Cruising Heights May 2010

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Rs 60

May 2010

Praful Patel Minister, Civil Aviation Wilbur Ross, Head, WL Ross & Co.

Sanjay Aggarwal CEO, SpiceJet

WARRING OVER

SPICEJET

AIR INDIA

THE TURNAROUND COMETH? Arvind Jadhav CMD, Air India

DASHED

TO THE GROUND RARELY HAS NATURE REACTED SO RUTHLESSLY AS EYJAFJALLAJOKULL DID BRINGING INTERNATIONAL AVIATION TO ITS KNEES. HAVE WE LEARNT ANYTHING FROM THE DISRUPTION?

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EDITOR-IN-CHIEF’S NOTE

Tough laws, taxing woes!

T

he European Union (EU) reaction to the Iceland ash spill that caused the airspace across the continent to be free of a thousand flights was reminiscent of the hamhanded manner in which Indian authorities have dealt with emergencies at times of crisis. The last big one at the time of the Kandahar hijack was a textbook case of how not to do it. Since then Indian aviation has undergone a sea change and those in command now swear that the drills to cater to distress is a routine way of life at our airports and we are prepared for all eventualities.

Thankfully, it hasn’t be been tested in real time so far.

The EU reaction is no surprise. That’s the style of a union that was supposed to have the dexterity and flexibility to steer the troubled continent to prosperity and nimble-footed governance. Look at how they have meandered from goalpost to goalpost over the past several months to resolve the Greek financial meltdown. That should tell one a lot about the ability of the mandarins or the political leadership of the EU to deal with emergencies.

It — in an oblique way also — reflects on the ability (or the inability) of the most important airline body in the world — the IATA (The International Air Transport Association) — to be able to influence decision-makers in one of its most important constituencies. It’s one thing to harangue airports in India or the government here for not doing enough, but it’s in Europe where it is headquartered that the IATA has failed the most. IATA chief Giovanani Bisignani’s fulminations notwithstanding, the EU simply

CRUISING HEIGHTS May 2010

couldn’t care less about what the airlines or IATA seems to be saying.

The environment tax on airlines and the rights of passenger’s bill are two remarkable pieces of legislation by EU that are far from flattering to the law-making abilities of the Union.

According to the EU’s plan, by the year 2012, all airline companies which have business in the EU will have to reduce their carbon emissions to 97 per cent of their average emission levels between 2004 and 2006. Another two percentage-point reduction will be required by the year 2013.

The carbon tax is obtained by multiplying the emission volume during flight and the per unit price of carbon. For example, a Boeing 747 flying from Delhi or Mumbai to London will be taxed over 8,000 Euros based on the current carbon price of close to 15 Euros per unit. While the EU cannot provide data on emission levels between 2004-06 on which the free emission amount will be calculated, they will bill you for the duration of carbon footprint for the trip and not just the period you spend in the European airspace.

If that is one strange piece of legislation, the other would be the payout required to be made to passengers stranded because the airline in question wasn’t flying. Frankly, the issues here were beyond the control of the airlines. They were desperate to get in the air, but were not allowed. And then to rub salt in their wounds, they were asked to compensate passengers.

One wonders if Jet Airways, Kingfisher and Air India have been caught in the quagmire. It is more than likely that they will have a few claims and it will then tell them a few things about the liberal airspace in which they operate back home.

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Off the cuff

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Caught you!

Now your mind and soul will tell you the truth about you. Ehud Givon, head of a small Israeli firm called WeCU claims that his new technology is based on the principle stimuli and reflexes.

Givon believes that his technology can spot suspicious individuals that traditional methods miss.

The Economist reports that the technology involves showing photographs, code words that are associated with particular terrorist operations (that intelligence has discovered) and might be known to terrorist and not to ordinary people. After giving these stimuli the reflexes will be observed. The trick is that the observation is done automatically, and does not rely on the subjective impressions of possibly tired and bored security guards.

When confronted with such stimuli, someone who is unfamiliar with them will merely be bemused and ignore them. Someone who knows what they are, and is feeling guilty about it, will undergo an increase in body temperature, heart rate and breathing rate. WeCU's apparatus is able to monitor the first two of these using an infra-red camera. This captures the heat pattern of blood vessels near the skin, betraying both changes in overall temperature and in heart rate. The system first establishes a baseline for an approaching individual, and then flashes the potentially stimulating image on a screen or wall in the subject's eye line. If the baseline changes in a way that is suspicious, the individual can be ushered away for further questioning.

The Economist says that the technique is different from the normal lie detectors or polygraphs as it operates in normal conditions without using any emotional pressure tactics in which practiced bad guys can keep their emotional responses under control.

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contents

LESSONS FROM VOLCANIC ERUPTION p36 The worst-ever air traffic dislocation in aviation history! A report and related stories on the volcanic eruption that turned the European airspace into a virtual no-fly-zone. A report on the measures that are being contemplated by IATA to counter future similar disruptions.

NEWS DIGEST

p14

Is it the end of Captain Gopi as an entrepreneur? The Spicejet story gains momentum and IndiGo prepares to go international, Tirupati and Gondia airports are going to be expanded.

CRUISING HEIGHTS May 2010

SPECIAL REPORT

p42

Air India has undergone many changes in a short span of time but these have not brought a phenomenal transformation in its fortune. Though those who are at the head of Air India believe that the four new independent directors would help it to become a mover in the market.

Planman Marcom / ACE / 06/ 2010

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contents ARTICLES NEWS VIEWS EDITS INTERVIEWS CLIPPINGS PROFILES NEWS DIGEST

CHOCKS OFF

p32

CRUISING HEIGHTS Volume V No 1

Editor-in-Chief K SRINIVASAN Managing Editor

TIRTHANKAR GHOSH Consulting Editor

R KRISHNAN Co-Ordinator Editor

PRIYANKA SAXENA

INTERVIEW

p51

TNT is looking at a strong growth in India, thanks to its road network connectivity and enhancement of its infrastructure. Abhik Mitra Managing Director, TNT-India, in a candid conversation.

Special Correspondent (Mumbai)

As domestic airline owners are planning to increase capacity with growing domestic air traffic, there are some points they have to have in mind so that there is no replay of 2008.

ROOHI AHMAD Reporters

JASLEEN KAUR, SREYA SHANDILYA, PUNIT MISHRA Art Director

BHART BHARDWAJ Design

RUCHI SINHA, PRADEEP JHA, SHIV Photo Editor

H C TIWARI Director

RAVI SHARMA (Mob. 9650433900)

Director (Admin & Corporate Affairs)

RAJIV SINGH Regional Sales Manager (South)

KARTHIK K. V. (Mob. 9880209405)

Senior Manager (Marketing)

VARUN MALHOTRA

CARGO

p58

The termination of express activities by India Post has pushed back the ambitious Nagpur cargo hub project.

A report on the reasons of termination and chances to get back to work again for Nagpur hub.

(Mob. 9871866651/9650433099)

GLOBETROTTING

p64

A professor nods off in the air; a dead body gets a chance to fly and veils for air hostesses now.

Business Development

PRANAV KHULLAR (Mob. 9650433088)

Asst. Manager (Corporate Affairs)

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RENU MITTAL Editorial & Marketing office: Newsline Publications Pvt. Ltd., D-11 Basement, Nizamuddin (East), New Delhi -110 013 , Tel: +91-11-41033381-82

BACK PAGE SNIPPETS

p66

Kingfisher expands its network to five international destinations, Jet flies to Johannesburg, Air Arabia completes five years in India and a lot more.

4

p72

A thing called a seaplane. A 1917 boat-cum-plane was on auction in Manhattan and was bought by a bidder on telephone.

CRUISING HEIGHTS May 2010

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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PERISCOPE

‘Rule’ of uncertainty

“

“Air India is not very sure what kind of organisational and management structure it is going to be in the next three to five years’ time.”

KAPIL KAUL, CEO (India and Middle East), Centre for Asia-Pacific Aviation (CAPA) on the unplanned attitude of Air India in recruiting its Chief Operating Officer (CEO).

LETTERS TO EDITOR

The cover story (The woeful journey of a Maharaja who became a pauper, April 15, 2010) pointed out some very pertinent points about the sad story of Air India. Air India is bleeding like never before. The Parliament’s Committee on Public Undertakings (COPU) report has underlined various irregularities that the airline is going through. The protectionist measures by the government still continue for the ailing carrier. The losses are sky high and new measures are announced but not implemented.

At the end, Air India still remains the Holy Grail for the government. Long live the Maharaja!

Rudra Pratap, Varanasi Madhavan Nambiar Secretary, Ministry of Civil Aviation

Praful Patel Minister, Civil Aviation

Arvind Jadhav CMD, Air India

Vasudevan Thulasidas Former CMD, Air India

The story on pilot training in India (Learn to fly - in India, April 15, 2010) was an interesting one. The pilot training institutes in India are minimal as compared to other countries and that can be attributed to the fact that most of the pilots who are engaged are expatriates. Hiring of foreign pilots still does not augur well for the Indian airline industry as there is no dearth of talented and efficient people in the country. It is a fallacy on the part of the civil aviation industry not to provide efficient pilot training institutes for aspiring pilots.

Hiren Shah, Surat

Illustrations: Rajeev Kumar

“If the merger is wrong, Air India is ruined, Indian Airlines is ruined, employees have faced hardships then the civil aviation ministry and minister are responsible.”

SANJAY NIRUPAM, Congress MP on demand of split in Air India and Indian Airlines by the union of employees.

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April 2010

6

It’s enough now

The establishment of the first air freight station will spell a boom for the aircargo industry in India as mentioned in Air cargo gets a booster (April 15, 2010). New companies such as Esquire Express India are leading from the front to boost cargo operations. At last, the untapped potential of cargo is seeing the light of the day as more and more logistics companies are jumping onto the bandwagon to leverage the air cargo business in India. The example of Esquire Express India exemplifies this fact.

The government should provide incentives to companies that want to enter the logistics business.

Madhav Menon, Kannur

Optimism is good for health “We are also seeing a resurgence of the business travellers and demand for connecting flights both domestic and international.”

SUDHEER RAGHAVAN, CCO, Jet Airways on the issue of planning of fare hike by 10-15 per cent by Jet Airways.

New beginning “Everything that has been proposed in the previous turnaround plan is under review.”

ARVIND JADHAV, CMD, Air India on reworking the turnaround plan and methodology.

Oh my God! “We are thrilled to be chosen to provide this critical, strategic service for the organisation representing the leading US airlines.”

NARESH LAKHANPAI, President, Patni Americas on bagging the contract for developing, implementing and maintaining the next generation of ATA Aviation Marketplace.

All correspondence may be addressed to Editor, Cruising Heights, D-11 Basement, Nizamuddin (East), New Delhi -13, OR mail to cruisingheights@newsline.in.

CRUISING HEIGHTS May 2010

Coming, a system “The regulator is developing a system for compensation.”

DR NASIM ZAIDI, Director General of Civil Aviation on the issue of giving compensation to fliers when the flights are cancelled or delayed.

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Aircrashes and heads of states

Bahawalpur on August 17.

1994: Rwandan President Juvenal Habyarimana and his Burundian counterpart Cyprien Ntaryamira killed when their Dassault Facon 50 9XR-NN is shot down by a missile while approaching Kigali airport on April 6.

2004: President of Macedonia Boris Trajkovski’s Beechcraft Super King Air 200 Z3-BAB crashes while attempting to land in poor weather at Mostar on February 26.

2005: Vice-President of Sudan John Garang dies when his helicopter crashes in poor weather on July 30.

2010: Polish President Lech Kaczynski and many of the country’s other leaders die when their Tupolev 154 crashes in Smolensk, Russia, on April 10.

COLD STATS

The recent crash of the Tupolev 154 in Russia that resulted in the deaths of the Polish President and a number of leaders was the last in the long list of air accidents that have resulted in the deaths of heads of states.

1977: Prime Minister of Yugoslavia Dzemal Bijedic’s Gates Learjet crashes into a mountain during a snowstorm on January 18.

1981: President of Ecuador Jaime Roldos Aguilera is killed when his Beech Super King Air 200 FAE-723 crashes in poor weather on May 24.

1986: Mozambique’s first President Samora Machel’s Tupolev-134A crashes in a storm while trying to land at Maputo on October 19.

1988: Pakistan President General Mohammad Zia Ul-Haq’s Pakistani Air Force Lockheed C-130B crashes shortly after taking off from

LOOKING GLASS Long live the fight for better work conditions and air safety!

NEWS REPORT: Around 2000 pilots have formed the Air Line Pilots’ Association, affiliated to the aviation regulator, International Federation of Air Line Pilots’ Association (IFALPA), a world body representing more than a lakh pilots from 101 countries.

Mai chup rahunga “I cannot talk.”

WL Ross India CEO RANJEET NABHA.

“As a policy, we do not comment on market rumours and speculations.”

SANJAY AGGARWAL,Chief Executive Officer, SpiceJet

Both on Sun TV promoter Kalanithi Maran’s conditional offer to buy its entire 30 per cent stake in low-cost carrier SpiceJet Ltd.

CRUISING HEIGHTS May 2010

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Off the Record

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OFF THE RECORD

Gustav Baldauf Harsh Neotia

Anand Mah indra

Fali Major

Dr Amit Mitra

Yusuf Ali

TAKING CHARGE

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A

mit Mitra, Anand Mahindra, Harsh Neotia and Fali Major were inducted as independent directors and some crucial decisions were taken by the AI Board some two weeks back. That all the four independent directors have taken charge of crucial functions at Air India is a good sign, but one has to wait and watch where it leads.

Mitra will head the committee set up for the human resource function, Neotia will look after strategic decisions, Mahindra will oversee the audit committee and Major will head the fourth one on engineering.

Interestingly, Dubai-based expatriate businessman Yusuf Ali M A will be the first member to join the airline’s board.

CRUISING HEIGHTS May 2010

Joint Secretary Prashant Sukul said as much at the first meeting of the reconstituted board in mid-April. Ali is Dubai based and, therefore, his clearances have taken greater time .Because his approval hasn’t come as yet, his name hasn’t been notified. Anand Mahindra, vice-chairman and managing director of Mahindra and Mahindra Ltd; Federation of Indian Chambers of Commerce and Industry Secretary General Amit Mitra, industrialist Harsh Neotia and former Air Force Chief Fali H. Major joined the board in March. If you have been to the Middle East, you will know of Lulu-the retail chain favourite with India expats in the Gulf. It comes under Ali’s Abu Dhabibased Emke Group.

So what’s the feedback from the first full meeting of the board. For starters, whole-timers state that the new board members were pleased with the presentation that included an overview on AI, the way forward with GoM (Group of Ministers) and the turnaround plan.

There was also the sneaking suspicion that all four had, perhaps, spoken to each other and had been well briefed on most issues. Most important they spoke in one voice. And their perspective was simple: we are here to help support Air India in its revival, all of us have a huge reputation outside and people want us deliver ‘tangible’ results. But there seems to be some division of opinion on this. The official line is that this facility is being given at no cost to the company. If indeed that was the case, why were a large number of AI employees, who had spent over a quarter century in the airline, left out of the loop till a short while ago on the plea that it was part of a cost cutting exercise?

Meanwhile, insider’s doubt whether in the face of stiff opposition from Air India employee unions over the reported Rs 3-crore annual salary packet of the airliner’s newly appointed chief operating officer Gustav Baldauf, his appointment will go through at all. According to the Ministry: “The Chairman and Managing Director (CMD) will negotiate the pay of Baldauf who has said he is willing to talk on the matter… nothing has been fixed as of now”.

Finally, what seems to have swung the tide in favour of Gustav Baldauf’s two-year experience in an Indian airline (Jet), managing and expanding its international operations and handling different aircraft, forced the selectors to examine his case. Insiders say, Baldauf received glowing testimonials from Jet sealed it in his favour. But then why did he leave Jet in the first place?

Off the Record

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OFF THE RECORD

I

t was the sort of April fool joke that is typical of British LCCs: the Queen has resorted to flying on low-cost carriers (“cattle class” as dear Shashi Tharoor explained to us some months back) in a bid to keep the mounting maintenance bills of her palaces in check. This EasyJet pun shows her Majesty pulling up to an easyJet plane in a Range Rover in a YouTube video. Accompanied by her

WHEELBARROW AT TRAFALGAR

FOOLING AROUND: It’s the era of LCCs, and whatever they do, have no loo or charge you for the use, all you can say is — aye aye commander!

Ryanair boss Michael O’Leary against Easyjet founder Stelios Haji-Ioannou, describing them as “inappropriate, inaccurate and personal attacks”.

Haji-Ioannou issued libel proceedings against O’Leary after the Ryanair chief executive depicted him as a liar. Ryanair had earlier published advertisements depicting the Easyjet founder as Pinocchio and accusing him of failing to publish the airline’s punctuality data.

The row between low-fares airlines Ryanair and Easyjet over a series of Ryanair ads which claim Easyjet is a ‘high fares’ airline and that it is hiding its poor on-time statistics has been taken to another, albeit bizarre, level recently by Ryanair CEO Michael O’Leary, who has challenged Easyjet boss Stelios Haji-Ioannou to a Chariots of Fire-style race around Trafalgar Square in London.

O’Leary has promised to stop calling Easyjet a ‘high fares’ airline or an ‘always late’ airline if Haji-Ioannou wins the race. If the Easyjet boss loses though, O’Leary says his

entourage, she is then filmed boarding the plane. According to sources at Luton Airport, she was flying to Scotland for her Easter break at Balmoral Castle and that it was the first time she had taken a public flight.

Ryanair did one better: It announced, again on April 1, that it was cutting its on-board staff to save money and instead passengers would be offered vending machines. This talk of introducing vending machines in place of staff may well have been an April Fools’ joke judging by the date of announcement and the fact that the link to this announcement on the firm’s own website no longer works.

But for the British travelling public the announcement was proof that the airline was indeed considering it and brought back memories of last year where the idea was floated to much consternation that Ireland’s most headline-hungry carrier was planning to charge its passengers for use of its on-board toilets. Actually, that last sentence should refer to “the on-board toilet” in singular rather than “on-

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board toilets” plural because Ryanair is apparently pushing its latest idea to its most extreme extent — by having only one loo on the plane, the other two having been removed to carve out space for six extra profit-generating seats.

On another front, easyJet chairman Michael Rake has hit out at comments made by

CRUISING HEIGHTS May 2010

airline’s forfeit will be to admit that it is a high fares airline (by comparison with Ryanair) and that it will agree to resume publishing its weekly punctuality statistics.

O’Leary appears to be unstinting in his preparations for the race: “I am currently in rigorous training and believe that my daily regime of 40 cigarettes, 24 beers and extended sessions on the couch watching TV, leaves me in perfect shape to beat Stelios in a 21st-century version of the Chariots of Fire race around Trafalgar Square.”We believe this race will be a much better use of Stelios’ time rather than paying expensive lawyers to issue vacuous threats, when both Stelios and Easyjet know they can’t compete with Ryanair’s prices and they can’t match our punctuality either,” he told reporters.

The Ryanair boss kindly offered Haji-Ioannou an alternative of a wheelbarrow race around Trafalgar Square if he was too “tired” to run.

“Win or lose, at least Stelios and Easyjet will save a fortune on expensive lawyers’ fees. No expensive lawyers can alter the facts, compared to Ryanair, easyJet is a high fares airline, and an always late airline,” O’Leary said before signing off with a flourish: “See you in Trafalgar Square, Stelios!

Off the Record

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OFF THE RECORD

BITTERSWEET MONTH FOR GMR

I

Photo: H.C. Tiwari

t’s been a mixed month for G M Rao, patriarch of the infrastructure giant GMR. First, he was elected as the next President of the Aeronautical Society of India (AeSI) and later in the month when the UPA cut its deal with the BSP and Mayawati, the government fast-tracked the now-off, now-on Greater Noida airport project. Strictly speaking the government can’t have a new airport within a 150-km radius and in the worst case scenario, GMR (or for that matter GVK in Mumbai) will have the first right of refusal for any new project. Of course, they have to bid for it.

Anyway, first things first: On the occasion of the 61st annual general meeting of the society by the Aeronautical Society of India (AeSI) they organised a seminar on “Frontiers of Aeronautical Technologies”.

Vijay Mallya who heads the AeSI had a few perceptive thoughts to offer: despite the weak economy and cost-cutting measures all around, the aviation sector has seen 20 per cent increase in air passenger traffic, according to the Chairman of Kingfisher

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Airlines. He said that there were 500 unused airports in India of which only 40 airports were operating properly. “Air travel is much safer compared to road transport,” he said.

The Kingfisher Airlines Chairman also stated that a National Aeronautics Commission should be set up by the government to bring all research and development in aeronautics under one umbrella. “A proposal in this regard has already been submitted to the Centre but the project has not taken off.

This is a high priority programme which needs to be pursued,” he added. According to him, government and private sector must partner with each other not only to create civil aviation infrastructure but also to address critical issues such as high taxation, input costs and regulations, faced by the industry.

Vice-chief of Air Staff, Air Marshal P K Barbora, who delivered the Neelakantan Memorial Lecture, stressed on the fact that the aviation industry as a whole should move into the next phase. “Instead of just making the doors, windows and other assembly parts for companies like Boeing, we should be able to make the full aeroplane itself like China which was a late entry to the field,” he said.

Once the business end of the session

GM Rao in conversation with Civil Aviation Minister Praful Patel.

CRUISING HEIGHTS May 2010

FUTURE READY: (Top) Vijay Mallya chairs the AeSI meet and (above) G M Rao (second from left) poses with AeSI members.

was over, the Society inducted GMR as the incoming President and he will take over from Mallya next year for a two-year term.

Knowing the no-nonsense Chairman of the infrastructure giant one can be sure he will spend his time beefing up the activity of the AeSI, but for the moment his mind will be distracted.

And the reason for the distraction is no surprise. By the time this copy is in your hands, the Group of Ministers would have fast-tracked the Greater Noida airport project that Mayawati is dead set on having.

Now don’t be under any illusion that Maya Memsahib is a great infrastructure buff who is keen to develop the UP hinterland for the masses. The sole aim of the deal is to offer the project on a platter to the Gaurs of JP Group and to leverage the huge parcel of lands that her relatives and cronies are alleged to have bought around the vicinity of the proposed airport.

Now without a doubt there will be a tender and the process will meander along, but if past tendering procedures in UP are anything to go by then the process of bookmarking projects for particular groups has been so fine-tuned that it leaves nothing for the genuine bidder. In fact, if one looks at the number of projects given to the JP group in the Noida-Greater Noida region, it’s a perfect case for the Competition Commission of India. There is literally no competition and everyone has been squeezed out in favour of the Gaurs.

So it’s a battle royal for GMR that has a capex of our Rs 12,000 crore at Delhi. And just as it comes to fruition, they see a looming headache up north in the form of Maya Memsahib.Watch this space for an update.

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A UNIQUE ALPHA FLIGHT

T

he recent brouhaha over the alleged diversion of flights for the Indian Premier League (IPL) has brought into sharp focus the practice of chartering flights by special interest groups. In the present case, both the flights were for Mumbai Indians for whom Air India is the official carrier. While the airline has said that in both cases the diversions were in order and had been logged well in advance, questions continue to be asked.

Old-timers in Air India recollect one flight that was pulled out to be a charter just an hour after the national carrier was asked to do so in October 1984. The then regional director in Kolkata received a call from the West Bengal Chief Secretary asking the then Indian Airlines (IA) to keep n aircraft ready on an urgent basis for a VVIP charter and said the VIP would arrive in less than an hour by helicopter.

The VIP in question was Rajiv Gandhi and he was in the Bengal hinterland travelling with Pranab Mukherjee to address party workers in the state. It was there that

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they received news of the shootout at one Safdarjung Road and Mrs. Gandhi being taken to AIIMS and the duo were rushing back to Delhi.

IA was in a quandary.

Those were the days of the towering heights of the public sector and IA was the only domestic carier.Its flights to Delhi had all leftthe direct one as well as the one that flew through Ranchi, Patna, Lucknow and onwards to the national capital. But there was a Boeing 737-200 available (the last of these are now with Alliance Air) and this jet was commandeered for the chartered operation. Not having enough time to file their plan with the DGCA or obtain clearances, IA decided to operate this aircraft as an additional flight.

