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EDITOR-IN-CHIEF’S NOTE
Meeting the Prime Minister
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CRUISING HEIGHTS December 2011
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H.C. Tiwari
ere are a few to help airlines. interesting nuggets Nugget Five: Both the Union Minister for from the Prime Civil Aviation and the Secretary were not Minister’s meeting with the invited to the meeting. The idea, so to speak, CEOs and owners of India’s was for the airline bosses to pour their heart K Srinivasan beleaguered airlines — the out directly to the Pradhan Mantri and his top meet took place on November 26, 2011 — officials. But how does that help? After all the who call themselves the Federation of Indian FDI proposal has come from the Ministry. Aviation (FIA). They are the ones who have been chasing the Nugget One: Diversity in unity. There is vexed taxation issue on fuel. And they are the plenty of diverse opinion and there is no ‘one’ ones who set up the FIA meeting in the first voice in FIA. Some of the biggies had their own agenda to pursue and are least interested in pursuing a one, two, three approach to getting solutions. Nugget Two: Naresh Goyal is simply against Foreign Direct Investment (FDI) in aviation. He told a few players before the meeting that it would be inappropriate to raise the issue at the meeting with his argument being that the FIA should focus on core issues. The issue never came up for discussion although a Cabinet note approving 26 per cent FDI in the aviation IMPASSIONED PLEA: Aditya Ghosh and Rahul Bhatia of IndiGo phosector has been circulated to the tographed soon after CEOs of domestic carriers ended their meeting Union Cabinet! with the Prime Minister. Nugget Three: One or two of the LCCs did not want the economic place! regulatory aspect to be debated at the meeting. Nugget Six: No one found the time to In other words, ticket pricing, etc. Simple. brief the media. After all, who wants to tell the They didn’t want Big Brother to tell them media that FDI was, taboo, economic what price they should offer fliers. With both regulation was taboo and they discussed the Jet Airways and Kingfisher focusing on same issues — fuel, freedom to fly overseas lambasting Air India for what they perceive as speedily and quickly, route dispersal below-cost ‘predatory’ pricing, the last thing guidelines, etc.— they have been discussing the likes of IndiGo and SpiceJet want is the for the past seven years. government’s heavy hand in regulating prices. The moral of the story is simple. FIA is Nugget Four: Vijay Mallya has been the ruling UPA. Everyone has his or her own attending Parliament and crying hoarse about axe to grind and the sector can go to hell! how he is doing a Herculean task in getting Kingfisher out of the frightful mess that it has got into. But he had no time to attend the PM’s early morning meeting. He was represented by his CEO. Conclusion: Mallya doesn’t think srini@newsline.in that the FIA or the PM’s meeting can do much
Off the cuff
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Nagging X-rays Studies have found that a person receives the same amount of radiation passing through an X-ray scanner as during three minutes of flying at cruising height. Not our words but those of John Pistole, the chief of the US’s Transportation Security Administration (TSA). Pistole was speaking about X-ray body scanners and whether they were safe or not. The question has been debated many times over but there are no definite answers yet. A recent article by ProPublica, a non-profit news outfit in the US, queries the doubts that have been raised continually about body scanners that the TSA is planning to install at US airports. The article goes on to say that the TSA should, instead have installed the second type of body-scanners and not the X-ray ones. Known as the millimetre-wave machines, these use radiofrequency technology that has not been linked to cancer scares. According to ProPublica, “Research suggests that anywhere from six to 100 US airline passengers each year could get cancer from the (X-ray) machines.” However, Robin Kane, the TSA’s Assistant Administrator for Security Technology, has been quoted as saying that the minute amount of radiation emitted by the X-ray scanners can give nobody cancer. “(The radiation is] a really, really small amount relative to the security benefit you’re going to get. Keeping multiple technologies in play is very worthwhile for the US in getting that cost-effective solution — and being able to increase the capabilities of technology because you keep everyone trying to get the better mousetrap.” The ProPublica article states that X-ray scanners were once “taboo” but are now considered safe enough for airports.
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contents
FUTURE IMPERFECT
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Domestic airlines are battling tough times. Indian aviation industry is reeling under losses largely due to high input costs and low fares. Panic and pessimism have gripped the whole industry putting a big question mark on the future. What is the state of the industry and how is it comparable to the international scenario?
FOCUS
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The Maharaja is battling merger blues in the backdrop of current sorry state of affairs of the Indian aviation industry. The merger saga being played out in Air India has deepened the financial mess of the airline. CRUISING HEIGHTS December 2011
NEWS DIGEST
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DIAL gets AERA nod to re-introduce the levy of airport development fee (ADF) while overtaking Mumbai as the busiest airport in the country. And US and India complete a bilateral agreement to enhance international safety.
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contents ARTICLES NEWS VIEWS EDITS INTERVIEWS CLIPPINGS PROFILES NEWS DIGEST
CRUISING HEIGHTS Volume VI No 8
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AH-64 takes centrestage as the leader in the IAF's combat chopper competition even as Eurocopter pitches the EC225 at the Indian oil and gas industry. Plus an interview of Captain Sandeep Saraf of Aviation India who envisions a great future of helicopter simulator training in India.
Editor-in-Chief
K SRINIVASAN Managing Editor
TIRTHANKAR GHOSH Group Consulting Editor
R KRISHNAN Consulting Editor
H.C. Tiwari
FOCUS ON CHOPPERS
NANDU MANJESHWAR Assistant Editor
JUSTIN C MURIK
NET EXPRESS
p45
TripAdvisor announces the results of its pilgrimage survey conducted online giving a thumbs-up to virtual pilgrimage. In an exclusive chat, Amadeus India MD Ankur Bhatia gets candid about the online travel business.
Copy Editor
ASHOK KUMAR Sub-editor-cum-reporter
PUNIT MISHRA Senior Designer
RUCHI SINHA Design
NAGENDER DUBEY, MOHIT KANSAL, MODASSAR NEHAL Picture Editor
1.bp.blogspot.com
PRADEEP CHANDRA
SNIPPETS CARGO
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The Indian pharmaceutical industry is booming even though export infrastructure is poor. The highvalue perishable pharma sector can do well if air cargo infrastructure at airports is enhanced.
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Cathay unveils Mumbai-Hong Kong flights while Flydubai boosts UAE and Russia cooperation. On the domestic circuit, a Belgian national honour for Jet Airways' Naresh Goyal.
Photo Editor
HC TIWARI —————————— Director (Admin & Corporate Affairs)
RAJIV SINGH Director (Marketing)
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Newsline Publications Pvt. Ltd., D-11 Basement, Nizamuddin (East), New Delhi -110 013 Tel: +91-11-41033381-82
BACK PAGE GLOBETROTTING
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An amusing story of an inflight proposal of a marriage or a rather unusual story of a psycho who wanted to open the door of a plane he was flying in mid-flight. Also an inflight bout between an American and RCMP members.
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Did you know that Apollo 11 astronauts had to take the Customs' department permission for taking out Moon rocks. According to the Customs form filed at Honolulu Airport in Hawaii, the form was signed by all three Apollo 11 astronauts.
CRUISING HEIGHTS December 2011
All information in CRUISING HEIGHTS is derived from sources we consider reliable. It is passed on to our readers without any responsibility on our part. Opinions/views expressed by third parties in abstract or in interviews are not necessarily shared by us. Material appearing in the magazine cannot be reproduced in whole or in part(s) without prior permission. The publisher assumes no responsibility for material lost or damaged in transit. The publisher reserves the right to refuse, withdraw or otherwise deal with all advertisements without explanation. All advertisements must comply with the Indian Advertisements Code. The publisher will not be liable for any loss caused by any delay in publication, error or failure of advertisement to appear. 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
Policy review
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“The government is in the process of reviewing the existing Foreign Direct Investment policy framework in the domestic aviation sector.”
CIVIL AVIATION SECRETARY DR NASIM ZAIDI on the existing Foreign Direct Investment policy framework in the domestic aviation sector.
Sorry picture
LETTERS TO EDITOR
A boost for air cargo, but… (November, 2011) was written in the right perspective. The air cargo industry has finally caught the imagination of those in the aviation sector. The air cargo industry is in a Air cargo gets a lift futuristic mode as it gears to be equated at par with passenger services. Air cargo’s role has always been underestimated by governments for some strange reason. India too, has not been the exception as it has been a laggard in pushing the air cargo sector over the years. Rajat Singh, Kota
CRUISING HEIGHTS
“DGCA teams carried out audits of 40 flying schools across the country since mid-April and found discrepancies in almost all of them.” E K BHARAT BHUSHAN, DIRECTOR GENERAL, DGCA, on the discrepancies found in flying schools across India.
WOUNDED PRIVATE CARRIERS CAN ONLY RESORT TO TATTLING
November 2011 ` 90
www.cruisingheights.in
The case for dedicated cargo airports
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The air freight industry is emerging from the shadows to make its presence felt after years of remaining hidden behind the glitz of passenger services.
Full Service Vs Low Cost
Doors open for foreign flights
Expedia set to capture India
Kingfisher downs shutters on its low fare version and starts a debate
ICAN 2011 witnessed negotiations on grant of bilateral and Fifth Freedom Rights.
A little late, but Expedia enters India with its tie-up with AirAsia.
India can and did (November, 2011) made pleasant reading. The ICAN 2011 conference has proved to be a milestone in Indian aviation as the country negotiated bilateral air traffic rights with 35 nations. The conference ended on the right note where the focus was on modernisation of Air Service Agreements (ASAs) by including certain safety clauses, code-sharing guidelines, security and tariff. As per reports, the meet was attended by 65 International Civil Aviation Organisation (ICAO) member nations Rohan Bajaj, Amritsar
The column, A table-turning tale (November, 2011), made some noteworthy revelations about the domestic aviation scenario in India. Air India’s aggressive pricing strategies have caused discomfort for private airlines. The problems through which the domestic airlines are going, perhaps, tell the story behind the hullabaloo. The dire state of the airline industry is evident from the fact that barring IndiGo, the big boys like Jet Airways, SpiceJet and Kingfisher have posted losses. Kanu Sharma, Raipur
Clarion call “Our priority is to deliver good service to customers, both on the ground and in the air, and give them the best value for money.” GOAIR CHIEF EXECUTIVE GIORGIO DE RONI on service to customers.
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“There is no control order from government on regulating airfares. There can be a chance where we have a similar airfare hike as we had last year.” AMBER DUBEY, DIRECTOR (AVIATION), KPMG, on regulation of airfares from the government.
Ratio analysis “Around 80 per cent of our transit passengers are international and the rest are domestic. The international passengers are mainly from Bangladesh and Nepal. They contribute almost six per cent to the total revenue from sales at our airport.” I PRABHAKAR RAO, CEO, Delhi International Airport Limited, on the ratio of international and domestic passengers for revenue generation of Delhi airport.
Delightful offerings “This is part of a most important refurbishment exercise that was started by the airline to upgrade its products in all classes. On the India route, the upgraded first and economy class product is now available and we hope to offer a more upgraded product from early next year.”
Correction In the cover story (CH, November ‘11), A boost for air cargo, but…the designation of Tulsi Mirchandaney was wrongly mentioned as MD, Blue Dart instead of MD, Blue Dart Aviation. All correspondence may be addressed to Editor, Cruising Heights, D-11 Basement, Nizamuddin (East), New Delhi -13, OR mail to cruisingheights@newsline.in.
Control or no control
AXEL HILGERS, SOUTH-ASIA DIRECTOR, LUFTHANSA, on sprucing up in-flight offerings on India-bound flights.
CRUISING HEIGHTS December 2011
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World’s most hated airports
staff, bad food, tiny washrooms, shabby duty free shops, overpriced food outlets, filthy restrooms, broken escalators, etc. The top 10 world’s most-hated airports were: Paris-Charles de Gaulle, Paris, France Los Angeles International Airport, US London Heathrow, London, England Toncontín International, Honduras Ninoy Aquino International, Philippines Jomo Kenyatta International, Kenya John F Kennedy International, US Tribhuvan International, Nepal Perth Airport, Perth, Australia São Paulo-Guarulhos International, Brazil
COLD STATS
CNNGO.com, a travel-based website of CNN recently published "10 of the world’s most hated airports". The website analysed travel websites, blogs and message boards before coming out with the report. And the coveted crown went to Charles de Gaulle Airport, Paris, France which CNNGO.com described as the most-maligned major airport on earth. The website stated about the airport: “Grimy washrooms with missing toilet seats don’t help. Nor do broken scanning machines and an overall lack of signages, gate information screens and Paris-worthy bars, restaurants or cafés,” pointed out the website about the airport. Others that featured in the list included well-known airports like Los Angeles International Airport, Heathrow in London and JFK International in New York. The mosthated airports faced flak on a number of parameters which were just interesting and awful: smelliest toilets, the longest queues, the rudest
LOOKING GLASS
Maharaja’s story: Air India Vs Air India (Oops Indian!)
Rethinking strategy “Airport security is effective but it needs a major resthink to meet growing passenger numbers and calls for less intrusive processes. And the less time travellers spend queuing, the more time they will have for airport shopping.” TONY TYLER, IATA’S DIRECTOR GENERAL AND CEO, on the improvement of airport security around the world.
Security check “Airport security procedures may be overhauled to focus on intelligence gathering and change the way children are searched.” TSA ADMINISTRATOR JOHN PISTOLE on the overhauling of airport security procedures in the US.
CRUISING HEIGHTS December 2011
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TRAFFIC DATA
Rising Market share of scheduled domestic airlines
Capacity & Demand
Passengers carried by scheduled domestic airlines
Reasons of cancellations
The month of Oct 2011 witnessed significant increase in seat factor as compared to previous month primarily due to beginning of peak season.
D
omestic carriers continued to lose money but there was no let-up in the number of fliers. The month of October 2011 witnessed a significant increase in seat factor as compared to the previous month. This was primarily due to the beginning of the peak season, according to the latest data released by the Director General of Civil Aviation. The number of passengers carried
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by domestic airlines during JanuaryJet was 24.8 per cent. Following the October 2011 were 496.18 lakh as against two carriers, Jet Airways and IndiGo 419.34 lakh during the corresponding were Kingfisher, Air India, SpiceJet, period of previous year thereby registering and GoAir. a growth of +18.3 per cent. The month of October 2011 witnessed The top domestic carrier that held a a significant increase in seat factor in market share of 19.6 per cent was comparison to the previous month IndiGo. However, if Jet Airways (17.6 primarily due to the beginning of the per cent) and JetLite (7.2 per cent) are peak season. IndiGo’s seat factor was taken together, the market share held by 84.2 per cent, Kingfisher’s was 79.3 CRUISING HEIGHTS December 2011
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Reasons of delay
number of fliers Passenger complaints of scheduled domestic airlines
Scheduled Domestic Airlines Overall OTP (Oct 2011) - 89.5%
Total number of complaints (Oct 2011) – 913 • Number of passenger-related complaints – 1.7 per cent 10,000 passengers carried
Foreign Carriers
• At the time of compilation of this report, OTP data of 55 carriers was received. • On-Time Performance (Oct 2011): - 81.6% (departures) - 79.1% (arrivals)
Passengers carried by scheduled domestic airlines Passengers carried by domestic airlines during Jan-Oct 2011 were 496.18 lakhs as against 419.34 lakhs during the corresponding period of previous year thereby registering a growth of + 18.3%.
Data, charts and graphs: DGCA
per cent, SpiceJet’s per cent was 78 per passengers carried. GoAir had 4.5 Airways was at 92 per cent, JetLite at cent, GoAir’s was 76.1 per cent, complaints per 10,000 passengers 91.8 per cent, IndiGo was at 91.4 per Jetlite’s was 74.1 per cent, Air India’s while Air India had 1.1, JetLite had 1.4, cent, SpiceJet was at 89 per cent and was 72 per cent and Jet Airways’ was IndiGo had 1.5, Kingfisher had 1.6, Jet Air India at 79.9 per cent. 70.8 per cent. Airways had 1.7 and SpiceJet had 1.7. Of the foreign carriers operating According to the data, passenger The overall on-time performance of to/from India, the data of 55 carriers complaints of scheduled domestic airlines in October 2011 was 89.5 per were received by the DGCA. The airlines in October 2011 were 913. The cent. GoAir led the carriers in on-time on-time performance for October 2011 approximate number of passengerperformance with 94.3 per cent, was 81.6 per cent (Departures) and related complaints was 1.7 per 10,000 Kingfisher was at 92.6 per cent, Jet 79.1 per cent (Arrivals). CRUISING HEIGHTS December 2011
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NEWS DIGEST
EasyJet follows Ryanair in allowing allocated seats
wikimedia.org.
Europe bans airport body scanners
and 20 per cent of all the passengers will be using the Internet-based video phone service. Passengers will be able to call Sheremetyevo on Skype using its “svo_checkin” Skype username. During a video call, passengers will be asked to state their last names and flight details and to display their passports, and they may print out their boarding passes at the end of the session.
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Super FSC from Tony
AirAsia Group CEO Tony Fernandes confirmed that he was looking into setting up a superpremium full-service carrier (FSC) and it would definitely involve national carrier Malaysia Airlines (MAS). In his first public comment on the issue, Fernandes said that setting up a FSC was one of the ideas being tossed around, and should the plan materialise, it would definitely involve MAS. “There is an appropriate time for everything. This is not just me. I am right now focusing on MAS and AirAsia and I am on the board of MAS,” he told reporters after the launch of AirAsia’s new global loyalty programme called “BIG” recently. “I think there is a wonderful opportunity for people who don’t want to queue when checking in, want a different flight experience and pay for it. But whether we can make it (super-premium FSC) work, who knows? As a traveller, time is very precious, so why not? All I am saying is that there are some people who are trying to make this (plan) to be a disadvantage to MAS. If this idea works, then MAS may be one up against Singapore Airlines because the latter does not have this kind of first-class premium service. This is great for Malaysia. Right now it is just an idea.”
f1india.org
Sheremetyevo International Airport has started a service — the first in the world - video flight checkin via Skype. The airport forecasts that between 15
www.hitechanalogy.com
Skype check in at Moscow
Time magazine has named Pratt & Whitney’s PurePower PW1000G engine as one of “The 50 Best Inventions of 2011”, describing it as “the most important development in aviation in 2011”. The PurePower family of engines is designed to power the next generation of passenger aircraft. The combination of its gear system and advanced core allows PurePower engines to deliver doubledigit improvements in fuel efficiency and emissions with a 50 per cent reduction in noise over today’s engines. The PurePower engine has been selected as exclusive power for the Bombardier CSeries aircraft and Mitsubishi Regional Jet. It will also power the first Airbus A320neo aircraft, as well as the Irkut MC-21 narrow-body jet. To date, more than 1,800 PurePower engines are on order by customers around the world.
THE EUROPEAN UNION HAS PROHIBITED THE USE OF X-RAY BODY SCANNERS IN EUROPEAN AIRPORTS, PARTING WAYS WITH THE US TRANSPORTATION SECURITY ADMINISTRATION, WHICH HAS DEPLOYED HUNDREDS OF THE SCANNERS TO SCREEN MILLIONS OF AIRLINE PASSENGERS FOR EXPLOSIVES HIDDEN UNDER CLOTHING. THE EUROPEAN COMMISSION, WHICH ENFORCES COMMON POLICIES OF THE EU’S 27-MEMBER COUNTRIES, ADOPTED THE RULE “IN ORDER NOT TO RISK JEOPARDIZING CITIZENS’ HEALTH AND SAFETY”. EUROPEAN COUNTRIES WILL BE ALLOWED TO USE AN ALTERNATIVE BODY SCANNER THAT RELIES ON RADIO FREQUENCY WAVES, WHICH HAVE NOT BEEN LINKED TO CANCER. THE TSA HAS ALSO DEPLOYED HUNDREDS OF THESE MACHINES.
