CEO, FedEx Trade Networks, adding, “They told us they prefer doing business with providers who have offices in the regions where they do trade. With our global expansion efforts, shippers can get the flexible and reliable freight forwarding solutions they need from a name they trust-FedEx.”

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Lufthansa Cargo has increased its freighter services to Frankfurt from Bengaluru and Chennai to four MD11 flights a week by adding an additional freighter into its existing network in India. Reflecting the growth of the Indian economy, Carsten Hernig, Regional Manager India and Middle East, Lufthansa Cargo, said, “India is still one the most dynamic markets with high growth potential. With this latest addition we can offer our customers a wide spread of main deck capacity offer from the Indian subcontinent.” Lufthansa Cargo currently serves the Indian market with connections to Bengaluru, Chennai, Hyderabad, Mumbai, Kolkata and New Delhi.

DHL is Aerospace Logistics DHL has been named the ‘Aerospace Logistics Company of the Year’ at the 2010 Frost & Sullivan Asia Pacific Aerospace and Defense Award. The award comes at a time when DHL has strengthened its focus on the Aerospace logistics sector by expanding its aerospace hub in Singapore by 50 per cent, adding 25,000 sq ft to the existing aerospace hub situated near the Singapore Changi International Airport. Paul Graham, Chief Executive Officer, DHL Supply Chain Asia Pacific, said, “With the expansion, the DHL Aerospace Hub in Singapore is now a 70,000 sq ft facility, especially designed to meet the stringent safety regulations and quality standards set by the aviation industry.”

Honour for Emirates SkyCargo Emirates SkyCargo has bagged the title of “International Cargo Airline of the Year” presented by STAT TIMES - the international multimodal transport media which has been encouraging excellence in various categories of the Air Cargo industry since 2006. Emirates SkyCargo was elected as a winner through a poll conducted across sectors in the aviation industry. On receiving the award, Ram Menen, Divisional Senior Vice President Cargo, Emirates, said, “We are delighted that we have been chosen as an ‘International Cargo Airline of the Year’. We would like to take this HONOURABLE MOMENT: (L to R) Ram Menen, Divisional Senior opportunity to thank our customers, front line Vice President Cargo, Emirates; staff and airport services team who have helped Keki Patel, Cargo Manager-India us achieve this success year on year. This and Nepal, Emirates; and Prakash Nair, Manager Network Cargo recognition is the best acknowledgment of our continued investment and commitment to providing Sales Development, Emirates SkyCargo with the 'International a world-class cargo service to our customers.” Cargo Airline of the Year' award.

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Financial aid Big problem If a flight is going 95 per cent empty, people either can’t afford or do not want to pay higher prices. CAPT G R GOPINATH Chairman and Managing Director, Deccan 360 on the hike in air fares

We have asked the government to restructure our debt and help convert short-term loan into long-term. This will reduce our cash outflow by Rs 500 crore annually ARVIND JADHAV CMD, National Aviation Company of India Ltd (NACIL) expecting relief on Air India’s loan payments.

That’s optimism I hope the aviation sector will certainly revive in 2011.

Recovery in three years

Civil Aviation Minister PRAFUL PATEL with a strong belief that the airline industry is likely to rebound by 2011.

The industry globally lost $50 billion (Rs2.32 trillion) in the past 10 years, with $11 billion in 2009 alone. We’ve had a terrible 10 years. It would take at least three years to recover the level of growth we have lost. GIOVANNI BISIGNANI Director General and CEO, International Air Transport Association (IATA) on the crucial times of the aviation industry.

Positive outlook The airline industry is getting better. It’s on its way to recovery. NARESH GOYAL Chairman of Jet Airways, hoping that the worst was over for the global aviation industry and it will soon back on track.

Getting nod

Right pitching As the aviation sector is an integral part of India’s economic growth engine, it is important that certain benefits in the form of uniform sales tax on ATF, bringing it into the declared goods category, should be implemented immediately. Paramount Airways CEO M THIAGARAJAN on the aviation industry’s demand to government to give the sector infrastructure status in the Budget 2010-11.

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M A R C H

We hope to get the government approval to start international flights in a month or so. But as of now we have not finalised any schedule for our international operations Spicejet Chief Commercial Officer SAMYUKTH SRIDHARAN hoping to get the government’s approval on starting international flights in a month.

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2/20/2010

3:15 PM

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2/17/2010

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