So there it was IC 410 Alfa as that flight was called, flew to Delhi with Rajiv Gandhi,Pranab Mukherjee and several other VVIPs including the then Governor of West Bengal. That flight was commanded

by Captain A A Siddiqui and the Chief Air Hostess was Ms Celine. Rajiv went into the cockpit soon after the flight took off

and wept and wept for a whole hour to be comforted by Siddiqui whom he endearingly addressed as ‘Miyan’. He then came out composed and that is the image that India and the world saw of Rajiv Gandhi.

He was sworn in hours after arriving in Delhi and the rest as they say is history.

Usually, VVIP charters within the country have been the domain of IA or AI’s domestic wing if one could call it that. Be it foreign heads of state or former Presidents like Bill Clinton, IA has been at the forefront. They have always won high marks for the professionalism.

This time they are in the spotlight for Mumbai Indians.

PLAYING HOST: Bill Clinton, former President, US, disembarking from an Indian Airlines flight.

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NEWS DIGEST

C

aptain Gopinath might have laid the path for his own exit from his second venture — Deccan 360 — that he promoted more than two years ago.

Unlike Vijay Mallya who bought the Gopinath promoted India’s first LCC, Air Deccan, and merged his own Kingfisher Airlines into it to benefit from Air Deccan’s foreign rights, RIL (Reliance India Limited) boss Mukhesh Ambani picked up 30 per cent stake in Deccan 360 and brought along two of his men as directors on the Board of Gopi’s new logistics company where the Captain will have three representatives. Mallya took nearly two years to wipe off all traces of Air Deccan on his board, including Captain himself. This time we understand Gopi will have at least a threeyear breather.

If the grapevine is to be believed,

Captain’s tie-up with Ambani before RIL subsdiary owned by Mukesh Ambani picked up 30 per cent stake in Deccan 360 for nearly Rs 150 crore, the two had prolonged discussions. When this news was aired in mid-April 2010, Gopinath said he was looking for $25 million to 30 million and what RIL has bought is neither minority nor majority and it was above 26 per cent and below 30

per cent. It was agreed that Mukesh could hike his stake to 40 per cent if the logistics company met certain goals while Gopinath would stay on along with his top executives to manage the company for three years.

When Gopi began looking for funds, he received offers including that from Mukesh Ambani who it is believed was ready with Rs 600 crore. Perhaps, the Captain did not wish to be inundated by this and once again earn the epithet of Serial Entrepreneur. Later, a deal was worked out. The real bait was the offer from RIL to hand over its entire logistics requirement to Deccan 360 or the supply chain mangement of Reliance Retail.

This is believed to be a Rs 25-crore business monthly or Rs 300 crores annually. With such a captive business, much of Gopi’s working capital needs as

infrastructure

news >>>>

WHAT HAS DGCA TO DO WITH COMMISSION? The Director General of Civil Aviation (DGCA) has passed an order indicating that as per rule DGCA cannot lay down the quantum of commission payable by airlines to agents. It is entirely up to the airlines to take a decision in this regard in consultation with agents, taking in to account various commercial factors such as the market conditions, the cost of agents’ establishments, etc. and the statutory definition of ‘tariff’.

This information was given by the Minister of Civil Aviation, Praful Patel, in the Lok Sabha.The Minister also

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informed that the following airlines had stopped commission to travel agents in the country: Air Canada, Air France, Austrian Airlines, British Airways, Continental Airlines, Delta Airlines, Finnair, Japan Airlines, KLM Royal Dutch, Lufthansa, Northwest Airlines, Qatar Airways, Silk Air, Singapore Airlines, Swiss International and United Airlines.

AAI SEEKS WAIVER

The Airports Authority of India (AAI) has sought the withdrawal of waiver of landing charges for aircraft having a seating capacity of less than 80 passengers and being operated by scheduled domestic operators. The Ministry of Civil Aviation has directed Airports Authority of India (AAI) to commission a study on the various aspects to get a clearer picture of the proposal. The waiver of landing charges in respect of aircraft with passenger seating capacity of less than 80 seats and other concessions in Route Navigational Facility Charges (RNFC), 15 per cent reduction in Landing Charges for domestic flights, etc. were allowed by AAI in February 2004 as per the recommendation of

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NEWS DIGEST well as the seed money for and the logistics industry. expansion of his network can Moreover this sector had a be met. You may wonder why very good long-term we mentioned that Captain potential. In a significant Gopinath would exit his observation, Kiran Thomas second business. This is both a said that “the deal will help hunch and based on a reality RIL to test waters in the check because RIL and its logistics market where it Chairman Mukesh Ambani wants to grow in a big way are never known to give a and RIL can use this majority stake to any of its investment as a stepping Mukesh Ambani business partners. And even if stone for its future they enter a business, it is always expansion”. This remark fits perfectly with the aim of taking complete with Gopi’s remark that the Indian management control. logistics market was dominated by It must be stated that RIL had made foreign companies and the association attempts in the past to roll out its own between Deccan 360 and RIL opened up logistics business but it did not take off. huge opportunities to grow an Indian This was surprising considering that giant in this sector. whatever Mukesh Ambani has touched has Deccan 360, at present, has three usually turned into gold. Following the A310s it bought from Air India and five RIL way of doing things — everything has ATRs besides 300 trucks and 850 bikes to to be mega and world class-cum-size. In connects 50 cities. The new funds will this context, it must be stated that Deccan help in acquisition of more suitable 360 will not be an exception. Said Mukesh aircraft, land vehicles and widen and Ambani on the deal: “We believe that our deepen its delivery systems. collaboration with Deccan 360 will see a Reliance Retail has 900 multi-format transformation in the logistics domain in stores in 80 cities across India. RIL and India. We are sure that this will enhance Deccan 360 will shortly hold a strategic customer experience in the logistics session to chalk out detailed business domain.” Speaking about the deal, Captain plans and it will not be out of place to Gopinath said that the strategic repeat the words of Gopi who said India partnership with RIL would enable the can also have its own Fedex. company to realise its dream of creating It may be useful and appropriate to world class logistics within reach of every recall here the earlier plans of RIL to set nook and corner of India. According to up a huge dedicated cargo airport in its yet Kiran Thomas, Lead Strategic Alliance, to take-off SEZ in Haryana and offer huge RIL, the decision to go with Deccan 360 competition to GMR’s DIAL. RIL also was because it met all of RIL’s parameters. toyed with the idea of building a dedicated It made good sense for RIL to be in retail cargo base in Patalganga that could handle the Naresh Chandra Committee. These concessions/incentives are applicable at all airports. This information was given by the Minister of Civil Aviation Praful Patel in the Lok Sabha.

GREENFIELD AIRPORTS

The ‘in-principle’ approval for setting up of Greenfield airports has been granted for airports at Mopa (2000), Navi Mumbai on (2007) Sindhudurg (2008), Bijapur, Gulbarga, Hassan and Simoga (2008) and Kannur (2008).

In addition, the Government of India has also received various proposals for setting up of Greenfield airports from various State Governments: Greater Noida (2002) and Kushinagar (2009) from the Government of Uttar Pradesh; Chakan near Pune (2002), Shirdi and Solapur (2009) from the Government of Maharashtra and Dholera (2009) from the Government of Gujarat, according to Civil Aviation Minister Praful Praful Patel

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Airbus A320 types or B737 type aircraft or even bigger widebodies. None of these plans took off. But with the tie-up with Deccan 360 and actually getting into logistics business both on land and in air, RIL has got a new handle to re-launch its pet projects like huge airports, big fleet of freighters, etc.

Perhaps, it would indeed be possible to see the rise of India’s own Fedex kind of freighter-cargo-logistics company. For instance, it costs just under Rs 30 to courier

Captain Gopinath

Patel in the Lok Sabha.

KOHIMA STUCK OVER HIGH COST

A shadow of doubt continues to loom over the aviation development plans for Nagaland. After suffering a setback with the airport extension proposal at Aoyimti village in Dimapur, the much-awaited Chiethu Greenfield airport at Kohima, shows few signs of taking off. The delay is reported to be due to the high estimate cost of construction — amounting to Rs 1,231 crore. The Ministry of Civil Aviation in 2006 earmarked three proposed Greenfield airports for the North-East: Itanagar, Gangtok and Kohima. According to a ministry report, the Gangtok Pakyong Airport in Sikkim projected an estimated cost of Rs 358.36 crore. The memo submitted by the Sikkim government was immediately approved by the Airports Authority of India and the airport is due for completion by 2011.

Meanwhile, the Itanagar airport in Arunachal Pradesh, with an estimated cost Rs 699.66 crore, received a nod from a Central panel in March this year. The Arunachal Pradesh government has already announced the construction of the new airport. Only the ambitious Chiethu airport remains stalled. The Ministry of Civil Aviation, in its report, said the project was likely to be unviable due to its high cost. However, the silver lining is that the

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a minimum weight envelope to IGI airport in Delhi from say South Delhi, a distance of not more than 12 km. For the same distance, Fedex quoted a price of Rs 135.

Obviously, as Gopi said we need our own ‘desi’ version of DHL, Fedex or UPS. Even as we mention these, we are sure the entry of RIL in the logistics business should send real fright (not freight) to our bleeding airlines who thought they will be able to make money by carrying more belly cargo.

It may be pointed here that the huge cargo hub spread over 50 acres that Deccan is setting up at Nagpur’s multi-modal airport will complement Reliance Retail for justin-time deliveries to its various retail outlets as well as provide a whole lot of business opportunities to carry and deliver third party cargo. Alliance Air, a subsidiary of the then Indian, had leased two planes to India Post to perform a kind of Sarkari Courier service. However, not more than 30 per cent of the space could be utilised in the B737-200 converted freighters. At one time Deccan 360 thought of looking at this option. With a strong partner in RIL, it should not be a problem for Captain to increase his air power. He now has a chance to offer a cheaper alternative both in terms of delivery time and cost. However, what is not clear is the government rule regarding the building of airports by a logistics company. For instance, any company that is in airport infrastructure business cannot take more than a minority (10 per cent and below) stakes in an airline.

The airlines, in turn, cannot hold more than 10 per cent in an airport. But clarity may be required when we are talking of freighter and cargo companies.

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ndia’s second biggest LCC, Spicejet, will complete five years on May 23, 2010 and has received government approval to launch its international flights from June 2010.

When it completed three years in May 2008, there was a heavy buzz that Spicejet promoters may sell out and the airline could go the way Air Sahara and Air Deccan went. This did not happen and Spicejet remained with its original promoters besides getting American billionaire Wilbur Ross to invest $100mn in it to fund its aircraft acquisition and short-term working capital needs.

At that time — or to be precise in June 2008 — there were rumours that Naresh Goyal’s Jet Airways could take over Spicejet as it was a perfect fit as both carriers Boeing 737 NGs. Later, Anil Ambani’s ADAG made an attempt to take over Spicejet after failing to buy Air Deccan. ADAG also failed for many reasons but principally the equity price which was about Rs 36 then. So, W L Ross ended up investing US$ 68 mn in the FCCB (Foreign Currency Convertible Bonds) of Spicejet in the second half of 2008 which will come up for conversion into equity in November

Nagaland government has reportedly rejected the estimated cost carried out by a private consultation firm.

According to sources, a survey was initially carried out by a consultancy firm that proposed an estimated cost Pakyong Airport running into a thousand crore rupees. The government felt that the cost was ‘unrealistic’ and asked for a second review. Accordingly, the Airport Authority of India carried out a survey of which the details are yet to be submitted to the government.

ALCOHOL MAY BE ALLOWED

After a hiatus of nearly 16 years, high spirits may finally make a comeback in the Indian skies. To begin with, the civil aviation ministry is planning to allow all privately-owned jets and chartered aircraft companies to serve liquor on board, ministry sources have revealed. For domestic passengers flying on Indian carriers like Jet Airways and Kingfisher Airlines, the wait may be a little longer. There was a long-pending demand

Owning Spicejet is tough 2010. Should that happen, then Ross could end up holding 30 per cent equity of Spicejet besides the nearly 13 per cent held by original Spicejet promoter, the Kansagara family through their Royal Holdings and Ajay Singh and his friends who together hold nearly 12.3 per cent.

There may be other foreign holders including FIIs (Foreign International Inverstors). In that event, the foreign equity could exceed the prescribed limit of 49 per cent. And if the airline is not able to sell stakes now and decides to redeem the FCCB at a premium of 40 per cent as per the original deal, then W L Ross will take home $95mn.

While we cannot vouch that such an event will take place, what is important is that Spicejet has no money to fund the

from private non-scheduled aircraft operators to resume serving alcohol during domestic flights. The matter is under active consideration of the ministry.

The proposed move would enable most of the leading industrialists and their guests to sip alcohol midair in the confines of their private aircraft. Curiously, even as AI-coded Air India flights can serve alcohol on its international flights minutes after take-off in the Indian skies, the erstwhile Indian Airlines cannot serve alcohol on its international IA-coded flights, until it begins the international leg of the journey. In 1994, the DGCA banned alcohol service by domestic air operators in the country, or consumption of alcohol by flyers on-board a domestic flight. The move followed incidents of drunken brawls among passengers and misbehaviour with cabin crew on private airlines Damania and East West.

Globally, liquor is allowed on domestic flights in most countries. British Airways serves alcohol and the US allows airlines with a special licence to do so. Three years ago, three

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further instalments of its earlier orders on firm basis for 33 Boeing 737 NGs. It has so far received 20 of which five are B737900s and 15 are B737-800s. We often hear Spicejet CEO Sanjay Aggarwal stating at every forum that his airline needs to raise at least $75mn to meet its various requirements. One option was and is stake sale. But the way the promoters are differing with each other, a consensus on the price per share at which the Spicejet majority could be offered in a single bloc has eluded all of them. This is because some promoters want to exit while some want to stay. Thus the same tamasha of June 2008 was repeated in March-April 2010 when Spicejet got offers to buy out at least 51 per cent equity by a new set of players as well as Anil Ambani’s ADAG. The first to make an offer was Sun TV’s Kalanithi Maran who was ready to pay Rs

37 per share. This was when the ruling market price was Rs 60. ADAG upped the offer a bit and said it was ready to buy at Rs 45 per share and even spoke to W L Ross and the Kansagara family. In any case, Ajay Singh and his friends holding stake in the company were not keen.

Later, Malvinder Singh and Shivinder Singh of Religare reportedly offered Rs 70 per share but this news was later discounted by the Singh brothers themselves. Kalanithi Maran had even done a reality check and found that if he succeeded in buying out W L Ross and did not manage to get on board, Kansagara and Ajay Singh then would be left holding only 30 per cent and which under SEBI (Security and Exchange Board of India) norms would mean coming out with a public offer to buy out stakes at the same or higher price. This prospect was

MPs attached to the ministry’s consultative committee had made a strong pitch for resuming alcohol service on board domestic flights, citing benefits to the vineyard farmers.

JET AWARDS CONTRACT TO ST AEROSPACE

Jet Airways and JetLite have announced the award of a Maintenance-By-the-Hour contract to ST Aerospace for the support of Jet Airways’ CFM56-7B engines that power Jet Airways’ and JetLite’s fleet of 67 Boeing 737 next-generation aircraft. The contract is worth $750mn (about $1050mn) and is set to commence immediately.

Under the agreement, ST Aerospace’s wholly-owned subsidiary, ST Aerospace Engines Pte Ltd, will provide comprehensive engine maintenance and engineering support over 10 years for Jet Airways’ 143 CFM56-7B engines, which includes the fleet operated by Jet Airways’ subsidiary, JetLite Limited. Work for both airlines will involve Total Engine Maintenance support.

The 10-year agreement was signed by Saroj K Datta, Executive Director, Jet Airways and Tay Kok Khiang, President, ST Aerospace in Singapore. This Maintenance Agreement is expected to provide a high standard of maintenance quality with

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daunting for Maran. A shrewd businessman that he is, Anil Ambani preferred to wait.

Meanwhile, the rising domestic air traffic and increasing yields accompanied by rising seat factor has once again begun to push airline scrips higher. This was evident from the March 2010 traffic figures based on year on year comparison. When these figures became public in mid-April 2010, we are told some of the promoters decided to hold back and wait for an even better price offer which should not be less than Rs 72 per share in any case. In fact, at least two of the bloc shareholders among the promoters who have differences with W L Ross and his CEO nominee Sanjay Aggarwal, have given enough hints of not charting a common course with Ross.

This was evident from the attempt of Spicejet CEO to float a tender to invite bids to supply 90 narrow body aircraft from the Airbus A320 family or the B737 NG family. The proposal piloted by Sanjay Aggarwal did not pass muster in the Board whose members shot down that proposal stating that Spicejet did not require more than a dozen aircraft in addition to the 33 it had ordered and received 20 till now. He was quite displeased with this and has been trying to get to Ross to straighten things out.

Even industry-watchers feel this move to buy 90 narrow body aircraft as irrational.

Coming back to the majority stake story, with the promoters virtually rejecting all offers from the Sun TV group owned by Kalanithi Maran, Anil Ambani’s ADAG and Religare, it is being speculated

improvement in technical reliability and longer on-wing life of the engines.

The agreement also encompasses the commissioning of an "Engine Hospital Shop’ at Jet Airways’ hangar facility at Mumbai. The commissioning of this will enable India’s premier private airline and its subsidiary to maintain and service the engines of its Boeing 737 aircraft fleet.

Jet Airways’ relationship with ST Jet Chief Naresh Goyal Aerospace began in 1993 when ST Aerospace provided component services to its Boeing 737 Classic fleet. Service support extended to airframe MRO and in 2007, to engines when the first two CFM56-7B engines were inducted. ST Aerospace has since completed more than 40 engines under a time-and-material agreement for Jet Airways’ CFM56-3 and CFM56-7B series of engines.

NUANCE TO EXIT HYDERABAD AIRPORT

The world’s leading airport retail firm, Nuance Group AG, is exiting its duty-free shop at the Hyderabad international airport due to sluggish sales. The group is considering exiting its duty-

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Sanjay Aggarwal

Bulu Kansagra

that one or two of these bidders may again come out with higher offers. Some promoters want a price higher than Rs 62 (as quoted in the stock market in the third week of April 2010) which could be in the range of Rs 72 to Rs 75. This is notwithstanding a dampner in the deal: a disputed Income Tax demand of Rs 200 crore from Spicejet.

To put the record straight: airline valuation has no basis today. On April 15, 2010, Spicejet with a fleet of 20 aircraft had a market capitalisation of Rs 1,400 crore and Kingfisher Airlines with a joint product — full service and low cost variant — and with a fleet of 69 aircraft had a market cap of Rs 1,243 crore. The reason why we say that the door to Spicejet is not fully shut is evident from the observation of Sanjay Aggarwal who told a leading business TV channel that his airline does plan to dilute the promoters’ stake through a preferential allotment of shares. In this context, he said Spicejet aimed to raise $50-75mn through allotment of equity. Even Aggarwal’s informal boss, W L Ross reportedly stated that various offers were under

consideration. But any potential buyer would want to buy the majority bloc without the SEBI norms coming into play before acquiring a majority. Else he could be saddled with a big bloc of “minority stake” — technically more than 26 per cent to bar any special resolution — but not enough to capture or control the management on his own.

It also needs to be pointed out here that all the aircraft in Spicejet’s fleet are under the “Sale Lease Back” route. When the market is high and the new planes command premia, Spice like other airlines can get a handsome margin even after signing a seven to nine-year lease deal with the leasing company — in the case of Spicejet, Babcock Brown. In any case, it cannot directly ask the lessor to pay Boeing as that is not the manufacturer’s policy. So, Spicejet has to find the money right from the intial cash down payment at that time of seeking a plane on the assembly line till the date of delivery when all the money has to be paid. Spicejet has been finding funding difficult and has reportedly approached the US EXIM Bank. But this arrangement does not allow a simple Sale Lease Back

free store at the Bengaluru international airport as well, the senior executive said on condition of anonymity. This will effectively put an end to Nuance Group (India) Pvt Ltd, a joint venture (JV) it formed in 2007 with India’s second-largest listed retailer Shopper’s Stop Ltd, which runs both the duty-free outlets.

The GMR Group, which also operates the New Delhi international airport, is planning to float fresh tenders for a dutyfree shop at the Hyderabad airport.

Nuance Group (India) does not reveal sales figures, but it had been expecting revenue of up to $240 million (around Rs 1,070 crore) over seven years. Pulling out from Hyderabad international airport may mean the end of the 50:50-owned joint venture formed between Shopper’s Stop and Nuance Group. This is because the group is also considering exiting the JV at the Bengaluru airport, as operating just one store is economically not feasible for it. This is not the first time that a JV venture for dutyfree shops at airports has fallen through. In November 2008, Pantaloon Retail (India) Ltd, which runs the Big Bazaar chain of retail stores, pulled out of a 50:50 JV with UK-based airport retailing firm Alpha Airports Group Plc after two years of

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Kalanithi Maran

Dayanidhi Maran

solution. At the same time, the airline has also to find money to pay the various instalments that lead to the manufacture of the plane as per its specification. All of its owned 30 Boeing 737s are supposed to be with it flying to various destinations latest by fiscal 2011-12 with at least five of them being inducted in the current fiscal 2010-11.

The only smart thing it has done is to get Government permission to allow its international flights from June 2010 by when it would have completed five years of domestic flying. Besides, it also has the minimum 20 aircraft for entitlement to fly foreign routes. Spicejet has indicated that it will launch its foreign foray with flights to Colombo and Dhaka. Its international flights will be during night when its aircraft will not be required for day-time domestic operations. At least this is what one hears about Spicejet’s plans that will ensure higher utilisation of its aircraft and perhaps higher revenue stream. These moves, on the other hand, will increase its valuation. This is where the Spicejet story rests. If new suitors come in, then we can expect more spice to be added to the story.

operations at the New Delhi international airport.

LOHEGAON’S POPULAR DUTY-FREE SHOPS

The first and only duty-free shopping area in the city that has come up at Pune’s Lohegaon airport have become popular.

Open only for international travellers, the shops — one at the arrival and the other at the departure zone — have been generating an average footfall of 100 passengers on each

A Flemingo duty free outlet in one of the airport.

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nterGlobe’s Rahul Bhatia and former US Airways CEO Rakesh Gangwal promoted IndiGo Airlines is all set to enter the capital market should their plans take off in the next few weeks.

IndiGo run by Inter Globe Aviation Pvt Ltd has hired four international investment banks to help raise funds in the current fiscal 2010-11 to finance its fleet expansion plans, build infrastructure it needs to put in place to support its international operations when IndiGo completes the mandatory five years in August 2011 when it will be entitled to fly to foreign destinations.

As a smart airline operator, IndiGo had applied and got Ministry of Civil Aviation permission to fly foreign routes from August 2011. So, in its future public communications it can always hold this

IndiGo’s ready to enter the capital market carrot before share subscription from the public like what Jet Airways did in its IPO in February 2005. It is a different matter that Jet’s IPO price was fixed at Rs 1,150 per scrip for the 20 per cent stake which its promoter Naresh Goyal

operational day that is more than the management had expected.

According to Vivek Singh, location manager, Flemingo Duty Free shops, there are only two flights on a weekly basis — a Lufthansa flight to Frankfurt and an Air India Express flight to Dubai. The Lufthansa flight has around 50 passengers, of which at least 25 visit the shops everyday on an average. A majority of the visitors from Dubai flights are Indians. The duty free outlet is looking to add electronic goods too.

The shop at the arrival zone started on December 21, 2009 and the one at the departure zone started in February, 2010. Open four days a week, with over 100 international brands of chocolates, 70 brands of liquor, 20 varieties of perfumes and multiple options of tobacco products, the shop is one of the 14 duty-free shops located at 14 international airports in the country.

Six private hangars at Lohegaon: The Lohegaon International Airport will soon get six new private hangars which will also double up as business centres to generate extra revenue for the Airports Authority of India (AAI).

Likely to be constructed from June onwards, the new hangars

off-loaded in the Indian stock market. It is also a different matter that after such highs it dropped to lows of below Rs 200 during the “airline industry killing recession” in 2008-09 before reviving to Rs 560 but still at 40 per cent of what it sold five years ago. We are not suggesting that this will be the way to go for newcomers.

This happened even with Air Deccan and the price at which Vijay Mallya picked up Captain Gopinath’s Air Deccan. Today, Kingfisher Airlines is quoted in the market at Rs 55 ( midApril 2010) against the offer price to public under SEBI norms of nearly Rs 155 nearly three years ago. The only gainer in that sense could be Spicejet which was the erstwhile Modiluft the shares of which were picked up by the Kansagara family, Ajay Singh and his associates for less than Rs 10 — or was

will have parking space for private aircraft and space to set up aviation-related business establishments.