CRUISING HEIGHTS December 2011
purepowerengine.com
EasyJet will introduce allocated seating and sell more tickets via corporate bookers as Europe’s second-biggest low-cost airline scraps elements of its discount model to lure higher-paying flyers and lift profit. Passengers will be assigned seats on some flights this spring, with front-row berths and others with extra leg-room costing more, Chief Executive Office Carolyn McCall said. EasyJet is looking for new ways to boost revenue after expansion beyond the UK and charges for food and checked bags helped swell full-year earnings 61 per cent. McCall is building on flexible ticketing added a year ago in a move that distanced the company from discount rival Ryanair while shifting it towards network carrier and IAG unit, British Airways.
PW1000G is one of ‘50 Best Inventions of 2011’
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Lion Air announces historic mega order
www.4.bp.blogspot.com
14 airports in Roll of Excellence ACI World has announced that 14 airports have been inducted into the Director General’s Roll of Excellence during a ceremony at the ACI World Annual General Assembly in Marrakech, Morocco, in early November. Seoul Incheon and Hong Kong were both honoured as Inductees with Distinction for achieving the No. 1 position in their respective customer service categories for five consecutive years. ACI World also inducted 12 other airports in the Director General’s Roll of Excellence for ranking among the top five in an ASQ category for five consecutive years.
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Jakarta-based Lion Air has announced a commitment for the airline to order 201 737 MAXs and 29 Next-Generation 737900 ERs (extended range). The agreement also includes purchase rights for an additional 150 airplanes. The deal is for 230 airplanes at a list price of $21.7 billion. Boeing and Lion Air are working to finalise details of the agreement, at which time it will be a firm order posted on the Boeing Orders and Deliveries website. Lion Air will also acquire purchase rights for an additional 150 airplanes valued at more than $14 billion if exercised at list prices. US President Barack Obama witnessed the announcement at a ceremony at the East Asia Summit in Bali, Indonesia. To date, the 737 MAX has commitments for more than 700 airplanes, while the Next-Generation 737 family has won orders for more than 6,000 airplanes and Boeing has delivered more than 3,800. Lion Air, Indonesia’s largest private airline, currently operates or has on order a total of 178 Next-Generation 737s.
flagpictures.tk
Brazil needs 3D flight simulator for more than 700 MiG-29 jet fighter new aircraft Russian Aircraft Company’s MiG is best known for its fighter According to the recentlyreleased Airbus Global Market Forecast (GMF), Brazil will require 701 new passenger aircraft of more than 100 seats between today and 2030. The 501 single-aisle, 174 twinaisle aircraft and 26 very large aircraft have an estimated value of $82 billion. By 2030, Brazil, the largest and fastestgrowing passenger market for Airbus in Latin America, will become the fourth-largest domestic air travel market in the world with an annual growth rate of 7.4 per cent, following the United States, China and India. Brazil is currently ranked fourth in the world in terms of seats on departing flights, offering twice as many seats today than that a decade ago.
planes, which have been used by the USSR, China, North Korea and North Vietnam since the beginning of WWII. Now, MiG has claimed a major first in military aviation with the launch of a 3D flight simulator at the Dubai Air Show, providing volumetric visualisation of beyond-the-cockpit space for trainee top guns. The simulator comes complete with the MiG-29’s cockpit and actual control systems. Existing military simulators have a 2D projection system, at best projected on a wrap-around screen, imitating surround environment in the more or less precise manner, but they do not provide volumetric visualisation. MiG claims it has developed a better visualisation system with a much higher level of accuracy from the virtual cockpit. The system produces stereo imagery of the aerial environment using the same type of glasses as are used in 3D cinema to create a far more realistic illusion of real flight, and experience so far suggests even inexperienced pilots can easily assess distances to and dimensions of other aircraft and objects.
CRUISING HEIGHTS December 2011
Landmark RR Delivery
ROLLS-ROYCE JOINED WITH CUSTOMER CATHAY PACIFIC AND AIRBUS TO CELEBRATE THE DELIVERY OF THE 1,000TH TRENT 700 ENGINE. CATHAY WAS THE FIRST AIRLINE TO OPERATE THE TRENT 700 IN 1995. SINCE THEN, THE ENGINE, WHICH POWERS THE AIRBUS A330, HAS BECOME THE LARGEST-SELLING MEMBER OF THE TRENT ENGINE FAMILY, WITH MORE THAN 1,400 IN SERVICE OR ON ORDER. THE TRENT 700 HAS SECURED MORE THAN HALF THE MARKET SHARE OVERALL AND MORE THAN 75 PER CENT IN THE LAST THREE YEARS. ITS SUCCESS IS THE RESULT OF A COMBINATION OF FUEL EFFICIENCY AND ENVIRONMENTAL PERFORMANCE, WITH THE LOWEST EMISSIONS AND NOISE ON THE A330. THE ENGINE HAS ALSO BENEFITTED FROM A COMMITMENT BY ROLLS-ROYCE TO INTRODUCE ADVANCED TECHNOLOGIES FROM LATER TRENT ENGINES. THIS HAS RESULTED IN A FURTHER ONE PER CENT REDUCTION IN FUEL CONSUMPTION ON LATEST VERSIONS OF THE ENGINE.
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NEWS DIGEST
Jet scores a century
DFC holds AGM The Annual General Meeting (AGM) of the Aeronautical Society of India, Delhi Branch was held recently Lalit Gupta Debashis Saha at the Delhi Flying Club, New Delhi. The Society is presently being piloted by its President, Dr Vijay Mallya, Chairman, UB Group. While there has been a change of guard at the Delhi branch of the Society with Sudhir Gupta, Director Aeronautics, DRDO, taking over as Chairman, Dr O P Sharma, Director Aviation School of Technology and Lalit Gupta, Dy. DGCA continue to be the Honorary Secretary and Honorary Treasurer, respectively. The Delhi Branch has strengthened its core group by appointing Debashis Saha, Head, Commercial Sales, Eurocopter India as its Joint Secretary. On the occasion, the branch organised a special talk on ‘Government assistance towards air travel for persons with disabilities’ by Mohammed Asif Iqbal, who is visually impaired and working as Principal Consultant with Price Waterhouse Coopers (PwC).
Southwest lands reality series
TLC (TRAVEL AND LIVING CHANNEL) HAS PICKED UP 13 EPISODES OF A NEW REALITY SERIES ABOUT THE DALLAS-BASED SOUTHWEST AIRLINES. THIS TIME, THE NETWORK PROMISES THE SHOW WILL LOOK AT “BEHIND THE SCENES OF THE MODERN AIR TRAVEL EXPERIENCE, SHARING THE LARGE-SCALE OPERATIONS AND PERSONAL CUSTOMER STORIES AT SOUTHWEST AIRLINES”. ADDED TLC GENERAL MANAGER AMY WINTER: “SOUTHWEST IS A BELOVED BRAND, AND THEIR CUSTOMERS AND EMPLOYEES WILL REVEAL THE PASSION, COMMITMENT, AND FANTASTIC PAYOFF OF 'GETTING THERE' THAT HELPS KEEP US ALL FLYING.”
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Jet Airways achieved a major milestone with the induction of the 100th aircraft into its fleet. The airline accepted a brand new, Next Generation Boeing 737-800 with sky interiors in Seattle on November 15, 2011. The first carrier in India to have 100 planes, the new Boeing 737-800 configured with 8 Premiere and 162 economy seats, and will commence commercial operations from December 5, 2011. New improved passenger service units and a significantly quieter cabin will add to the comfort of the guests. Another feature that will most definitely be appreciated by guests are the new pivot bins, which afford greater overhead bin capacity for storage. The aircraft also possesses superior on board, sound quality and clarity through new speakers that have been improved in each passenger row. The all new Sky Interiors with curved cabin architecture further provide a feeling of openness and space. The plane is replete with bright new colours and décor with modern, sculpted sidewalls and larger windows, combined with the LED lighting significantly enhancing the sense of spaciousness in the cabin.
Swansong for the A340 Airbus has announced that it is pulling the plug on its four-engine A340 widebody jet. The A340 first flew nearly two decades ago with a vision to focus on routes like the 18-hour trip from Singapore to New York. Twin-engine jets like the 777 did the same for less. Once the ETOPS (Extendedrange Twin-engine Operational Performance Standards) was relaxed for the twin engine operations, it suddenly became a superior aircraft. What ETOPs does is allow twin-engine models such as the Boeing 777 to fly long routes without having to stay close to emergency stopping areas. And may we add the 777 too. The US jetmaker has won 132 orders for the (that jet) in this year’s first 10 months and is boosting output. Ironically, news of Airbus’ decision to end A340 production comes just a day after Boeing began work on its 1,000th 777. There are 365 A340s in operation today. For the record: Virgin founder Richard Branson posed in front of an A340 with German supermodel Claudia Schiffer at a Farnborough Air Show a decade ago, with the words “Mine’s bigger than yours” emblazoned on the side of the aircraft.
CRUISING HEIGHTS December 2011
Broadband on board with Etihad
Etihad Airways has signed a deal with Panasonic valued at more than US$1 billion (Dh3.67bn) to offer passengers broadband internet, mobile phone services and live television on its flights. The entertainment and communications services will become available across the airline’s long-haul fleet. “It is essential that we offer the most engaging and dynamic in-flight entertainment for our guests — especially on long-haul flights,” said James Hogan, Chief Executive of Etihad. The items for the News Digest pages have been culled from a number of sources and publications worldwide.
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NEWS DIGEST
ABOVE GROUND LEVEL ¨¨ Haj operations
Pilgrims around the Kaaba in Mecca.
The Phase-1 of Haj Air Charter Operation 2011 has been successfully completed and the second leg of the charter is now under way. The operation commenced in the last week of September. A total of 1.25 lakh pilgrims were successfully airlifted to Madina/Jeddah by Saudi Arabian Airlines (SV) and NAS Air. A total of 435 flights operated to carry these pilgrims and 99.9 per cent of the flights maintained the time schedule. The return phase has commenced and is expected to conclude in the middle of December.
EU-ETS and its impact Regardless of the non-EU States’ objections and concerns, the European Union had unilaterally passed the regulation to include aviation in the European Emissions Trading Scheme (ETS). The EU-ETS affects all aircraft operators regardless of where they are based, provided they operate flights departing from and/or arriving at an aerodrome in the EU. Consequently, in the Council of ICAO in Montreal, India has taken a lead to organise a strong group of ICAO non-EU Council Members to join hands to oppose EU ETS in its current form. The Representative of India to the Council of ICAO presented a working paper for ICAO Council using the elements of the New Delhi Declaration of September 2011 which was endorsed by 26 Member States in the 194th session of the Council of ICAO in early November. The 26 non-EU Member States supporting the working paper are Argentina, Brazil, Burkina Faso, Cameroon, China, Colombia, Cuba, Egypt, Guatemala, India, Japan, Malaysia, Mexico, Morocco, Nigeria, Paraguay, Peru, Republic of Korea, Russian Federation, Saudi Arabia, Singapore, South Africa, Swaziland, Uganda, the United Arab Emirates and the United States of America. After a
AERA decision and tariff hikes !
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MR group, which has the mandate to modernise and upgrade Delhi International Airport Limited (DIAL), should be somewhat relieved after the Airport Economic Regulatory Authority (AERA) permitted it to re-introduce the levy of airport development fee (ADF) on departing domestic and international passengers from Delhi’s IGI Airport with effect from December 1, 2011. The departing domestic passengers from Delhi airport will pay `200 and international passengers `1300. In fact, DIAL wants arriving passengers too, to pay up. Following an NGO’s plea in Delhi High Court, the levy of ADF was discontinued from June 1, 2011 causing huge financial strain on GMR Infra, whose airport division is developing and modernising the Brownfield airport at Delhi and the Greenfield airport at Hyderabad, respectively. On November 15, 2011, AERA had formally notified the levy of ADF at IGI airport. After the Delhi High Court suspended the collection of ADF, the promoter was left with a huge funding gap of `1931.27 crore which the AERA order now seeks to rectify and close. AERA has recommended that with effect from December 1, 2011 and up to May 2013 described as Stage I, DIAL can recover `1230.37 crore. For Stage II, the balance gap of `701 crore arising due to costs not incurred by DIAL as on March 30, 2010, but incurred since then will be allowed to be recovered by levy of ADF from June 2013 to February 2014. So, in
all GMR can now continue to levy ADF at Delhi airport for a period of 27 months or December 1, 2011, to February 2014. Another very significant development was the approval given by the regulator to DIAL for the total project it incurred to modernise and develop Delhi airport — primarily T3, the new runway etc which is estimated at nearly `12,718 crore. It was in connection with the recovery of this cost, that DIAL proposed a huge increase in airport charges reportedly as high as 775 per cent. GMR says it is entitled to this increased levy as per the Operation, Management and Development Agreement (OMDA) which forms the basis of airport modernisation project. Incidentally, there has been no revision of airport charges in Delhi and Mumbai since 2001 except for a marginal change in 2009-10 and OMDA permits the airport developers both at Delhi and Mumbai (being done by GVK) to re-jig upwards the airport charges which includes parking, landing, navigation and other related aeronautical revenue streams. While approving the entire project cost of DIAL, AERA did not approve the expense incurred by GMR of `204 crore relating to upgradation of apron ( `23.82 crore), runway ( `37.50 crore), additional re-inforcement of civil structures ( `35.67 crore) and increase in floor area of 86,520 metre ( `107.15 crore) which were all executed through competitive bidding process. The reintroduced ADF will be collected on all fresh bookings and advanced books at the time of booking and checking-in. GMR
THOROUGH INSPECTION: Flyers taking their baggage after screening at Delhi Airport.
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long debate in the Council of ICAO, the Working Paper presented by India and supported by 25 other States was fully adopted by the ICAO Council. The ICAO Council also adopted the New Delhi Declaration of September 30, 2011.
Second Meeting of SACCA The second meeting of the Security Advisory Council to Civil Aviation (SACCA) was held recently under the Chairmanship of the Secretary, Dr. Dr Nasim Zaidi Nasim Zaidi. The meeting was addressed by Union Minister of Civil Aviation Vayalar Ravi. The Minister said that the challenge in aviation security was to develop a robust security system for tackling the security challenges posed by criminals with the help of advanced technologies and methods. He said that the Ministry of Civil aviation was constantly examining the need for infusion of new modalities and technology for fast and secure clearance of passengers and their carry-on items. He further said that the meeting was significant as the inputs and interaction of stakeholders, users, regulatory authority and Government bodies created an environment of aviation security, while ensuring passenger facilitation. Highlighting the initiatives taken by the Ministry on aviation security, the Secretary, Dr. Nasim Zaidi said that the new Aircraft (Security) Rules, 2011 was framed for the first time, which was under process of Notification. He said that the Anti-Hijack Act 1982 was being amended to give severe punishment to the perpetrator of such acts. He suggested that passengers’ convenience and passenger-friendly aspects should also be part of the security mechanism. In a Power Point presentation, the Commissioner of BCAS (Bureau of Civil Aviation Security) highlighted initiatives taken on airport security. Around 16,000 persons were trained in civil aviation security this year compared to 9,000 last year. Also 61 mock exercises were conducted this year. Assessment of security threats for all airports is underway and a committee was set up for screening of vehicles and persons entering airside.
Infra posted during Q2 (July-September) 2011 48 per cent rise in revenue on yearon-year basis but recorded a net loss of `63 crore . This was against a profit of `71 crore in Q2 of 2010. The reason for the loss of `227 crore in Q2 2011 was the inordinate delay in reimposition of ADF and also clearing the request for hiking airport charges at Delhi airport. It may be recalled that GMR Infra posted a loss of `192 crore during Q1 2011 on its airport segment with Delhi being the main reason. During Q1, the CFO of GMR Infra’s airport division, Siddharth Kapur, pointed out that the losses were driven mainly by depreciation and interest cost. He claimed the losses could have been higher had it not been for cost reduction efforts and better management of non-aeronautical revenue streams. Even at that time he said once the new tariffs were in place, the airport division mainly led by DIAL would become profitable. It was in August 2011, AERA for the first time indicated that it might approve cost escalation of T3. So GMR managers felt that should the approval come through they would be able to immediately begin repayment of loans it had taken for the modernisation project. One major reason for the financial crunch was the delay in payment of airport charges by mainly the state-owned Air India which owed till September 2011, a sum of `350 crore and Kingfisher Airlines among others. Another restraining factor has been the delay in monetisation of the real estate at Delhi airport. GMR which holds 250 acres of land available for commercial use had monetised till August 2011, `45 crore. Since the balance could not be monetised on time, it hit capital expenditure necessitating recourse to expensive borrowing. The gravity of the problem was evident from the fact that during Q1 2011, Delhi airport saw passenger traffic climb up by 23 per cent and aircraft traffic movement by 15 per cent. It is now stated that for another eight years that is till, perhaps, 2020, T3 will be the largest terminal in India as no expansion of this terminal may be required for the next five to eight years. Currently, DIAL has a total capacity to handle nearly 60 million passengers. Following the decision of AERA to re-impose the ADF and its decision to approve the entire project cost of DIAL, officials at GMR believe the new airport Dr Yashwant Bhave
charges should be in place between January and March 2012. GMR had applied for tariff revision in June 2011 to AERA which is now evaluating it through a consultative process. Under the OMDA concession agreement, GMR was and is entitled to an increase in user tariff from 2009 onwards. As a result, the losses of 2009 and later will have to be accounted while computing the increase. It will be a prospecting increase but will take into account the losses of the past. Said Siddharth Kapur, CFO of GMR airports, “The increase will be in such a way that it will enable us to recover the past losses and we are entitled to it.” Though there was a minor revision of 10 per cent in 2008, no major revision had taken place since 2001. Airport officials said in the past one decade, passenger traffic had risen nearly five-fold. It was the same with aircraft movement, etc. In anticipation, developer GMR had invested heavily in expanding the facilities at Delhi airport: the new T3, new runway, refurbishing of 1D, etc. While disclosing the results of Q2, 2011, A Subbarao, GMR Infra Group CFO, said Delhi airport was costing GMR Infra a loss of `600 crore to `700 crore on an annualised basis and “even today if you exclude Delhi airport we are profitable”. On an investment of `12718 crore, GMR is seeking a return of 24 per cent return on equity. While this may seem to be high in terms of return on investment, what GMR wants all to appreciate is the virtual no to an early flow of revenue stream because of the delay in decisionmaking as well as on the regulatory front.
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Flying schools on notice
CBI books top DGCA official
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Aviation regulator Directorate General of Civil Aviation (DGCA) has found fault with almost all the 40 flying schools in the country, Bharat Bhushan issued notices to over 20 of them giving them a 30-day deadline to comply with regulations. One school in Bermi, Rajasthan, has been asked to shut down due to gross non-compliance. One of the country’s oldest flying clubs, the Bombay Flying Club, has been allowed to conditionally restart operations even as the DGCA continues to keep it under strict watch. “None of the 40 flying schools in India were following rules. They would be either logging false flying hours or they lacked adequate infrastructure to train pilots. We have given each school 30 days to fall in line otherwise their licenses would be suspended,” Director General DGCA EK Bharat Bhushan told the media. During the audit of these schools, DGCA took the help of ATC concerned on whether a particular club really allowed candidates some real flying experience and the results were then matched with logbook of candidates. Earlier this year, the regulator began a comprehensive audit of all flying schools in the country after some were found fudging their logbook entries to help candidates get licences. Many pilots were arrested for using forged mark sheets and fudging flying hours to get licences. Thereafter, the DGCA set on overhauling the entire pilot licensing process by computerising the process of examination and documentation. The first online pilot exams would be held this November. The CBI has registered a case against a top official of the DGCA for allegedly helping in selling an old aircraft of his wife’s company to Kolkata-based Aircraft Maintenance and Engineering Institute Private Ltd (AMEIPL), which resulted in loss of over `one crore to the DGCA. CBI sources said Raje Bhatnagar — Deputy Director (the then senior Air Worthiness Officer in DGCA) — caused pecuniary benefit
Being under pressure to deliver, the minimum increase of 25 per cent in company did deliver before time: for domestic fares. But then what does one example, T3 and the new runway, expect the airport developer to do after reportedly one of the longest in Asia. having borrowed at higher interest rates DIAL’s proposal to increase user to complete the project even before time, tariff by an estimated 775 per cent has a feat not achieved in India at least in the worried leading foreign carriers and airport specific infrastructure sector. domestic airlines.GVK-controlled When GMR got the Delhi airport Mumbai International Airport Limited modernisation contract, it agreed to share (MIAL) has also sought an airport charge 46 per cent of its gross revenue with the increase of between 500 to government which was the 600 per cent. But, MIAL basis for it winning the seems to be slightly better airport contract. As against off as it made profits in the aeronautical revenues fiscal ending March 31, which still remains to be 2011, notwithstanding an settled, the non-aeronautical equally high investment of revenues in the last five `12,500 crore it made and years since Delhi airport is making in upgrading was handed over to GMR as Mumbai airport. MIAL in part of the Public Private its request to AERA has Partnership (PPP) initiative given multiple scenarios in 2006 has risen by 300 per for consideration by the cent. DIAL’s non-aero Siddharth Kapur regulator to boost its revenue share rose from revenue streams. `323 crore in 2006-07 to `797 crore in According to newsreports, Finnair 2010-2011. In the current fiscal 2011-12, it Director for the Indian subcontinent Kari is expected to rise further to `1052 crore. Stolbow said if DIAL hiked airport AERA chief Dr Yashwant Bhave had told charges, it would make flying to and out a news daily that the airport developer of Delhi uneconomical. Air France-KLM would be allowed to collect ADF. When General Manager Pieter De Man said the project cost was an estimated `9800 Delhi and Mumbai airports were among crore, DIAL was allowed to collect the fee the most expensive for airlines to operate to cover a funding gap of `1827 crore. and to top it all, if the hiked airport However, the project cost later rose to charges come into effect, it will not be `12718 crore and funding gap widened to surprising if some carriers even abandon `3481 crore. The mid-November their India operations. Air Asia’s announcement to reintroduce ADF again Regional Chief based in Delhi, Suresh took into account these changes. GMR Nair said his airline had earlier in 2011 earlier in November said all legalities were ceased operations to and from Hyderabad over, the appellate tribunal had given its go after airport tariffs were revised there. If ahead and only AERA’s approval was tariffs are hiked in Delhi and Mumbai on awaited. Now that AERA has cleared the the lines suggested, it will make low-cost project cost, it is only a question of time operations even more unattractive. before the airport charges are hiked. But What should not be forgotten is while the million-dollar question is: Will it be in the last few years there was a huge 640 per cent in Delhi as being speculated? increase in connectivity, it should not get Ultimately what happens to nondisconnected equally fast as rising costs players (read air passengers)? Will Indian — fuel, airport charges, etc. — will add aviation be able to clock 20 per cent annual up and increase fares enormously placing growth once again if the airport charge many new travellers out of air travel. As component of air fare rises to at least per estimates, every departing passenger `1200 if not more and the airlines also from Delhi reportedly pays through his adjust fares to include increased fuel ticket between `250 and `280 as airport prices? Will the Indian honeymoon with air charges at present. If the regulator travel last long? accepts the plea of GMR’s DIAL, then That such a possibility exists is evident this could increase to between `1400 and from the fact that even the Airports `1800 in the case of Delhi and not less Authority of India has filed its multi-year than `1200 for travels from Mumbai. requirement of airport charges (five years) Though we have no independent way of with AERA as mandated by its rules. It checking this, our sources said these are may be pointed out here that this is not a fairly acceptable estimates. For every ‘one-shoe-fits- all’ kind of situation. Each departing passenger to pay at the individual airport has filed its request minimum an increase in airport charges separately for the regulator to affect any of `1200 per ticket will mean a increase in airport charges. CRUISING HEIGHTS December 2011
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for Global Aviation in the sale of aircraft. Bhatnagar was recently suspended from DGCA after a probe found him guilty of favouring the company by getting it business worth crores without any prior intimation/permission of the government. The CBI probe concentrated on the sale of a Lear Jet 24 aircraft to AMEIPL from Global Aviation, which reportedly deals in small aircraft and their parts.
Jet union says ‘no’ to cuts DOWN, BUT NOT OUT: A view of Mumbai Airport.
D A Jet Airways plane on the runway.
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Delhi emerges as busiest airport
The All India Jet Airways Officers and Staff Association, representing ground staff, security and cargo workers, said it would resist any move to cut workforce. “Our charter of demands for pay revision and promotions is being negotiated. Till this is pending, the management can’t take any decision regarding job cuts. We will not allow it,” said Kiran Pawaskar, union president and Nationalist Congress Party legislator. Earlier, the Jet management had sounded department heads to prepare for lay-offs and lists were being prepared. Sources said the airline was keeping tabs on employee productivity with a view to enhancing performance and reducing costs. Jet has an employee strength of 10,000. The airline posted a loss of `128 crore in the first quarter due to high fuel costs. Its losses in the second quarter are expected to widen due to spiralling costs and increased competition in the domestic and international routes.
Airlines under stress test The DGCA has initiated a detailed financial surveillance of all airlines. Carriers that are found to be seriously strained after this survey would not be allowed to add any aircraft to their fleet till they meet all safety requirements for the existing fleet. Also, the extension of such airlines’ licences could come under a cloud if
elhi airport has superseded Mumbai as the busiest in the country and it is only expected to consolidate its lead. Passenger traffic and air traffic movement figures reveal that Mumbai airport, which has been the busiest in the country since 2006-08, is now reaching a point of saturation, due to a dearth of space and delay in building a second airport. Though passenger traffic in Delhi was only 1.4 per cent higher than that in Mumbai and flight movements higher by 11.61 per cent in 2010, industry experts say the gap between the two airports will only widen from here. Despite a severe space crunch and hence limited infrastructure, Mumbai international airport, till recently, handled more traffic than Delhi did. In 2006, Mumbai handled 21.37 million passengers whereas Delhi had 19.37 million passengers. The trend continued in 2007 and 2008 with Mumbai being way ahead of Delhi in passenger traffic. The scenario changed in 2009, when Delhi airport took a leap to 25.25 million passengers annually and Mumbai lagged behind with 24.80 million. In 2010, Delhi handled 28.53 million passengers and Mumbai 28.13 million. Air traffic movement growth in Mumbai had slowed down in comparison to Delhi. A new terminal integrating both domestic and international flight operations and a new network of taxiways are the two major projects that Mumbai International Airport Private Ltd (MIAL) has undertaken to enhance the capacity of Mumbai airport. The airport, which accommodated almost 30 million passengers in the last financial year, is now bracing itself to reach the 40 million mark. Airport officials said the new terminal would have 184 check-in
CRUISING HEIGHTS December 2011
counters, 56 passenger boarding bridges, 14 reclaim belts, around 700,000 sq ft of retail space and lounges and travel services and a car parking facility for over 5,000 cars. Currently, the airport has around 30 boarding bridges, 135 check-in counters and parking capacity for 3,600 vehicles. However, aviation analysts say it is the enhancement of the operational area which will lead to the actual growth in flight movements and passenger traffic. Airport officials said the master plan drawn up by MIAL includes a network of taxiways running parallel to the crossrunways. Currently, the airport has around five rapid exit taxiways. Two more are being constructed. By 2013, 11 rapid exit taxiways will be made. This will reduce the runway occupancy time of aircraft and ultimately enhance capacity. MIAL has already completed the resurfacing and widening of the main runway (0927). The runway, MIAL said, is now Code F compliant. "This means it can accommodate bigger aircraft like A-380, which it was unable to do so far,’’ an airport official said. The secondary runway too was recently re-carpeted. After a round of delays due to a Turkish Airline aircraft stuck for three days, MIAL also initiated the construction of two rapid-exit taxiways (RET) on the secondary runway. The secondary runway has only one RET, which is located at a distance. It was essential to have more so that aircraft could exit the runway quickly. The Airports Authority of India (AAI), which is in charge of air traffic control services, is also evolving an Air Traffic Flow Management System, which will monitor and relay real-time flight information to all airports. This will help a controller to gauge delays in advance and help reduce the long queues of arriving and departing flights. The system is likely to be installed by 2012.
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the regulator found that their financial capacity had degraded to such an extent that it would not be safe to allow them to fly passengers. DGCA chief Bharat Bhushan said: “We will finalise the modalities of the detailed surveillance shortly The focus will be on the airlines’ economic viability and safety.” Among the indicators used to determine financial health of airlines are: whether they have defaulted on payments, salaries and whether they are facing a high attrition rates because of this fact. “The problem is one of the stressed airlines is government-run and the other belongs to a highly influential business magnate. Will the government be able to take any real action against such airlines remains to be seen,” said a senior commander.
Religare, KRC to float regional airlines The financial services group Religare and KRC, a Noida-based group, will start regional airline operations in the next few months linking important cities in northern India, executives of both groups said. Religare Voyages, the aviation arm of Religare, got a no objection certificate (NOC) from the Ministry of Civil Aviation some time ago and plans to start operations in four months with 17-seater Beechcraft 1900D aircraft. “We will be getting two of the aircraft from Religare Charters to kickstart regional operations and then look at scaling up in times to come,” said Sandeep Bhatt, CEO, Religare Voyages. Religare Charters is a group company doing airline chartering with a 12-fleet aircraft. Karina Airlines International Ltd, the aviation arm of KRC Group, will begin operations in less than a year, its Chief Executive Officer (CEO) said. The firm got the NOC recently. “There is demand in underserved areas, which is likely to constitute 40 per cent of India’s traffic over the next decade and I won’t be surprised if 5-10 players enter this market over the next three years,” Karina Airlines MD Namrata Chawla told the media. KRC Group has businesses in healthcare, hospitality, real estate and services sectors. The flagship company of KRC Group is Goodwill Hospital and Research Centre, which is running a super multispecialty
InterGlobe’s pilot training centre
AMBITIOUS START: Kapil Bhatia, Executive Chairman, Interglobe Enterprises performing the rituals during the ground-breaking ceremony for the new pilot and maintenance technician training centre in Noida. Also seen to his right: Jeff Roberts, CAE Group President, Civil Simulation Products, Training and Service and Dr Kiran Rao, President, Airbus (India).
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AE, InterGlobe Enterprises, and Airbus recently held a ground-breaking ceremony for a new pilot and maintenance technician training centre in Noida, near Delhi. The CAE-Interglobe joint venture is expected to start offering pilot and
IATA Update
maintenance training solutions in 2013 and will eventually be able to train up to 5,000 pilots and technicians annually for airlines in India and the neighbouring region. The ground-breaking featured a traditional Bhoomi Pooja ceremony, and was attended by representatives of Airbus, CAE and InterGlobe. Dr Kiran Rao, President, Airbus (India), said, “The demand for pilots in
Innovation in Airline-Airport Cooperation
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he International Air Transport Association (IATA) called for innovation and a renewed agenda of cooperation in the relationship between airports and airlines. "We need a common and forward-looking agenda that builds on past successes and puts innovation at the heart of our common issues. Airports and airlines share a common interest in making aviation safer, more secure, user-friendly, operationally efficient and environmentally responsible. Combined, these are our common license to grow," said Tony Tyler, IATA’s Director General and CEO. Tyler’s remarks came in a keynote address to the world’s airports at the Airports Council International (ACI) World Annual General Assembly in Marrakech, Morocco. Tyler highlighted six areas where airports and airlines can enhance cooperation to innovate and deliver value: safety, security, improving the customer experience, infrastructure investments, environment and charges. Tyler also reiterated the importance of cost efficient, affordable airports with
CRUISING HEIGHTS December 2011
charges in line with International Civil Aviation Organization (ICAO) principles. "Airlines and airports are in a business relationship. And it is a tough business. Airlines are expected to make a margin of 1.2 per cent this year and 0.8 per cent in 2012. Airports will be under similar pressure. In fact, regardless of the economic situation, there is a natural tension in the suppliercustomer relationship between airports and airlines. But let’s keep focused on the fact that airlines and airports both need to be financially sound financial partners that are able to plan and grow our businesses together," said Tyler. Tyler proposed innovation in four aspects of the ongoing discussion on airport charges: Airline engagement in major capital expenditure development More transparent and meaningful consultation processes Longer-term charges agreements which include service level agreements Development of innovative concepts for risk sharing
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India and the neighbouring region is large. India is one of the fastest-growing aviation markets in the world and will require above 1,000 aircraft over the next 20 years, so investing in pilot and crew training facility is for the long term to continue the growth of the national’s commercial airlines and in turn the growth of the Indian economy.” Rahul Bhatia, InterGlobe Group Managing Director, said, “We are delighted to collaborate with CAE and Airbus to bring to the National Capital Region a world-class training facility. This training centre will be pivotal to meeting the needs of the civil aviation community in India and offer access to globally benchmarked training technology and solutions to aviation personnel here.” Jeff Roberts, CAE Group President, Civil Simulation Products, Training and Service, said that the “new training centre is a testimony to our continued long-term commitment to serve the growing needs of the aviation industry in India. This will be the fifth CAE aviation training facility in the country, and our entire focus at these training centres is on enhancing the safety and operational efficiency of our
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customers.” Located on 3.5 acres in the Greater Noida Industrial Area about 40 kilometres southeast of Delhi, the centre will provide “wet” and “dry”-type rating, recurrent, conversion and jet indoctrination training for commercial aircraft pilots. Programmes will also be offered for maintenance technicians. The Delhi training centre will initially house four full-flight simulators and will be capable of expansion to eight simulator bays. Advanced training technology will be used such as CAE Simfinity multimedia classrooms, computer-based training and brief/debrief facilities. The new training centre in Delhi will become part of the Airbus-CAE flight crew training services cooperation agreement which provides Airbus operators with a joint global network of training centres with the largest fleet of full-flight simulators (FFS) for Airbus aircraft types, standardised courseware and expert instructors. Airbus-CAE cooperation, which began in 2002, has grown to more than 60 FFSs in nearly 20 locations in Asia, India, the Middle East, Europe, North and South America.
Working Together On Fuel - Biofuels
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ATA called on stakeholders in the aviation and air transport fuel supply value chains to join together on three critical areas for innovation: safety, environment and commercial issues."Air transport needs fuel that is safe, used
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supply, storage and provision as an example of what can be achieved when stakeholders work together. "Safety always comes first. Recent incidents involving fuel contamination show the need for systems and processes that keep the fuel supply safe. Working together with the International Civil Aviation Organization (ICAO) and the Air Transport Association (ATA) we are producing the first manual of global standards for fuel supply, storage and provision though the ICAO processes. This is a true innovation in how we manage fuel FUEL FOR THE FUTURE: Jatropha has shown remarkable with standards, best promise as a bio-fuel. practices and in an environmentally responsible procedures to safeguard quality manner, with a reliable supply and at throughout the fuel supply chainreasonable cost," said Tony Tyler, from the refinery to when it is IATA’s Director General and CEO in delivered into the aircraft," said an address to the IATA Fuel Forum, Tyler. taking place in Paris, France. Tyler urged similar cooperation Tyler noted the creation of a on environment and commercial manual of global standards for fuel issues.
CRUISING HEIGHTS December 2011
ABOVE GROUND LEVEL ¨¨ hospital in Noida. The two companies think that the domestic aviation sector being in trouble doesn’t mean the proposition is risky for them too as their target market is Tier-II and -III towns and not the “overcrowded market”.
An ombudsman for fliers’ complaints
Hurried flyers at one of the airports.
Nearly three years after the Civil Aviation Ministry mooted setting up an ombudsman to hear air passengers’ grievances, the move is finally preparing for take-off. Passengers in India do not have a common forum to address their travel woes. The move to have an arbitrator is part of a slew of passenger-friendly measures introduced by the Ministry in the recent past. Last year, it came up with the debut policy that empowered passengers to claim monetary compensation between ` 2000 and ` 4000 against flight delays, cancellations and those denied boarding despite valid tickets. Before that, it introduced a rule to send flights to the end of the departure queue if the pilot was unprepared for take-off 15 minutes before the scheduled time of departure. In 2008, when Praful Patel’s ministry first proposed appointment of an ombudsman the idea fell through owing to disagreements between fliers and airlines. One of the major areas of dispute was who would pay for the ombudsman. All airlines had then refused to bear the cost citing losses.
SOEC tangle for SWISS and Austrian The Civil Aviation Ministry has asked for the views of the law ministry on the replies of Swiss International Airlines (SWISS) and Austrian Airlines, owned by German carrier Lufthansa, on their ownership issue. India had raised objections to the operations of these airlines on the ground that they had violated the
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India, US tie-up for aviation products
Lufthansa planes lined up.
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substantial ownership and effective control (SOEC) clause mandated under the bilateral air services agreement between the countries. India had threatened to stop all their services stating the ownership of the airlines were not from their respective countries. Lufthansa had acquired SWISS in 2005 and Austrian in 2009. The former has been operating in India since 2005, while the latter since 2010.The airlines have said they are owned by trusts based out of their respective countries. According to the SOEC clause, any airline can only utilise the seats quota of a particular country if the airlines’ ownership is from that country. The government also has the right to designate one or more airlines; however, its substantial ownership and effective control should be vested in the party designating the airline. If the substantial ownership clause is not resolved, both airlines would be barred from operating from India. This issue had come to the fore after Air India said SWISS and Austrian were allowed to continue operations after it was bought over by Lufthansa only because of the German carrier’s expected support to Air India for joining the Star Alliance, which has Lufthansa as its founding member. Air India’s entry was shelved after the alliance board said the carrier was not ready to join the alliance. While SWISS operates 14 flights a week, Austrian operates 11 from Delhi and Mumbai. The two are developing new hubs for Indian travellers flying to the US and other European countries. As much as 63 per cent passengers of SWISS and 86 per cent of Austrian fly under the sixth freedom carriage to and from India (they transit from these countries to other foreign destinations).
TOGETHER FOR THE FUTURE: DGCA E K Bharat Bhushan exchanges agreement documents with Dorenda Baker, Director, Aircraft Certification Service of the FAA. Standing behind them are Civil Aviation Secretary Dr Nasim Zaidi (third and fourth from left) and US Ambassador A Peter Burleigh.
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he Federal Aviation Administration (FAA) recently completed a bilateral agreement between the United States and India that will allow for the reciprocal certification of aviation products. Dorenda Baker, Director of the FAA’s Aircraft Certification Service and Bharat Bhushan, Director General of the Directorate General of Civil Aviation (DGCA) signed the Implementation Procedures for Airworthiness (IPA) in New Delhi during the third US-India Aviation Summit. These implementing procedures reflect the mutual commitment of the United States and India to enhance international safety and will enable a more efficient exchange of aviation products. The IPA details the scope and nature of the cooperation established in the framework set up in the US-India Bilateral Aviation Safety Agreement (BASA) Executive Agreement that was signed by Dr Nasim Zaidi, Secretary, Civil Aviation and J Randolph Babbitt, Administrator, Federal Aviation Administration (FAA) in July this year, coinciding with the visit of US Secretary of State Hillary Clinton to India. BASA will facilitate reciprocal airworthiness certification of civil aeronautical products imported/exported between the two signatory authorities. Indian standards would be comparable to global standards and its aeronautical products would be accepted by the US. The nascent aircraft manufacturing industry in India would be hugely benefitted and it would spur trade between the two sides. It would demonstrate that India has the capability to develop FAA
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certifiable aircraft articles/appliances. It would encourage the civil aeronautical products industry which will eventually lead to self sufficiency in the sector. BASA would encourage indigenous aircraft and aeronautical products industry and the US acceptance of Indian products will help their global acceptance. It would lessen the economic burden imposed on the aviation industry and operators by redundant technical inspections, evaluations and testing. During the IPA signing ceremony, Dorenda Baker congratulated the DGCA for demonstrating and sustaining a high level of competence as a regulatory agency. The agreement, said Baker, “will further strengthen our already successful safety partnership. The FAA appreciates India’s long-standing commitment to improving aviation safety”. At the summit, Dr Nasim Zaidi invited American business houses to invest in the Indian aviation sector that held immense potential for investment of up to $130 billion over the next 10 to 15 years. The Secretary, Civil Aviation, said that the country’s air passenger traffic would rise to 260 million by 2020. Private investment in the aviation sector had been around $ six billion. Dr Zaidi pointed out that the investment opportunities would come from airport modernisation which was already in progress. “After successful implementation of public private partnership (PPP) in the development of six major and 35 non-metro airports, we have identified 30 more airports to be developed under the joint venture or PPP modes.”