Meanwhile, the Supreme Court cleared the way for an additional runway at Lohegaon, which is also an Indian Air Force base, by lifting a stay on the land acquisition. The district collectorate will now acquire 22 acres for the purpose. In a news release, District Collector (DC) Chandrakant Dalvi said that the apex court had turned down a petition filed by Achla Resorts Pvt Ltd against the land acquisition. The proposal for the additional runway was put forth jointly by the Defence Ministry and the Airports Authority of India (AAI) in March 2004. Following clearance from the authorities, the District Collector had initiated proceedings to acquire land.

Extending the runway is of major importance for the people of Pune, particularly the business community and frequent air travellers, said the DC. He could not give a time frame as the acquisition of land involved various stages but the administration would monitor the stages to hasten the process of acquisition as early as possible. In January this year, addressing concerns of the airline industry, the Airport Advisory Committee (AAC) chairman Suresh Kalmadi had

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it Rs 7 per scrip in 2003-04. Spicejet scrip has now reached Rs 62 or nearly six to seven times at which it was bought. So, its promoters have nothing to lose including the latter entrant W L Ross.

What should we expect from IndiGo promoters? Obviously, nothing less.

IndiGo has hired UBS AG, Morgan Stanley, Credit Suisse Group and Citigroup Inc to raise money through an IPO or the Private Equity route. These IBanks will submit their recommendation in a month (this is what IndiGo management said in early April 2010) depending on which call the management takes on how to go about the job. The size of the share sale is yet to be decided.

IndiGo is looking at around $400mn and market watchers say the IPO, should it be that route, could be on schedule for public subscription in the second half of 2010.

That means Inter-Globe Aviation Private Limited will have to file its prospectus with SEBI in about two months. The size of the IPO as one hears could be not less than Rs 2,000 crore. A well-known electronic business news channel went so far as to value IndiGo at Rs 7,000 crore. Though it may not be so simple but nevertheless a back-of-theenvelope calculation shows that a 20 per cent divestment may get IndiGo Rs 1,400 crore and a Indigo’s 26 per cent Rahul Bhatia

nearly Rs 1,850 crore and with a greenshoe option to retain 10 per cent extra it could well hit the bullseye of Rs 2,000 crore.

We admit that all of this may be speculation but as we are informed by knowledgeable aviation watchers, this may not be much off-mark. Even a year before IndiGo launched its operations in August 2006, or to be precise during the initial airline boom days of 2005, IndiGo announced from the Paris Air Show that it had signed a deal with Airbus Industrie to buy 100 Airbus A320 aircraft — a deal which was reportedly structured by Rakesh Gangwal and John Leahy. As on date IndiGo has 20 A320s all of which are on the same Sale and Lease Model as in the case of Spicejet.

When economic recession set in from early June 2008 (though now passing out) combined with high jet fuel prices, the option of Sale — Lease Back got increasingly squeezed as many airlines went under and there was an over-supply of aircraft. The lease rentals that went sky high in 2005 and remained so till 2007 suddenly plummeted. In fact, today the lease rentals for the same type aircraft is much less than what it was in 2006-07. This also meant a squeeze on the margins or premiums one got for entering a Sale-LeaseBack deal.

IndiGo is planning to induct another 10 planes in one year and had even advertised for flying

said that the focus should be on upgrading the Lohegoan Airport as the Chakan Greenfield airport would take another five to ten years to materialise. The runway extension would be vital for operating larger commercial airliners such as Boeing 747s and Airbus A340s compared to the short-winged Boeing 737-8 and Airbus 319s, 320s currently operating from the airbase.

contracting system followed by NAL is to be reviewed by competent authority,” it said in its report.

NAL, the only design house for passenger aircraft in India, has built a two-seat trainer called Hansa, sold to flying clubs to

DESIGN CHANGES IN SARAS

Finding fault with the management of the country’s first civil aeroplane project Saras, India’s aviation regulator has recommended key design changes to the 14-seater plane. The Directorate General of Civil Aviation (DGCA), in a probe report on the crash of a Saras prototype during a test flight in March 2009, has asked the National Aerospace Laboratories (NAL), the agency developing the aircraft, to not employ private contractors in designing the plane. DGCA has suggested that NAL consult other aircraft makers for flight trials.

According to NAL, Implementing DGCA’s recommendations and getting them certified could delay the Saras project by 1824 months. The regulator has said private contractors be engaged only for supplying parts and appliances. “The

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and cabin crew some months ago. Now, the latest news reports that IndiGo has sought in-principle approval from the civil aviation ministry for a possible further order of 150. In the application for the in-principle approval, Aditya Ghosh, President, IndiGo has said that the 100 planes will join the airline by 2015 and that they need the nod for fleet expansion in the 2015-25 decade. The fact remains that whatever other carriers may or may not do, Indigo has certainly earned a great name for itself in India with rising seat load factor that is giving a run for money to every known competitor — be it in the full service category or LCC. Does this mean the party will continue for ever?

This is where we want to recount what Naresh Goyal, promoter of Jet Airways was heard telling someone. He said it is one thing to fly with 25 aircraft and quite a different ball game with 50 or 75 planes. Perhaps, he was cautioning at the usually-held belief that a bigger fleet does not necessarily deliver the economies of scale as one understands in the economics books on micro economic theory. This is especially true when regulatory frameworks, ATF prices, industrial relations legislation, airport charges and crucially airport slots are way beyond an airlines control. But we can state for sure that at least one more player — Spicejet — may want to see IndiGo papers as how it could be valued much less when its one-year younger competitor is valued so high. So, yet another sprinkling of spice on the Indian aviation story.

Saras’s engine ground runs are on.

CRUISING HEIGHTS May 2010

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Tirupati and Gondia airports to be expanded Tirupati ATC control tower

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fter being stalled for various reasons, the Airports Authority of India (AAI) got a shot in the arm when the Planning Commission approved Rs 600 crore budgetary support to it for the new financial year, 2010-11. It may be recalled that when the former Chief Minister of Andhra Pradesh, the late Dr Y S R Reddy was alive, he had made a public commitment in Tirupati that he would ensure substantial expansion of the city’s airport and would get Prime Minister Dr Manmohan Singh to inaugurate the project or lay the foundation stone for it.

Since then, the State Government worked vigorously and acquired more than 300 acres of land surrounding the present airport as well as the critical piece

unidirectional extension towards the main highway has also been finished. The blueprints are ready. There may be questions asked as to whether all this is of land required for the extension of the really needed for Tirupati. All we can say runway to more than 10,000 feet if not is Lord Balaji knows what he wants and 12,000 feet. His idea was to make Tirupati gets it as he is getting it now via the AAI. a truly religious city and So, no questions need to be enable flights in and out of asked or raised about the the town from various commercial aspects of international and domestic Tirupati airport’s expansion. destinations.

For instance, tourists coming As on date the airport is from Chennai prefer to drive Airbus A320-compliant and down. But this is not possible after expansion it will be able from Hyderabad from where to accommodate widebodies the flight time to the temple as well. When the new town is nearly 50 minutes. It terminal is completed, it will is true that if more flights have a capacity for more than come to Hyderabad and then V P Agrawal 300 passengers each in the fly onwards to Tirupati it arrival and departure halls. Land and soil would mean extra business for Hyderabad testing has been completed and even a Airport or GHIAL. But the way Tirupati survey of the existing runway and its airport is being sought to be expanded, we

train pilots, and Saras, for use by feeder airlines for short-haul routes. But since last year’s crash, the Saras project has been suspended.Two Saras prototypes have been built so far. NAL has asked Rs 35 crore from CSIR to build another plane to replace the one that crashed, the NAL official mentioned earlier said. NAL is designing a regional transport aircraftRTA-70-to carry 70-90 passengers on short-haul routes, India’s ambitious attempt to build a civilian plane and bridge the gap in aeronautical expertise with China and Brazil. The Rs 2,500 crore project, to be built on a public-private partnership, is yet to get the government’s nod, but has the Planning Commission’s approval. The Saras programme was conceived in the 1990s as an Indo-Russian joint collaboration. It became an indigenous plane project with defence aircraft maker Hindustan Aeronautics Ltd after Russia backed out in 1995 due to financial constraints. Since then, the Rs 139-crore programme has been hit by delays due to design flaws and non-availability of foreign components on account of US sanctions following the 1998 nuclear tests.

LUDHIANA-DELHI TEST FLIGHT TAKES OFF

Finally, for the convenience of city residents, the Ludhiana-

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Delhi test flight began on April 13. However, regular flights would only begin in May. Following the test flight, the Airports Authority of India and Air India gave their nods to commercial flights from the industrial hub of the state.

A six-member team from Air India, Delhi, arrived at the Sahnewal Airport to check operational facilities available at the airport, which had not witnessed any flight since its inauguration eight years ago.

The members checked the commercial segment, security arrangements, ground support engineering, fire fighting operations and passenger facilities. The information was given in a press release issued by local MP and Congress national spokesperson Manish Tewari. He was informed by the DGCA Naseem Zaidi that the ministry has finally decided to start the flight from the city.

He asserted that it was a long-pending demand of the city’s residents that despite the airport, there were no flights to the industrial and commercial capital of the north India. He hoped that business in city would get a further boost with the commencement of the flights. After the flights start, people from the city would not have to go to Chandigarh or Delhi to board flights.

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NEWS DIGEST

Artist’s impression of the proposed Tirupati Airport

may soon see both domestic and approval from the Ministry of Civil international charters coming directly to Aviation. The idea is to attract more traffic the airport. The actual spend on Tirupati to Jaipur including those which come via airport’s expansion could be more but the Delhi. The budgetary support given for new budgetary support should be able to fiscal 2010-11 will be immensely useful in take care of it. achieving this objective, feel officials.

Yet another project pending for Apart from Jaipur, plans have also sometime was the extension of the Jaipur been approved for development of a new Airport runway. The airport is spread out airport at Ajmer where the well known over 725 acres and has two (cross) Chisti’s Dagrah is situated. However, runways with the main being 09/27 since Ajmer does not have the facilities, runway which is about 9,000 feet long. the Centre in consultation with the The AAI is now working hard to get it Rajasthan State Government has directed extended to 11,500 feet and if possible and AAI to upgrade the airstrip in Kishangarh feasible both politically and financially to (about 40 km from Ajmer) into a full12,000 feet. The Authority has already got fledged airport. The Ajmer airport, as it permission from the state government as would be called, at Kishangarh will have a well as additional land to extend the Jaipur 7,500 feet long runway to facilitiate the airport main runway. This will enable landing and take off of A320s and B737s.

Jaipur airport to receive even bigger Incidentally, the present Kishangarh widebodies from international destinations airport belongs to the Rajasthan directly. During the tourist season, the Government which has handed it over long haul international charters can hope for more convenient connections and its passengers will be able to connect to the famous triangle of Jaipur-Agra-Delhi more easily. During the winters, Delhi suffers more from fog leading to very heavy congestion and inordinate delays to both arriving and departing aircraft. In that sense, Jaipur which is an alternative airport to Delhi and Qatar Airways planes will soon have Indian crew. suffers less on account of fog may see more traffic. Jaipur handled 1.2 million passengers on the domestic side now to AAI for full-scale airport and 1.93 million international passengers development. during 2008-09.The extension of the The fast pace at which AAI is doing runway will help AAI to shore up its the job is also to counter the competition aeronautical revenues. Simultaneously, from the proposed Public-Private AAI is planning to sharply increase the Partnership airport at a place called Saras terminal capacity and cargo capacity. The near Jaipur for which nearly 5000 acres of Authority has also decided to allow free land is being acquired. It has reportedly night parking for widebodies besides the been offered to the same people who narrow body planes. This decision of the reportedly hold stakes in the Durgapur AAI does not require any endorsement or Aerotropolis project. Of the 5,000 acres

26

CRUISING HEIGHTS May 2010

land being acquired by the Rajasthan Government and the promoters, 2,500 acres will be for the airport project which will be developed as a major cargo hub.

The remaining piece of land will be developed into industry parks including a Special Economic Zone (see Page 61 for a detailed story). Perhaps in keeping with this competition, AAI has decided to move ahead with its extension and expansion of the Jaipur Airport project as well as the Ajmer airport project at Kishangarh. AAI hopes to spend Rs 150 crores on creating the new facilities in Ajmer, or should we say Kishangarh.

We have another story for you. The Pilot Training academy at Gondia about which we had written in our earlier issue, is likely to undego further expansion. The AAI has surveyed and prepared the blueprint to extend the existing runway attached to the CAE-AAI JV Flight Academy at Gondia (the Parliamentary Constituency of Civil Aviation Minister Praful Patel) near Nagpur. Soil testing has been done on the land which was acquired in anticipation. Soon, AAI will begin work to extend the runway length so that A320s and B737s are able to operate from Gondia. In fact, this academy will soon train pilots for absorption by Qatar Airways especially on A320s and B737s.

There is a plan by Qatar to start its own version of a low-cost carrier with aircraft that are four or five years old and fully amortised. The carrier wants to compete with likes of flyDubai and Air Arabia on its own turf and needs pilots for narrow bodies. It offered to get them trained in Gondia as part of its return gift for the additional bilateral rights it secured from the Government of India besides the promise of increasing the supply of LNG to India.

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Maharashtra CM Ashok Chavan lights the lamp to inaugurate the new terminal. Others in the picture are Praful Patel, Dr. T. Subbarami Reddy and GVK’s G V Krishna Reddy.

Terminal IC at Mumbai 28

CRUISING HEIGHTS May 2010

omestic fliers can look forward to better shopping and dining options and less congestion with the opening of Mumbai airport’s new terminal (1C). Civil Aviation Minister Praful Patel and Chief Minister Ashok Chavan did the honours.

The terminal is connected to the existing terminals (1A and 1B) and has six aerobridges. Check-in counters won’t be shifted from the existing terminals. Those whose flights depart from 1C will check in at the existing terminals. Frisking and screening of cabin baggage will be done at Terminal 1C.

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Commenting on the occasion, G V Krishna Reddy, Chairman, Mumbai International Airport Pvt Ltd (MIAL). said, “At MIAL, our focus has been on enhancing passenger experience and the opening of 1C is yet another testament to our endeavour to consistently provide passengers with a world class travel experience at the Chhatrapati Shivaji International Airport (CSIA). The opening of this terminal also marks a significant milestone for MIAL as we are poised to meet the demands of the growing tourist and business traffic in and out of Mumbai.

We have always strived to give Mumbai an

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airport that the city can be proud of and we will continue to do so going forward.”

A section of departing passengers who check-in at Terminals 1A and 1B will be facilitated through Terminal 1C, the second level of which has a large security hold area for passengers post checking-in.

Designed with a high roof and glass facade providing a view of the runway, this area has spacious interiors with a seating capacity for around 900 passengers.

This area also has 9,677 sq ft of retail space including prominent F&B outlets such as Coffee Bean and Tea Leaf and Ultra Bar. Passengers can shop at a range CRUISING HEIGHTS May 2010

of premium stores such as Ethos, William Penn, Parcos, Swarovski, Croma, Media Mart, Bombay Store, Lilliput and Hidesign. It also houses a 4,250 sq ft common lounge for all airlines where passengers can relax and unwind before boarding their flight.

A state-of-the-art Mantra Spa will be available soon for passengers who wish to indulge in a relaxing massage prior to their flight. The mezzanine level holds an expansive 11,750 sq ft food court, overlooking the airside where passengers can grab a quick meal while waiting for their flights. It hosts a variety of Indian and international outlets including KFC, Domino’s, Idli.Com, Curry Kitchen, Cafeccino and Mad over Donuts.

Additionally, the terminal provides other value added facilities such as Wi-fi connectivity, ATMs, foreign exchange, an internet kiosk, long distance and local telephone call booths, an infant care room, laptop charging stations and two smoking rooms. The terminal will also house airline and MIAL back offices.

Meanwhile,Mumbai airport is to finally have a ‘hospitality district’, along the lines of international airports like Shanghai and New York. So far, in Mumbai, the project had stalled due to land constraints. But now MIAL, a joint venture led by GVK that runs the airport, is reportedly ready to lease out two million sq ft of buildable area this year for the purpose.

Once cleared, the project will translate into luxury hotels and shopping destinations within a five km radius of the airport. The plan is to sub-lease plots to real estate and hospitality companies for 30 years — renewable for another 30 years. Sources say as part of the first phase, the company has identified eight lakh sq ft of land at different locations near the airport that will be up for bidding.

Some of this land includes plots along the Western Express Highway, those near the police station, and Air India Colony, Kalina. Real estate experts feel land parcels in the first phase could help raise Rs 1,200 crore. In fact, sources say that road-show for developers may start in May. Sanjay Reddy, vice chairman of GVK, recently announced plans to monetise around 200 acres (8.7 million sq ft) of land in the next 10 years for hospitality and retail purposes. This is part of the land leased to GVK by Airports Authority of India with rights for commercial development. But the entire land is not available immediately as much of it is encroached upon or is in small fragments.

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Passenger confidence helps carriers to fly high

MARKET SHARE Airline-wise details of market share of scheduled domestic airlines for March 2010 was:

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he total domestic passengers carried by the scheduled airlines in the first quarter of 2010 — January to March 2010 — was 118.53 lakhs. The break-up: Air India (Domestic) - 20.90, Jet Airways -22.16 lakhs, Jet Lite - 8.38 lakhs, Kingfisher - 26.84 lakhs, Spice Jet - 14.28 lakhs, Paramount - 1.84 lakhs, Go Air 6.37 lakhs, IndiGo - 17.76 lakhs.

The total domestic passengers carried by these carriers in the first quarter of 2009 — January to March 2009 — was 98.22 lakhs.

The total domestic passengers carried by the scheduled airlines in March, 2010 were 39.03 lakhs. The break-up is as follows: Air India (Domestic) - 6.93 lakhs, Jet Airways -7.39 lakhs, Jet Lite - 2.79 lakhs, Kingfisher - 8.99 lakhs, Spice Jet - 4.63 lakhs, Paramount - 0.50 lakhs, Go Air 2.06 lakhs, IndiGo -5.74 lakhs.

The percentage share of the carriers in the first quarter of 2010 was: Air India (Domestic) 17.6 per cent, Jet Airways - 18.7 per cent, Jet Lite - 7.1 per cent, Kingfisher - 22.6 per cent, Spice Jet12.0 per cent, Paramount - 1.6 per cent, Go Air - 5.4 per cent and IndiGo - 15.0 per cent.

The percentage share of the carriers in the month of March, 2010 was: Air India (Domestic) - 17.8 per cent, Jet Airways - 18.9 per cent, Jet Lite - 7.1 per cent, Kingfisher - 23.0 per cent, Spice Jet - 11.9 per cent, Paramount - 1.3 per cent, Go Air - 5.3 per cent and IndiGo 14.7 per cent.

The seat factor of the domestic airlines in the month of March, 2010 was: Air India (Domestic) - 66.5 per cent, Jet Airways - 70.3 per cent, JetLite - 72.9 per cent, Kingfisher Airlines - 70.1 per cent, Spice Jet - 73.5 per cent, Paramount Airways - 84.7 per cent, Go Air -70.0 per cent and IndiGo - 74.0 per cent.

30

SEAT FACTOR The seat factors of various scheduled domestic airlines in March 2010 were as follows:

CAPACITY VERSUS DEMAND Analysis of Capacity (ASKM: Available Seat Kilometers) and Demand (RPKM: Revenue Passenger Kilometres) data on year-to-year basis indicates that trend of increase in both the capacity and demand continued in the month of March 2010 also.

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ON-TIME PERFORMANCE (SCHEDULED DOMESTIC AIRLINES)

Speed Read

The overall On-Time Performance (OTP) of scheduled domestic airlines for March 2010 was 86.4 per cent. The airline-wise details of OTP were as follows:

Jet Airways Saroj Dutta answers to CNBC TV 18:

On international load and domestic load factors

ON-TIME PERFORMANCE (FOREIGN AIRLINES) There are 70 foreign carriers operating to/from India. At the time of compilation of this report, OTP data of 46 carriers was received. The overall On-Time Performance (OTP) of these 46 carriers for March 2010 was 76.3 per cent in departures and 73.4 per cent in arrivals.

We are optimistic that travel volumes are increasing; traffic growth is taking place very significantly. So we are very optimistic about going ahead.

International load factors are on an average, above 80 per cent; 81-82 per cent and domestic is also improving significantly.

On fare hike

I cannot give a definitive answer of any sort. But I can say that economic principle says that we should be looking at fare increases if crude prices keep going up. We all know yields have been low for sometime, so to improve the bottom-line we may have to look at it, but no decisions have been taken.

On QIP (Qualified Institutional Placement) issue

We hope we will. As I said we are waiting for some final clarifications and after that we will take a final decision.

FIVE AIRLINES HAVING HIGHEST OTP (DEPARTURES)

CRUISING HEIGHTS May 2010

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Cause and effect R Krishnan

As domestic air traffic rises, airline owners have been planning to increase capacity at a fast pace. But they should be forewarned: if the increase in capacity is not in keeping with traffic growth, we could have a replay of the 2008 situation, writes R Krishnan.

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The yields are rising and are 20 per cent more than what they were a year ago. This is good news but will it be possible to sustain in the face of aggression being exhibited by leading LCCs IndiGo and Spicejet?

32

here are two important developments in the Indian aviation industry of which one has become the cause for the other and if the other is pursued relentlessly in the absence of any change in the global and national aviation environment, it may well cause the destruction of the first before getting burnt out.

I am not implying any ‘high funda’ arithmetic in making this observation. It is the simple demand-supply logic whose rollout witnessed the virtual collapse of the Indian aviation industry as elsewhere during the sunshine days for domestic scheduled carriers from 2005 till the second quarter of 2008. What I mean is: will the rising domestic air traffic embolden airline owners to increase capacity at a faster pace that may not be commensurate with the traffic growth and thus end up the same way as it did two years ago?

From that perspective, there are now signs of the sun shining on the horizon for the Indian carriers.

But will greed, aggression and understanding or misunderstanding of the scene spell another round of instability?

Domestic air traffic continued its double digit growth which began in the last quarter of (OctoberDecember) 2009 and continued well into the first quarter of 2010. YOY (Year On Year) the domestic carriers flew 39.76 lakh passengers in March 2010 which was 23 per cent more than 31.60 lakh passengers who flew in March 2009. If we take the first quarter January-March 2010, passengers flying various domestic carriers aggregated 120.32 lakh which was 20.54 per cent higher compared to 99.82 lakh passengers in the first quarter JanuaryMarch 2009.

In the absence of any capacity addition, the April-June 2010 quarter seems reassuring as its immediate past. In terms of market share, during March 2010, Jet and Jetlite together had a market share of 26 per cent, followed by Kingfisher Airlines (whose 65 per cent capacity is low fare) with 23 per cent, Air India with 17.8 per cent, IndiGo 14.7 per cent, Spicejet 11.9 per cent, GoAir 5.3 per cent and Paramount 1.3 per cent.

The yields are rising and are 20 per cent more than what they were a year ago and are on higher seat load factors. This is good news but will it be possible to sustain in the face of aggression being exhibited by leading LCCs IndiGo and Spicejet who want to reinstate/revisit capacity additions and CRUISING HEIGHTS May 2010

reconnect stations that were kept in abeyance after the slowdown. We hear that in fiscal 2009-10, at least IndiGo and Spicejet may fly into profit while Jet Airways could break even leaving aside Kingfisher Airlines which continues to be in financial trouble and Air India which has at last begun to see Rs 100 crore monthly reduction in its losses to Rs 300 crores.

IndiGo, Spicejet and GoAir are planning to induct 16 new aircraft in the current fiscal 2010-11.

Of this, IndiGo which already has 25 Airbus A 320 plans to add nine more aircraft followed by Spicejet’s four or five more Boeing 737-800s to its 20plane fleet and GoAir’s three A 320s in addition to the eight it is operating. Four more A 320 family aircraft of Air India is expected to join its fleet for domestic operations.

The Chief Commercial Officer of Spicejet Samyukth Sridharan said it was reasonable to expect robust growth of 15 to 17 per cent during the current financial year. His boss and CEO Sanjay Aggarwal told a business TV channel that it would be reasonable to assume an annual traffic growth of 10 per cent. There is a huge difference between 10 per cent and 17 per cent. It means a 50 per cent higher traffic growth and could lead to deployment of capacity that may not be in line with reality. If LCCs are thinking of foreign forays, then Spicejet alone can speak as it qualifies to fly international in the current fiscal year; i.e. June 2010. IndiGo will complete the mandatory five years of domestic flying in August 2011 and qualify to go international only after that.

Against this scenario, when the traffic began to revive there was loud thinking that Jet Airways could whittle down the operations of its own Jet Konnect slowly and if possible reinstate its onceupon-a-time famous business class in its Boeing 737 NGs. But traffic uncertainty has forced it to rethink and it has once again decided in favour of widening and deepening the operations of Jet Konnect. The only change is the plan to offer meals on all its economy flights and it is not known at this moment if it would charge for it or build it into the fare itself. Kingfisher’s nearly 65 per cent fleet is low fare model and it is also looking to expand.

That leaves Air India and its domestic operations which continue to trail behind other full service carriers. It is interesting to note here that with a combined fleet of 45 aircraft, IndiGo and

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SpiceJet have a market share of 26.6 per cent in March 2010 as against Air India (read former Indian) with a domestic fleet of nearly 70 aircraft that include some which do foreign legs registering a market share of only 17.8 per cent. Already Air India’s domestic operations are suffering from excess domestic capacity and should this be carried forward then it could become even more painful in the coming months especially with rising ATF prices.

It was in this context I enunciated my theory that if there is a mismatch between capacity-addition and traffic growth and with more capacity being added than necessary, then it could once again put pressure on fares and therefore the yields especially at a time when jet fuel prices are trying to stabilise at a higher price band based on higher crude prices of over $82 per barrel. It is true that most airlines have shown a healthy revival riding on cutting costs to the bare bones.

If that balance gets disturbed with a capacitytraffic growth mismatch or even if the traffic does not grow as anticipated, it will again push the airline industry to the brink though not necessarily in the same way as in 2008-09. Against this background, IndiGo’s Initial Public Offering (IPO) plans of nearly Rs 2,000 crore or raising money through the PE route seems to be a big gamble. In fact, SpiceJet has been exploring the PE route for sometime without much luck. Even its recent tryst with a majority takeover bid came to nothing. It may not make much sense for Spicejet promoters to go aggressively now for stake sale when the recent offers showed up its valuation far below what IndiGo has anticipated. Maybe, it will try and fly overseas, induct the expected four to five aircraft quickly and hike its value to make it worthwhile for any of the promoters or all promoters to exit. So, we may see a battle being fought not just on the basis of high traffic expectations but also high valuation expectations. This will add a third dimension to the issue.

Even as the LCCs indulge in shadow boxing, the big two — Jet Airways and Kingfisher Airlines — are trying their best to raise money if possible cheaply. For starters, Jet has dry leased three of its Boeing 777-300 ER to Thai Airways in March 2010 at nearly $3 million per month per aircraft which will bring it US$ 108 million or nearly Rs 500 crore annually which as per its own admission is adequate to meet its interest , maintenance and other costs. It had also leased three Boeing 777300 ER to Turkish Airlines earlier. Thus of its 10 Boeing 777-300 ERs, Jet has leased Six Boeing 777-300 ER. In a way it has secured the repayment for these six aircraft through lease rentals.

Otherwise why would Jet Airways sit over its own proposal to raise $400 million for which it had secured Foreign Investment Promotion Board (FIPB) approval quite sometime ago? On the domestic front, Jet has assigned 75 per cent of its capacity to Jet Konnect, its low fare arm. Jet Airways has been frantically trying to raise money from various sources but is not keen to pledge equity or follow the Foreign Currency Convertible

Page 3

Bond (FCCB) route which could later come up for conversion into equity lest the promoter has to contend with shrunken managerial space.

Kingfisher Airlines is planning to raise nearly Rs 300 crore in debt in the near future which could take its current debt to Rs 7,800 crore. A consortium of banks led by SBI will help Kingfisher Airlines meet its operational expenditure. The UB Group President and Chief Financial Officer A K Ravi Nedungadi has stated that the airline will also raise Rs 400 crores through the Global Depositary Receipt (GDR) route and for this purpose has engaged London based legal firm Linklatera. The GDR will be listed at Luxembourg Exchange. In a frank admission, he said Kingfisher is constrained to raise equity as its net worth has been eroded due to recent losses it incurred. And post-GDR, if there is appetite for aviation stock in India, then the airline may even follow up with a public issue.

The airline has already appointed US firm Seabury to draw up a five-year-plan to reduce debts and work out its operational strategy.

While IndiGo and Spicejet are looking at the valuation game, Jet is in no position to revalue itself and is testing waters by leasing its big birds to ensure some revenue as against none in the actual business of flying. The issue is: why does Jet Airways with 82 per cent load factor on international flights have to lease its big birds? Obviously, more big birds on flights out of India means further downward pressure on fares and yields which Jet can ill-afford.

This logic also holds true for domestic aviation. Even if the Indian market has only six main scheduled domestic operators and they face these issues, can we imagine what could happen if a big business player with deep pockets buys out a regional airline and tries to convert it into a scheduled domestic carrier? For air travellers, safety and security is a must while flying and for the operators it has become nec essary even while on ground.

(Veteran journalist and long time aviation watcher R Krishnan is Consulting Editor at CH. He can be reached at rkrishnanji@yahoo.com.)

CRUISING HEIGHTS May 2010

Why does Jet Airways, with 82 per cent load factor, have to lease its big birds?

Obviously, more big birds on flights means further downward pressure on fares and yields which Jet can illafford.

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Eyjafjallajokull-ed!

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Photo courtesy: httpnews.sky.com

his unpronounceable volcano in Iceland literally ground the mitty of the international aviation industry for a whole week in the middle of April. Stung out of shape by losses for over two years, the Icelandic volananic ash was like a swinging an upper cut that put the airline business up for a count of ten!

The International Air Transport Association (IATA) estimated that the Icelandic volcano crisis cost airlines more than $1.7 billion in lost revenue (estimated figure six days after the initial eruption). For a three-day period (April 17-19), when disruptions were greatest, lost revenues reached $400 million per day. “Lost revenues now total more than $1.7 billion for airlines alone. At the worst, the crisis impacted 29 per cent of global aviation and affected 1.2 million passengers a day. The scale of the crisis eclipsed 9/11 when US airspace was

36

The trail of ash in the sky following the volcanic eruption in Iceland caught international airlines and European governments unawares. Flights were grounded for nearly a week with airlines losing whopping amounts. It is time that efforts were made to establish a global safety risk framework to determine the safe levels of operation in airspace contaminated by volcanic ash.

WE CAN’T FLY: Planes lined up at Manchester airport and views of the affected areas on other pages.

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Around the world, airlines, travellers and governments are tallying the many lessons learned from the crisis. We have all been reminded how much more dependent the world is on air transportation now than 20 years ago and how easily Mother Nature can upend modern technology

CRUISING HEIGHTS May 2010

Europe’s unique methodology of closing airspace was based on theoretical modelling of the ash cloud. This was interpreted by the airlines that governments had not taken their responsibility to make clear decisions based on facts.

Instead, it was the air navigation service providers who announced that they would not provide service. And these decisions were taken without adequately consulting the airlines. To assist governments in assessing risk, airlines conducted successful test flights in several European countries. The results had not shown any irregularities or safety issues. Airlines were also exploring various operational measures to maintain safe operations.

These included day flights, restrictions to specific flight corridors, special climb and descent procedures, and more frequent detailed boroscopic engine inspections to detect damage.

The scale of airspace closures seen in Europe was unprecedented. “We have seen volcanic activity in many parts of the world but rarely has it resulted in airspace closures and never at this scale. When Mount St. Helens erupted in the US in 1980, we did not see large-scale disruptions, because the decisions to open or close airspace were risk managed with no compromise on safety,” said Bisignani, who urged Eurocontrol to establish a volcano contingency centre capable of making coordinated decisions.

Bisignani is right. The Alaskans learnt their lessons decades ago. In fact, 30 years ago, when Mount St. Helens erupted in Washington state and planes were grounded for days, carriers

Photo courtesy: wikimedia commons

closed for three days,” said Giovanni Bisignani, IATA’s Director General and CEO. Around the world, airlines, travellers and governments are tallying the many lessons learned from the crisis. We have all been reminded how much more dependent the world is on air transportation now than 20 years ago and how easily Mother Nature can upend modern technology. Some travellers have learned the limitations of travel insurance and the high cost in dollars and discomfort of being stranded unexpectedly. Many have newly learned about an old danger to jet aircraft volcanic ash. Although it has never caused a major airline disaster, volcanic ash has come close to downing big jets.

IATA noted there were some cost savings related to the flight groundings. For example, the fuel bill was $110 million a day less compared to normal times. But airlines faced added costs including from passenger care. “For an industry that lost $9.4 billion last year and was forecast to lose a further $2.8 billion in 2010, this crisis is devastating. It is hitting hardest where the carriers are in the most difficult financial situation. Europe’s carriers were already expected to lose $2.2 billion this year-the largest in the industry,” said Bisignani.

What seems to have angered IATA and the airlines was the decision-making process. There was literally no risk assessment, no consultation, no coordination, and no leadership. “It is incredible that Europe’s transport ministers have taken five days to organise a teleconference,” an angry Bisignani said.

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COVER STORY

T

he volcanic ash shutdown is expected to cost the industry, primarily in Europe, more than $1 billion as 95,000 flights were grounded and stranded eight million passengers. However, officials across the continent were wary of confirming whether any aid would be granted. This has been the single biggest grouse of the airline industry.

The present concerted calls for financial support is similar to the fierce lobbying from the US airline industry in the wake of the September 11 terrorist attacks.

The Congress had then approved a $15 billion support package less than two weeks later, with many airlines claiming they faced bankruptcy after US airspace was closed for three days.

Three associations of European airlines called on the European Commission and European Union member countries to help cover multi-million Euro losses.

“Prolongation of this situation in which airlines are bearing... additional costs but earning no income, inevitably threatens their business viability with serious risks to both routes and jobs,” the European Low Fares Airline Association, ELFAA, the European Regions Airlines Association, ERA, and the International Air Carrier Association, IACA, said in a statement.

The Board of Airline Representatives in the UK (BARUK) said the EU regulation over passenger compensation was intended to apply when airlines had individual delays or cancelled flights, not a mass shutdown of airspace.

BARUK called on the Government to tackle the European Commission over “unfair” regulations against member state airlines. Chief executive Mike Carrivick said: “The eagerness of the EU and the UK government to publicly state that airlines have a responsibility under EU Regulation to accommodate and feed passengers booked on flights cancelled by the volcanic disruptions, is a misuse of the regulation.”

All of them said that it was never intended to apply to wholesale shutdown of the airways system imposed by governmental rulings and without any limitation of time. It was also relevant that airlines could not immediately resume normal services from the moment that the airspace restrictions were lifted.

“This regulation, when used in this way, is draconian, disproportionate and often impractical. In this particular situation, passengers have in all probability been delayed a lot longer than they might have been and air-

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PAY FOR THE ASH DELAY? NOT US, lines have lost millions every day as a result.” BARUK called for an “urgent reassessment” of the implementation of the regulation in the present and in the future. “Not to change anything would be a huge disservice to everybody,” the organisation said.

Almost unanimously, airlines across the region said that European governments, which decided to close many of their airspaces because the volcanic ash could damage jet engines, “can’t ignore the massive economic consequences of their decisions on airlines”. Citing help given to airlines in the wake of the attacks in New York, British Airways and EasyJet

CRUISING HEIGHTS May 2010

said they were talking to the UK government about possible help. Air France-KLM, Germany’s second largest airline Air Berlin, Belgium-based Brussels Airlines and Poland’s LOT Polish Airlines signalled they would look at requesting aid once they had dealt with the immediate effects of the crisis.

The European Commission said it would consider updating state aid rules in the wake of the Icelandic volcanic eruption to clarify how airlines affected by flight cancellations could benefit from national government help. The commission has rules that could be applied to compensate airlines in exceptional circumstances and allow memberstates to compensate companies for damage caused by natural disasters.

Under the current rules, which were clarified in the aftermath of the September 11 attacks, compensation can be paid on a non-discriminatory basis to all affected airlines within a member state. The aid must be limited to the actual cost to the airline of the interrupted traffic, and governments should ensure there was no extra “padding”, or money

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WHAT ARE THE EU RULES?

The rules make airlines responsible for events outside of their control, including weather and air traffic control problems, when the majority of delays and cancellations are due to such factors.

The rules impose a flat rate of compensation, the levels of which represent some of the LCCs highest fares and beyond.

The rules were introduced without fully consulting the industry or carrying out an economic impact assessment to ensure they are workable.

Two airline associations, ELFAA and IATA, challenged the new EU rules before the European Court of Justice and lost. What the airlines are looking for are exemptions from having to pay out for events outside of their control or at least compensating airlines where disruption was caused by air traffic control, airports, strike action and government measures.

SAYS AIRLINES paid for restructuring a company that may have been in trouble before the disaster.

The US aid package in 2001 included $5 billion in cash and $10 billion in loan guarantees. Airlines had to apply and make concessions including executive salary caps and gave the federal government equity warrants in return.

“There is a precedent for this to happen as compensation was paid after the closure of US airspace following the terrorist events of 9/11 and clearly the impact of the current situation is more considerable,” said BA Chief Executive Willie Walsh. EasyJet said it wasn’t asking for specific aid direct to airlines, but wanted the UK government to help with the costs for stranded passengers.

“The government is responsible for caring for its citizens following a natural disaster and, therefore, it should help the airlines get people home and cover the costs of care and repatriation. This is a major natural disaster which has had a huge impact, affecting over one million passengers on UK airlines alone, with the financial cost to airlines running to hundreds of millions of pounds. The measures

Making financial compensation proportional to the fare paid.

Ensuring passengers enjoy the same rights across all modes of transport.

Airlines across the continent were stating that they are not calling for less passenger rights but for better rules that make sense and do not penalise some carriers unduly or one mode of transport over another.

They view the EU as “trigger happy to penalise low-fares airlines when it turns a blind eye to the billions of Euros that go into carriers like Alitalia or Olympic Airlines.

Meanwhile, tube and rail operators have no such obligations whilst more billions keep pouring into their infrastructure.”

announced are welcome but are nowhere near enough,” said EasyJet Chief Executive Andy Harrison.

Meanwhile, a row has broken out between Ryanair and the aviation regulator after the airline’s chief executive Michael O’Leary dubbed as “absurd” legal obligations European airlines have to passengers affected by cancelled

CRUISING HEIGHTS May 2010

flights. O’Leary said Ryanair would welcome any court action taken by the Commission for Aviation Regulation (CAR) aimed at making it cover the expenses of passengers stranded in airports across Europe for up to a week after much of the continent’s airspace was closed.

Under EU regulations, airlines have to offer passengers affected by flight cancellations a full refund or a re-routing on the next available flight. The rules make it explicitly clear that airlines are legally obliged to provide accommodation and refreshment for passengers who choose to be re-routed.

However O’Leary said Ryanair would not be covering the accommodation or food costs of passengers. “While we will consider all passenger requests for reimbursement of reasonable receipted expenses over the past week, any such reimbursement will be limited — as it is in the case of rail, coach and ferry passengers — to the original air fare paid by each passenger.”

He said there was “no legislation designed that says any airline getting a fare of €30 should be reimbursing passengers many thousands of Euro for hotel accommodation. It’s absurd”.O’Leary added that he was “fairly sure” the regulator would take a court action against the airline. “We will look forward to seeing this in court because frankly I think this is a great opportunity for the airlines to expose this nonsense.” O’Leary called for legislation to put planes on an equal footing with coaches, train and ferry operators, with the carrier only liable for the original cost of a fare.

The commission insisted the airline had “no wiggle room” and had to abide

by European rules that cover passengers’ costs in the event of cancellations.

It urged people left out of pocket to pursue claims. Commission spokeswoman Patricia Barton said, while the regulator had enormous sympathy for all airlines affected by the crisis, the obligations they had to their passengers were very clear. “There is no ambiguity or no wiggle room here. The law is the law,” she said.

“We will have to fight this battle, and we are prepared for the fight,” she said.

“But we are going to have to see what happens. At the moment Ryanair have said they are not going to abide by the regulation, but they still have not infringed them. Saying they are going to do something is not the same as doing it.”

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COVER STORY developed an effective way to navigate safely around the volcanic ash belt. The airline, which encounter volcanic ash in Alaska every couple of years as well, Alaska Airlines, was crippled for days by Mount St. Helens.

Whenever a volcano erupts in Alaska, Alaska Airlines scrambles to find safe routes for its aircraft by using computer models to predict the path of ash clouds and sending pilots up in empty planes to test the skyways. Its planes never take off, fly, or land in ash, although all its pilots go through simulations of ash encounters in training. “Even though they all know it’s coming in the exercise, everyone says it’s eye-opening how big an event it is when it happens,” says the airline’s fleet captain, Capt. Williams.

The company decided at the time to try to develop procedures that would minimise volcano disruptions in the future.

More resources were added in 1989 with establishment of the Alaska Volcano Observatory. One unbendable rule: Alaska’s planes never take off, fly or land in ash. It’s just too dangerous. Even taxiing at an airport with ash on the ground can clog aircondition systems and take a plane out of service for 36 hours. But that doesn’t mean you can’t find safe sky for flight.

A collaboration of aviation and weather experts have created computer models that predict the trajectory for volcanic ash in Alaska or elsewhere in the Pacific Northwest. Whenever there’s an eruption, the airline scrambles off-duty pilots in empty airplanes-some in Alaska Airlines’ Boeings and others in smaller private planes-to take temperature and wind measurements at various altitudes. The data helps validate satellite projections and computer forecasts. “The more data you have, the more surgical you can be,” said Capt. Williams in an interview to The New York Times.

It doesn’t always work, of course. If Alaska Airlines can’t stay at least 35 miles away from ash, it doesn’t fly. And if it’s night time and pilots can’t see or if the airline isn’t sure of the actual winds aloft, it won’t operate. In 2009, when Mount Redoubt erupted again in Alaska, the airline couldn’t get its aircraft out of Anchorage early enough and ended up canceling flights and shrink-wrapping planes to keep ash from contaminating instruments and engines.

Ash is such a threat that Alaska Airlines puts all 1,400 of its pilots through an ash encounter in recurrent training. In a cockpit simulator, engines suddenly flame out and the “aircraft” loses pressurisation.

Pilots, wearing smoke goggles and oxygen masks, must figure out how to restart them and return to an airport.

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FAQ FLYING THROUGH ASH Volcanic ash clouds are a serious hazard to aviation, reducing visibility, damaging flight controls and ultimately causing jet engines to fail. Encounters between aircraft and volcanic ash can happen because ash clouds are difficult to distinguish from ordinary clouds, both visually and on radar, according to the US Geological Survey, reported CNN. What happens when aircraft encounter ash clouds?

According to Airbus, flying through an ash cloud should be avoided by all means. The aircraft manufacturer says experience has shown costly damage can occur to aircraft surfaces, windshields and power plants, while ventilation, hydraulic, electronic and air data systems can also be contaminated. Critically, it says the ingestion of volcanic ash by engines may cause serious deterioration of engine performance due to erosion of moving parts and partial or complete blocking of fuel nozzles. Volcanic ash contains particles, whose melting point is below that of an engine’s internal temperature. During flight these particles will immediately melt if they go through an engine.

Going through the turbine, the melted materials rapidly cool down, stick on the turbine vanes, and disturb the flow of high-pressure combustion gases. In the worst case this disorder of the flow may stall the engine, the manufacturer’s operational guidance says.

Whenever a volcano erupts in Alaska, Alaska Airlines scrambles to find safe routes by using computer models CRUISING HEIGHTS May 2010

Can these ash clouds be detected?

Each year millions of passengers fly over volcanically active regions such as Iceland and the North Pacific, which has more than 100 active volcanoes and four to five ash producing eruptions each year, the USGS says. As weather radar is not effective in detecting volcanic ash clouds, pilots rely on accurate forecasts of volcanic eruptions along their air routes, according to CNN. There are nine Volcanic Ash Advisory Centers (VAAC) around the world designated by international organisations to provide expert advice to national meteorological agencies about the location and expected movement of volcanic ash clouds.

Have there been any fatal incidents?

No. But a number of aircraft have flown into ash clouds over the years, resulting in a few near-fatal incidents.

In June 1982, British Airways Flight 009 en route to Auckland from London flew into a cloud of dust and ash thrown up by the eruption of Mount Galunggung, on the Indonesian island of Java, resulting in the failure of all four of its engines. Fortunately the pilots were able to glide the Boeing 747-200 far enough to exit the ash cloud, before three of the engines were restarted, allowing the crippled flight to divert to Jakarta and perform a safe landing. At the time it was the longest glide in a non-purposebuilt aircraft.

When all four engines on the Boeing 747 being flown by Captain Eric Moody shut down at 37,000ft, he hadn’t a clue why. It wasn’t until later, when Capt Moody, his crew and the 247 passengers

Scientists have no standard for what concentration of ash is safe and what is a danger to aircraft, but ash cloud does scatter enough with time and distance to not threaten jets. Fallout from Mount St. Helens actually circled the globe three times before fully dispersing, but flights were grounded only within a couple of hundred miles of the source.

Capt. Williams thinks Europe will follow much the same path as Alaska Airlines did after Mount St. Helens and establish procedures to collaborate quickly on draw-

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on board the flight, were safely back on the ground, that he discovered the cause of the narrowly averted catastrophe — volcanic ash.

There had been no hint of trouble when flight BA 009 took off from Kuala Lumpur in Malaysia on the evening of 24 June, 1982. Heading for Perth, Australia, the weather forecast for the five-hour journey was good and the crew were anticipating an uneventful flight. The first sign of trouble came as the plane, which had hit cruising height, headed past Java over the South-Eastern Indian Ocean.

Capt Moody, who had left the cockpit for a stroll, was summoned back to the flight deck. As he climbed the stairs of the Jumbo he noticed puffs of “smoke” billowing from the vents in the floor and detected an acrid smell.

When he opened the door to the cockpit he saw the windscreen ablaze with a St Elmo’s fire — a discharge of static electricity. Ash clouds can be seen in daylight but they do not show on weather radar, designed to detect humidity and the

ing paths around ash whenever volcanoes erupt. “It’s got to be more flexible,” he said.

Volcanic observatories exist in London and Toulouse, France. But it wasn’t until five days after the eruption that a specially-equipped Lufthansa A340 was sent out to collect data on the concentration of ash in European skies in cooperation with Germany’s Max Planck Institute, a scientific research centre. The flight, five days into the crisis, was the first wide-scale measurement in European airspace.

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electrical discharge of lightning the aircraft was flying in the dark and the crew saw only saw a bizarre, bright light on the windshield as the glass was being sandblasted. There were fumes and a smell of sulphur in the cabin and the passengers had a fine view of fire as unburnt fuel ignited behind the stopped engines Looking out the side windows of the cockpit, the crew noticed the front of the engines were glowing as if lit inside.

Then Capt Moody’s flight engineer detailed the impact the dust was having on the aircraft itself. “Engine failure number four... engine failure number two,” he said. “Three’s gone… They’ve all gone.” Within a few moments, a passenger jet powered by four Rolls Royce engines had become a glider. Needing time to calmly consider his options, Capt Moody used autopilot to put the plane into a gentle descent, and instructed his first officer to issue a mayday call. Eventually, after quarter of an hour without any power, the engines were brought back to life. Ash had clogged the engines,

A speciallyequipped Lufthansa A340 was sent out to collect data on the concentration of ash in European skies CRUISING HEIGHTS May 2010

which only restarted when enough of the molten ash solidified and broke off.

“We glided from 37,000ft to 12,000ft before we got [the engines] going again,” recalled Capt Moody. The plane headed back to Jakarta where it landed safely, though even then one of the engines had failed again. Surprisingly, the landmark incident of June 1982 was the first potentially catastrophic encounter between an airliner and high altitude ash. “They copied what we did and published it in every pilot’s manual in the world,” Captain Moody told The Times.

Mr Moody’s announcement to the passengers after losing power had gone down in airline lore. “Ladies and gentlemen, this is your captain speaking. We have a small problem. All four engines have stopped. We are doing our damnedest to get it under control. I trust you are not in too much distress.” The problems of Speedbird 9 — Flight 9’s BA call-sign — and a few other incidents led to a global tracking system for volcano cloud. Pilots are now trained to look for signs, including the odour of sulphur in the cabin and electrification on the leading edges of the wings from sandblasting by dust particles.