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SPOTLIGHT
The recent Dubai Airshow turned out to be a whopper with $63.3 billion worth of orders. Coming as it did when airlines around the world are struggling to keep their noses up, it brought in an atmosphere of cheer for planemakers. Vignettes from the show…
Do buy in
Dubai
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he Dubai Airshow closed with $63.3 billion worth of orders for aircraft, maintenance services and flight training programmes.Visitor numbers broke previous Dubai Airshow record with 56,548 people attending, making the twelfth edition of the show the biggest as well as the most colourful yet, as the halls, pavilions and chalets displayed the colours of the UAE national flag in celebration of the nation’s 40th anniversary on December 2. The theme of flight training was at the core of this year’s show. To commemorate the 40th anniversary celebrations, the show came to a climax as the country’s new aerobatic display team — Al Fursan — opened the aerial display with a fly-past with an Emirates Boeing 777 aircraft, proudly trailing the colours of UAE national flag.
Airbus draws with Boeing
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irbus and Boeing finished the Dubai show neck and neck on contracts, in an event that was dominated by Boeing’s biggest-ever order by dollar value for commercial airplanes - 50 twin-aisle Boeing 777 jets and a public dressing down of Airbus by one of its biggest customers. A GREAT START: Sheikh Mohammed bin Rashid Al Maktoum, ruler of Dubai, on his rounds near the EADS chalet at Dubai Air Show, 2011.
airbus.com
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SPOTLIGHT
The Emirates order for 50 twin-aisle Boeing 777 jets was the big opening stroke of DAX11 ( Dubai Air Show 2011). The airline also has an option to buy 20 more planes, which would push the total list price to $26 billion. The Emirates order consolidates Boeing’s lead in the market for widebody planes and helps hold at bay competitor Airbus’ attempt to encroach on its dominance with the A350 airliner. Boeing’s win at the show comes four months after Airbus said it would push back the debut of its largest A350, which competes directly with the 777-300ER. It delayed the debut to add more thrust after customers demanded more payload and range. Boeing left with an order from Emirates for 50 777-300ERs valued at $18 billion at list price and pulled in another two 777 freighters from Qatar Airways worth $560 million. Airbus’s $17.6 billion order tally relied almost entirely on the single-aisle A320neo, the industry’s fastest-selling model. Airbus, however, was embarrassed hugely when Qatar Airways chief Akbar alBaker cancelled a commercial announcement with them and went instead to a joint conference with Boeing; lashing out at Airbus by saying that the manufacturer was “still learning how to make airplanes”. Emirates’ President Tim Clarke too, was scathing in his comments on the aircraft that is just about making it off the drawing board. A few hours later, he turned up all smiles for a joint briefing with Airbus,
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BUSINESS AS USUAL: (Clockwise from top left) Ben Baldanza (left), President and CEO, Spirit Airlines signs commitment for 75 Airbus A320 family jets with John Leahy, COO-Customers, Airbus; Aviation Capital Group (ACG) signs a purchase agreement with Airbus for 30 eco-efficient A320neo jetliners at the 2011 Dubai Airshow; Airbus management while announcing the creation of the Airbus Corporate Jets business unit at the Airshow; and, a general view of the Dubai Airshow 2011.
Airbus’ sales of the A320neo have climbed to 1,268 units, including 130 ordered at Dubai. Scheduled to enter service in October 2015, the new version of the A320 family has a list of 21 customers. CRUISING HEIGHTS December 2011
announcing the long-awaited order which gave a large boost to the recently-launched A320neo fuel-efficient jetliner, of which he ordered 50. In addition, he doubled the carrier’s order for the A380 superjumbo to 10. The total deal is valued at $6.4 billion at list price. Airbus’s success at the show mirrored its performance at the Paris Air event in June, where new engines for its 20-yearold A320 drew orders for hundreds of planes. “Our A320neo has again been the star of the show,” Airbus Chief Operating Officer John Leahy said in Dubai. “Despite some storm clouds on the horizon there is still strong market demand for fuel-efficient aircraft from airlines and lessors.” Airbus’ sales of the A320neo have climbed to 1,268 units, including 130 ordered at Dubai. Launched in December 2010 and scheduled to enter service in October 2015, the new version of the A320 family has a list of 21 customers, with AirAsia being the largest single customer after ordering 200 planes. Five customers have also signed memorandums of understanding for 152 aircraft, bringing the total number to 1,420 units, making it the fastest-selling aircraft ever, according to its maker. Airbus says the A320neo airliner will deliver a 15 per cent cut in fuel consumption, thanks to the latest-generation engines and large sharklet wingtip devices. In August, Boeing, launched its 737 MAX single-aisle aircraft, which builds on
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SPOTLIGHT
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its 737 Next-Generation to be more fuel-efficient. The 737 MAX promises a 16 per cent improvement in fuel use per seat compared to current competitors and is expected in service in 2017. Boeing has received orders for 700 units so far.
HUSTLE AND BUSTLE: Oman Air announced order for six Boeing 787 Dreamliners; Visitors checking out the stalls at the airshow; Emirates announced anorder for 50 Boeing 777-300ERs; and, fighter planes displaying aerobatics at the airshow.
Embraer cuts bizjet outlook
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mbraer has downgraded its outlook for business jet deliveries in 2011, blaming a downturn in world economy in recent months. The Brazilian company said it expected to deliver 16 of its bigger executive jets, such as the Legacy and Lineage, from an expected 18. Its smaller jet delivery outlook, made up of Phenom 100 and 300, was cut to 75 to 80 from 100, according to Claudio Camelier, VicePresident, Marketing. Embraer put out two possible scenarios of a 10-year industry outlook — one of sustained growth with 11,275 units and one of a downturn scenario with a 9,125 units.
Boost for Bombardier
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he burgeoning market for aircraft in the Middle East has given Bombardier a new customer for its C Series plane, but a larger order that has been talked about by Qatar for more than a year is still proving elusive. Atlasjet Havacilik a charter operator and low-cost airline based in Turkey, signed a letter of intent to buy 10 of the larger CS300 version of the new Bombardier plane in a deal worth $776 million
which will grow to $1.18 billion if the airline exercises five options it also took on the plane. The values are based on list prices, but airlines typically receive a discount of about 30 per cent from list prices. The Atlasjet deal increases the number of airlines ordering the C Series to 10 and boosts the number of orders and potential orders for the aircraft to 153. Airlines have taken options on another 154 planes. That’s a little more than halfway to Bombardier’s goal of landing 300 orders by the time it enters into service in late 2013.
Waxing eloquent
Rather than change strategy during times of trouble, Shaikh Ahmad Bin Saeed Al Maktoum, says that it is important to realise that the Eurozone crisis or natural disasters will keep occurring. CRUISING HEIGHTS December 2011
S
haikh Ahmad Bin Saeed Al Maktoum, President of Dubai Civil Aviation and Chairman and CEO of Emirates Airline, was candid in an interview with the BBC at the show: Rather than change strategy during times of trouble, he says that it is important to realise that events, such as the Arab Spring uprising, the Eurozone crisis or natural disasters such as the earthquake in Australia or the tsunami and quake in Japan, will keep occurring. As such, seemingly abnormal events should be considered normal business that must be dealt with directly, rather than avoided. As is the case with clouds and bad weather facing aircraft, “there is always a way to get over it or to get through it,” he says.”We always expect that there will be difficulties. The world will never be free of problems.” Can anyone quarrel with that?
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GUEST COLUMN
It’s all turnover, and no leftover! TONY TYLER
International Air Transport Authority chief Tony Tyler is optimistic about the future of the aviation industry despite the major challenges it is facing now.
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We still have enormous potential for growth and innovation. But it rests on our ability to continue to deliver a safe, secure, efficient and environmentallyresponsible product. 30
am passionate about aviation and I believe strongly that it is a force for good in the world. Every airplane that takes off carries with it almost infinite possibilities. It connects people and commerce, creating wealth both physical and of the human spirit. Unfortunately, in spite of the value aviation creates, it is a very challenging industry, as our financial numbers bear out. 2010 was one of the best years we ever had. Airlines made a collective $15.8 billion. But our margin was a meagre 2.9 per cent. This year, we expect a $6.9-billion net profit on revenues of $594-billion. That’s a margin of just 1.2 per cent. 2012 is looking even tougher. The high price of oil and an anaemic economic outlook are the biggest issues. Air cargo demand, which had been flat for more than a year, is now declining. September volumes were 2.7 per cent below the previous year. Passenger traffic has been unexpectedly resilient but it is difficult to imagine that trend continuing in the face of rising economic uncertainty and stubborn unemployment levels. We expect profits to fall further to $4.9 billion in 2012 for a 0.8 per cent margin. The problem with the airline business will continue to be that it’s all turnover, and no leftover! If we are right about 2012, it will mean that airlines, since 2001, lost $25 billion on $5.5 trillion in revenues. We still have enormous potential for growth and innovation. But it rests on our ability to continue to deliver a safe, secure, efficient and environmentally-responsible product. One theme that I want to establish early on in my time at IATA is that the aviation value chain must work even more closely together in the many areas where our interests not just overlap…but where they are exactly the same. Under my watch, IATA will continue to be a strong advocate of industry issues. But IATA will be even more effective as a voice in a chorus of industry advocates than as a soloist. And, of course, the message will resonate more effectively with those we seek to influence if the industry is aligned, in harmony and delivering results. Safety is the perfect example. In the decade to the end of this year, over 23 billion people and nearly 426 million tonnes of cargo were transCRUISING HEIGHTS December 2011
ported safely by air. Those amazing statistics are the result of our rich history of working together to address this fundamental challenge with global standards consistently applied. The IATA Operational Safety Audit (IOSA) and IATA Safety Audit for Ground Operations (ISAGO) are good examples. Both are global standards developed in cooperation with industry stakeholders — including governments — that are helping to drive safety improvements across the industry. IATA’s longer-term vision is to develop a Circle of Excellence that covers safety functions with global audit standards. It is an ambitious innovation that will require the cooperation of many partners. Environment is another great example of cooperation. A decade ago, we found a solution to noise in the Balanced Approach agreed through ICAO and supported by industry. Today, we are focused on ICAO for a global solution for aviation on climate change. The industry has done its homework to address the two per cent of global manmade emissions that it produces. As I am sure you are all aware, airlines, airports, air navigation service providers and manufacturers have made three sequential commitments: To improve fuel efficiency by 1.5 per cent annually to 2020, To cap net emissions from 2020, And to cut net emissions in half by 2050 compared to 2005. Unfortunately, the attention of governments on aviation and environment issues is being distracted by Europe’s unilateral plan to include international aviation in its emissions trading scheme from 2012. The airline industry has long opposed this because regional schemes will distort markets and open the door to a patchwork approach of conflicting, competing or layered measures including taxation. In recent months, the debate on Europe’s misguided plans has taken on a new dimension. Governments outside of Europe see its extra-territorial aspects as an infringement on their sovereignty. The US is debating legislation that would prevent its carriers from participating. And the ICAO Council agreed on a declaration opposing Europe’s plans, sponsored by 26 of its member states. Europe’s plans are coming under enor-
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mous pressure. Indeed, I cannot think of another issue touching on international aviation, with the exception of safety, on which China, India, Russia, Japan and the US are in agreement. Two months ago marked the 10th anniversary of the tragic events of 9/11. Air transport is far more secure today than it was 10 years ago. But that security has been achieved at enormous expense. Airlines and governments have spent at least a cumulative total of $100 billion. Airlines themselves are now spending $7.4 billion a year. Unfortunately, for many of our passengers that investment has made security the single-biggest point of dissatisfaction in the travel experience. It is often slow, unpredictable and overly intrusive. Part of the problem is that we are working with a 40-year-old concept for checkpoints. It was developed to stop hijackers by detecting metal weapons — at a time when there were far fewer air travellers. IATA’s vision is for a Checkpoint of the Future that takes a risk-based approach and uses technology solutions to allow a passenger to walk uninterrupted from curb to gate. Within seven years or so, technology will be available to screen travellers and their hand baggage as they walk uninterrupted through checkpoints. During my tenure at IATA, along with improving safety, if there is one change that I would like to achieve, it is the security experience. Of course, as we were reminded just a year ago with the Yemen printer cartridge incident, cargo security must also be addressed. A riskbased approach is needed here as well, but there is no Checkpoint of the Future solution for cargo — nor should there be. The innovation needed is to secure the supply chain. That means shippers, freight forwarders, airports, airlines and regulators working together on a multi-layered approach combining advanced electronic information and physical screening. ICAO is aligned with this vision. We can see progress in the e-cargo security declaration, which offers states data on who is shipping what and where. This provides a globally harmonised format for governments to make risk assessments. Many of aviation’s challenges are political. Aviation globally supports $3.5 trillion in economic activity and 33 million jobs. Despite our vital economic role, politicians appear to value us more as surrogate tax collectors or as a target of populist regulations that undermine the industry’s efficiency. From my first-hand experience in Asia, I have seen aviation act as a catalyst for economic growth in China — and elsewhere across the region. Governments in Singapore and South Korea have built strong economies on global connectivity. The expansion that we are seeing in the Middle East is the result of a similar strategic approach. I used to run an airline. We wanted to get our customers to their destinations on schedule as much or more than they did. But aviation is above all a collaborative endeavour and it is both unfair
PERFECT SET-UP: A bird-eye view of Frankfurt Airport.
and unproductive to lay all the responsibility and financial liability for an irregular operation on just one participant in the process. I am not arguing that airports and government agencies should also be subject to draconian fines for equipment failures or personnel shortages. I am suggesting that we need to innovate our thinking and replace a rigid culture of blame with a flexible structure mandating collaborative decision-making among all the stakeholders. I also believe that we need innovation in aviation’s economic oversight. Deregulation started in the US over three decades ago and spread around the world. But it is only half-baked because governments are unwilling to cede to the marketplace their control over competition. We see it in fare unbundling. It is taken for granted in the telecom, hotel and car rental industries. But governments want to regulate the product offering of airlines. Of course, no one likes paying for things they used to receive for free. But it is unrealistic to expect a deregulated industry to maintain the business practices used when airlines were quasi-public utilities with a regulated costplus pricing model. Governments should not deny airlines tools, which are taken for granted in other industries. I have witnessed vast changes in the aviation landscape since I joined this industry in 1978. The disappearance of some of aviation’s greatest names has been accompanied by the rise of new liveries, some in regions that previously were considered aviation backwaters. Through it all, there were at least two constants. Innovation made aviation safer, greener and more efficient. And aviation made the world better — with connectivity driving both economic and social progress. Working together, we can overcome the challenges we face and enable aviation to continue to transform our planet into a global community. (Excerpted from the speech of IATA Director General at the International Aviation Club, Washington in early November.) CRUISING HEIGHTS December 2011
The disappearanc e of some of aviation’s greatest names has been accompanied by the rise of new liveries, some in regions that previously were considered aviation backwaters. 31
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RISING FUEL PRICES, HIGH OPERATING COSTS, DEPRECIATING RUPEE AND RISING PASSENGER LOADS ALL ADD UP TO A HEADY CONCOCTION FOR THE COUNTRY’S AVIATION SECTOR. WHILE KINGFISHER NEEDS A HEFTY INFUSION OF FINANCES, JET AIRWAYS AND SPICEJET ARE NOT FAR BEHIND. CRUISING HEIGHTS TAKES A LOOK AT THE GLOOMY SCENARIO.
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The debt and liabilities of the Indian domestic carriers amount to a whopping `85,000 cr...It is a classic case of 'Fly more, Earn less'
According to DGCA, the domestic passenger growth rose more than 18 per cent during January-October 2011 at 49 million compared to 42 million for the same period of 2010. Data from the International Air Transport Association (IATA) suggested that the growth in domestic aviation registered in India was, perhaps, the highest. Despite such a rosy climate where demand is rising relentlessly, the airlines are going down because of rising costs that are beyond their control. For instance, Aviation Turbine Fuel (ATF) prices have gone up from `42,000 per kiloliter in January 2011 to nearly `63,000 per kiloliter in September-October 2011. The fuel component now costs nearly 50 per cent of the total operational cost for domestic airlines. Sales tax levied on ATF by state governments on an ad valorem basis ranges between four per cent and 30 per cent. Soon these airlines will also have to brace up for a massive increase in
Graphic: Ruchi Sinha
ndian aviation industry has now acquired a unique distinction. In a classic case of ‘Fly more, Earn less’, domestic airlines carried year on year more passengers across the blue skies but painted their balance sheet a shade darker in red. This phenomenon is largely true of all domestic carriers with the exception of one player whose reality will be known only if disaggregated figures are available in the public domain. What we mean is operational cost versus returns rather than non-operational income like sale and lease back, etc. This is because nearly 80 to 85 per cent of all costs borne by domestic carriers is common and so any scope for making money on operations would largely depend on cost cutting in the remaining areas of variable costs and how fuel efficient the aircraft are flown and handled. A few common costs are fuel, airport charges, pilots, engineers, salary packets, etc.