In December 1989, KLM Flight 867 en route to Anchorage in Alaska from Amsterdam flew into a normal looking cloud, which turned out to be a volcanic ash cloud — the result of an eruption of Mount Redoubt, a volcano in the Aleutian Range.

The pilots increased the power in an attempt to climb out of the cloud, but all four engines on the Boeing 747-400 failed shortly after and the standby electrical system failed. Fortunately the crew eventually managed to restart the engines two at a time, enabling the airliner to land safely at Anchorage, despite extensive damage to the windshields, internal aircraft systems, avionics and electronics.

“In the light of the unprecedented disruptions to air traffic, it is clear that more exercises need to be undertaken to establish a global safety risk framework for routinely determining safe levels of operation in airspace contaminated by volcanic ash,” the International Civil Aviation Organisation (ICAO), A UN agency that sets rules for international flying and established a system to track volcanic ash in 1987, said in a statement after the ash had

grounded the world.

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SPECIAL REPORT

Air India plane at the Farnborough airshow.

THAT’S AIR INDIA FOR YOU. EVEN AS CHAIRMAN AND MANAGING DIRECTOR ARVIND JADHAV COMPLETES A YEAR IN OFFICE, THE CARRIER THAT HE HEADS CONTINUES TO GASP FOR SURVIVAL. THROUGH THE LAST YEAR, THE MAHARAJA’S FORTUNES HAVE NOT CHANGED — INDEED, THEY HAVE GONE DOWNHILL. PERHAPS, THE ONLY EVENT OF CONSEQUENCE , WRITES R KRISHNAN, HAS BEEN THE APPOINTMENT OF FOUR INDEPENDENT DIRECTORS.

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W

hen Air India Chairman and Managing Director Arvind Jadhav completes one year in office on May 1, 2010, he need not answer two questions. First, how is Air India doing and second, was the merger of Air India with Indian a good idea? This is because the questions have been answered by Civil Aviation Minister Praful Patel in April 2010.

Speaking to a news channel on April 1, Patel speaking about the merger issue said that, perhaps, the merger could have been better executed but for the sabotage from within. He said there are no two opinions on whether the merger was required or not. It was a well thought out, well-planned decision which made immense economic sense.

Later, on April 13, at an Indo-US business meet in Delhi, Patel speaking about the health of Air India commented that “the worst is over”. He said Air India had cut its losses by 25 per cent on a monthly basis and the carrier was now incurring a monthly loss of Rs 300 crore against the earlier Rs 400 crore. Perhaps, the comments were meant to send a message to the members of Parliamentary Standing Committee on Transport and Tourism headed by Sitaram Yechury which vehemently criticized the whole merger. It was also meant to serve as an informal response to the

“

Things are looking much more controlled than they were two months ago…There has been a qualitative improvement in the functioning (of Air India) in the last six months. ” — PRAFUL PATEL Minister, Civil Aviation

“

The government should write-off the losses of Nacil and then think of giving it direction. Its huge losses are because of irrational decisions of the government. ” — SITARAM YECHURY Chairman, Parliamentary Committee on Transport

“

The government has approved the release of equity support of Rs.800 crores. The equity induction would to some extent ease the cash flow situation... ” — M MADHAVAN NAMBIAR Secretary, Civil Aviation.

CRUISING HEIGHTS May 2010

“

We are expecting that these independent directors are going to give us guidance... The new directors have expressed confidence in turning around the carrier. ” — ARVIND JADHAV CMD, Air India

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SPECIAL REPORT Public Accounts Committee’s (PAC) criticism of the merger. Even before he made these comments, Praful Patel had his way when he got the government to appoint four independent directors on the Air India Board and which in turn chose Captain Gustav Baldauf as the airlines new COO. In a way the run-up to Jadhav’s first birthday in Air India was quite eventful. It might not have been exactly to any CEO’s liking when the newly constituted Board comprising the four directors — Anand Mahindra, Amit Mitra, Harsh Neotia and former Air Chief Marshal Fali Homi — sought a new turnaround plan within a month by asking Jadhav and Captain Baldauf to put their heads together (see page 8). What is inexplicable is what happened to the detailed turn around plan submitted

by Arvind Jadhav to the central government in August 2009 which was followed up with his first official press conference in Delhi on August 7, 2009. In fact, last year’s revival plan had more or less been accepted and the centre subsequently went into micro management issues before it released the first installment of Rs 800 crore to shore up Air India’s equity. Incidentally, it is planning to release another Rs 1200 crore during the current financial year to further hike the equity component.

In the accompanying page, there is a table that illustrates various important components of Air India’s performance in the first 11 months of the just concluded fiscal year, 2009-10. According to the figures, there seems to be no change in cost or rather at the same cost the performance indicators on a comparative basis have shown better results. Look at the rise in Plane Load Factor (or seat load factor). In the face of a flat cost, the revenues have increased and, therefore, a marginal cut in losses. All this is taking place with the same aircraft flying more and the traveling passenger also paying more or simply put, an increase in yields.

This is represented by the rise in Revenue per Kilometer (RPKM). The table also shows a slight rise in market share which means nothing since even with a high market share you could still be losing money.

The question to be asked of Air India is: Are you controlling the market or, better still, are you the mover of the market?

Air India is not in that position and the questions that should be asked are: Will the four brand new directors help Air India to really become a mover in the market? Will the directors also turn a shaker of excess staff out of the carrier?

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The questions that should be asked are: Will the four brand new directors help Air India to really become a mover in the market? Will the directors also turn a shaker of excess staff out of the carrier?

AI-SATS TERMINAL: The JV has opened new vistas in cargo and groundhandling.

CRUISING HEIGHTS May 2010

The possibility, however, of becoming the mover and shaker is simply not there for the Maharaja. For instance, the famous Nambiar Plan (Civil Aviation Secretary M M Nambiar’s plan to downsize AI fleet to conserve losses) wants that Air India should soon become a 27-plane widebody fleet. Already its six Jumbos B 747-400 are on ground (except for brief periods when VIP flights take place or they are commandered to transport volcano affected passengers back home). The four leased B 777-200 ERs are back or in the process of going back and there are serious attempts to lease at least three Boeing 777-300 ERs and if possible all the eight Boeing 777-200 LRs. This is a combined operation with the other part being the early termination of aircraft leased by Air India. In this context, in a recent communiqué to the government, AI noted that in view of the sudden downturn in aviation during 2008 and 2009, efforts were made with all the lessors for an early termination of leases. While several lessors declined early termination, some declined to accept the proposal since it was difficult to find new lessees. In case of termination, NACIL would have to pay all costs and lease rental differentials. Therefore, the AI management has now decided to return all the leased aircraft only on the expiry of the lease term. Meanwhile, if necessary, the management has planned to keep some aircraft on the ground to cut operation costs as the revenues earned will not be commensurate with costs incurred.

On the other hand, AI is also striving to lease its own aircraft to meet the cost of its financing and at the same time also reduce operation costs. It tried to lease three of its Boeing 777-300 ERs to Brunei but failed and then tried to do so with Thai Airways which was again upstaged

by Jet Airways which leased its Boeing

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777-300 ERs to Thai. “One reason for the failure was while lessees want the plane yesterday, Air India as lessor says it will able to deliver only day after tomorrow because of very strict government norms and CVC guidelines,” said someone who was conversant with the deal. At the end of the day, the Maharaja has a brand new fleet which it is unable to utilise to the maximum. It has on lease older aircraft which it is unable to return because its lessor does not want them before time.

Saddled with such issues, one thought Air India would take advance action to get its pilots to train for the new Boeing 787 Dreamliners which will begin to join its fleet from April 2011.

Unfortunately, that plan too is bogged down in international politics as has been aired by the Indian Commercial Pilots Association (ICPA). Recently, Air India (international arm) wanted to recruit about 40 trainee pilots to meet its immediate and future requirements. To this, the ICPA shot off a letter to the management reminding it of a 2006 agreement where it was agreed that the ICPA members (essentially pilots of erstwhile Indian who fly domestic and nearby foreign routes of less than three to four hours flying) would be able to log a Flight Duty Time Limitations (FDTL) of 90 hours a month or 240 hours a quarter. In reality, however, ICPA noted that the FDTL logged was less than 60 hours in many cases. Therefore, it said, instead of Air India recruiting trainee pilots, the trained pilots of Indian should be allowed to fly long haul and others should come behind in the queue. In the same context, we would like to point out that in the last issue of CRUISING HEIGHTS, we had mentioned about Indian’s Central Training Establishment (CTE) in Hyderabad offering to host the yet-to-arrive B 787 simulator and train pilots for the same. Apparently, this suggestion of Indian has been shot down by Air India pilots.

As for Jadhav he will now sit with Capt Baldauf to prepare a revival plan while what Air India needs is a survival plan. Between then and now, the two major achievements of Jadhav’s stewardship has been the signing of the agreement between AI and SATS for Ground and Cargo handling in Bengaluru and Hyderabad which were already settled and operationalised as separate JVs in 200607. Jadhav had also succeeded in sealing an agreement with SITA to put in place the much-delayed and very crucial Passenger Service System (PSS) in place. This will allow Air India to join Star Alliance seamlessly.

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Air India’s performance in 2008-09 in comparison to 2009-10 (upto February 2010) Average number of passenger carried/day 2008-09 Apr-Sep '09 % Domestic 15718 17034 International 13635 14753 Network total 29353 31787

Change + 8.4 % + 8.2 % + 8.3 %

Oct'09-Feb'10 21082 14605 35687

% Change +23.8 % - 1.0 % + 12.3 %

Apr-Sep’09 63.7% 62.2% 62.5 %

% Change + 4.8 points + 2.5 points + 3.0 points

Oct'09-Feb'10 74.5% 66.1% 68.0 %

% Change + 10.8 points + 3.9 points + 5.5 points

Yield - Revenue per KM (RPK in Rs ) 2008-09 Apr-Sep'09 Domestic 5.27 4.72 International 3.05 2.57 Network total 3.54 3.05

% Change - 10.5 % - 15.7 % - 13.8 %

Oct'09-Feb'10 5.20 2.69 3.31

% Change + 10.2 % + 4.7 % + 8.5 %

Passenger load factor 2008-09 Domestic 58.9% International 59.7% Network total 59.5 %

Market Share % 2008-09 Apr-Sep '09 Domestic 16.9 % 17.2 % International 24.2 % (CY 2008) (including AI Express)

% Change Oct'09-Feb'10 + 0.3 points 18.4% 23.1 % (CY 2009)

% Change + 1.2 points

Flight Profitability against cash costs of a operations Average per month (Rs) 2008-09 Apr-Sep '09 % Change Oct'09-Feb'10 % Change Domestic - 33.4 Cr - 3.8 Cr +29.6 Cr + 28.6 Cr + 32.4 Cr International - 218.8 Cr - 186.5 Cr + 32.3 Cr - 156.4 Cr + 30.1 Cr Network total - 252.2 Cr - 190.3 Cr + 61.9 Cr -127.8 Cr + 62.5 Cr

Saddled with such issues, one thought Air India would take advance action to get its pilots to train for the new Boeing 787 Dreamliners which will begin to join its fleet from April 2011.

CRUISING HEIGHTS May 2010

No doubt these are two important achievements of Arvind Jadhav and he needs to be complimented. On other issues, he will now deal with four bosses (who are the four new directors charged with four important subjects — HR, Finance and Audit, Commercial and Engineering) and one immediate subordinate in the COO. Air India was both top heavy and bottom heavy. With the new management structure in place, the previous top has moved down to middle heavy. Air India which should look like a sleek aircraft has become barrel like (three layers of top management, middle management and lower level of other staff) that symbolically also represents the rising fuel prices, that has made life or many airlines simply tough.

It is still felt in many quarters that Arvind Jadhav has the chance of his lifetime to mend Air India as other macro economic parameters have increased that were either absent in the last two years or were not within the realm of any management to alter or dictate. Perhaps, Jadhav needs to freely discuss issues with those outside Air India rather than marinate in

the same old juices.

45

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FOCUS FEATURE

RUSSIAN PLANES FOR

INDIAN OPERATORS Russian plane manufacturer, United Aircraft Corporation, is bullish on India.

Through its Indian partner, Hindavia Aeronautical Services (HAS), it has pushed through the sale of eight aircraft. Over the next few years, the Russian manufacturer will set up a training and maintenance facility in the country.

U

nited Aircraft Corporation (UAC), the low profile Russian aircraft manufacturer, has made a solid start to its India operations by inking a deal with three Indian companies for the delivery of eight passenger aircraft valued at $400 million. The aircraft deliveries are expected to commence from the second quarter of 2011. The company has signed a Memorandum of Understanding (MoU) with three India-based non-scheduled air-operators for the delivery of eight passenger aircraft.

The deal is being followed through by Hindavia Aeronautical Services (HAS) Pvt Ltd. HAS is the Indian partner of UAC. In addition, UAC has firm orders of 10 cargo aircraft from domestic cargo operators and the first delivery of these aircraft is likely to commence from 2012. Hindavia is led by the charismatic Siddhartha Bose who has been instrumental in putting the company in the Indian aviation equation.

UAC also plans to set up a training and maintenance facility in India to provide after-sales service. Companies from five

The UAC stand at the recent Hyderabad airshow.

The UAC delegation presents a memento to DGCA chief Naseem Zaidi.

46

CRUISING HEIGHTS May 2010

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“INDIA, A PROMISING MARKET”

Excerpts from an exclusive interview with UAC Director (Regional Aircraft), Yuri Grudinin:

The Indian market is dominated by Boeing, Airbus and to a lesser extent by Embraer and ATR? How will your company break into this?

The market for regional aircraft is not actually occupied — maybe because of the unavoidable presence of the 737 aircraft. But we see that many of these flights carry fewer passengers than the normal capacity. We also know the market research done by the Embraer Company and the result. The outcome of that research was that the market for regional aircraft in India is very promising.

Can you tell us what regional markets you are looking for in India?

When we speak about regional aviation markets, we do not think of the major

UAC Director Yuri Grudinin poses with one of the passenger aircraft.

CRUISING HEIGHTS May 2010

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FOCUS FEATURE cities like the capitals of states. We are speaking about the towns in different provinces. These are towns and small cities which have airports — difficult airports and where the conditions of landing are heavy. The landing performance of the aircraft and its general layout with the high position of the engines, fits into those conditions. The Indian Government and the state governments have a special programme for reorganisation of the airport network. The primary goal of the programme is to address major cities and airports in these major and metro cities.

We fit very well into it.

But this aircraft of yours requires the same kind of conditions like other narrow-bodied aircraft in terms of length of runway...

The takeoff required length for this particular type of aircraft is 1,800 meters. This year we shall get the certification for landing at airports that are situated 3,000 metres above sea level.

particular airline. But all those three versions carry the same number of passengers. Those three versions have the same capacity. They differ in takeoff weight. This produces a result on the price range.

3,000 metres, that means 10,000 feet.

With full payload what is the distance it can fly?

Which are the major airlines presently using it at the moment?

4,500 km (nonstop).

Where is this aircraft from?

It comes from Varonich, which is about 600 km south of Moscow. We have the aircraft in three versions. The main idea is to have the unified family of the aircraft to use for a particular need of a

states have come forward for setting up the training and maintenance centres and were at the discussion-stage, according to UAC sources.

Russia’s United Aircraft Corporation (UAC) is to double production by 2012 from 2009 to 200 planes, the company said recently. The target is part of the corporation’s draft plan for 2010-12. In 2009, UAC reportedly delivered 95 aircraft,

48

Is this a particular aircraft that you want to sell in India? Have you found any new market to sell and have you started selling it? What is the situation of your marketing and selling?

We are selling this aircraft to Russian airlines. So, we are selling to both government-owned airlines and privateowned airlines. We have got orders from old customers and this year we will deliver two aircraft to the government of Myanmar. The Indian market is one of the most promising ones in terms of sale of our aircraft. We are also trying countries on the Pacific Rim: Laos, Vietnam, Cambodia, Indonesia and also the Middle East and Africa.

The Russian airline which is called the State Transport Company in Russia, which is based in St. Petersburg. This aircraft has the markings of this particular airline, which is again State Transport Company of Russia.

Do you require FAA or EASA approvals?

We have Russian certification and we are

UAC delegation photographed at a meeting with DGCA authorities.

CRUISING HEIGHTS May 2010

in conversation and discussion with the Indian DGCA. We have talked about the validation of the Russian Certificate in India: the air-worthiness certification. We have that certification which is from Russian Ukraine, our own authorities.

They are launching the process of validation of this certificate in India.

For whatever reasons, FAA and EASA have become very important the world over. So when planes are sent from Russia to any of the countries which follow FAA, what will you do then?

The requirement which is AP 25 is harmonised with the GA’s limitation rules. This is the European requirement, not the FAA. This is valid for the authorities of the Commonwealth of Independent States. There is a procedure of validation according to the inter-government agreement between the governments of Russia and India. So, you need to acknowledge the Russian procedure set by the government which will also address the specific requirements of the Indian aviation authorities. And we intend to complete this process and finish off this year.

In terms of fuel efficiency how good is the plane?

As for the fuel burn per passenger, we have similar numbers as the Boeing and Airbus mainline airlines. At the same time we must understand that the efficiency of a particular type depends on the peculiarities of the network approach of a particular airline. including 31 MiG-29s and two Su-34 fighter jets and 17 passenger airliners.

The state-controlled corporation, established to streamline the Russian aviation industry, incorporates aircraftmaking and affiliated firms engaged in the manufacture, design and marketing of civilian and military aircraft, including unmanned aerial vehicles.

UAC, which has two assembling units in Russia and Ukraine, expects to sell 200 aircraft in the next 15 years to Indian air-operators. Russia and Ukraine have agreed on the division of production of the Antonov An-148 regional jet aircraft, Alexei Fyodorov, head of the United Aircraft Building Corporation said some time ago.

According to him, most of the assembly work will be carried out in Russia by the Voronezh Aircraft Building Association while the final assembly of the longer version of An 158 will be made by state

Antonov Corporation in Ukraine.

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CRUISING HEIGHTS AIR CARGO & LOGISTICS

May 2010

Flying into oblivion The India Post-Air India tie-up has ended raising questions about the viability of the cargo hub project in Nagpur.

Focus on India p51

Heavy lifters

As the recession ends and opportunities for business increase, TNT's Abhik Mitra speaks about the plans to expand in India.

Cargo carriers across the globe were awarded for enhancing their capacity through the global economic turmoil in 2009.

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LAST IN/FIRST OUT

TRENDS

IATA reports continued growth in air cargo CARGO traffic, which plunged much, further than passenger demand, has an extra three per cent to recover in order to return to precrisis levels.

The International Air Transport Association (IATA) announced that in February 2010 international scheduled air traffic showed continued strengthening of demand. Compared to February 2009, cargo demand grew 26.5 per cent.

“We are moving in the right direction. In two to three months, the industry should be back to pre-recession traffic levels,” said Giovanni Bisignani, IATA's Director General and CEO. While demand increased by 9.5 per cent, supply was held back to just 1.9 per cent.

Airlines are maintaining normal aircraft utilisation on short-haul fleets but long-haul

utilisation is down over eight per cent compared to 2008 levels. The resulting increase in unit costs for long-haul operations may delay the positive impact of stronger demand to the bottom line.

Despite the sluggish U S economy, North American airlines have seen a rebound (+34.1 per cent) equivalent to those experienced by Asia-Pacific (+ 34.5 per cent) and Latin American airlines (+ 41.9 per cent).

European airlines are benefiting least from the strong upturn in air freight volumes, with year-on-year growth of just 7.2 per cent in February, compared to 26.5 per cent on average.

The global strong air freight upturn has been largely driven by the business inventory cycle.

GST to empower Indian logistics industry GST (Goods and Services Tax) is probably the biggest reform undertaken by any Government in India in decades. Given its significance to Indian industry, of which the wider manufacturing and logistics services industry are key parts, as well as the ultimate consumer, it is critical that the final legislation regarding this important reform and its roll out is mature, well thought through and well discussed.

In this context, the Supply Chain Leadership Council undertook to represent the Indian manufacturing and logistics industry in front of the empowered committee for GST implementation.Accordingly, SCLC, together with direct support from KPMG and AFL Logistics, crystallised the opinions of the manufacturing and the logistics industry in a white paper, which was shared with the empowered committee as well as with key ministerial individuals including Dr Asim Dasgupta, Dr Pranab Mukherjee and Dr Vijay Kelkar in February 2010. Dr Kelkar said, after receiving the paper,“I commend the Supply Chain Leadership Council for executing this important initiative”.The content of the paper has been collated based on the proceedings of these two events and is intended to represent the position and the expectation of the Indian Industry - mainly manufacturing and logistics sectors - with regards to the implementation of this important reform.

“This paper represents a meaningful and timely effort on the part of over 150 senior individuals from various facets of the industry to contribute towards the construction of this important legislation”, said Gautami Seksaria, Founder and Partner, Supply Chain Leadership Council on the eve of the presentation of this paper to the GST committee.

50

As a logistics industry leader we can recognise early indications of demand and inventory increases, as order books begin to fill again and more goods need to be shipped… The worst seems to be over, and there are clear signs of an economic come-back on the horizon. Yet, the overall economy remains fragile and tentative.

Frank Appel

Chief Executive, Deutsche Post DHL

CRUISING HEIGHTS May 2010

SOFTLINK Logistic Systems in its recent study has observed that investment in IT by the logistics sector has doubled to 14 per cent in 2010 compared to the previous year, reported Information News.

Softlink Logistic Systems in its recent 'Adoption of Technology in Indian Logistics Sector-2009' study has observed that the logistics industry in the country is expected to see greater technology adoption in the year 2010.

The study conducted amongst 700 Indian logistics players operating as Customs

Clearing, Freight Forwarding, NVOCCs and 3PL players has estimated that the number of larger players, making technology investments up to Rs 10 million have doubled to 14 per cent in 2010 compared to last year.

The survey gauged the penetration of technology in key areas of logistics industry.

While 98 per cent of the surveyed respondents feel commercial documentations and regulatory compliance are important aspects in their businesses, 14 per cent and 19 per cent respectively said that their existing IT system is not meeting the expected requirements.

The report also highlights that though 96 per cent of the respondents feel that customer service is an important aspect in their businesses, 34 per cent respondents still feel that their existing IT system is not meeting the appropriate requirement of customer service.

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CARGO

“We would like to have our own freighters” Says Abhik Mitra, Managing Director, TNT-India on the company’s high, growth strategy and the focus on its domestic network. TNT is looking at a strong growth in India, thanks to its road network connectivity and enhancement of its infrastructure. The country’s economic growth will see TNT expanding its footprint domestically and internationally. In his candid conversation with Tirthankar Ghosh, Mitra outlines his game plan for the years to come and what’s in future for express players.

Q

How was 2009?

We understand TNT India did very well? Can you please give us details which sectors helped in TNT’s growth in India?

We had a good year in 2009. We grew our international business and we also grew the domestic business both in the service logistics space and expanded our network.

Obviously, there is much more to be done on the domestic space as we continue to expand our business on that. But I think 2009, in essence, was the end of a very good year for us.

This despite the global recession when almost everyone suffered losses in business…

Yes, I think, it had partly to do with the game plan that we had. We had one integrated organisation doing both international and domestic services. We engaged with our customers more sharply in our business because we always took care of both the requirements rather than one company doing international, another company doing domestic.

That was one of the reasons. We also focused a lot on leadership in our segment which we did very well. From a domestic market perspective, the

A

economic downturn did not threaten us.

This despite the global recession when almost everyone suffered losses in business…

Yes, I think, it had partly to do with the game plan that we had. We had one integrated organisation doing both international and domestic services. We engaged with our customers more sharply in our business because we always took care of both the requirements rather than one company doing international, another company doing domestic.

That was one of the reasons. We also focused a lot on leadership in our segment which we did very well. From a domestic market perspective, the economic downturn did not threaten us.

issue now for us is to expand that base and improve the quality of our services and improve our loyalty to our customers, improve the reach of our business. That is absolutely the focus.

more as we expand the business… (we have spent) a fair amount in terms of improving line haul,

Back in 2007 you had said that TNT had plans to spend about E100mn in India in five years. How much of that has taken place?

A fair amount. I can’t quote numbers.

We need to spend

You have been speaking about enhancing the domestic front. What are your plans?

We already have a very strong business. Of course, there was the acquisition of Speedage and then its transformation and expansion and integration. So, we already had a strong base starting 2008-09. The CRUISING HEIGHTS May 2010

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CARGO improving the quality of our services, people, investments in infrastructure… IT has been a major area for investments.