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BLEEDING
RED
CRUISING HEIGHTS December 2011
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COVER STORY airport charges. Among others, Delhi and Mumbai have filed their multi-year aeronautical charges with the Airports Economic Regulatory Authority of India (AERA), which is expected to give its final decision by February-March 2012. The Indira Gandhi International Airport at Delhi developed by GMR has asked for a whopping 775 per cent increase in airport charges, which include landing, parking, navigation and other related aeronautical charges. If that happens, then the almostdying airlines will surely pass on the increased airport charges to passengers which in turn will have its inevitable impact on demand leading to contraction of passenger traffic growth. Domestic carriers — Air India, Jet Airways, Kingfisher Airlines and SpiceJet — have registered rising losses in the second quarter (Q2) July-September 2011 compared to the corresponding period of 2010. This is evident from the performance of the publicly quoted airlines: Kingfisher Airlines, Jet Airways and SpiceJet (see accompanying story on Pages 36 and 37). Soon after Kingfisher Airlines announced the withdrawal of flights from a number of destinations — mostly those that were making losses — in the third week of November 2011, there was a hue and cry. The media even wrote off Kingfisher as a gone case. Later, its promoter Vijay Mallya addressed the media after announcing a day earlier the airlines’ Q2
Vijay Mallya
Kingfisher chief Vijay Mallya met Vayalar Ravi and sought assistance prompting even the Prime Minister to state that the sector needed help. This was construed as a bailout by the public and the media
A REPLAY ALL OVER THE WORLD
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t is not that the aviation scenario is woeful only in India. All over the world, it is a replay of the ‘fly more, earn less’ scenario. International carriers had faced strong headwinds following the global economic slump of late 2008. In 2009, global carriers lost $ 4.6 billion, according to the International Air Transport Association (IATA). IATA should know: it represents 230 carriers that account for more than 90 per cent of scheduled global air traffic. The association had emphasised that the times were hard and it would be more difficult in the days to come, what with high fuel prices and precarious economic conditions in Europe and the US. “The financial performance of the airline industry is closely linked to the health of world economies. If economic growth is strong, airlines can cope with high fuel prices,” IATA said. However, global air passenger traffic rose 5.6 per cent in September from a year ago. That
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could have been because of bookings made earlier when economic conditions were good, IATA said. In Asia, with some semblance of growth, preliminary traffic figures for the month of October released in the third week of November by the Association of Asia Pacific Airlines (AAPA) showed that there was growth in international air passenger travel but weakness in the international air freight markets — indeed a clear warning for the future since air cargo rise and fall is a clear indicator of the global economy. Asia Pacific-based airlines carried a total of 16.5 million international passengers in October, an increase of 5 per cent compared to the same month last year. Overall, international passenger traffic, in revenue passenger kilometre terms (RPK), grew by 5.1 per cent. Available seat capacity grew by 8.8 per cent as a result of additional aircraft deliveries, resulting in a 2.7 percentage point fall in
CRUISING HEIGHTS December 2011
results. Mallya presented the so-called “real picture of his airlines”. At the end of March 31, 2011, Kingfisher Airlines had a total debt of `7054 crore and accumulated loss of `4200 crore. As reported earlier in these columns, Kingfisher Airlines got a Reserve Bank of India-backed debt restructuring by a SBI-led 13 lending banks group in early 2011. These banks had lent `7000 crore and part of the loan was converted into equity at over `60 per share adding up to 23 per cent of the airlines’ equity. When it became difficult for Kingfisher to hide the fact that it was nearly bust, in early November 2011 it announced cancellation of many flights till November 19. In reality, the cancellations continued days beyond that. This was sought to be justified by the management that it was a consequence of the decision the airline board had taken in September 2011 to scrap its lowfare service, Kingfisher Red, and retain only the full service represented by Kingfisher First and Kingfisher Class, which were the business and economy class, respectively. The flight cut announcement and subsequent revelation led the airlines’ share prices to fall to a record low of `19. Mallya met Civil Aviaiton Minister Vayalar Ravi and sought assistance prompting even the Prime Minister to state that the sector needed help. This was construed as a bailout by the public, the media and even competing airlines that declared that it should be the case of survival of the fittest. As the build-up continued, Mallya was constrained to call the media and say, “We have not asked for any bail-out and the average international passenger load factor, to 76.4 per cent. Commenting on the results, Andrew Herdman, AAPA Director General said, “Asian carriers have continued to see growth in demand for both business and leisure travel, with an overall 3.7 per cent increase in international passenger numbers for the first ten months of the year. However, air freight markets remained weak, with international air cargo demand declining by 4.5 per cent compared to the same period last year.” Herdman concluded, “Asian airlines are continuing to benefit from relatively strong economic growth in developing economies across the region, but airline margins have been squeezed by sharply higher fuel prices this year. Despite these challenges, optimism about the long-term outlook is reflected in ambitious fleet expansion plans, and innovative new business ventures.” Take the example of two of the top
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all we want is `500 crore in working capital loan.” It was in this context that he met the bankers. The bankers, adopting a policy of once-bitten-twice-shy, simply did not bite the bait. In fact, the bankers wanted Mallya to raise nearly `2000 crore of which `800 crore had to be in the form of fresh equity injection. Forced, Mallya is now busy trying to raise money that is proving to be difficult. However, the going down of Kingfisher has reignited the debate of allowing Foreign Direct Investment (FDI) by foreign airlines in Indian domestic carriers. Will Mallya be able to get FDI from foreign carriers? This is the million dollar question since Mallya’s Kingfisher Airlines in its current state of financial health has a market cap of not more than `890 crore. Besides, its net worth has also been eroded. So, if one goes on the basis of the existing valuation, a chunk of 26 per cent can literally be had for a song to any foreign carrier. But will Mallya part with so much equity for so little? Perhaps we may have to wait for good times to return. The SBI Managing Director remarked that the bank had to be satisfied about the viability of Kingfisher Airlines as there was no point in restructuring debt if the airlines’ operations were not going to be stable. From 89 aircraft it had three years ago, the fleet of Kingfisher has shrunk to 66 and of this, more than a dozen are on ground due to various problems, primarily engine. The lessors who have leased the aircraft to the airline are demanding recall of their planes
Jet Airways also made a huge Q2 2011 loss of over `714 crore. The loss was due to a combination of high fuel cost and low passenger traffic
carriers in the world, Singapore Airlines (SIA) and Emirates. Both have been seen a fall in earnings. Known for being among the few best managed airlines, both the carriers have been able to do little to put a cap on expenses. In the three months ended September 2011, SIA’s net profit had gone down to 194.2 million Singapore dollars ($152.4 million) from S$380.2 million a year earlier. Revenue totaled S$3.7 billion, up slightly from S$3.6 billion, the carrier said in a statement to Singapore Exchange Ltd. A statement from SIA said: “The prevailing economic uncertainty and weak consumer confidence are impacting demand for air transportation. Advance passenger bookings are showing signs of weakness, particularly in Europe and the United States.” If anyone thought that the Middle East was an oasis of tranquility — international passenger traffic recorded at 9.1 per cent above 2010 levels; capacity
growth was held to 8.5 per cent and the region was the only area where demand growth outstripped growth in supply — the Dubai-based Emirates and one of the world’s fastest-growing airlines, reported that half-year net profit had gone down to 827 million UAE dirhas ($225 million), down from 3.4 billion dirhams a year earlier while revenue increased 15 per cent to 30.3 billion dirhams. The major portion of the profits was eaten away by fuel costs, according to Emirates. In fact, the carrier had to pay a billion more dollars for fuel in comparison to the corresponding period in the previous financial year. In fact, the $900-million profit generated in 2010 by the airlines from the Middle East would fall to $800 million this year and to $700 million in 2012, according to a press release from the International Air Transport Association (IATA). Majdi Sabri, IATA regional vice president for the Middle East and North
Naresh Goyal
since Kingfisher has defaulted on lease payments. To top it all, between 75 and 100 of its pilots have over time quit the airline. Mallya, on his part, has told the banks to securitise maintenance money he had deposited with lessors which is about `1000 crore and get it released. This, he feels, will help him reduce the interest burden and debt. But the rising dollar vis-a-vis the rupee has complicated matters even more as the foreign exchange component of running an airline is quite substantial and the rupee depreciation is, therefore, taking its toll. Kingfisher reported a net loss of `468.66 crore during Q2 2011, which was nearly double of Q1 in 2011. This, despite a rise in income by 10.5 per cent to `1528.16 crore during Q2 2011 against `1382.72 crore in Q2 2010. Kingfisher’s oil dues amounted to `636.79 crore, an increase of ` 24.21 crore during April-September 2011. It is not only Kingfisher that owes money for ATF. The total outstanding fuel dues of all airlines to oil companies rose by 30 per cent to ` 1639.38 crore on September 30, 2011 from `1261.45 crore on March 31, 2011. Jet Airways’, for example, unpaid or outstanding fuel bill to oil marketing companies was `849.15 crore at the end of September 30, 2011, a 65 per cent increase over `514.68 crore outstanding at the end of March 31, 2011. Jet owed ` 695.90 crore to IOC and ` 153.24 crore to BPCL during the same period. If Kingfisher Airlines has gone under water, the country’s biggest private carrier Continued on Page 39
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Africa (MENA), was quoted as saying, “In the light of the many global economic challenges that we face, it is more important than ever for the industry to explore all possible ways of improving efficiency and customer service.” In the US, the Air Transport Association of America (ATA) said that this year 2 per cent lesser number of people would fly during the Thanksgiving holidays in November although planes would still be full. Once again, fuel prices were the main culprits. In the first nine months of 2011, fuel expenses rose 38 per cent, or $9.4 billion, from a year earlier for 10 of the largest US. airlines, according to ATA. In desperation, a number of airlines have cut capacity. For Deutsche Lufthansa AG, Europe’s second-biggest airline, operating profits have fallen to €575 million from €783 million a year earlier, and the carrier has cut a planned increase in winter capacity by two-third.
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NO TIME
TO TOUCH AIRLINE STOCKS
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With most carriers bleeding, we asked Subhankar Ghose to take a close look at the stocks of the listed airlines. Here is his report:
Jet Airways
SpiceJet
Kingfisher Airlines
CRUISING HEIGHTS December 2011
The acknowledged ‘guru’ of stock market investing, Warren Buffett, has shared his investment success formula: “Be fearful when others are greedy, and be greedy when others are fearful.”
G
lobal economies — particularly those of the Eurozone countries, as well as those of the UK and USA — have been in the doldrums for more than three years. Over-leveraging and financial shenanigans created an untenable situation that required serious belt-tightening. Instead, the problems were exacerbated by injecting large doses of economic stimulus (read ‘money printing’) that hardly bolstered the stumbling economies, but lifted global stock markets on a high tide of cheap liquidity. GDP growths have remained tepid or non-existent in Europe and USA, despite easy liquidity and low interest rate regimes. Massive job losses have hit consumer sentiment. Export orders are drying up. Travel and tourism industry is taking it on the chin. The economic outlook is hardly conducive for a sustained rally in global stock markets. In India, however, the situation is different. The country’s economic growth is not that dependent on external factors, unlike those of our Asian neighbours. A large domestic market has sustained our GDP growth to the extent that inflation has started eating away at our prosperity. Successive rounds of interest rate hikes by the Reserve Bank of India (RBI) has failed to curb inflation, but has started to affect economic growth. Bold fiscal policies and reforms would have strengthened RBI’s hand in controlling inflation. Instead the situation is drifting from one crisis to another. Stock markets don’t thrive when interest rates are high and GDP growth is slowing down. No wonder, our stock markets are devoid of retail participation, and stock brokers are sacking their research teams and closing down offices in a bid for survival. No one wants to buy stocks because of the prevailing uncertainty in global and local economies. Most investors appear to be fearful. That means this is a great time for smart investors to be greedy and start picking up shares of fundamentally strong companies with proven management and business models that have survived through thick and thin. The question is: Do airline companies qualify as suitable picks? Let us first look at the promise. India’s demography and huge middleclass are awakening to the possibility of
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living the good life — thanks to the proliferation and reach of Bollywood movies and satellite TV channels to the remote corners of the country. Marketers of the world — whether of Reebok shoes or Airbus aircraft — are making a beeline to sell their wares in India. Liberalisation of the airline industry by allowing private players, and introduction of nofrills, low-cost flights has opened the doors to first-time flyers who had hitherto boarded a bus or a train. Air travel is no longer considered a luxury but a faster means of transport to get business done quickly. The teeming multitudes at any of India’s metro and even non-metro airports are a clear sign of the growth possibilities in the aviation sector. Spiffy new airports are coming up. Existing airports are being modernised to bring them up to world standards in terms of passenger amenities and groundhandling services. Latest aircraft — both for long-haul and short-distance flights — are being ordered by the dozens. Bilateral entitlements to several international destinations have increased the number of inbound and outbound flights to hitherto improperly-serviced regions of the country. All systems appear to be “GO” for a phenomenal growth of the airline industry. What about performance? Sadly, it hasn’t lived up to the promise. Most of the private players who entered the airline industry did so because they had the money. The airline industry is extremely capital intensive and requires large and regular doses of money — to keep the business running, and for regular maintenance and modernisation of existing fleets. The exhorbitant cost of aviation fuel, which is heavily taxed by the government, has been a major deterrent to profitable operations. Huge manpower costs — particularly of very highly paid pilots, who are prone to switching loyalties or striking work at the drop of a hat — add to the overall burden. Last but not the least, is the cut-throat price competition among existing players trying to carve out a bigger portion of the consumer pie. Add to that the inexperience of promoters in running the complicated logistics involved in day-to-day operations of an airline business. That has led to a seat load factor several percentage points lower than the global average — compounded by ridiculously high prices of business class (and first class) seats. An over-estimation of growth possibilities led to ordering of aircraft far in excess of requirements. India’s population is not a mobile one, in the way it is in the biggest air-travel
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market of the USA. People usually travel shorter distances — whether going to their place of work or visiting relatives or friends. That makes air travel unviable — more so because of India’s well-connected railway system. The business model being used by airlines companies — a hub-and-spoke model followed in the USA — is unsuitable because the distances between hubs are not large enough in India. A different and more financially viable model needs to evolve through judicious application of information technology — perhaps through a combination of air and surface transport facilities. Jet Airways managed a miniscule net profit in the year ending March 2011 due to accounting adjustments. It has been making profits at the operating level, and cash flows from operations have been positive for four of the past five years. But the debt/equity ratio is a massive 16, leading to financial expenses exceeding ` 1800 crore, the Price per Earnings (P/E) ratio stand at a bloated 238, giving zero earnings yield; the Return on Equity (RoE) at a negligible 1.15. Recently, the airline announced Q2 ‘12 results that have been dreadful. Top line grew marginally over Q2 ‘11 but the company has slipped into losses both at the operating and net levels. Net loss in Q2 ‘12 exceeds `700 crores. Investors may be better off keeping their money in a savings bank account! The one year closing chart pattern is reflecting the poor financials: The stock is trading below its 50-day EMA and well below its 200-day EMA and is deep inside a bear market. From its peak of 905 touched in November ‘10, the stock’s price lost a whopping 75 per cent to its October ‘11 low of 226. All attempts at a revival have met with selling pressure. The stock is likely to test and fall below its October ‘11 low. Don’t go anywhere near it: The less said about Kingfisher Airlines, the better. The financials are in such a pitiful state that any sensible person would shut down the business immediately. The perennially loss-making company has a negative net worth and negative cash flows from operations for the past five years. Failure to make fuel payments has led to stopping of supply and consequent curtailing of flights. The recently announced Q2 ‘12 results indicate that the financials are going from bad to worse with a doubling of the net loss over Q2 ‘11 despite growth in the top line. This is clear evidence that the company’s survival has become a big question mark. The spurt in the stock’s price on high volumes during the past couple of days was mainly on speculation of a government bailout of the company. CRUISING HEIGHTS December 2011
Such hopes are belied. The stock chart resembles the path of a downhill skier who has imbibed too many bottles of Kingfisher beer! The stock price dropped from its peak of 88.40 touched in November ‘10 to a trough of 19.55 in October ‘11 — a huge 78 per cent fall from the top. It is currently trading well below its 50 day and 200 day EMAs, and is in danger of sliding deeper inside a bear market. A single-digit price will not be a surprise. Avoid with a capital A: The financials of SpiceJet almost make it investment-worthy. RoE of 32 and a P/E ratio of 9 are not bad figures by any means. But net profit margin is a meager 3.4 per cent and cash flows from operations have been negative for four of the past five years. Though the company has been making profits for the past two years, it was largely due to the professional management at the helm. That has changed since the Maran brothers took control. A fresh infusion of equity has prevented the company’s net worth from turning negative, but the respite may be short-lived. Q2 ‘12 results were extremely disappointing in spite of decent topline growth. The company made big losses at the operating and net levels from small profits in the year-ago quarter. The stock made a futile effort to stay above its 50-day EMA, and is trading well below its falling 200-day EMA — the sign of a bear market. Ever since it touched a 52-week high of 92.30 in November ‘10, it has been making a bearish pattern of lower tops and lower bottoms. At the October ‘11 low of 20.55, the stock corrected nearly 78 per cent from its top. But the correction is far from over, and the stock is on the verge of dropping to a new low. There are other players such as Indigo and GoAir which are not listed entities yet. As per available reports, they seem to be performing reasonably well and, perhaps, adding to the margin pressure of the listed companies. Consolidation within the airline industry started when Air Deccan merged with Kingfisher Airlines, and Sahara was taken over by Jet Airways. A few more mergers and acquisitions may reduce competition and help the profitability of the remaining players. Till the industry settles down to more sustainable and profitable operations, investors should look at stocks from other sectors that haven’t fared so disastrously. [The author is an independent analyst who writes an investor-education blog at http://investmentsfordummieslikeme.blog spot.com]
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COVER STORY
‘A big blow to survival and continuity of aviation sector’ Making an impassioned plea for the aviation industry, G M Rao, Chairman, GMR Group, sent a letter to Prime Minister Dr Manmohan Singh. Excerpts from the letter: G M RAO
DR MANMOHAN SINGH
November 15, 2011 Dr. Manmohan Singh, Hon'ble Prime Minister, Government of India, New Delhi 110 001 Respected Sir, Sub: Government support to aviation sector, particularly airline industry. Emboldened by your vision, and support of Government of India, aviation industry in the country has grown by leaps and bounds. Since the last five years, Indian aviation industry has grown from 46th to 9th largest position in the world, which has supported Indian GDP's hitherto growth of 8 per cent to 9 per cent. This has become possible mainly due to the upgradation of major airports at Delhi, Mumbai, Hyderabad and Bangalore, with world-class infrastructure, including entry of new airlines — 'full service' and low-fare carriers. Services rendered both by airlines and airport operators by now are amongst the best in the world.
Role played by Aviation sector Aviation industry is playing a key role in GDP and economic growth of the country. Due to entry of low-cost carriers and keen competition, air travel has become affordable to the common man. Indian aviation is expected to reach 3rd position in 2020 from the current 9th largest aviation market in the world. Aviation sector plays an important role in contribution to GDP and employment generation. Such an important aviation industry, today it is at crossroads due to: (i) National carrier — Air India is incurring huge losses (ii) Kingfisher Airlines — also incurring huge losses and is having severe difficulties to meet operational expenses (iii)Jet Airways — also reported about Rs 700 cr loss in the last quarterly results (iv) SpiceJet, IndiGo and GoAir too are stated to have recorded losses in the last quarter. If this situation is allowed to continue, it will be a big blow to survival and continuity of aviation sector. You are kindly aware that modernisation of four airports — at Delhi, Mumbai, Hyderabad and Bengaluru — involved a huge capital outlay of more than `30,000 cr in the last 5 years. Therefore, airport operators are also keen that government appreciates the problems and supports the airline industry with solutions.
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According to us, the airlines are facing the following challenges: Today there is a cut-throat competition with airlines including national carrier, Air India resorting to lowering of fares, which is lower than their cost. No business can sustain as long as fares are below the cost. Most of the airlines are making huge operational losses. In the operating cost of an airline, fuel cost accounts for about 35 per cent to 40 per cent. One of the reasons for such a high cost is the high component of Sales Tax varying between 20 per cent 38 per cent being levied by various states. This is leading to ATF price in India amongst the highest in South Asian countries. Also, over the last 12 months, ATF prices have increased by 45 per cent (current ATF price is about `61115 /KL Vs `42276 /KL last year). When the state governments are getting support from Government of India in the form of share in tax and duties collected by Government of India, imposition of steep Sales Tax on Aircraft Turbine Fuel by state governments is not justified. To overcome the current crisis, we give the following pragmatic suggestions: National carrier, Air India to operate with a price structure not below its cost in all the sectors. This will induce other airlines to benchmark costs by fixing realistic fares. Reduce Sales Tax, thereby lowering cost of ATF by declaring ATF as “declared goods”, so that there will be uniformity of sales tax @ 4 per cent across all states Allow foreign carriers to invest (FDI) in airlines in India As viability and success of airport operators is very much dependent on viable operations of airlines, we request your goodself to get the matter be examined, and extend full support to airline industry at this critical juncture. If the above are not addressed in time, the problems will spread to airports — landing them also into financial problems. This will, in turn, affect GDP growth very badly, besides cascading effect across the value chain in aviation industry. On the occasion of India celebrating 100th year of Civil Aviation journey, your kind intervention to support the airline industry will help the overall economic growth of the country overcome the crisis which, otherwise is bound to have ripple effect on the economic growth of the country. Warm regards, G M RAO Chairman For Delhi International Airport Private Limited
CRUISING HEIGHTS December 2011
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Jet Airways also made a huge Q2 2011 loss of over `714 crore. The loss was due to a combination of high fuel cost, low passenger traffic because of slack season and huge forex burden following the sharp depreciation of the rupee against the US dollar. Incidentally, during Q2 2010, Jet Airways made a marginal profit of `12.40 crore. The forex variation alone caused a loss of `276 crore in Q2 2011. This was in sharp contrast to a forex gain of `374 crore in Q2 2010. Jet Airways incurs 60 per cent of its expenditure in dollar denomination to buy fuel for operating international flights, pay lease rentals and outstation staff. The fuel costs of the airline rose 50 per cent to `1491 crore during the quarter under review. Jet’s revenues grew by 8 per cent to `3294 crore of which nearly `106 crore came from the airline leasing its wide-bodied Boeing 777s to foreign carriers. Due to the low fares prevailing in the domestic market, the airline despite a load factor of 72 per cent hardly saw any revenue growth which was at `1208.77 crore. With Q3 October-December 2011 being the peak season, the airline expects to not only increase passenger loads but also yields. The absence of Kingfisher Airlines has already helped the airline like its competitors to increase loads. There has especially been an increase in Business Class loads that are not there in competing LCCs and the other full-service carrier Air India not providing any competition in the Business Class segment. Even the First Class seats in Jet Airways international flights have attracted sizeable passenger loads. Taking the first half of fiscal 20112012, Jet Airways made a loss of `836.76 crore. As part of cost rationalisation, Jet Airways has reportedly shifted its night halt bases in Hyderabad and Bengaluru to Chennai. The biggest problem of Jet Airways is the drag effect the losing JetLite has on its principal, Jet Airways. Soon Jet Airways may decide to scrap one its two low-fare brands — Jet Konnect and JetLite. In all probability it may scrap the latter brand. Meanwhile, Jet Airways auditors, Deloitte Haskins & Sells and Chaturvedi & Shah, have stated that raising finances will remain critical issue for the airline if its accounts are to be prepared on a “going concern basis” in future. The auditors in their note said: “The appropriateness of assumption of going concern is dependent upon the company’s ability to raise requisite finance or generate cash flows in future to meet its obligations including financial support to its subsidiary.” Jet Airways has replied to the auditors’ note of November 11, 2011 that it was confident of raising
ADDING CAPACITY BUT HOW WILL THEY FLY? A Bombardier plane ready to be handed over to SpiceJet .