But tell me one thing as far as infrastructure is concerned, as everyone speaks about the bad quality of infrastructure how are you tackling this situation?

Yes obviously, we as a company can’t do anything independently regarding infrastructure. I would also say that in last three-four years, the infrastructure certainly on the Golden Quadrilateral and many of the other roads that emanate from that have improved. We see that average truck speeds have improved in our industry from what it was. The problem still comes when the highways reach the cities and the bottlenecks there. It is something that we have to live with and adapt to while we continue to do our business. The roads of Delhi, Mumbai or Kolkata are jammed and pick-ups take longer... there is nothing much we can do about them.

That hampers your quality of service to your consumers, isn’t it?

That happens and then we take collective action on them. There are cost angles too. It is not a good situation to be in. One is, of course, the infrastructure and the other is the laws. Some of the Customs laws have not been completely corrected till now though I think the process is going on. We have had some very good work done with the Customs and I expect in the next 6-8 months we will be fairly up to speed in that area.

52

EXPANDING SERVICES: TNT is planning to induct freighter planes in Indian domestic market.

What about the state laws?

We will have problems still and obviously the non implementation of GST, the removal of Octroi, the sales taxes…it is a huge problem. This in addition to city traffic jams builds up delays for hours…

But even in such a situation, a number of multinational express providers have branched out into the domestic arena. Do you think there is capacity enough to accommodate

the demands of all the players?

I think it’s going to be an expanding business. I mean this business is going to expand a lot — two times, three times GDP, 15 per cent to 20 per cent. I think there is also consolidation happening. There will be probably be in a five-year span from now, three or four serious companies.

Then there will be others who will have their own niche: some will be handling documents, some which focus on life sciences, etc.

There will probably be three

CRUISING HEIGHTS May 2010

to four large integrated players who will do everything. We would like to be foremost in that (group).

So, that is really our plan but the market is a big market and the market is a growing one and the customer demand is becoming more sophisticated and more defined. They are looking for better service.

Don’t you think your earlier plans of inducting freighters into India are being hampered by the lack of

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does have a competitive advantage as it has its own aircrafts. The other companies which have their own aircrafts don’t really have the size of aircraft or the service as yet. There are not too many of them to speak of actually

You have been concentrating on Tier II & III cities for your services. Are you setting up your own offices or what are you doing in this area?

We have our own offices that we acquired through Speedage which we handle and run as our own TNT offices. We continue to run that and we continue also to expand our footprint through our dedicated TNT business associates.

infrastructure?

From a domestic perspective, yes, we would like to have our freighters but I think freighters also come with a certain amount of scale and I think our focus has been much more on the ground in the initial period. I think for the next one or two years, we will continue to be more on ground express. That doesn’t mean that this cannot change and we will not focus on getting freighters at some point of time. Our first and most immediate focus is to get the ground business, the

business service quality and size to the next level as also to help connect India and Europe. These are two focus areas. Yes, you are absolutely right: we will have to have get freighters at some point of time for the domestic market.

Should we choose to play the domestic air freight game and I don’t think there is much of a debate or discussion on that because if you are a full service to your customers…it is not that we don’t do it.

Everybody does it — we, DTDC, First Flight, AFL, etc. Obviously, Blue Dart

What is happening that now the whole problem of infrastructure is always there? Don’t you think Nagpur as a hub would be viable?

In the long term, it makes a lot of sense but I don’t think India has the volumes to really move on the hub and spoke model immediately or even in the next 3-5 years. If you look at Blue Dart which is not the best and the biggest volumes…when I say best it is from a quality perspective, it uses the crescent model rather than the hub and spoke model.

The hub and spoke model can work but what will happen in the short term is that the rates of air freight will move up — i.e. the rate per kg — and that the customers will not be willing to pay. The only thing would be the significant growth in volumes on domestic front.

Now that would be driven

CRUISING HEIGHTS May 2010

by GST up to an extent. But also on the other side the argument against it is that once the road transport improves, he (the consumer) would want to move less and less by air.

So, there are pros and cons on why air (freight) should grow and why hub and spoke should happen. I am taking a wait and watch approach on the hub and spoke model.

You don’t have any sort of hub?

We have a road hub at Nagpur — the road connectivity to Nagpur is good - but not for the air connectivity. I think Nagpur has been more spoken of as an air hub.

Talking about Nagpur, the India Post story has failed… it just couldn’t take off. What do you have to say about that?

In my opinion, if one company alone trying to do it, then it’s never going to fly. You got to have the volumes that three or four companies have to justify such a business. You have to have volumes that justify lower FTK (freight tonne kilometers) that gives you a lower cost per kilo that gives you a business model that works. At the moment we do not have it. Trying to go alone is foolhardy.

How do you see the business five years from now?

Oh, I think this is a very good time for the logistics business. GST would drive a lot of positive change for logistics players like us.

Supply chains will change dramatically.

And, with industry focusing more and more on growth we will see more express players?

I won’t say more express players. There will be a few but you will see more and more consolidations.

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CARGO

Heavy lifters Victors of $50 billion air cargo industry were felicitated at the Air Cargo Excellence Award ceremony during the recent IATA World Cargo Symposium 2010. t is not that international air cargo carriers were found wanting. In fact, more than keeping their noses above the water, many of them put in their best efforts. The sixth air cargo excellence survey conducted by Air Cargo World magazine goes to prove not only that air cargo moved but also did remarkably. The survey was unveiled at the recent IATA (International Air Transport Association) World Cargo Symposium in Vancouver.

Air Cargo World collected views of customers measuring carriers and airports on specific criteria and ranked them to identify industry performance levels.

While measures for air carriers were rated on customer service, performance, value and

I

application of information technology, airports handling cargo too was rated on performance, value, facilities and operations.

Talking to the media, on the survey, Steve Prince, Publisher, Air Cargo World said that the results of the ACE Survey were important to cargo airlines because it was the customers who rate the performance. The Air Cargo Excellence Awards ceremony gave a great opportunity to honour the airlines and airports that strived to meet excellence and to exceed their past performances.

The top five airlines were honoured with awards, ranging from Diamond to Bronze. With the highest overall airline score, Southwest Airlines, based in Dallas, led all airlines in the Performance and Value

Customer Performance Service Southwest Airlines 128 134 FedEx Express 123 119 Emirates Sky Cargo 126 118 Virgin Atlantic 122 113 Nippon Cargo Airlines.

113 127 Japan Airlines 121 106 Continental Airlines 115 109 Lufthansa 113 114 Singapore Airlines 115 114 Cathay Pacific 111 109 SAS 109 108 Swiss WorldCargo 105 107 Thai Airways 113 112 South African Airways 132 100 Finnair 118 108 Cargolux 109 109 Korean Air 102 114 KLM 106 112 Gulf Air 104 111

Air Carrier

54

Value 132 113 113 115 113 107 112 100 104 112 113 121 109 100 101 107 108 102 105

Information Technology 116 133 123 120 101 119 118 125 115 116 112 107 106 104 107 110 109 111 107

Overall

Air Carrier

128 122 120 118 114 113 113 113 112 112 111 110 110 109 109 109 108 108 107

Iberia Air Canada UPS Air Cargo Qantas Air New Zealand Volga-Dnepr Airlines China Airlines EVA Air Cargo United Airlines Turkish Airlines Qatar Airways All Nippon Airways Asiana Airlines American Airlines British Airways Air France Hawaiian Airlines Air Hong Kong LAN Chile Airlines

CRUISING HEIGHTS May 2010

Customer Performance Service 112 108 114 105 104 100 109 99 104 103 94 114 105 99 106 105 101 106 102 101 108 96 106 99 101 105 103 100 105 100 101 102 98 104 106 95 99 110

Value 113 104 106 110 105 114 110 107 101 100 112 104 103 99 101 95 110 93 92

Information Technology 94 104 118 106 111 97 107 96 109 109 96 103 103 111 107 108 90 111 102

Overall 107 107 107 106 106 105 105 104 104 103 103 103 103 103 103 102 101 101 101

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Value

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Facilities

Operations

Overall

120 98 104 106

116 107 105 102

106 113 90 104

109 106 105 101

106 126 121 109 115 110 109 106 104 101 110 103 106

120 118 116 113 113 111 107 105 103 103 103 103 101

119 115

113 110

74

118

147 131 137 167 150 131

142 141 138 135 115 104

North America – 1,000,000 or more tons Memphis (MEM) 109 117 117 Anchorage (ANC) 114 114 103 Louisville (SDF) 104 104 107 Indianapolis (IND) 95 103 107 North America – 500,000 to 999,999 tons Dallas/Ft. Worth (DFW).

111 110 107 Newark (EWR) 101 104 106 Atlanta (ATL) 111 105 115 Philadelphia (PHL) 103 102 95 North America – 100,000 to 499,999 tons Rockford (RFD) 154 110 110 Bradley (BDL) 118 104 124 Denver (DEN) 110 111 121 Detroit (DTW) 129 107 104 Houston (IAH) 118 113 107 Baltimore/Washington (BWI) 117 106 108 Ontario (CA) (ONT) 102 108 107 Orlando (MCO) 99 110 107 Boston (BOS) 98 106 103 Cincinnati (CVG) 101 106 103 Kansas City (MCI) 100 109 94 San Antonio (SAN) 103 109 98 Phoenix (PHX) 96 99 104 Europe – 1,000,000 or more tons Amsterdam (AMS) 97 120 120 Frankfurt (FRA) 97 119 114 Europe – 500,000 to 999,999 tons Luxembourg (LUX) 141 131 124 Europe – 100,000 to 499,999 tons Athens (ATH) 137 129 154 Chateauroux-Deols 122 176 138 Barcelona (BCN) 127 151 139 Frankfurt-Hahn (HHN) 175 132 58 Copenhagen (CPH) 100 99 112 East Midlands (EMA) 69 82 138

Airports

Performance

Value

Facilities

Operations

Overall

Madrid (MAD).

127

101

84

103

104

120

115

Latin America – 100,000 to 499,999 tons Santiago (SCL)

121

117

101

Asia & Middle East – 1,000,000 or more tons Seoul Incheon (ICN)

124

118

112

113

117

Singapore (SIN)

119

112

108

113

113

Hong Kong (HKG)

103

110

118

115

111

97

111

123

108

Tokyo (NRT)

104

Asia & Middle East – 500,000 to 999,999 tons Tokyo (HND)

126

96

102

113

110

Shenzhen (SZX)

103

124

102

99

107

Osaka (KIX)..

94

104

99

112

102

Asia & Middle East – 100,000 to 499,999 tons Nagoya (NGO)

97

140

145

120

123

Macau (MFM)

91

116

113

128

110

Shanghai Honqiao (SHA)

133

101

104

72

105

Sharjah (SHJ).

90

.115

106

110

104

Abu Dhabi (AUH)

116

87

90

115

103

Senai (JHB)

133

85

96

88

103

categories and received the highest honor, the Diamond Award. Its cargo division currently serves more than 70 cities and has more than 150 million pounds of available cargo lift per month. First runner up FedEx Express, that delivers about 3.4 million packages daily to more than 220 countries and territories, was the recipient of the Platinum Award whereas Emirates Sky Cargo came in third and received the Gold Award. It carries freight in 134 aircraft, including belly hold space in the passenger fleet, to 61 countries across the globe.

The Silver Award went to Virgin Atlantic and Bronze to Nippon Cargo Airlines. Other airlines that get pace in the top 10 list are — Japan Airlines, Continental Airlines, Lufthansa, Singapore Airlines and Cathay Pacific.

Airports rated highest

by airlines and forwarders included Memphis in North America, Amsterdam in Europe, and Seoul Incheon in Asia and the Middle East, in the one-million-or-more tons category. In the half-amillion to million ton category, Dallas/Ft. Worth, Luxembourg and Tokyo Haneda took the lead in each of their regions. For the half-a-million and less category, Athens (Europe) advanced to the top spot from 11th in 2009, and Rockford (North America) moved into first place, up from seven last year.

Unfortunately, any of the Indian cargo airlines could not make it to be in the list of even top hundreds. But as newcomers are steadily coming up on block, it there is no harm to hope for such appreciations in near future.

CRUISING HEIGHTS May 2010

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COLUMN/CARGO

Move away from the beaten track For the Indian logistics industry it is time to break away from legacy and flow with the winds of change. Global partnerships, technological initiatives and strong network are the basic requirements to go beyond the present boundaries, comments Hemant B Bhattbhatt. he Indian logistics industry is going through extremely exciting times. Trade, commerce and industry are growing sophisticated by the day; and as a key enabler, the logistics industry in its myriad forms, is trying to keep pace. From being predominantly an in-house function, logistics has evolved into a specialised discipline with a number of domestic and global players acting as 3PLs and 4PLs to service the industry needs. The maturity of the industry as manifest in the nature of services provided and the ease with which these services are available in the market indicates that there is still a long way to go.

Logistics is all about procurement, deployment and utilisation of infrastructure and assets to provide for a seamless, synchronised and cost effective provision of goods from places of availability to places of need. In the initial stages of maturity of the industry the focus is on asset ownership and subsequently on asset utilisation. Later the focus shifts to asset networking and subsequently to network leveraging. Finally the interest shifts to information tracking and subsequently to supply chain streamlining.

Different constituents of the industry are in different stages of maturity and the evolution continues. In this regard Indian logistics industry is ‘work-in-progress’ — which is good as well as bad. Good because it means work is underway and progress will be made, bad because it is painful while it lasts!

It is widely understood that cost of logistics accounts for almost 13 per cent of the Indian GDP as against almost half that in several advanced countries. Moreover it is also learnt that cost of transportation is not where India fares too badly. It is chiefly in the material handling and the paper work that significant cost disadvantage arises.

The first issue requires standardisation of material handling and transportation of equip-

T

Different constituents of the industry are in different stages of maturity and the evolution continues. In this regard, Indian logistics industry is ‘work-inprogress’ which is good as well as bad.

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CRUISING HEIGHTS May 2010

ment. Incompatibility of equipment made by different manufacturers, multiplicity of dimensions etc. result into increasing the ‘hand-offs,’ as also the need for manual intervention in the process. This reduces automation and impacts, time as well as cost. Also this enhances the criticality of manual skills in material handling.

First the industry needs to resolve in favour of standardisation at an all India level. Introducing such standardisation would take several years but a strategy for achieving this can be developed quickly. It could concentrate on defining the stages and categories (from basic to more sophisticated and general to more specific) of equipment for standardisation. Initially a scheme of some incentives may also help.

This calls for joint industry action and as such is a change that will take long to manifest — not so much because it is technically difficult achieve (though that it certainly is!) but more because of lack of ownership of this common cause. Hopefully logistics / transporter trade bodies and federations will step in and make this their own business.

We have long carried the allegation of being excessively procedural and contributing to the inefficiency of operations in a variety of business areas, logistics being no exception. While there has been significant investment in infrastructure (especially roads) the benefit is drained away by the frequent interruptions to smooth flow of traffic caused by interventions of multiple monitoring agencies, at many times by corrupt / overzealous officials. The damage caused by such interruptions is slowing down entire chains (though visible incidence may be on one link in the chain alone) that is immeasurable. Unfortunately corruption in small places (not high offices alone) is having big impacts which defy quantification and recognition. Suitable legislative as well as executive measures are needed to address this aspect. This is one area where the ball lies firmly in the government’s court and

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businesses are at a receiving end.

The other area is ‘information imperfectness’. The information need is right from the supply chain planning stage right up to the monitoring stage. While we see several solutions making an appearance to aid the process of monitoring — technologies like RFID, barcoding, GIS etc catching up, their penetration is slow. A large part of the service providers being relatively unsophisticated, lacking in techno savvy and being a part of the unorganised sector, accounts for this. While this definitely needs attention, even more importantly attention is needed in terms of real-time, accurate multimodal information at the logistics planning stage. The decisions can be only as good as the information and its analysis are. There is a strong need for web based portals providing online real-time data on option availability cutting across transport modes, service providers and cost and quality levels for the users to make better informed choices. Service provider ratings and accurate delivery lead time forecasting are needed. Given India’s IT capabilities one can only wait for some visionary entrepreneur stepping in with a business models to address these needs.

As markets evolve they go through phases of basic intermediation, advanced intermediation and disintermediation (and in some case reintermediation). The current stage of intermediation in logistics industry is somewhere between basic and advanced. The future however lies in disintermediation and technology would act as a major force enabling this. Information repositories and self service models will replace some of the existing intermediation roles and reduce costs significantly. One obsession that the industry will have to overcome is to wait for precedents — to wait for it to happen elsewhere.

A lot has been said regarding the ‘large middle class population’ adding to the country’s consumer base. Since a very large part of the populace still lives in villages the various businesses that have an eye on servicing this are expected to develop and implement reach out strategies to cater to the rural population. The critical success factors here may again rewind to penetration, access and reliability instead of speed. 3PLs may need altered / different business models to succeed in these markets.

The thrust on infrastructure creation that the government demonstrates is commendable but is unlikely to be enough to improve competitiveness on Indian products and exports by itself without suitable policy changes. The government would be most effective if it plays the role of a ‘market creator’ and also retains minimal regulatory role to itself thereby allowing market forces to determine natural equilibrium.

The gradual opening up of the railways is a welcome sign. Faster reform though is needed.

Move towards corporatisation of ports needs to be revived. Where it is difficult to establish financial feasibility in airport creation, creative

models with only O&M outsourcing and commercialisation may be resorted to. Cold storages and warehousing need more than just policy support.

The DFCs are a great idea and are sure to have a salutary impact on the logistics industry.

Abetting this will be the influence of introduction of GST and removal of state sales tax. One still waits to see what effect the dual structure of GST will have in terms of vehicular movement across states. Proactive assessments and restructuring of the service models (hubs and spokes) will give a head start to 3PLs who invest in the same. The next few years will hence see quite a few changes in the market positioning and fortunes of logistics companies. Times are changing and clinging to earlier ways of working will not help.

Partnerships with global logistics players and creation of virtual networks are likely to be in vogue. Besides technology and best practices, it is the strength of networks that can enable provision of a more comprehensive service offering that will make a difference. The shifting preference from 3PLs to 4PLs is an indicator of this. The recognition that ‘logistics’ as the name suggests is more about ‘logic’ than about the physical dimension is pushing firms to invest in soft aspects like ‘planning capabilities’ as against the earlier focus on physical asset creation. This is sign of industry maturity. Besides the need for superior and trained manpower capabilities to deliver high quality and fault free service is also likely to spawn a ‘vocational training and certification’ industry. This however will happen only with the active participation and patronage of the user industry. Again, the need is for the industry to recognise and embrace the issue as its own mandate and rally to generate a solution in common interest.

(The writer is Transportation Leader & Senior Director, Deloitte in India)

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The government would be most effective if it plays the role of a 'market creator' and also retains a minimal regulatory role to itself thereby allowing market forces to determine natural equilibrium.

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CARGO t was an innocuous office memorandum (see accompanying photograph) but one that spoke volumes.

Issued by Rishikesh, Director (Mail Management), India Post, it was on the subject of “Introduction of Freighter Aircraft on major routes and continuation of North-East Freighter Operations”. The memo mentioned that “after a comprehensive review of freighter operations, it has been decided that India Post freighters would cease to operate on metro routes with effect from April 18, 2010. However, one freighter aircraft would continue to operate on Kolkata-Guwahati-ImphalAgartala-Kolkata route as per the existing arrangements and prescribed schedule”.

For India Post, it must have been a painful decision.

Started with much fanfare, India Post began its freighter operations when its airmail service's first Boeing 737-200's flight touched down at Guwahati's Lokpriya Gopinath Bordoloi International Airport in Assam in the north-eastern corner of India. The flight created history: it was the first freighter of the Indian postal department and it was also the first domestic cargo carrier of Air India after its merger with the government-owned domestic carrier Indian (Airlines). The India Post service was dedicated to the 'seven sisters', or the seven states in the North-east.

The first freighter was taken on wet lease from the erstwhile Indian (Airlines).

Before it was leased, John Samuel, General Manager, India Post, had pointed out why India Post needed its own freighter. He had said that India Post with its own aircraft, the department would not only be able to bring about an image makeover -- from a mere

I

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Post out Started with a lot of hype three years ago, India Post's “night mail” service using Nagpur as a hub, has all but ended. Tirthankar Ghosh pieces together the details of the rise and fall of India Post's “night mail” services.

CRUISING HEIGHTS May 2010

social service unit to a business unit — but also help in the delivery of consignments in the fastest possible time while cutting down on logistics costs.

Soon enough, the North-east saw a freighter with the India Post livery. With one aircraft, the service operated during the day - since the airports of the region do not have night landing capabilities - started off from Kolkata on the Kolkata-Guwahati-AgartalaImphal route. The popularity of the services prompted India Post to extend the services with the

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induction of more leased freighters and more destinations. The aim was to add extra muscle to the postal department's speed post services and ensure delivery of 'faster' mail to around 15 major cities in India with the Nagpur airport being used as a hub.

Using the Nagpur international airport as its hub, India Post freighters used to land late every night at Nagpur from Mumbai, Delhi, Chennai and the Kolkata-Guwahati route.

After exchanging postal cargo, the planes used to fly back to their original

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stations. India Post, in fact, was reenacting the history of the 1950s when Dakotas carrying postal mail and parcels from four points of the country met at Nagpur.

From Nagpur, the mail was sent out by rail and road.

When it had launched

the “airmail services”, India Post had taken a brave step by going for a direct confrontation with private express carriers. With the help from a giant like Air India, the move would have been successful and the Department of Posts had indeed chalked out big plans.

Air India, however, spoiled the party. The first bits of news about the decision by India Post to discontinue the services were heard by this

When it had launched the “airmail services”, India Post had taken a brave step by going for a direct confrontation with private express carriers.

CRUISING HEIGHTS May 2010

correspondent way back at the end of November 2009.

A senior executive of one of the private carriers that India Post had contacted said that the government's postal department was scouting for bellyhold space for its packages.

It was not difficult to fathom the reason. India Post's freighter venture was inextricably linked to Air India and its fortunes rose and fell with the Maharaja.

While senior Air India officials cited the reasons for the stoppage of “night air mail services” as “operational”, those in the know say that the main problem was the shortage of pilots. Some time ago, a number of pilots were thrown out of their jobs, as part of the phasing out of Boeing 747-400 and A310 freighters (Air India has six

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A familiar question mark relapses ow that the India Post story is all but over, a question that is doing the rounds is: Will Nagpur be viable as a hub? Though a lot has been written about the subject - some clearly against the project the Techno-Economic Feasibility studies that had been done by the Maharashtra State Road Development Corporation (MSRDC), the nodal agency for the project, mentioned that the Nagpur had the potential for becoming an international hub airport. The studies pointed out that the airport, when backed by a Special Economic Zone spread out over 2,453 hectares comprising an Inland Container Terminal, Truck Terminal, financial Institutions within an international environment, repackaging and similar activities, Convention and Exhibition Centres, etc., had a bright future. In addition, the Nagpur hub would gain importance with the establishment of the Boeing Maintenance, Repair and Overhaul (MRO) facility.

Nagpur has a lot going for it. It is centrally located and its position on international flying routes — the city is between Dubai and Bangkok and is in the five-hour fly zone between

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Boeing 747-400 and two A310 cargo carriers). The service contracts of 30 senior commanders were not renewed. In fact, Cruising Heights was informed by sources in Air India that the proposed cargo unit - about which this publication had reported some time ago that was supposed to start operations as an independent unit, was abandoned, once again due to a shortage of pilots.

The end of the “airmail services” has also put a question mark on the viability of the multi-modal hub at Nagpur. The cargo hub project - a project that Civil Aviation Minister Praful Patel has been keenly interested in because his parliamentary constituency, Gondia, is next door - has been in the news for all the

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which no airport hub is located -- is conducive for its development. In addition, major national highways and main railway lines cross the city.

The multi-modal hub will ensure transshipment of passengers and cargo between different modes of transport, i.e. rail to road, road to rail, surface to air, etc. Its integration with international passengers and cargo air facilities would make it advantageous and cost effective for development of transport.

However, things do not seem to be working in favour or Nagpur.

Even before the stoppage of the 'night mail' service, Duke Aviation, another MRO, that had held a groundbreaking ceremony more than a year ago near the airport, withdrew from the scene apparently for want of funds. Though Ajit Karnik, the promoter of the project, has gone on record to say that he is looking for new partners to fund the project, one doesn't expect it to come soon.