Kalanithi Maran
SpiceJet reported a net loss of `240 crore in Q2 2011 because of spiralling fuel prices with the airline's fuel expenses 83 per cent higher than that the same period of last year. CRUISING HEIGHTS December 2011
money through equity infusion. To start with Jet Airways plans to raise $300 million through sale and lease back of nearly 40 aircraft it owns. Besides, the airline is also confident of mobilising $500 million from the sale of its Bandra-Kurla complex property in Mumbai to Godrej. Jet Airways has a debt of `14,000 crore. SpiceJet reported a net loss of `240 crore in Q2 2011 because of spiralling fuel prices and the weakening rupee. During Q2 2010, the low-cost carrier made a profit of `10 crore. In a statement SpiceJet CEO Neil Mills said: “The traditionally weak July-September quarter was made even more challenging this year by high fuel prices, depreciating rupee and irrational pricing environment.” The airline’s fuel expenses were 83 per cent higher than that the same period of last year and fuel cost constituted 63 per cent of the total revenue in Q2 2011 as against Q2 2010. During Q1 2011, the airline made a loss of `71.96 crore. Notwithstanding all this, the low-cost carrier posted a 26 per cent growth in net sales at `759 crore in Q2 2011 from `603 crore in Q2 2010. Compared to fuel expense of `261 crore in Q2 2010, SpiceJet spent `478 crore during Q2 2011. Its total income was `766.50 crore in Q2 2011 against `629 crore in Q2 2010. With the induction of Q 400 turbo-props and Boeing 737s, its lease rentals rose 31 per cent to `137.50 crore compared to `104.3 crore in the previous year quarter. The Q2 2011 also saw the airline issuing 35,900,000 shares to Kalanithi Maran, the airline promoter, through preferential share issue at a price of `36.48 aggregating `130.96 crore. The LCC claimed that it outperformed the industry in passenger growth which was as high as 28 per cent compared to industry average of 19 per cent. The real problem was the pricing environment as low fares depressed yields. The average passenger yields of the carrier were down by 4.8 per cent at `3317.
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COLUMN/CHOCKS OFF
Time to bite the bullet and go for FDI R Krishnan
Now that a demand for Foreign Direct Investment in Indian domestic carriers has been raised, it is time we looked at the matter dispassionately, argues R Krishnan.
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While IndiGo is supposedly sitting pretty, indications are that GoAir, the third low cost carrier, is also facing a financial crunch 40
he Indian economy is no longer on a roll. GDP growth has slowed to 7.5 per cent against the earlier 8.5 to 9 per cent. With global economic indicators showing no signs of comfort, we will have to contend with lower figures growth for a couple of years more. Normally, domestic air traffic growth is not more than one and a half times the GDP growth. India during the boom years of 2005, 2006 and 2007 witnessed three times this growth when GDP grew by 9 per cent annually. Perhaps, that was largely due to the low base in earlier years. Now that the economy has slowed, the aviation industry too is moving at a lesser speed than what it did during the boom years. Even so, the present 19 per cent growth in domestic air traffic on the face of a 7.5 per cent GDP growth clearly suggests that something is really wrong with the Indian aviation industry and the way it is run. How can the aviation industry that was booming bust airlines? This is what is happening in India. At least two of the six domestic carriers should have closed down and two more need to be admitted in the ICU (Intensive Care Units). The fact that none of this has happened seems to suggest that even today there is unexplained optimism. The Indian aviation business has suffered a double whammy. First, the US dollar has risen so sharply against the Indian rupee (by more than 15 per cent in the last six months) that much of the dollar-denominated costs of the airlines in the country have gone through the roof. Second, the rising dollar has sharply pushed up oil prices which have also risen independently leading to a steep hike in the prices of aviation turbine fuel (ATF) for domestic carriers. Between January and October 2011, the sale price of ATF by state-owned oil marketing companies in India rose sharply from `41,200 per kilolitre to `63,200 kilolitre or more than 50 per cent. What this means is that the fuel cost component in the total operating cost of a domestic airline in India has now reached nearly 50 per cent. Further, the rising dollar has made it excruciatingly painful for airlines to pay for lease rentals, spares, etc. To top it all, the state-owned Air India CRUISING HEIGHTS December 2011
adopted a policy of sharp fare cuts to corner a bigger share of the domestic market since early 2011. While Air India’s market share showed a slight improvement, its policy of reduced fares hurt not just the competing domestic carriers but also itself as the overall yields of every airline fell sharply leading to a loss of `1522 crore sustained in the second quarter (Q2) JulySeptember 2011 by Jet Airways, Kingfisher Airlines and SpiceJet. While IndiGo is supposedly sitting pretty, indications are that GoAir, the third low-cost carrier, is also facing a financial crunch. As for Air India, it is only been making losses for the last four years — whatever the fuel price or rupee-dollar exchange rate. Notwithstanding the severe financial crunch these airlines have been facing, there has been no fare rise to cover costs. Consequently, they are going under with two of them already buried under heavy losses. It is but natural that when fares are low and purchasing power rising in India, the demand for air travel will only rise. In 2005-06, domestic air travel rose by 37 per cent and is nearly 19 per cent today which it should not be if actual economic forces are allowed to be operated combined with tweaking of policies. The fact that none of this has happened speaks eloquently of the Indian government and the Indian carriers’ policy disconnect. However, one issue has come to the fore again: Foreign Direct Investment (FDI) by foreign carriers in domestic airlines. This is an issue that has been hanging fire for more than 14 years since the time Tata-Singapore Airlines (SIA) wanted to launch a domestic carrier. At that time the policy did not specifically bar FDI by foreign airlines as even Jet Airways, which was already five years into operation as a scheduled carrier, had FDI from Bahrain airport and Kuwait besides Gulf Air. So when the TataSIA application came in, it was rejected by the then United Front government which subsequently ruled that there would be no FDI by foreign carriers directly or indirectly. In a move that can best be characterised as an eyewash, Jet Airways handed over a letter to the Ministry of Civil Aviation that it had bought back the equity of the foreign airports/carriers. Since then, that is from 1996-97 till today,
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status quo continues. Between then and now, many private carriers like Damania, NEPC, EastWest, and later Air Sahara and Air Deccan have disappeared. The last two met their doom during the period of boom. After a four-year lull, we are seeing Kingfisher Airlines crashing down. But even when he knew that he would not be able to sustain his airline, promoter Vijay Mallya continued to advocate FDI by foreign carriers in Indian domestic carriers. Thus, when on November 22, 2011, the Department of Industrial Policy and Planning under the Ministry of Commerce and Industry circulated a cabinet note seeking the Cabinet’s approval for its proposal to allow 26 per cent FDI by foreign carriers in Indian scheduled domestic carriers, it seems the government had at last learnt a lesson. Strangely, the Ministry of Civil Aviation has said that FDI should not be more than 24 per cent raising the bogey of security. What the bosses at the Civil Aviation Ministry have probably never understood is the fact that there could be an impact on security in airports where it has allowed 100 per cent foreign investment in Greenfield airports and 74 per cent in Brownfield. For inexplicable reasons three governments, namely the Narasimha Rao-led Congress government between 1991 and 1996, the UF-led government from 1996 to 1998 and the A B Vajpayee-headed and BJP-led NDA government from 1998 to 2004 resisted the entry of foreign carriers in Indian domestic carriers; hence no FDI was allowed from foreign carriers. It is after all these years of resistance that the present UPA-II government — out of sheer necessity — wants to allow FDI by foreign carriers. Is it not strange that when Dr Manmohan Singh was the Finance Minister in the 1991-96 period of the Congress government, he took the first proactive step to devalue the Indian rupee, abolish industrial licensing and allowed the scheme of automatic approval for foreign investment even in the chocolate-making business. He had then also allowed the entry of the Indian private sector into the domestic aviation business. With the circle coming full, Dr Manmohan Singh this time as the Prime Minister in UPA-II has understood the need for allowing FDI by foreign carriers in Indian domestic carriers. Why? Because, as in 1991, when the Indian economy was in a serious economic crisis, he opened the economy, and this time when the Indian aviation sector is in a state ready to be wheeled into a hospital, he is seeking to open it to foreign carriers. As usual the Ministry of Civil Aviation, which has always obstructed (in the context of allowing FDI by foreign carriers) — except where it concerned granting liberal bilateral rights to Gulf airlines/mega carriers, playing favourites with select Indian private carriers and granting desired foreign rights to them — again chose to first reject and later demanded a cap on FDI by foreign carriers at 24 per cent. The truth about the condition of the sector was better reflected by the Ministry of Com-
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FADED INTO OBLIVION: Private carriers such as Air Sahara had to stop the operations due to financial crunch.
merce and Industry whose DIPP in the cabinet note said: “Private airlines are in dire need of funds for their operation and service upgradation to compete with other global carriers. They need immediate infusion of funds. Investors with 26 per cent or more holding is considered strategic as he can have a say in the policy decision of the corporate entity under Indian company laws.” This was the justification for 26 per cent and rejection of 24 per cent cap suggested by the Ministry of Civil Aviation. Perhaps, for the first time in the last 15 years, the proposal of the Commerce and Industry Ministry is seemingly receiving the support of the Finance Ministry and even the Prime Minister’s Office. Once earlier, in 1996-97, the then Industry Minister late Murasoli Maran moved a cabinet note seeking to allow FDI by foreign carriers in Indian domestic carriers. The proposal was jointly killed by the then Civil Aviation Minister C M Ibrahim and his own political mentor H D Deve Gowda who was then the Prime Minister. Rather, the two actually banned FDI by foreign carriers. After that, such a proposal never saw the light of the day during the six-year Vajpayee regime of the BJP-NDA even though they wanted to sell Air India allowing foreign strategic partners to hold 49 per cent equity. So when we heard and saw BJP MP Rajiv Pratap Rudy, who is not only the party’s spokesman but also a pilot with IndiGo that his party would oppose FDI by foreign carriers in domestic Indian carriers, we were surprised — nay shocked. Perhaps, this also explains the opposition by IndiGo to the FDI proposal. As for Jet Airways, it always opposed FDI even though it was the first to induct such equity and off-load when it became illegal. Now we hear the CCO of Jet Airways, Sudheer Raghavan, saying his airline is “neutral” to the FDI proposal. Even after all that has happened to the Indian aviation sector, should the government go back on its bold move? (Veteran journalist and long-time aviation watcher R Krishnan is Consulting Editor at CH. He can be reached at rkrishnanji@yahoo.com.)
CRUISING HEIGHTS December 2011
Strangely, the Ministry of Civil Aviation has said that FDI should not be more than 24 per cent raising the bogey of security 41
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Redux AN INSIDER'S PERSPECTIVE ON THE AIR INDIA SAGA AND DISCUSSES THE CHALLENGES THAT THE MAHARAJA HAS TO OVERCOME IN HIS BID TO OUTDO HIS RIVALS — LEAVE ALONE THINK OF A PLAN TO VANQUISH THEM.
CRUISING HEIGHTS December 2011
t the outset, the merger of Air India and Indian Airlines in 2007 was expected to make the merged entity into a big player comparable to the likes of Singapore Airlines, Lufthansa, Malaysian, etc. With years of aviation experience behind the airlines and infrastructure built by both over the years, the single entity was to be a force to reckon with even at the global level. Given the large number of qualified and skilled manpower, the synergy of these two carriers was expected to be dreaded by any competitor. Added to this list was the order of 111 aircraft in 2005-06 by both these airlines Boeing and Airbus. As these aircraft began to be delivered, the fleet of Air India transformed into the latest, youngest and most modern and in the process provided passengers ultimate in comfort. After all, one should not forget the decades of benchmarked service standards set by Air India. If this was so, then why did Air India, the merged one, is what it is today? When the merger of the two airlines was conceived and executed, there were high hopes. Many employees believed that merger was the only answer. Based on such optimism, there was little resistance from the unions and associations to the merger. However, no details were worked out on how all issues relating to operational, financial and human resources of these two distinctly different organisations would be blended. It was presumed that once the two entities merged, these issues would get sorted out automatically. A point often repeated to drive home the need for the merger was that both Air India and Indian Airlines were competing with each other instead of working together. On the operational front, while the erstwhile Indian Airlines had a fleet of Airbus aircraft, it was almost an all-Boeing fleet with Air India. As such, the functionalities of the operating and engineering personnel would remain on two parallel roads, as it is today, even after the merger. There is no need to go deeper into the other areas like flight duty and time limitations for the two types of operations viz. domestic and international. Till February 2011, the unified airline was operating with two distinct IATA codes: AI and IC. It also went in for the unified code AI as part of its requirement to join the Star Alliance that did not take place. In the name of route rationalisation, many routes recording high seat factors were suddenly withdrawn. A large section of Air India employees alleged that the withdrawal was to facilitate some private operators. On the financial front, both the
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airlines were on a rollercoaster ride in terms of profits and losses. The aviation sector has an unhealthy track record of a very low return on investment — around five per cent. Hence, it was beyond understanding how a merged entity with an equity base of `145 crore thought it fit to go in for fleet expansion to the tune of `40,000 crores? No risk analysis or capacity to pay from future revenue streams seem to have been made. There was, for example, no calculation to show the impact of borrowing on the finances of the company. The huge interest payments coupled with the provision for depreciation on the books of accounts was certain to bleed the airline as it is doing. How is it that this major factor was ignored while placing an order of such high value? From an employee’s perspective, in the event of a merger, in the new organisation he or she would like to be better off both in terms of position and finance. With the promise of being a large global airline, the employees expected that they would be climbing the ladder immediately after the merger. But the ground reality after four years of merger is that the promotional avenues are sealed and opportunities scuttled. Add to that more problems: delayed payment of salaries and allowances. No solution has been reached on issues relating to travel of employees on Air India flights. The regulations governing the travel of erstwhile Air Indians on Indian Airlines and vice versa are so different that it is a talking point in any conversation in the rest rooms. Management of human resources is given top priority in many organisations as this has a direct bearing on the productivity. All out efforts are put in by major multinationals to check the attrition — particularly of the skilled workforce. But in Air India, the proof of the pudding is in the eating. Look at the number of times different sections of employees have gone on flash strike for trivial reasons. How is it that the airline has never held exit interviews for Pilots and Engineers who quit their jobs in the national carrier to join other domestic carriers including international ones. When the pay and allowances of these two categories of employees (AI and IA) are at par with counterparts in the private sector and service conditions much better, why should they be leaving? Did the HR team of AI management ever address these issues? However, the management did one thing — played football with its HR managers who seem to have been now settled properly following a change in both the management and style of management. But then it is that prover-
SEEING RED: Air India's fleet has largely contributed to the airline's recurring losses.
bial case of too little, too late. Other issues like grades, seniority, posting, transfers, etc. have not been addressed and nor are they easy to address when the service conditions are different in the two organisations. The first step towards any parity on such contentious issues was not taken till the appointment of the Justice Dharmadhikari Committee in mid-2011 — a clear four years after the so-called merger. Even now, the erstwhile Air Indians handles the international operations while the domestic flights are handled by the erstwhile Indian Airlines employees. No interchange of manpower is possible in a crisis situation as no concrete agreement has been arrived at with the unions and associations concerned. The same is the case with groundhandling equipment and manpower. What is available on the international side is not available for the domestic operations and vice versa. It is beyond anyone’s imagination that a superior product — the latest B777 aircraft of Air India flying non-stop between India and the US — is incurring losses. Look at the convenience of a non-stop flight with the latest in-flight entertainment system, all that would give an Indian a feel of India on board in terms of service and marketing initiatives like companionfree offer, etc. Despite all this, instead of commanding a premium price, the airline is reporting losses. Where does the fault lie? Is it the pricing or lack of marketing and publicity? In these days of intense competition, no stone should be left unturned to get extra revenue. Private airlines are beating the national carrier by a mile on this front. Their marketing team is everywhere to fill every single seat in every flight. Employees’ performances are assessed continuously. A sense of insecurity drives them to perform better. As a government-owned CRUISING HEIGHTS December 2011
airline, Air India on the other hand neither rewards its employees for excellence nor punishes the non-performer. Let there be no doubt in anyone’s mind regarding the capabilities of the workforce in Air India. But does it have a strong management to guide the employees? With changes in the top management once in two years, there is a lack of vision. Before the CEO can understand the complexities of issues and tries to address them, he is shifted or shown the door. The competition is also playing its role in the mess. While it is their prerogative to fix a fare why should they cry foul and demand revision of fares from the national carrier when their finances are bad? In this intense moment every airline tries to wrest a higher market share, throwing the yields to the winds. Lower yields coupled with higher operating costs — everyone knows about the high levy of sales tax by the states on the Aviation Turbine Fuel (ATF) — are driving many airlines crazy. Having done no homework prior to the merger has caused this deep distress. Nothing was done to put in place managerial skills required to successfully execute the merger by taking all stakeholders on board. Five years into the alliance, it is time for the management to take responsibility as also the government. This, however, does not minimise the employees’ role in the fiasco because of their indifferent and callous attitude instead of standing by their commitment to the merger and quit functioning as two different entities. While these were the forces from within, consequent to the recent changes in the aviation policy, competitors from within the country and outside have made a huge dent in the market share of the Maharaja post-merger. Aggressive marketing, matching the private sector in terms of cost effectiveness, pruning the workforce
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to the industry standards, improving the service standards, improving the punctuality, improving the utilisation of aircraft to global standards, better human resources development practices and more are the need of the hour for Air India. If they choose to continue with their existing practices, Air India will surely be a story. Going by the scheme of things in Air India, it seems to be a fit case of undoing the merger. Having failed miserably on the operational, financial and human resources front after merger, the logical alternative is to demerge the two entities. The failure on the operational front is evident. For instance, instead of gaining advantage of the newly-acquired fleet with all new features, synergies of the merged carriers and experience from the wellestablished airlines of long-standing and more, it continues to operate flights on daily average load factors that is below its competitors. Air India has a very poor record of having the least average daily flying hours of its entire fleet. Even on the domestic front, its average is far below low-cost competitors. We all know of the long ground time of the aircraft that reaches the US before its return journey. Air India is still far behind, both on ground and in the air, in terms of service standards as compared to Jet Airways or even Kingfisher. The product upgrade of the modern fleet has not been complimented by the services that should go with it or should have gone with it. The finances of both Air India and Indian Airlines, prior to merger, were not that pathetic although they were not in the pink of health. The carriers registered some profits and losses alternatively and still maintained decent financials. The interest burden on the working capital loan, long-term loans for aircraft purchase, depreciation on the final accounts of Air India clearly sends alarming signals that the recovery is not in the near future. Let’s not forget the dwindling revenues (despite increase in passenger movement in India due to low yields) and the increasing costs due to high ATF prices which also contribute to the already projected losses of the national carrier. It is increasing at a geometric progression. With lower levels of aircraft utilisation, higher cost of operation, lower yields, higher employee costs, higher overheads, there is absolutely no answer as to when it can turn around. This raises an important issue whether mere injection of additional equity by the government alone will be an answer to the deep trouble Air India is in. If the debt restructuring and additional loans to Air India get the final approval of the government, then it
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NO SAVING GRACE: Pilots from Air India shouting slogans during a recent strike.
could easily be one of the biggest and historic bailouts in India. When the Group of Ministers (GoM) met on October 28, 2011, to consider among other things the delivery of the 787 Dreamliners, the turn-around plan and reinjection of tax payers' money into the losing state-owned carrier, it was decided that RBI would be asked to look into the debt-loan issue. Following this, the RBI on November 23 reportedly gave a green signal to the loan restructuring proposal submitted by SBI Caps for Air India. As a consequence, the concerned banks will now be able to extend the tenure of loans and also convert part of the loans into cumulative redeemable preference shares and cash credit. The banks have been given four months to complete the restructuring. Once this is done, the banks will be able to extend the repayment period of loans, etc. to 15 years from the current 10 years and accordingly the interest rate and, therefore, that burden will come down. An RBI official said its directive to banks was purely a banking exercise and had nothing to do with Air India. Therefore, the government will have to inject fresh equity in Air India to reduce or eliminate the risk which the banks have or hold and increase their comfort level. The RBI-supervised scheme envisages restructuring of ` 11000 crore into long-term loans with a repayment guarantee by the government and the tenure will be extended from 10 to 15 years, Apart from this, ` 7000 crore debt will be converted into cumulative redeemable preference shares and another ` 3500 crore outstanding into cash credit. Recently, Civil Aviation Minister Vayalar Ravi informed the Rajya Sabha that the total debt of Air India comprised aircraft loans and working capital loan totalling `43,777 crore of which the working capiCRUISING HEIGHTS December 2011
tal loan was ` 21,511.10 crore and aircraft loan `21412.06 crore. There is also a thought to trim down the number of Boeing 787s. The situation on the human resources front is really a point to ponder — conveniently ignored by all till the Dharmadhikari Committee was set up. The working hours of employees in the same area of work are different in both the airlines and it continues to be so. The number of working days also differs for the two airlines even in the same operational areas. Welfare facilities like canteens, etc. continued to be serviced to the employees of the pre-merged airlines separately, with different rates and menu. Even the holiday list of the two pre-merged entities continues to hold good almost five years after the merger. Passage facilities to the two carriers continue to be the same as prior to merger despite a single code. The passage entitlements of employees too, are different for the two carriers. No clear understanding has been worked out with the unions and associations to deploy their members in areas of shortage in the merged entity. As such, there is no free movement of personnel to the actual areas of requirement, creating artificial scarcities. There is still no seamless integration on the synergies of various groundhandling facilities including manpower connected with it. Promotions, pending wage revision from 2007 and many more issues are in the cold storage which will come to the surface at surprising moments. It is clear that the merger is only on paper. The policy-makers will do well to undo the damage done by demerging the airlines — making them two separate entities again with one for domestic and other for international operations and start afresh.
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Connected – always
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ould-be travellers, here’s something to think about. A recent finding in the World Travel Market 2011 Industry Report (World Travel Market is the leading global event for the travel industry) points out that despite high roaming charges, almost half of holidaymakers continue to use their mobile phones when abroad. The report surveyed 1,000 people — all had a holiday of seven days abroad or in the UK in 2011— and 48 per cent of them said that they continued to use their mobiles/smartphones when out of the country despite the high roaming charges levied by foreign networks.. Said World Travel Market Chairperson Fiona Jeffery: “The number of people using their mobile phones abroad despite such high roaming charges shows how important the mobile phone has become in our lives…People used to go on holiday to get away from their everyday lives, but mobile internet access means we now feel we have to be connected 24 hours a day.”
STATELY PRESENCE: Amritsar’s Golden Temple presents an awesome sight to the faithful
Anyone for pilgrimages online?
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he world’s largest travel world, India lives up to its spirit of being site, TripAdvisor, recently a truly secular nation as 84.6 per cent announced the results of its respondents said that they would visit a pilgrimage survey conducted religious destination even if they didn’t online amongst over belong to the same faith. 3800 Indian travellers. India Nikhil Ganju, Country emerges as a country of the Manager of TripAdvisor India devout with 87 per cent travelucidated, “It’s not entirely ellers who said that they had unexpected to find so many undertaken a pilgrimage or Indians heading for pilgrimPER CENT SURVEYED religious travel at least once ages and so frequently too, SAID THAT IT WAS A in their lives and 57 per cent but the real surprise is the GOOD OPTION who travel for the same at percentage of 20-30 yr olds least once in a year. Not to be who are taking to religious travmistaken as being a phenomenon el.” However, despite the influx of among the older generation, more than tourism to these popular religious desti70 per cent respondents in the age group nations, “devout travellers often have to of 20-30 undertake pilgrimage at least deal with daunting conditions, with once a year as well. The spiritually notable gaps in their management and inclined also appear to be technologicalmaintenance,” said Ganju. ly inclined as 42 per cent respondents Worship and pleasure feel that a ‘virtual’ pilgrimage is a great 96 per cent respondents said that option for the elderly and infirm. they combined pilgrimage travel While abstinence from smoking, with leisure and explored the destidrinking and eating non-vegetarian seem nations beyond the place of worship. to be the most common practices among 75 per cent respondents said that travellers during a pilgrimage, many go they did not consider austerity a sign a step further to abstain from speaking of their reverence or sincerity and lies and maintain celibacy. Home to almost every religion practised in the Continued on Page 48
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FUTURE PERFECT Amadeus India MD Ankur Bhatia on the online travel business.
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HOTWIRE'S HOT Hotel rooms at a discount and a surprise
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BORDER MANAGEMENT Indonesia goes for a biometric solution
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Ankur Bhatia, Managing Director, Amadeus India, talks about online travel business, the future of mobile functionality in the travel trade and more to CRUISING HEIGHTS. What are the new business solutions that Amadeus is working on for agents, travellers? At Amadeus, we are planning to introduce differentiating factors with unique functionalities. We are aiming to provide improved search capabilities and broaden the key words as per region, cities and countries and offer solutions with feature-added content with activities such as entertainment, hotel transfers, etc. We will be looking at a fully-merged content display GDS and non-GDS. With our wide range of products and solutions, we are well placed to address the needs of the industry. We are looking at ways to drive down costs, improve service quality and increase revenue. Amadeus is working on providing user-friendly technology with one click access to its consumers. Mobile technology is transforming airline operations and traveller experience. How is Amadeus keeping pace with the transformation? Mobile services are still emerging in the travel industry and travellers are beginning to expect, demand and adopt them. In India, there are over 800 million mobile subscribers compared to 100 million internet users. This significant pool of customers remains to be tapped. Mobile definitely provides travellers a platform to access and purchase tickets and check-in for their flights. Customers
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are on the lookout for convenient access to up-to-date information from airport monitors through automated phone systems, mobile-friendly websites, mobile phone apps and messaging. Therefore, a huge potential lies in the same. Amadeus has, therefore, proposed a high quality mobile solution that has made bookings as easy as it gets for mobile devices. One has the ability to modify information or change preferences in the booking. With this solution, schedule disruption management is at one click away. One is able to see live flight status and airline information. It offers seamless integration with AltĂŠa mobile modules for check-in and boarding pass. The solution, thereby, offers a customised portal with relevant information and promotions depending on the customer, moment in time or location. Amadeus mobile gives the power to access Amadeus Selling Platform on mobile device. Travel agents can access a wealth of real-time information from the Amadeus Selling Platform without the need to install it on the phone. Regular Amadeus entries help in performing all availability, booking, fare and ticketing. Through this solution, the customer has the power to access their Amadeus office ID from anywhere, anytime. What is the impact of the social networks on the online travel market? Social media has become an integral part of majority of online Indians. General social media websites like Facebook and Orkut have a strong foothold in the country with approximately 12 million and 20 million users respectively. Social media therefore provides the user a plethora of real time information at the click of a button. This powerful platform of social media has given the users access to instant information regarding their travel related queries, which demand instant remedies too. Thus customer services will have to be modified accordingly and travel companies will have to offer good services to keep the online customer happy. Amadeus understands the significance of social media and is very active on the same, thereby keeping a dialogue on with our clients. This helps us in keeping our clients updated on anything new that we introduce and to hear their side of the story.
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How savvy are the Asian carriers about mobile functionality? Mobile technology is set to transform both airline operations and the overall traveller experience. Identifying changing traveller attitudes towards airline mobile services, Amadeus has recognised the emerging mobile technologies that will revolutionise each stage of the travel experience in the future. In Asia, 3.4 per cent of all travellers use their mobiles today to check-in for their flight, with this figure rising to 7.4 per cent. Amadeus has developed localised technologies for commercial and civil airlines in Asia with a focus on markets in India and China. What is the progress on that? As a leading travel technology provider to airlines, Amadeus has been offering solutions to cater specifically to the carriers in Asia. Amadeus Altea Suite is a ground-breaking passenger service system, which provides an integrated platform to airlines to effectively manage their reservations, inventory and departure control operations. This helps them streamline their passenger service system, thereby enhancing customer service for hassle-free operations. Amadeus AltĂŠa-suite is used by 112 airlines the world over. These airlines access the same technology platform and can choose to share traveller information with their airline partners to benefit the customer. Travel agencies booking Altea airlines benefit immensely because they access the airline's flight content via the same technology platform, which means more information, more choice, lesser errors. This simplified process is one example of Amadeus' innovation. Another solution, Amadeus Ticket Changer is a multi-carrier and highly international solution that gives customers an unparalleled level of flexibility and reactivity to all their itinerary change needs. It allows all kinds of changes, including date, flight and routing, and processes a vast range of tickets, giving the end-consumer unprecedented control over their itineraries. Tickets for several different passengers can all be changed at the same time in one transaction and with the multi re-issue function an unlimited number of successive changes can be made to the ticket before departure. How do you see the online travel market shaping up in India?
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The Indian online travel market is still evolving and we are seeing some emerging trends in the online travel space. Today, GDS-connected travel agencies can also shop and book rail, travel insurance, in-destination activities and events, vacation and apartment rentals and much more. Another key trend is that GDS companies have expanded well beyond their original mission and are now integral to travel distribution, reservations processing and technology services for the global travel industry. Many travel agencies today use their GDS vendors not just for shopping and booking travel services, but also for mid and back-office tools (i.e., quality control procedures and accounting), customer management and marketing software, online booking engines for leisure and corporate travel, and other functions. The GDSs have provided shopping, pricing, booking and ticketing services to the online travel agencies. Today, each GDS company owns one or more OTAs, provides one or more online booking tools to the corporate travel market and offers a range of ecommerce services (from booking engines to fulfilment processes) to travel intermediaries and suppliers alike. Asia Pacific is truly a region of extremes with its developing countries, advanced economies, and everything in between. Where would you place India as far as technology is concerned? With the rising economic status of the middle class and affluent population, India's outbound travel is on the rise. The Internet has added a new dimension to the business of travel with websites being used as a primary source of information and booking. Today, the Indian consumer can shop, book rail tickets, travel insurance, indestination activities and events, vacation and apartment rentals and much more. Reports also say that there has been an increase in interest in nonair bookings, as well as booking from online channels. Social media has further added thrust to the online medium as more and more people want to stay connected. It has been estimated that by 2012, nearly one-third of the travel industry gross bookings are expected to be completed online. Mobile travel planning tools will gain popularity in the initial adoption phase, while mobile bookings will likely gain traction after 2012.
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dismissed practice of austere measures like avoiding luxury stay and indulgent food while on pilgrimage. 64 per cent travellers mentioned that they would pay extra to beat the queue for worship without any qualms.
Women are not farbehind
62 per cent men said that they combine pilgrimage travel with leisure compared with 72 per cent women. Men appear to endorse austere measures for religious travel more than women: 58 per cent women as opposed to 51 per cent men consider virtual pilgrimage a great option.
Makeover of pilgrimage destinations
50 per cent respondents admitted that the condition of religious sites was poor. 81.5 per cent respondents said public utilities such as sanitation and
Saudi Arabian connects with Travelport
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ravelport, the business services provider to the global travel industry, recently announced that Galileo and Worldspan-connected travel agents globally could now benefit from enhanced connectivity on flight bookings with Saudi Arabian Airlines. Further to the three-year content deal signed with Travelport earlier this year, Saudi Arabian Airlines has upgraded its agreement with the GDS provider, opting to leverage Travelport’s cutting-edge ‘inside availability’ technology to ensure the highest level of connectivity on all bookings made through the Galileo and Worldspan reservation systems. The enhanced functionality ensured that travel agents have real-time connectivity to Saudi Arabian Airlines’ fare inventory, providing last-seat availability, instant booking confirmations, current pricing, rules, as well as full e-ticketing capabilities for agents booking seats for their customers on any of the airline’s flights. Travelport will also offer ‘dropthrough’ functionality where approved agents would be able to service and ticket bookings originally made directly within Saudi Arabian Airlines’ reservation system.
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DIP AT HARIDWAR: Net-pilgrmage is not satisfying enough.
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drinking water were a big problem area. 74 per cent believed that people traffic was not well managed during peak pilgrimage time. As a result of this glaring void in the management and maintenance of popular pilgrimage destinations, 49 per cent agreed that the management of these sites should be privatised instead of resting with the government. Would our pilgrims move to websites where they could worship religious destinations and even complete their pilgrimage all online, the survey questioned? While 42 per cent respondents thought it was a great option for the elderly or infirm for whom the physical journey could be strenuous or even impossible, a good 35 per cent put it down as fake worship and labelled it sacrilegious. However, a minority of respondents believed that it was as real to worship online as to undertake the physical journey as what mattered was having faith.
Stop that iPad when you are in a hotel
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otels abroad have been facing a major problem of late. Guests have been complaining about the poor internet service in their rooms. Now, it seems, these hotels have found the answers: IPads and mobile tablets. Apparently guests have been heavily streaming videos on the Wi-Fi networks. As a result, the net has been going slow. According to David W. Garrison, the chief executive of iBAHN, a provider of systems for the hotel and meetings industries, the iPad was the fastest-selling device in consumer electronics history, and because of it the demand placed on any public place Wi-Fi system has gone up exponentially in the last year and a half. Simply put, that means more hotel customers have become unhappy with their internet connections. While hotels have to spend money to upgrade the system — difficult after the recession — it will also mean an extra fee for guests. Some hotel Internet service providers have proposed a solution that offers tiered Wi-Fi
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service. The lowest level, suitable for basic Internet requirements like checking e-mail, would be free, but other levels would be priced depending on bandwidth requirements. According to iBAHN, iPads consume four times more Wi-Fi data per month than the average smartphone.
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ravelport has joined hands for a beneficial, long-term full content and technology services agreement with Hilton Worldwide, the leading global hospitality company. The agreement includes the distribution of full availability, rates, rules and property information from Hilton Worldwide and its global brands, representing 3,750 properties and 615,000 rooms in 85 countries. Hilton Worldwide and its renowned brands will also continue to deploy advanced interfaces to Travelport’s Worldspan, Galileo and Apollo global distribution systems (GDS), and expand property, pricing and policy information for Travelport subscribers globally. “Travelport is a vital distribution and technology partner, particularly at a time when Hilton Worldwide and its brands are expanding their global reach, including many new markets,” said Eduardo Schutte, Vice President, Distribution and Channel Management, Hilton Worldwide. “Travelport-connected travel agents are also invaluable partners and we are committed to enhancing our relationship with them through innovative technologies. This agreement ensures Hilton Worldwide and Travelport will achieve mutual objectives that deliver value to both companies.” “Hilton Worldwide continues to take advantage of evolving distribution and merchandising capabilities within the GDS channel, which is very robust, continues to grow and often brings better rates,” said Niklas Andreen, Group Vice President, Hospitality & Partner Marketing, Travelport. “We are working aggressively to raise industry standards in advanced connectivity, systems transparency, functionality and traveller services so that our supplier and subscriber customers can maximise their return and efficiency of working with Travelport, and deliver the best experiences to their travellers.”
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Hotwire for hot rates
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otels have taken to the net to fill up those vacant rooms. Incidentally, we are not talking about hotels in Indian metros — that do not need to fill up rooms — but those abroad. Helping them out is the US-based Hotwire, a hotel-booking website. Users of the website can get discounts that sometimes exceed 50 per cent. However, there is a catch: the names of the hotels are divulged only after the booking is completed. Hotwire, however, provides details about the hotels like location, star rating and ratings by Hotwire users and amenities. Ten years old now, Hotwire has an inventory of 27,000 hotels in 2,500 locations. According to Fulvia Montresor, a senior director at Hotwire, the website is especially useful in markets where travellers know their hotels. So, if travellers know what a four-star hotel should cost in a particular area, they can take advantage of the Hotwire “hot rates”. There is, perhaps, something mysterious about booking on Hotwire but users believe that if a bed and a room for a night is needed — and travellers are not
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touchy about star names — then Hotwire is the site to go for. According to Ms Montresor, the really good deals are available in the weekends and many users suggest that Hotwire is well worth scanning rather than going to TripAdvisor (which is, incidentally, part of the same Expedia group).
Is Hotwire good for business travellers? Maybe and maybe not. For those who want to add a holiday at the end of a business meet, Hotwire can help but in a general way, it is good only for those who are self-employed and those who book their own travel and want to save money.
Twitter and the English as she is spoken
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alph Fiennes on how Twitter is college essays becoming shorter, asks degrading the English the blogger? Or, were people language: “Our expressiveness preferring short words to long ones? and our ease with some words is being The blog goes on to state that diluted so that the sentence with more researchers were looking seriously at than one clause is a problem for us, Twitter. Some time ago, Ben Zimmer and the word of more than two wrote in the New York Times that syllables is a problem for several projects were us…I think we’re living in a analysing the language on time when our ears are the microblogging platform. attuned to a flattened and A team of computational truncated sense of our linguists at Carnegie English language, so this Mellon University led by always begs the question, is Jacob Eisenstein and Shakespeare relevant?” Brendan O’Connor has Fiennes, who has just used geocoded tweets to directed a screen adaptation build maps of regional Ralph Fiennes of Shakespeare’s language use across the Coriolanus, has his own reasons — United States. The amount of data basically pecuniary, according to a available for analysis is many orders blog in The Economist — for blaming of magnitude bigger than what could Twitter. That, says the blog, is not be collected with traditional dialect enough to make Twitter bad? surveys. From these mountains of data The syntax and vocabulary of can be gleaned hidden patterns of Twitter are indeed compressed but informal English, like the profusion of does that mean that Twitter is actually hella as a form of emphasis in changing how people use language? Northern California, as in, “It’s hella Were average sentence-lengths in cold out there.” 2flashgames.com
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Amadeus: Airline ancillary revenues to rise
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Border management, the biometric way
ITA recently announced that its biometric border management solution, BioThenticate was being used to tighten security at Indonesia’s international borders. The system, which can match and manage up to 20 million unique biometric identities, is being rolled out at nine airports and one seaport in Indonesia by the Directorate General of Immigration at the Ministry of Law and Human Rights in Indonesia, locally known as Imigrasi, and will provide real-time matching against a biometric watch-list. SITA’s solution is a comprehensive matching and management biometric system that allows Indonesia’s government entities to co-ordinate their border control activities across multiple departments. BioThenticate captures face and fingerprint data of arriving travellers and manages it in a person-centric database of identities. Duplicate identities are consolidated into a single person record allowing people who are claiming multiple identities to be easily tracked. This data is used by all departments to prevent identity fraud, including controlling the issue of stay permits, and managing primary line operations and illegal migrant activity. Rudhy Chaidir, Director of Immigration Information Systems, Imigrasi, said: “In just six months, SITA has implemented this sophisticated biometrics system which allows the various departments in Indonesia to have a single, shared view of identities. “ The process began at SoekarnoHatta International Airport, Jakarta, which handles 10 million international passengers a year, and are now adding nine additional ports of entry.