WHAT NEXT: The termination of cargo activities by India Post is a setback for Nagpur cargo hub project.

wrong reasons. First, it was the tussle between the promoters of the hub, the Government of the state of Maharashtra where Nagpur is located and the stateowned Airports Authority of India, the initial owners of the airport. Later on, there

were more problems, the foremost among them being the handing over of land by the Indian Air Force, which also owned part of the airport (see box with this story).

Meanwhile, India Post also informed in the same

CRUISING HEIGHTS May 2010

memo that “onward mail arrangements prescribed in connection with freighter operations would undergo a change.” The change incidentally was not in keeping with what India Post had earlier proposed: the service would be fast and cheaper than the regular private couriers. Today, India Post offices have been instructed through the memorandum that “apart from regular commercial flights of Air India, services of the following private airlines may be utilised for carriage of Speed Post and other air mail: Blue Dart, Jet Airways, Indigo, Kingfisher Airlines and Spicejet”. The services offered by all the carriers are more than those charged by the government-controlled India Post.

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CARGO JOTTINGS

NEW MOVE TO STRENGTHEN AIRCARGO A major dampener for the air cargo sector in India is infrastructure or rather the lack of it. While industry pundits have been forecasting that air freight will rise by 20 per cent by 2012, major players like Kingfisher Xpress with its recently started door-to-door cargo delivery services, Jet Airways, Air India and even Capt Gopinath’s Deccan 360 have found the going tough. Each one of them believes that the biggest factor hampering the growth is the lack of infrastructure. With the prediction that India’s GDP growth will be more than nine per cent per year and consumer spending at a growth rate of 12 per cent per year, the country’s logistics industry too is expected to grow at more than 20 per cent per year over the next three years.

It is in such circumstances that the establishment of a new airport near Delhi brings good news for the air freight industry in the north of India. The new airport at Viratnagar, 63 km from the capital of Rajasthan state, Jaipur, and 167 km from the Delhi international airport will be the country’s first no-frills facility.

Meant primarily for those travelling out of New Delhi and Jaipur, the civil aviation ministry gave its green signal to the plan sometime ago, apparently waiving its earlier policy of not allowing anyone to set up an airport within 150 km of an existing airport. The proposed airport’s plans were looked into by a committee comprising top officials from civil aviation, defense, home affairs, economic affairs, meteorological department, Airports Authority of India (AAI), Directorate General of Civil Aviation and the state government.

To be promoted by private developers on an area of 4,500 acres, the first phase of the airport will see an investment of Rs 500 crore. Funded by a debt-equity mix of 70:30 in which the promoters Rajasthan Aviation Infrastructure (India) — Fraport AG of Germany will provide the technical consultancy — will invest around Rs 50 crores, the new airport should be ready by 2014. The promoters believe that the airport will not compete with the present Jaipur airport but complement it. In fact, it will be at the centre of the traffic between Europe and East Asia.

Perhaps, what is important is that there are a few factors that would help the airport grow as a multi-modal logistics hub which will enable cargo to move seamlessly by rail, road, and air. First, its location: it has the Delhi-Jaipur highway on one flank and the dedicated freight corridor (DFC) — that will provide a direct connection to ports in Gujarat and Mumbai — on the other. The airport will also be on the Delhi-Mumbai Industrial Corridor (DMIC) that is being developed as a model

INITIAL STEPS: (L-R) Bina Kak, Minister of State for Tourism and Cultural Affairs of Rajasthan, Ashok Gehlot, Chief Minister of Rajasthan and Praful Patel, Minister, Civil Aviation during the inauguration ceremony of the new international airport terminal building at Sanganer in Jaipur, Rajasthan on February 25, 2009.

industrial corridor. The DMIC will have three industrial zones.

The airport planners also want the Indian Railways to build a 10-km railway track to connect to the freight corridor. The airport would offer lower parking charges, lower rates of ATF and faster landing facilities. Rajasthan Aviation has is the development of an aerotropolis which will house an MRO, perishable processing plants, etc.

The new Jaipur airport with its 7,000 feet runway that will be able to handle A 320s will be the country’s first no-frills airport that will offer faster landing, lower parking charges, and lower refuelling charges as Rajasthan charges only four per cent sales tax on aviation turbine fuel. The promoters have started sending out feelers to low-cost carriers in India and those from abroad coming to India like Air Asia.

The present Jaipur airport became an international airport on December 29, 2006. One of the fastest-growing in the country, the airport has shown a five-fold growth in passenger traffic in the last five years and if experts are to be believed, it is nearing saturation point. Though a new terminal was inaugurated sometime ago, the airport has no taxiways and cannot accommodate twin-aisle, wide-bodied aircraft. Even so, Jaipur saw an increase of 178.4 per cent in freight traffic in April-December 2009-10 in comparison to freight traffic handled in April-December 2008-09.

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Antwerp Port plans to investments in India THE company would prefer to look at investment opportunities in India, the world’s second fastest growing major economy, on a “one-on-one basis” Antwerp Port Authority (APA), which manages Europe’s second biggest port, has begun talks with local companies for investment opportunities in building new ports in India, a top executive has said.

“We are keen to participate by investing in the equity and share our know-how and expertise in building ports in India,” said, Yannick Dufraimont, a director at Port of Antwerp International (PAI), a subsidiary of APA, during an official visit to India.

“We are looking at investing in the development of one port on India’s eastern coast and at least two on the western coast,” he said. “That would be the ideal situation.”

Dufraimont said PAI is in discussions with around 10 local companies on potential investments in India’s ports, but declined to name these companies.

As a starting point, it will adopt the so-called landlord port model for choosing projects for PAI to execute or participate in.

In this model, the land and waterfront infrastructure are owned by the government or local authority, Antwerp port while cargohandling and other essential operations are outsourced to specialist private companies that put up their own superstructure, including buildings and equipment.

Indian port posts growth in cargo handling PORTS in India showed a trend of growth in cargo handling and posted six to seven per cent increase on an average. The Chennai Port Trust (ChPT) registered a 6.20 per cent growth in cargo handling for the year ending March 31, when it moved 61.06 million tonnes (mt) against 57.49 mt in the previous year.

Increased handling of containers (in tonnage) and POL (petroleum, oil and lubricants) contributed to the growth and offset the drop in volume of iron ore, fertiliser and coal during the year.

Also, one of the busiest airport of India, Jawaharlal Nehru port, near Mumbai which with its three terminals, designed to handle a total 3.6 million standard containers a year, took on more than its capacity. The volume of container cargo handled by the port, has risen to record levels, prompting shipping lines to reintroduce some services they had axed due to the slowdown.

The port handled 4.06 million standard containers in the year to March 31, up 2.78 per cent over the previous year, a spokesman said. In 2008-09, the volume of cargo handled had declined 2.64 per cent.

“This is the highest volume of containers handled by the port in a year since starting operations in 1989, surpassing the 4.05 million standard containers handled in 2007-08,” asserted a spokesman.

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DHL sees rising shipment of healthcare products

DHL says that it has observed a record number of movements of healthcare products in 2009 in Asia. Compared to 2008, shipment of finished pharmaceuticals, vaccines, medical equipment and devices and clinical trials facilitated by the DHL Life Sciences and Healthcare Global Customer Solutions grew overall by seven per cent, a steady growth despite the economic downturn.

Sue Arden, Vice President, Global Customer Solutions, Life Sciences & Healthcare, DHL Asia Pacific, said “Two major factors driving this growth are the rising demand for healthcare in fast-expanding economies such as China and India, as well as the rapidly ageing populations in countries such as Japan, South Korea, Australia, Taiwan and Singapore. The growth trend is not surprising given the increasing demand for quality healthcare and affluence in Asia. By 2014, China and India will make up 50 percent of the world’s population.”

According to Datamonitor, pharmaceutical sales in Asia Pacific amounted to $124.3 billion in 2009 representing 19.3 per cent of global sales. Sales are projected to grow steadily at a compound annual growth rate (CAGR) that exceeds 4.2 per cent from 2009 to 2014, reaching $153 billion.

From 2005 to 2009, the China market grew the fastest with a CAGR of 21.1 per cent and is projected to grow rapidly at a CAGR of 9.7 per cent from 2009 to 2014.

UPS names new commanders in India UPS announced the appointment of Mark Khambatta as Country Manager of India. In his new role, Mark has overall responsibility for UPS’s express and supply chain operations in India. Prior to his new appointment, Mark was the Country Manager for UPS’s supply chain operations in India. He was also previously responsible for managing UPS’s supply chain operations in the Philippines, Guam and Saipan. UPS has also appointed Vikram Mansukhani as Operations Manager for its joint venture. In this capacity, Vikram has responsibility for the day-to-day express operations of the company. Prior to his current position, Vikram was the industrial engineering manager for UPS Jetair Express in India where he oversaw the operations infrastructure and network across India.

Evergreen files lawsuit against Boeing IN a complaint filed in a Seattle court on April 1, 2010, Evergreen International Airlines alleged Boeing has “committed bad faith and breached its contractual promises to conduct its business fairly, impartially, and in an ethical and proper

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manner when it wrongfully cancelled its long-term LCF (Large Cargo Freighters) contract with Evergreen and entered into a secret replacement deal with Atlas Air for the purpose of offsetting Boeing’s nearly billion-dollar liability to Atlas resulting from delays on the B747-8 programme”.

The entire howling started when Atlas announced that Boeing had selected the company to operate the Dreamlifter fleet “toward the latter part of 2010” in a nine-year agreement.

William Flynn, President and CEO, Atlas Air Worldwide Holdings, commented, “We look forward to working closely with Boeing and to providing world-class Dreamlifter service,” Flynn added that Atlas expects first deliveries of 12 B747-8 freighter aircraft in 2011.

Evergreen alleges that in the autumn of 2009 “Boeing secretly negotiated with Atlas to trade the Evergreen LCF Contract for Boeing’s enormous exposure to Atlas’s refund claim based on late delivery of the 747-8 freighter airplane.”

The company goes on to say that “Boeing lied to Evergreen, asserting that it was merely conducting a review that was ‘standard procedure,’ and rebuffed Evergreen offers to engage in a good faith appraisal of both parties’ performance of the LCF contract.”

While acknowledging that the LCF deal allowed for cancellation by either party, Evergreen claims this was subject to an explicit “covenant of good faith and fair dealing” with the inclusion in the contract Boeing’s code of conduct that stated in part: “Employees will not engage in conduct or activity that may raise questions as to the company’s honesty, impartiality, reputation or otherwise cause embarrassment to the company.”

In addition to compensation and costs, Evergreen wants the Seattle court to ensure it has no obligation to participate in transition efforts with Atlas or provide Boeing with confidential information and data relating to the LCF program.

DoT rule will take time for implementation The International Air Cargo Association (TIACA) says a new US Department of Transportation (DoT) rule on how lithium batteries are carried on aircraft cannot be executed in 75 days and will have a negative impact on the air cargo industry and its customers.

According to the DoT there have been more than 40 air transport-related incidents involving lithium batteries since 1991.

The proposed change by the DoT’s Pipeline and Hazardous Material Safety Administration (PHMSA) will require lithium batteries to be stowed in a crewaccessible location except if they are shipped in an FAA-approved container or a Class C cargo compartment. Only batteries with a lithium content of less than 0.3 grams or 3.7 watt-hours would Daniel Fernandez be exempt and these would be subject to shipment restrictions in the aircraft hold.

On the issue TIACA says it is “unaware of any FAA-

approved container for the purposes of transporting lithium batteries, so that exception effectively offers no relief, at least for the foreseeable future.

Daniel Fernandez, Secretary General, TIACA, added, “Given the prevalence of lithium batteries in today’s marketplace and the substantial changes to existing procedures that would be required, the proposed rule would have a widespread adverse economic impact. This fact is not sufficiently acknowledged in PHMSA’s cost-benefit analysis, which underestimates the volume of lithium battery shipments, the scope and cost of new training requirements and the impact on shipping costs, and omits any consideration of impact on key sectors such as retailers and consumers.”

TNT splits mail and express TNT is going to separate its mail business from its express division. The company has announced this at its Annual General Meeting (AGM). Management stated that in order to explore the best structure in which a continued success for the mail business could be achieved, an “internal legal and financial carve-out” would be realised.

Peter Bakker, Chief Executive, Peter Bakker, TNT made it clear that the focus for TNT future growth lies in its express parcels business. European mail liberalisation has failed to live up to the Peter Bakker company’s expectations in terms of opportunities and volumes in its own domestic Dutch market are in a long term decline. The split is also being pushed by two activist shareholders who believe that spinning off the division will result in the release of value.

FedEx’s new connection FedEx Express has launched a new connection between Asia and Europe, with a direct roundtrip flight operating five days a week between Hong Kong and Paris.

“As the largest and fastest growing intercontinental cargo lane, the launch of this new direct route provides an unmatched value proposition from Asia to Europe,” said Robert W Elliott, President, FedEx Express Europe, Middle East, Indian Subcontinent and Africa. “This additional flight supports FedEx international growth strategy to improve its service offerings as well as to enhance the overall competitiveness and efficiency of its international network.”

The new flight is FedEx third intercontinental lane from EMEA to Asia, joining existing connections from Paris via Delhi to Shanghai, and from Paris to the FedEx Guangzhou hub in China. FedEx customers importing from Hong-Kong to Europe can now enjoy overnight delivery to key cities in major European markets—including Austria, Belgium, Denmark, France, Germany, Great Britain, Hungary, Ireland, Italy, The Netherlands, Portugal, Spain, Sweden and Switzerland. This service represents a one-business-day improvement in transit time on FedEx International Priority and FedEx International Priority Freight shipments to Europe.

“FedEx is committed to providing customers with greater access to markets and opportunities, as businesses in Hong Kong and in the Asia Pacific region start to emerge from the global economic downturn,” said David L. Cunningham Jr. President, Asia-Pacific, FedEx Express. “This service enhancement will strengthen FedEx overall network connectivity and operations, positioning the company for long term growth.”

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GLOBETROTTING

The body can't fly!

A German woman accused of trying to take her dead husband onto an EasyJet flight from England back to Berlin.

“I want to have Willi cremated and then to fly home to Berlin with his ashes,” Gitta Jarant, 66, told Germany’s Bild daily. But she denied that she had known her 91-year-old husband Kurt Willi Jarant was dead when she

Swanky flight arrived to check in at Liverpool John Lennon Airport in northwest England on April 10, 2010.

British police are not so sure, and suspect Jarant and her daughter, Anke Anusic, 41, knew the old man was dead and

Hollywood actress Hilary Swank loved learning to fly for her role in Amelia so much she surprised her boyfriend by giving him a lift during one of her flight lessons.

The 35-year-old actress, who played aviator Amelia Earhart in Mira Nair’s recent film Amelia, took a detour during her training for her pilot’s license, cancelled partner John Campisi’s flight and took her plane to pick him up instead, reported Contactmusic.

Uninvited visitor

Sleep, sleep, come my way

K

ris Lines was left snoozing on the Air Canada plane and was only woken a full hour-and-ahalf later after all the other passengers had got off by an aircraft mechanic.

First we must tell you who Kris Lines is? Lines is the head of sports law at Staffordshire University, so now it is hardly surprising then, that a university lecturer nodded off within minutes of the plane departing.

Lines told the local newspapers how he was left slumbering on the empty Air Canada jet after staff busy helping disabled passengers leave the aircraft failed to spot he was still on board. Recalling the moment he was nudged awake by the mechanic, he

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said, “I was disorientated and in a rush to grab my bags and get off the plane.”

‘I’m a heavy sleeper, so I drank CocaCola on the transatlantic leg to help stay awake,’, he said. ‘I hadn’t been drinking alcohol.’

Lines sent an email of complaint to Air Canada highlighting the security blunder.

He added, “If I’d been a vulnerable passenger, a young girl or elderly, it could have been a lot worse. The other implication is that if I was a terrorist, then I’ve got an hour-and-a-half after landing, all by myself, in a secure area on a plane,” he said.

The airline has apologised and offered him a 20 per cent discount on up to four tickets if he flies again with it in the future.

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IT could have been a disaster. With two international teams competing in the Kabaddi World Cup and VIPs with Z-plus security , an unmanned remote-controlled (URC) plane distributing pamphlets suddenly crashed into the crowd, a few feet from the Punjab deputy Chief Minister, Sukhbir Badal.

While none except a constable was hurt, there was panic as the unmanned plane crashed to the ground filled with international sportspersons and VIPs besides thousands of spectators. In the coming months, the nation is going to host the Commonwealth Games and the incident has given security agencies and games organisers a new headache. Surprisingly, the machine was airborne without permission from police.

“Since we are concerned about all aspects of security, this incident is being taken into cognizance,” said S M Sharma, Additional Director General of Police, Security.

Cry of a spy A Maryland woman was recently charged under a federal complaint with disrupting an overnight flight from San Francisco to Dulles International Airport (Washington DC).

Maria Rita Manzoni was concerned that terrorists were on the flight, and she screamed, pushed her way to the front of the plane and had to

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A walk to remember

be subdued by two male passengers, according to charging documents filed in the concerned US District Court.

An affidavit signed by E Christopher Meztista, the arresting FBI agent, said Manzoni called a flight attendant to her seat to say she was not feeling well. The two walked back to the restrooms, and during that time Manzoni said she believed the two men sitting in her aisle were terrorists. Manzoni claimed she overheard one of the men say “It wouldn’t surprise me if this flight doesn’t make it.”

Manzoni sat in the back of the plane while Rhodes-Pierce went to talk to those two men and see the items, according to the affidavit. Rhodes-Pierce determined they were not a threat.

After a while as the two walked toward the back of the plane, Manzoni demanded to return to her original seat.

The flight attendants asked Manzoni to sit down, but she instead pushed her way to the front of the plane.

“A male passenger attempted to intervene but Manzoni was able to push her way to first class. After making her way to first class, Manzoni was subdued by two male passengers and the flight attendants applied restraints.”

Angel, angel why did you hit?

A man who claimed to have been sent by Jesus to punish sinners rammed his car into a parked plane at an airport in southeastern Nigeria, an aviation spokesman said.

A German tourist is in hospital after walking into the propeller of an ultra-light aircraft on a central Queensland airstrip in Australia.

The 19-yearold woman suffered several deep cuts to her arm and shoulder after walking under the plane during maintenance works on a private prop-

erty near Agnes Water (Australia) on April 10, 2010.

She is now in a stable condition in Bundaberg Base Hospital — the hospital where she was admitted in. The Bundaberg News-Mail reported the incident occurred after a scenic flight around the Agnes Water district, about 460km north of Brisbane.

Illustrations by Rajeev Kumar

“I absolutely love flying. I picked up my boyfriend from a meeting in Las Vegas. I said to my instructor, ‘Can I pick my boyfriend up?’ and after his nod, we flew to Vegas and showed up at the airport.”

The PS- I Love You star claimed she wasn’t frightened by her lessons and loves trying out new and ‘exhilarating’ dare-devil stunts.

“Not many things make me nervous.

Flying, skydiving and bungee jumping are exhilarating: a reminder that you’re alive,” she said.

No one was hurt in the incident and the spokesman said Nigeria had no problem with security.

“There is no problem at all at our airports, no cause for alarm, as we have the necessary security on the ground,” said Akin Olukunle, spokesman for the Federal Airport Authority.

He said the driver had broken through two security gates at Calabar international airport and rammed his car into the Arik Air plane before soldiers arrested him.

The suspect was heard yelling that all Nigerians were sinners and must repent or perish, a reporter who was at the airport said. The man, who is from Nigeria’s southeastern state of Akwa Ibom, said he had been sent by Jesus Christ.

Parda hai parda “Wherever I arrive in a foreign airport, I feel the eyes of people attracted by my new outfit. I also feel that I give a good image of my country,” said Adel Hadj Zoubir, Air Hostess at Air Algeria, about the new uniform supplied by the administration of Air Algeria a few days ago.

For our part, we were prompted by rumours of some parties on alleged doubtful markets that the company would have concluded for the supply of new uniforms for pilots and flight attendants.

Air Algeria has decided a new outfit for the hostesses who accompany the Hajj (pilgrims) to the holy lands. The outfit consists of a Hijab, a veil with on top a cap bearing the symbol of the company. This dress will be in force since this season of Hajj and will be the first Islamic dress adopted by a company in the world. Previously, the hostesses who accompanied the Hajjs to Mecca used to wear the same outfit plus a headscarf. Now they have to wear a Hijab that meets the legal standards of Sharia, consisting of a long shirt with a scarf covering the hair, and leaving appear only the face, and a cap on the head with the symbol of Air Algeria.

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DOMESTIC AIRLINES Kingfisher goes on expanding network KINGFISHER Airlines, On March 28, 2010 flagged off its first flight on the New Delhi London route. The launch of this new route marks the first time that Kingfisher Airlines is commencing international flights out of New Delhi. These flights will be daily non-stop flights from New Delhi to London Heathrow.

Commenting on the launch of this new international route, Dr Vijay Mallya, Chairman and CEO, Kingfisher Airlines Limited said, “I am delighted to announce the launch of Kingfisher Airlines' maiden international service out of New Delhi… International traffic demand in and out of India remains robust and the unique ties between Britain and India generate attractive additional opportunities”.

TOAST TO FLY: (L-R) Prakash Jha, Film Director, along with Ranbir Kapoor and P S Nair, GMR CEO, raise a toast on-board Kingfisher Airlines Delhi-London flight to celebrate the launch of the flights.

Sharing details about the connectivity with the vast domestic route network of Kingfisher Airlines, Manoj Chacko, Executive Vice President-Commercial, Kingfisher Airlines Limited, said, “The London - New Delhi flight offers easy and convenient connections to Srinagar, Lucknow, Chandigarh, Kathmandu, Udaipur, Dehradhun, Ranchi. Amritsar, Bangalore, Indore, Raipur, Bhubaneshwar, Jaipur, and Kolkata. We also offer easy and convenient onward connections to multiple destinations throughout Europe”.

Airborne on New Delhi-Hong Kong route: Kingfisher Airlines started its inaugural flight on the New Delhi-Hong Kong route on April 7, 2010. Commenting on the launch Mallya said, “I am delighted to announce the launch of Kingfisher Airlines' second international route out of New Delhi. Within a very short time since launch,Kingfisher Airlines emerged as the market leader on the Mumbai - Hong Kong route and we expect to consolidate our leadership position further by being the preferred airline on the New

Amadeus’ ‘Hotel Store’ solution with Transhotel AMADEUS along with launch partner Transhotel, a global hotel consolidator with 15 years experience and more than 50,000 hotels in its portfolio, has launched the Amadeus Hotel Store solution in India.

Rakesh Bansal, CEO, Amadeus India said, “Amadeus Hotel Store, first-of-its-kind solution, will help travel agency

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INAUGURATING NEW FLIGHTS: (L-R) Major Leslie Missal, Asst.

VP Security, Kingfisher Airlines along with Murali Ramachandran, VP Ground Services, Addtl. Commissioner of BCAS, Manoj Malviya and Vijay Arora, All India Head of Sales hand over the boarding pass to the first guest of the Kingfisher Airlines Delhi-Hong Kong flight on April 7, 2010.

Delhi -Hong Kong route too, very soon.”

The flights on the New Delhi-Hong Kong route will be operated using a brand new Airbus A330-200, widely billed as the best A330 ever built for any airline.

“Beginning April 1, 2010, there is good news for Kingfisher Airlines' guests travelling to Macau via Hong Kong from New Delhi and Mumbai. Kingfisher Airlines has been accorded approval to commence through tagging of baggage for guests travelling from Mumbai and Delhi and onward from Hong Kong on Turbo Jet ferries to Macau,” added Chacko.

To Bangkok: Kingfisher Airlines has launched flights from Mumbai to Bangkok and from New Delhi to Bangkok. The launch of these new routes marks the fourth international route out of Mumbai and third international route out of New Delhi.

The flights on these routes will be operated using fleet of Airbus A320 aircraft featuring a dual-class cabin.

Commenting on the launch of this new international route, Dr Vijay Mallya, Chairman and CEO, Kingfisher Airlines Limited said, “I am delighted to announce the launch of two new international routes further enhancing connectivity between India and Thailand. Kingfisher Airlines has redefined the whole experience of flying and discerning flyers between Mumbai - Bangkok and New Delhi - Bangkok will now have the choice of traveling by India's favourite airline. Besides catering to the leisure traffic between these cities, these new services will cater to the huge community of entrepreneurs and traders that frequently fly on these routes.”

Flying more: In another expansion, the airlines launched its flights from Mumbai to Bangkok and New Delhi to Bangkok has launched flights from Mumbai to Bangkok and from New Delhi to Bangkok. The launch of these new routes marks the fourth international route out of Mumbai and third international route out of New Delhi. partners to maximise their profitability through the upfront payment of commissions and also, will allow them to offer their customers exactly what they are after.” Kartikeya Tripathi, Regional Director for Hotel Distribution, Travel Services Business Group, Amadeus Asia Pacific, said, “Transhotel has a well-balanced portfolio of independent properties and hotels in all price ranges complementing the existing Amadeus hotel content for the Asia Pacific region. This will offer more hotel options for customers of travel agencies - be they leisure or business travellers.”

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Bird Academy gets IATA’s ‘Certificate of Recognition’: Bird Academy, the educational arm of the Bird Group, has received a ‘Certificate of Recognition’ from IATA for the IATA International Travel and Tourism programmeme in India. The academy has been acknowledge as one of the top three IATA authorised training centres in India. The award ceremony took place in Kochi and Bird group was represented by Radha Bhatia, Chairperson, Dr P K Ray-Legal advisor and Nitika ParasharIATA course coordinator.

The certificate was presented by Guido Gianasso, Vice President Human Capital, IATA and was received by Parashar on behalf of Bird Group.

“The tourism industry in India is growing exponentially with an estimated over six per cent share in the GDP. As a result of these, the travel professionals are in great demand across levels in the industry. Our facilities, study environment and the faculty are very well coordinated and we have channelised every possible source available with us to part best of the training to the students.

We feel committed towards the industry to provide them with the best possible products,” said Radha Bhatia.

Mumbai to Johannesburg aboard Jet JET Airways, on April 14, 2010 commenced daily non-stop flights from Mumbai to Johannesburg aboard a state-of-the-art Airbus 330-200 aircraft. The launch of this new international route marks the beginning of Jet Airways’ international network expansion to Africa. Johannesburg will be the twenty-third destination in the airline’s international network.

On the occasion, Naresh Goyal, Chairman, Jet Airways, said, "The African continent occupies a unique place in Indian minds and hearts, given our strong historical trade, cultural and political ties. We at Jet Airways are happy to facilitate the creation of a golden gateway with our daily flights to Johannesburg, aiding accelerated business, cultural, sporting and tourism ties."

CSIA receives “Airport Service Quality” Awards MUMBAI International Airport Pvt Ltd (MIAL) presented the "Airport Service Quality" Awards to Chhatrapati Shivaji International Airport (CSIA) employees and stakeholders on March 26, 2010 at a ceremony in Mumbai.

The award is aimed at creating awareness of service quality, encourage airport staff to strive for service excellence and reward those who have rendered admirable services to passengers.

Speaking on the occasion, Bryan Thompson, Director Operations, Mumbai International Airport Pvt. Limited (MIAL) said, “At MIAL, we believe in providing quality service to our passengers and our “Yes We CARE” campaign is a testament to this. With this initiative, we are delighted to honour CSIA employees and all other airport stakeholders for their consistent commitment to achieve the quality standards set by us.”

Danish Mapari of Livewell Aviation Services was chosen as the Service Personality Champion. The programme received nominations from all airport stakeholders which primarily included staff from the Central Industrial Security Force (CISF), Immigrations, and Customs, all domestic and international airlines, ground-handlers and airport concessionaires. These were judged by a panel comprising of members from the CSIA ASQ (Airport Service Quality) Task Force. The nominations were shortlisted and evaluated on parameters such as outstanding nature of services, consistency, impact of services rendered and ably supported by commendation letters from passengers.

EXPANDING RELATIONS: (L-R) Gaurang Shetty, Senior Vice President, Customer Service and Alliances, Jet Airways; B F Kuzwayo, Consul General, South Africa; Saroj K Datta, Executive Director, Jet Airways, D M Balatseng, Deputy High Commissioner, South Africa; and Sudheer Raghavan, Chief Commercial Officer, Jet Airways at the launch of new flight.

Additionally, in conjunction with its daily non-stop service to Johannesburg, the airline has also introduced exclusive South African JetEscapes packages, which will enable tourists to explore the Rainbow Nation with its perfect blend of wildlife, luxury, adventure and picturesque landscapes.

Jet Airways will also offer guests enhanced connectivity across the African region. The airline will provide convenient and immediate onwards connections, via Johannesburg, to African cities like Harare, Victoria Falls, Windhoek, Livingstone, Mauritius, Lilongwe, Blantyre, Bulawayo, Gaborone, Maputo, Kinshasa, Lagos, Luanda and Lusaka, making Jet Airways India’s first private carrier to provide its guests with the dual benefits of seamless connectivity and significant savings for travel within the African continent.

Strengthen relationship with Gulf Air: Jet Airways, has entered into a code share agreement with Bahrain’s national carrier Gulf Air, enhancing network connectivity on services between India and Bahrain. The agreement, which was signed on April 1, 2010 between the two airlines’ management, came into effect from April 12, 2010.

As per the agreement, Jet Airways will place its flight code

AGREEMENT: (L-R) Sayed Ahmed, Sales Manager, Jet Airways; Fareed Al Alawi, Vice President, Gulf and MEA, Abdulrahman Al Busaidy, Group Executive Officer; Kyle Haywood, Chief Commercial Officer, Gulf Air; Hashim Mahmood, Director-Network, Gulf Air, Nawal AlMajed, ManagerAlliance Performance and Arabesk during the signing of agreement.

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SNIPPETS on all Gulf Air-operated flights between Bahrain and Mumbai, Delhi, Chennai, Kochi and Thiruvananthapuram. Gulf Air will place its flight code on Jet Airways’ daily services between Mumbai and Bahrain.

According to Nikos Kardassis, CEO, Jet Airways, “Jet Airways is delighted to enter into a codeshare agreement with Gulf Air, one of the most respected carriers in the Gulf. Besides offering enhanced connectivity to Bahrain from several cities in India, the agreement will also enable our guests from Bahrain to tap into our unmatched domestic network, besides complimenting our existing frequent flyer partnership.”

Samer Majali, CEO, Gulf Air, commented, “The code share agreement with Jet Airways will enable both carriers to further leverage their respective networks, offering passengers enhanced connectivity, seamless transfers between flights, baggage checkedthrough to their final destination and a host of other benefits including the fastest and most frequent access to the Middle East region.”

Signs lease agreement with Thai Airways: Jet Airways, on March 25, 2010, announced that as part of its strategic fleet and capacity rationalisation initiative, the airline signed a new lease agreement, for three of its B777-300 ER aircraft with Thai Airways.

The three new wide-bodied 777-300 ER aircraft will be dry leased to the Thai National carrier for a period of three years with immediate effect. The lease agreement with Thai Airways is in addition to the four other 777-300 ER aircraft currently on dry lease with Turkish Airlines. According to Nikos Kardassis, CEO, Jet Airways, “Jet Airways has worked with a focused approach… The leasing of three of our wide-body B777-300ER aircraft is among the last steps to fully achieving this objective. With the improvement in the global economic environment leading to a rise in air traffic, Jet Airways is now optimally positioned to return to profitability and sustain stronger growth, both in India and overseas with the introduction of new routes.”

Jet’s super offers: Jet Airways has introduced ‘Singapore Bonanza’ and ‘Singapore Extravaganza’ to Singapore under its holidays brand JetEscapes. These packages to Singapore are available with travel validity until June 30, 2010.

The Singapore Bonanza package includes return economy class air fare, three nights and four days accommodation in applicable hotels, airport transfers, an open bus tour with Singapore flyer, Explore Universal Studios Singapore in Resorts World, Sentosa, travel insurance, the chance to earn five JPMiles on every INR 100 spent, as well as 10 Kgs additional baggage allowance (not valid for infants). The Singapore Extravaganza package, on the other hand, includes return Economy class air fare, three nights and four days accommodation in applicable hotels, airport transfers, Night Safari tour, tours of Singapore city, Jurong Bird Park and Sentosa Island, travel insurance, the chance to earn 5 JPMiles on every INR 100 spent, as well as 10 Kgs additional baggage allowance (not valid for infants).

Pawan Hans flies pilgrims to Kedarnath PAWAN Hans Helicopters Limited (PHHL) is starting its service to Shri Kedarnath Shrine from Phata (Rudrapryag) from May 18, 2010.

Pawan Hans will start operations from Phata and Agustmuni by 5seater Bell 407/ Bell 206L4 helicopters. The Phata helipad is located beyond Agustmuni and is also linked by a good road on the way to Kedarnath.

Per passenger fare includes return fare Rs 7,000 + Rs 1,100 priority darshan charges. PhataKedarnath one way fare is Rs 4200

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SITA provides passenger service system to AI THE National Aviation Company of India (NACIL) today announced that SITA, the aviation IT specialist, has been selected to provide its hosted Horizon Passenger Services System (PSS) to Air India on a turnkey basis following a global competitive tendering process. The deal with the 13.5 million passenger airline is valued at $190 million over ten years.

Arvind Jadhav, NACIL Chairman and Managing Director, said, “Implementation of the Horizon Passenger Services System will complete the merger of Air India with the former domestic carrier Indian Airlines, and enable us to align processes and systems to meet Star Alliance standards. Air India will then be able to leverage the complementary strengths… This will be achieved through maximum flexibility in our "Go to Market" strategy and provision of an easy-to-use booking engine by SITA which will provide us full control over our own ticket distribution and drastically reduce our distribution costs.”

Francesco Violante, CEO, SITA said, “It is a great honour for SITA to be the chosen technology partner of Air India as it begins in earnest the journey towards business transformation. SITA has TIES AND SERVICES: Francesco been providing Air India Violante, CEO, SITA and Arvind with mission-critical Jadhav, Chairman and Managing services for more than 50 Director, NACIL. years, including network connectivity at all their domestic and international stations, check-in, air-to-ground communications, fares management and baggage tracing. Air India is now invited to join our Horizon Advisory Board which sets the strategic direction for SITA as it engages with Oracle and other partners to deliver a next generation Passenger Services System which will greatly benefit Air India as it exploits new technology and open systems architecture.” and Kedarnath-Phata one way fare is Rs 2,800. Bookings can be made on 9968686811, 011-24651248, 011-24690924. For further details one can visit www.pawanhans.co.in.

‘Spicy’ stay at Casino Royale NOW apart from flying experience, one can enjoy stay at Casino Royale as SpiceJet offers special stay at Casino Royale, Goa. As soon as a he or she shows SpiceJet boarding pass while checking in.

Casino Royale is a specially designed luxurious Class 7 passenger vessel that caters to distinguished guests. Here, while the gamers take on the gaming table Creche and trained childminders look after their children. That’s not all, to enhance their experience an Aqua Bar has been installed a long with an Oriental cuisine by China Garden.

The offer is valid for travel before June 30, 2010.

Delhi Airport launches new website DELHI Airport has started its website www.newdelhiairport.in to cater to all the needs of a traveller to New Delhi.

Features included on the website are live flight information, SMS alerts on flight schedules, online cab booking, Meta search facility for hotel and airline booking, interactive airport maps, currency convertor, weather forecast, route planners to Delhi city and a whole lot of information on New Delhi.

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INTERNATIONAL AIRLINES Qatar expands to Bengaluru QATAR Airways elucidated its continued commitment to India, helping strengthen commercial and economic ties thanks to the launch of its latest flights to the country — daily services to the southern Indian IT city of Bengaluru.

Speaking at a press conference in Bengaluru, Qatar Airways Chief Executive Officer Akbar Al Baker said the newest addition to the airline’s Indian network further strengthened its presence in one of the world’s most vibrant markets.

“I am delighted that Bengaluru has finally joined our international network. The route has performed exceptionally well and further demonstrates our commitment to give the travelling public greater choice,” he said.

“Bilateral trade between India and Qatar stands at $3.7 billion, according to figures for 2008 — a staggering increase from $140 million in 2000. Trade focuses on oil and gas, food and agricultural products, health care and IT services,” he added.

Flying from Bengaluru, passengers have a wide choice of destinations to travel to via Doha,including New York, Houstan, Washington, London, Paris, Madrid, Stockholm, Johannesburg, Nairobi and Muscat.

Bengaluru was the first of several route launches for 2010 during a year of aggressive expansion, which will see a further four destinations added to Qatar Airways’ global network from Doha, together with capacity increases across Europe, Middle East, Africa and Asia Pacific.

Qatar Airways announces operations in South America: Qatar Airways announced June 24, 2020 as the launch date for new South American flights. It will start its flights to Brazil and Argentina, marking its first operations to South America.

With the airline’s acquisition of two brand new Boeing 777-

Emirates starts flying to Tokyo EMIRATES on March 27, 2010 started its services to Tokyo and added it as its 102nd destination in the network. A high level Emirates delegation led by Richard Vaughan, Divisional Senior Vice President, Commercial Operations Worldwide, along with a number of the airline’s guests from Tokyo and Dubai and members of the media aboard the first flight.

Vaughan, on the occassion said, “The fact that passengers from across the Middle East, including the United Arab Emirates, Lebanon, Kuwait, Saudi Arabia and Turkey are joining our inaugural flight to Tokyo, further

200 Long Range aircraft in the last three months, these will be deployed on the two South American routes — to the Brazilian city of Sao Paulo and Argentine capital Buenos Aires.

“We have experienced incredible expansion over the years and by soon adding Sao Paulo and Buenos Aires to our growing network, we can proudly say Qatar Airways is a truly international airline,” said Al Baker, Chief Executive Officer, Qatar Airways.

“We have seven new routes lined up during the first six months of 2010, and the airline plans to open up even more routes

Buenos Aires

within the next 12 months as our growth strategy continues to evolve. The airline is receiving on average one new aircraft a month, allowing us to concentrate on enhancing our existing services, as well as opening up new routes. It’s a very exciting time for Qatar Airways,” added Al Baker. demonstrates how we are connecting this important region to Japan, be it for business or leisure. We are also seeing passenger traffic demand from Africa, South America and Europe.We already have a great deal of experience in serving Japan and we are confident in robust demand for our Tokyo services. In fact we are expecting our seat factor to be over 80 per cent on our Tokyo route during its first year.”

Passengers on the inaugural flight enjoyed the delicacies from the newly created Japanese menu, catering to all tastes while watching the latest blockbuster movies on Emirates’ ice entertainment system, which includes Japanese audio, TV and movie channels.

eme in its s Emirates’ th the IX: Japan wa i World Cup, ba Du ’s CULTURAL M ar ye ace this pl at ok s to ite su ich g, wh hospitality of horse racin y da . st se he ur ric world’s n Raceco opened Meyda at the newly

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SNIPPETS Emirates to Manchester aboard A380: Emirates, in a latest plan revealed that with its superjumbo A380 it will serve Manchaster from September 1, 2010 to mark its double decade of service to the city. The A380 will replace Boeing 777 aircraft. At the same time, Manchester will become the world’s first regional airport to have a regular A380 service.

Salem Obaidalla, Senior Vice President, Commercial Operations, Europe & Russian Federation Emirates’ Europe & Russian Federation said, “Manchester has become one of the strongest performers in our growing network of regional gateways. Our customers value our commitment to a regional network at a time when other airlines are abandoning them. We are delighted to give our Manchester customers the very best available in the shape of the Emirates’ A380, which, without doubt, has revolutionised flying.”

TOTAL CARE: Tony Tyler, Chief Executive, Cathay Pacific (second from left) and Quince Chong, Director-Corporate Affairs (second from right) receive the Total Caring Award from Chief Secretary for Administration of the HKSAR Henry Tang (middle), at a recognition ceremony for the Caring Company NGO Partnership Day. On far left is HK Council of Social Service (HKCSS) Chief Executive Christian Fang and (far right) is HKCSS Chairperson Bernard Chan.

STAR ATTRACTION: Liverpool football legend and TV pundit Alan Hansen joins Emirates' A380 Captain John Selwood and cabin crew at the announcement of A380 services to Manchester from September 1, 2010.

Andrew Cornish, Managing Director, Manchester Airport said, “Emirates’ decision to operate daily A380 services between Manchester and Dubai represents an historic moment for this airport and the region that we serve.”

Air Arabia completes five years in India AIR Arabia is celebrating completion of five years of its operations in India. Air Arabia has been the first international low cost airline to commence services between India and the UAE, starting with daily flights from Mumbai to Sharjah on March 26, 2005. Currently, the airline offers 102 flights a week, flying directly from its hub in Sharjah to 13 Cities in India. The destinations are Bengaluru, Ahmedabad, Chennai, Jaipur, Kochi, Mumbai, Nagpur, Coimbatore, Thiruvanathapuram, Hyderabad, Kozhikode, Delhi and Goa. The airline has served over 3.9 million passengers in India in the last five years of operations. Speaking on the occasion of the Airline’s fifth anniversary in India, Adel Ali, Group Chief Executive Officer, Air Arabia, said, “It is a very proud moment for all of us at Air Arabia. We delivered our promise to the Indian people by offering best rates in the market and flying to cities, no other airline served before. In the last five years, we have opened up affordable air travel to the Indian community living in the Gulf and will continue to offer comprehensive routenetwork and connectivity across the country.”

Administration of the Hong Kong SAR. The Total Caring Award is the top award under the Caring Company Scheme, organised by the Hong Kong Council of Social Service (HKCSS) since 2003 to recognise local companies that demonstrate a “continual and sustainable total commitment in caring for the well-being of the community, the employees and the environment”.

Cathay Pacific has been awarded the Caring Company Logo every year since the Caring Company Scheme was launched, while 2010 marked the third time for the airline to receive the “Five Year Plus” Caring Company Logo.

Accepting the award at the ceremony, the airline’s Chief Executive, Tony Tyler, said, “This is a very important honour for our airline, especially as were selected from more than 2,000 other organisations to be awarded with the Caring Company Logo this year. Cathay Pacific has made substantial investments to develop Hong Kong as one of the world’s leading global transportation hubs, in the process becoming one of the biggest employers in Hong Kong. At the same time we have always endeavoured to be a responsible corporate citizen by contributing to our community, caring for our employees and protecting the environment.”

Etihad’s delightful offer for Indian travellers ETIHAD Airways has announced an exclusive offer of a two night complimentary stay at one of Dubai’s finest hotels,

Cathay Pacific wins the total caring award CATHAY Pacific Airways received the Total Caring Award 200910 at a ceremony for the Caring Company NGO Partnership Day. The event was officiated by Henry Tang, Chief Secretary for

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AMUSING INDIAN GUESTS: Etihad Airways, with its fabulous offers, is attracting Indian travellers.

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AirAsia X presents premium ecstasy

AirAsia Group CEO receives French honour

AIRASIA X introduced another enhancement in its services with presenting new comfortable flatbed premium seats.

The flatbed seats are standard business class specifications of 20” width, 60” pitch and stretches out to 77” in full recline position. The seats feature universal

AirAsia Group CEO Tony Fernandes has been conferred the title of Officier of the Legion d’ Honneur by the government of France for his outstanding contributions to the aviation industry. Dominique Bussereau, Secretary of State for Transport of France, conferred the title on Tony in a ceremony held in Paris.

Officier of the Legion d’ Honneur is the highest rank of honour that the government of France can award to a non-French citizen.

Tony Fernandes co-founded AirAsia and has led the airline in its transformation from a loss-making Malaysian airline into the ASEAN airline that it is now.

Under the leadership of Fernandes, in only eight years, AirAsia grew its fleet from two aircraft to 92, its staff from 250 to 7,000, and its routes from one to more than 132. It has to date flown more than 85 million guests.

A JOURNEY TO ADORE: With new flatbed adjustable seats, AirAsia X has made air journey more passionate.

power sockets, adjustable headrests and built-in personal utilities such as tray table, drink holder, reading light and privacy screen.

Premium seat guests will get to enjoy the premium complimentary product and services like pick a seat, priority check-in, priority boarding, priority baggage, baggage allowance, combo meal and comfort kit.

Azran Osman-Rani, CEO, AirAsia X, said, “After reviewing all the feedback that we received from guests on our services, the need for better and comfortable seats tops the list. As frequent flyers ourselves, we understand the great need for comfort especially for long-haul flights. We are happy to tell our guests that their wishes are granted.

We thank our guests for the feedbacks and they will definitely enjoy the new level of comfort on our flights from now on.”

AirAsia X has also revamped its economy class seats with new ergonomical, reclineable seats at 31” pitch equipped with comfortable adjustable headrests. The airline also decided to move away from traditional black leather and opt for a mix of red and grey, which contributes to brighter cabin ambience.

Jumeirah Emirates Towers, for passengers travelling on Diamond First and Pearl Business Class from India to any Etihad destination via Abu Dhabi.

Neerja Bhatia, General Manager, Etihad (India), said, “This offer demonstrates our commitment to delivering world-class premium products and services to our first and business class customers. We anticipate a lot of interest for this promotion from our premium guests.”

Also included in the special promotion is a free limousine

'THE MAN OF HONOUR': Tony Fernandez, Co-founder and Group CEO, AirAsia at the ceremony.

transfer to and from Dubai, just 45 minutes from Abu Dhabi International Airport. The exclusive offer is available for passengers traveling from Mumbai, New Delhi, Chennai and Hyderabad, traveling up to June 30, 2010.

AI and SIA Offer on flying AIR India (AI) and Singapore Airlines (SIA) under their partnership programme Flying Returns - KrisFlyer are giving frequent flyers of both the airlines the chance to earn and redeem miles on flights operated by either carrier.

Announcing this promotion C W Foo, General ManagerIndia, Singapore Airlines said, “Singapore Airlines in the last 40 years has set a benchmark in the industry for superior customer support and service. As a constant value add to our travellers we have created the most innovative membership programmes and offered greater choice by partnering with leading airlines, such as Air India. Today’s announcement reinstates our commitment to all our travellers.”

The offer is valid till May 15, 2010. Also, the offer is applicable on India - USA - India, India - Australia - India, India - New Zealand - India, India Indonesia - India, India Philippines - India, India - Korea - India, India - Taiwan - India routes. To avail the offer one has to book and travel on or before May 15, 2010 and include the Flying Returns membership number in the Singapore Airlines booking.

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What is this?

IS IT A BOAT OR A PLANE?

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piece of aviation history” said Rupert Banner, Vice President, Bonhams. He added, “The distance you could cover with this, even at 50 to 70 miles per hour well, cars weren’t doing that speed. In the cockpit, barely wide enough for two people are a pair of steering wheels, along with wooden pedals that control the rudder. The pilot could hand-crank the engine, though bringing it to life would require an about-face and a stretch — the engine is above and behind the cockpit.”

Bonhams says the flying boat was a symbol of Curtiss’s “perfection of the seaplane.”

The MF was considered as an excellent trainer and the Navy procured eighty more from the Naval Aircraft Factory at Philadelphia, which had been created in 1917 to offset lagging deliveries from both foreign and domestic suppliers. The NAF had in fact produced under license at least as many Curtiss types as the Curtiss company itself. The MFs were delivered in 1919-20, primarily to naval training units at Pensacola, Miami, Key West and the Curtiss-managed flying schools established at Atlantic City and Buffalo. A former naval flight instructor, Capt Harry Rogers of dba Rogers Air Lines was probably the first commercial operator on the East Coast to use Seagulls. He had a fleet of five for instruction and charter work, operating from several locations of New York.

Photo courtesy: NY Times

his kind of guessing game was on when a 1917 “flying boat” — MF or Seagull was on auction in Manhattan, New York on April 13, 2010. It was auctioned by Bonhams (famous as auctioneers of art, pictures, collectables and motor cars). The sea plane was sold for $5, 06,000 on the first day of auction only. The buyer bid for the item by telephone, competing against two other phone bidders and one in the auction room.

Let’s go in flashback to know some secrets about this exclusive structure of naval aviation history.

The flying boat designed by the aviation pioneer Glenn H Curtiss, is considered as one of his greatest contributions to naval aviation The sea plane was on display since mid-March of this year. “It wasn’t faster than a speeding bullet or more powerful than a locomotive.

This is 1917 that is really an early

UP IN THE AIR, DOWN IN THE SEA: (Top) the auctioned MF seaplane, (above) Glenn H Curtiss, the maker of the sea plane, (bottom) the seaplane on display on the day of auction.

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RNI No. DELENG/2006/16897 Posting Dt. 3-4/05/2010 Reg. No. DL(E) 20/5294/2009-11