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ncillary revenue has become a crucial component in the global airline industry’s profit toolbox. The International Air Transport Association slashed its 2011 industry profit outlook to $4 billion and revealed that carriers will spend $10 billion more on jet fuel this year. The $32.5 billion contributed by ancillary revenue has lifted the airline industry from a loss-making position and continues to provide a very effective hedge against runaway fuel bills. Earlier this year, Amadeus and IdeaWorks reported the ancillary revenue disclosed by 47 airlines in 2010. These statistics were applied to a larger list of more than 200 airlines to provide a truly global projection of activity for 2011. The Amadeus Worldwide Estimate of Ancillary Revenue for 2011 is the second year Amadeus and IdeaWorks have undertaken the task of calculating global ancillary revenue activity. “As ancillary revenues continue to grow rapidly, we are now seeing increasing interest from full-service carriers around the world, which are also starting to implement ancillary services through global distribution systems, such as Amadeus. KLM and Iberia, for instance, have just joined the ranks of carriers implementing the Amadeus Ancillary Services solution for travel agencies. The model is now focusing on services which increase the scope of the product offering and reinforce the brand rather than unbundle the ticket price,” says Holger Taubmann, VP Distribution, Amadeus. The IdeaWorks analysis reveals natural groupings (or categories) based upon a carrier’s ability to generate ancillary revenue. The “percentage of revenue” results associated with four defined categories were applied to a worldwide list of operating revenue disclosed by 203 airlines. “Outside of the US market and the global LCC sector, airlines tend to choose a model that complies with
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industry standards rather than a customised approach to the development and deployment of their ancillary services,” says Julia Sattel, VP Airline IT, Amadeus. “Our philosophy is to balance the productivity and efficiency that industry standards bring with the desire for some airlines to customise the way in which their product is packaged and sold.” “Whatever the model, there is no doubt that the growth of ancillary sales is here to stay. The Electronic Miscellaneous Document (EMD) standard for the fulfilment of ancillary sales is rapidly gaining momentum. According to IATA, there are now 28 airlines in the world that are EMD capable, 15 of these are using Amadeus’ EMD Server and have issued over 2.5 million EMDs this year alone,” adds Sattel. The US Major Airlines category continues to produce a commanding share of global ancillary revenue: The $12.5 billion result (38 per cent of the global total) represents just seven airlines: Alaska Airlines, American, Continental, Delta, Hawaiian, United, and US Airways. Compare this to the second largest piece of the pie at $10.9 billion (34 per cent of the global total) which is generated by a far larger group of 140 airlines, the Traditional Airline category. As proven by this revenue result, US-based airlines have readily adapted to an à la carte world, but they also benefit from consumers who are keen to get frequent flier miles. Other sources include on-board sales of food, beverages, wifi, and hotel bookings. In addition, airlines offer an ever-increasing selection of services that add to traveller convenience such as priority security screening, early boarding, and exit row seat assignments. The ancillary revenue profile outside the US is difficult to define due to carrier-by-carrier differences. The outsized presence of frequent flier programme revenue is most obvious in the US.
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APACHE TAKES LEAD
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AH-64 has emerged as the leader in the IAF’s combat chopper competition
Eurocopter pitches EC225 at the Indian oil & gas industry We just don’t simulate a simple landing on a runway, you can go and land on a hilltop, you can go land on the shore, you can even go to the forest areas… the worst-case scenario you can think of for a landing.
About your simulator We have simulators for the Bell 206 and 407 single-engine aircraft. These two types account for a large number of helicopters flown in India.
The numbers you train We train pilots in two batches: for the Bell 407 in one batch and for the Bell 206 in another batch. In total we are able to train about 8 to 10 pilots a month.
Your clients
Ready for the
skies Flying civilian choppers in India is a messy affair. Pilots have to deal with a veritable maze of authorisations and permissions. The spate of recent helicopter crashes has complicated the process, with a significant number of these attributed to pilot error. This is set to change as chopper pilots — both fresh and experienced — take a few sessions of helicopter flight simulation services provided by Shaurya Flight Simulations from Aviation India. Captain Sandeep Saraf, Director, Aviation India, spoke to Justin C Murik about his ambition to make Shaurya Flight Simulations one of the top five simulator companies in the world by 2015.
About the company We wanted to do something good for the
TOWARDS AN ACCIDENT-FREE FUTURE : Captain Sandeep Saraf, Director, Aviation India, at the controls of the simulator
aviation industry and safety was the main concern. Since there were very few simulators, every pilot was going abroad…but not everybody can afford to go abroad every six months. So we tried to take an alternate route from the DGCA so that we could do the checks in India. When we looked at other Asian countries, they had simulators. Why can’t we have them in India? It was a big challenge. It was a huge investment, but we did it with the guidance of the DGCA and the Airports Authority of India. With their blessings we got this wonderful location.
On helicopter simulators ? Advantages ? Practising on an actual helicopter is extremely expensive. On real helicopters you cannot simulate the emergencies, which is why we decided to introduce simulators. A pilot flying on an actual helicopter can never be well versed with an emergency, but with a simulator he can be better prepared to handle the emergency. The pilot will not panic as much because he has encountered the situation before. CRUISING HEIGHTS December 2011
Pawan Hans has signed a contract with us for a year’s time and we are talking to Deccan also… After a spree of crashes, everybody is getting educated about the usefulness of the simulator. We also have individual pilots coming in from different operators of the country.
Your collaboration with Frasca We use Frasca simulators for the Bell 206 and Bell 407 helicopters. Frasca manufactures simulators for a wide variety of helicopter types and makes. We have been upgrading the simulators according to the changes in the capability of the helicopters by Bell.
Future prospects We are opening up the facility so that even non-pilots can come and try the simulator for a fee. This will help in increasing interest in helicopters …we will then issue these people with a student helicopter simulator license. This can then be upgraded to a commercial license. In the commercial license you do not need an instructor to be flying with you …you can come and take your family on a flight in the simulator. We are getting new simulators for the Eurocopter helicopters also.
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Eurocopter EC225 for oil & gas industry
Leading chopper maker Eurocopter is pitching its EC225 choppers to the Indian oil and gas industry and recently organised a demo flight at the Juhu airport as part of the endeavour. With already 15 per cent of the country’s helicopter fleet deployed in this sector, helicopters represent a crucial element in the expansion process. According to Eurocopter India Chief Executive Marie-Agnes Veve: “Eurocopter would like to continue playing a crucial role by providing logistical support to this growing sector and we are showcasing this product to the oil majors such as ONGC, RIL and Essar.” EC225 is Eurocopter’s biggest helicopter in the 11tonne, 19-24-seater passenger class of the Super Puma/Cougar family. Over 800 units of this family have already been delivered to customers so far. Since its introduction in 2004, EC225 has made a name for itself for long-range or deep-water offshore operations is being used by leading oil and gas players around the world. Eurocopter is also exploring the possibility of selling helicopters to other sectors such as city policing and tourism.
More Mi-17s for IAF
The Indian Air Force is moving towards finalising a second contract with Russia for another 59 Mi-17-V5 helicopters after the phased delivery of the first 80 of these medium-lift “rotary birds” began in September. “Of the 80 Mi-17s ordered under the $1.34-billion deal in 2008, the first squadron has come up in Bhatinda. IAF will get 26 of these choppers by end-December, with the second squadron coming up in Srinagar by March. All the 80 will be inducted by 2014,” said a senior official. “The 59 more Mi-17s, which will cost around $1 billion, will be ordered under the follow-on clause in the first contract. They will also be weaponised for combat operations like the first 80. The new Mi-17s will also make it possible for IAF to deploy additional choppers for logistical support in anti-Naxal operations,” he added. The Mil Mi-17 is in production at two factories in Kazan and Ulan-Ude. Mil 17 is a medium twin-turbine transport helicopter that can also act as a gunship. Developed from the basic Mi-8 airframe, the Mi-17 was fitted with the larger TV3-117MT engines, rotors, and transmission developed for the Mi-14, along with fuselage improvements for heavier loads.
Coast Guard floats tender for 16 choppers
The Indian Coast Guard has floated a global tender worth over $200 million to procure 16 light helicopters to be deployed on its warships for preventing any 26/11-type attack. “The global Request for Proposal (RFP) for procuring these choppers was issued a couple of months ago and companies have been asked to submit their bids by December,” a Defence Ministry official told a news agency. The RFP has been sent to three companies — Eurocopter, AgustaWestland and Sikorsky — it said. Eurocopter is planning to field its twin-engined Panther helicopter. According to the RFP, the Coast Guard wants these choppers to be equipped with surveillance devices to carry out search and rescue roles in coastal areas. The procurement is part of Coast Guard’s efforts to enhance its capabilities to tackle terrorism and other threats emanating from the sea. Deployment of the choppers on offshore patrol vessels and other large-size ships of the Coast Guard will help in expanding its reach in the maritime zone to locate suspicious boats and other vessels. The choppers will also have light and medium machine guns on board.
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Rudra to help guard Western border
In order to bolster its aerial capabilities on the western front, the Army has decided to deploy the Rudra Advance Light Helicopter (ALH) armed with advance air-to-air and anti-tank missiles along the Pakistan border in the near future. The induction of the weaponised version of ALH, rechristened Rudra, with the integration of the weapon system that includes 20 mm turret gun, 70 mm rockets and Anti-Tank Guided Missiles (ATGM) is in the final stages. The 5.5 tonne class twin-engine chopper has a number of advanced features such as Automatic Flight Control System, Integrated Dynamic System, Full Authority Digital Electronic Control and can cruise at speed of 250 km per hour. Armed with an array of guns, rocket pods, air-to-air and anti-tank guided missiles, the choppers will provide the field commanders the ability to apply decisive combat power at critical times anywhere in the battlefield. Necessary changes have been made in the airframe of the chopper to give it agility and speed and to make it a suitable support weapon for the ground troops.
State, Centre in chopper bill battle
The Odisha government has informed the Centre that it will not pay for helicopters used to airdrop food during floods since 2007. Recently, floods wrecked havoc in 21 districts of the state. The Ministry of Defence has sent the state government a bill for `7 crore for the use of Indian Air Force helicopters during relief operations. The bill also included arrears for the past four years. Special relief commissioner Pradipta Mohapatra said: “We will not pay the money. We have already written letters to the Ministry of Defence to co-ordinate with the Ministry of Home Affairs on this issue. The money should be adjusted against the central assistance that is likely to be coming from the National Disaster Response Fund.” The state government had used five choppers to airdrop essential stuff in the inundated areas during the September floods. The government has been billed `2.40 crore for using the choppers this year.
eurocopterusa.com
In 2007, the Air Force was supposed to get `98 lakh. In its letter, the Air Force stated that it had not received payment against pending bills since 2007. Consequently, when the floods struck in 2008, it was not willing to send a chopper. On the state government’s request, the Ministry of Defence agreed to send the chopper in 2008. In 2008, the Air Force had sent a `3.30 crore bill. For the 2009 floods, the state had to pay `23 lakh.
Apache bags IAF combat helicopter deal
The Indian Air Force (IAF) has selected Boeing’s Apache Longbow advanced attack helicopter for its combat chopper tender. According to RIA Novosti news agency, the other competitor, Russia’s Mi-28N Night Hunter, lost the competition. It quoted an unnamed Indian defence ministry source as saying that the US helicopter “showed better performance” while the Russian machine did not meet the tender requirements. IAF had a tender for 22 combat helicopters with no options. But more would be required and should be ordered once the first few machines are delivered. The Apache has the
capability to detect 256 moving targets in speed, distance and direction and engage them as required. The twin-engine tandem seat Apache is operated by two pilots, and can execute an attack within 30 seconds of an alert. It is equipped with Northrop Grumman’s highly sophisticated millimetre wave Longbow fire control radar and Lockheed Martin’s Hellfire and Raytheon’s Stinger missiles. Apache has a strong shell made of composite fibres to protect the pilots and sensitive components from bullets.
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Mumbai choppers flout altitude norms
bellhelicopter.com
Many Mumbai buildings are more than 500 ft high, examples being Antilia (568 ft) and the Imperial “Twin” Towers (833 ft) in Tardeo, but choppers in the city fly too close to the surface for comfort. Against an International Civil Aviation Organisation ( ICAO)-recommended altitude of 1,000 ft above the tallest building in an area (obstruction level), they fly at 500-700 ft from obstruction level and sometimes come as low as the height of the buildings. According to pilots, the risk of flying low is that in case of total engine failure, a helicopter cannot be manoeuvred to open spots and risks crashing on populated areas. The recommended altitude of 1,000-ft allows helicopters a better chance of being manoeuvred to open spaces like parks or even the sea to minimise casualties on the ground. Indian pilots say flying altitudes are set by air-traffic control (ATC), that follows rules set by the Airports Authority of India (AAI). According to AAI officials, the 1,000-ft altitude cannot be permitted for helicopters because they will then come in the flight path of aeroplanes ascending from or descending to the airport. In cities such as New York and London all flight operations are under radar monitoring. According to an AAI official, in Mumbai non-scheduled flights (for example,
helicopters) are not covered by radar and this makes it impossible to coordinate the movement of helicopters and aeroplanes at the same altitude. A pilot said that risk was an integral part of flying a helicopter in today’s Mumbai. Now that the height limit for buildings has been relaxed to 300 metres (beyond a radius of 9 km from the airport), the obstacles are far too many. Because of the new tall buildings and particularly when visibility is low, safety solely depends on the pilot’s skill and knowledge of terrain.
NH90’s final configuration approved
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Lockheed Martin is preparing for the deployment of two unmanned Kaman K-Max helicopters to Afghanistan begin operating a six month trial resupplying US Marine Corps forward operating bases there. The contract was awarded earlier this month to Lockheed Martin ahead of Boeing’s competing Hummingbird unmanned helicopter, after a five-day evaluation. The helicopter, originally developed by Kaman as an aerial crane for roles such as logging and power-line installations, can lift up to 2725 kg on its external hook. Powered by a derated 1350 shp Honeywell (Lycoming) T53, it features contra-rotating rotors and Kaman’s signature servo tabs. Unmanned, the KMax will be controlled by a pilot from a ground control system, which can control the helicopter to within 10 metres accuracy. Lockheed Martin developed both the KMax’s unmanned control avionics and the ground control station system Should the trial be successful Lockheed Martin and Kaman could deliver further refurbished K-Maxes within a six-month timeframe, while new-build aircraft could be delivered one year after order. Most K-Max resupply missions are expected to be flown at night to minimise its vulnerability to small arms fire and rocket-propelled grenades.
CRUISING HEIGHTS December 2011
lockheedmartin.com
The NH90 programme has reached a major milestone with the declaration of compliance for the NH90 TTH (Tactical Transport Helicopter) variant’s Final Operational Configuration. This marks the NH-90 TTH’s development completion, and enables deliveries to begin before year-end in the helicopter’s full operational definition. The declaration of compliance was issued by the NATO Helicopter Management Agency (NAHEMA), which is the North Atlantic Treaty Organisation’s function that manages the NH90 acquisition for the participating countries. The new-generation NH90 TTH is designed for use in a wide range of demanding missions, including logistics and utility transport, combat search and rescue, casualty and medical evacuation, electronic warfare, special operations and counter-terrorism. With this go-ahead, the initial NH90 TTH variant in the final operational configuration is to be received by the French Army. It will be followed by the startup of deliveries in 2012 to Italy, Belgium and Germany. This 11-metric-tonne rotary-wing aircraft will be produced in two basic versions — the Tactical Troop Transport and the NATO Frigate Helicopter.
Debut of unmanned choppers in Afghanistan
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DELHI GETS THE
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After the successful clearing of the Formula race paraphernalia, the airport gets set to welcome Code F aircraft
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WAREHOUSES COMING
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AIR CONNECTIVITY TO BOOST TRADE CII SUGGESTS LOGISTICAL CONNECTIVITY BETWEEN SAARC NATIONS
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TIPS TO BOOST PHARMA EXPORTS INFRASTRUCTURE ENHANCEMENTS WILL HELP HIGH-VALUE PERISHABLE CARGO SECTOR
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SKYCARGO'S 777F SETS NEW RECORD EMIRATES' FREIGHTER TRANSPORTS HEAVIEST SINGLE ITEM EVER TO CREATE RECORD
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Air cargo shrinks but there is hope
ASSOCIATION OF ASIA Pacific Airlines (AAPA) traffic results for September 2011 show sustained growth in international passenger traffic, but a slowdown in European and the US demand for Asian exports has seen international air freight traffic continue to decline. Asia Pacific airlines flew a total of 16 million international passengers in September, a 5.4 per cent increase over the same month in 2010. However, the demand for international air freight measured in freight tonne kilometres decreased by 6.5 per cent compared to last September. Offered freight capacity contracted by 1.3 percent, resulting in a 3.5 percentage point decline in the average international air cargo load factor for the region's carriers to 63.8
TRENDS
per cent for the month. Commenting on the results, Andrew Herdman, AAPA Director General said, “Overall, for the first three quarters of the year, Asia Pacific airlines saw a 3.7 per cent increase in the number of international passengers carried, whereas international air cargo demand fell by 4.1 per cent.” Herdman also said: “Resilient Asian economies, with relatively strong domestic spending power, helped support leisure and business travel markets. However, a slowdown in export demand, as a result of the ongoing European economic crisis and softening North American economies, contributed to the fall in overall cargo traffic. As a result, Asian airlines have seen only modest revenue growth this year. At the same time, airlines have had to grapple with a 40 per cent increase in jet fuel prices, squeezing what are typically already very thin margins.” The AAPA chief, however, held out hope: “Notwithstanding the current challenges, and uncertainty about the global outlook, optimism about future growth opportunities remains positive for Asia Pacific carriers. This sentiment is underpinning ambitious fleet expansion plans, as well as the establishment of a number of new carriers of varying business models, including international partnerships and joint ventures.”
Auto export boom in the offing IT IS NOW an accepted fact that Chinese quality does not match the standards of the developed markets as far as the auto industry is concerned where product quality and durability is, perhaps, the most important factor. The Tata Nano has proved that India is the global centre of excellence for small cars. In fact, Tata Motors is not alone. Hyundai uses India as the global source point of all small Hyundais with Chennai as the sole source for two small cars: the i10 and i20. Last year, Hyundai India exported 247,000 of these two models around the world. The figure is expected to go down to 225,000 cars in 2011. Among the others are Renault-Nissan, which has made its plant in Chennai to become the source point for the fourth-generation Micra that will be sold in more than 70 markets and more than 50 countries will receive the cars from India. Nissan also sources its European-market Pixo city car from Maruti Suzuki in India. Ford India, for example, plans to export Indianmade cars to 50 countries by the end of 2011, up from 32 countries in September 2011. Honda Siel Cars India said it was planning to export the Brio to Nepal, Bangladesh and Sri Lanka.
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“The Chinese will make everything and the Arabs will fly it.” Peter Scholten
Vice President Commercial, Saudi Airlines Cargo at the recent opening meeting of Air Cargo Americas that took place at Miami.
CRUISING HEIGHTS December 2011
THE AIR CARGO industry is most likely to see the establishment of “green” cargo warehouses. This, along with major changes in handling processes, will bring about a sea change in air cargo transportation. According to Oliver Schaaf, Managing Director of cargo consultant Realog GmbH, the storage system, stackers, and hoists, together with heavy machinery like elevator transfer vehicles (ETV) are oversized and are all designed for payloads of up to 6.8 tonnes leading to excessive costs, wasted energy and unnecessary greenhouse gas emissions. Schaaf is concerned because according to data collected at a number of cargo warehouses around the globe, only three per cent of all cargo pallets weigh more than 3.3 tonnes. This means that 97 per cent of unit load devices (ULDs) are lighter. Air cargo terminal technology has not changed in the last two decades: designs and mechanical layouts are based on IATA-dictated maximum ULD loads of 6.8 tonnes. This figure is meant for load assessments and is of limited use for storage processes on the ground. Schaaf has designed “green” cargo warehouses — Emirates’ Mega Terminal and the Flower Center at Dubai — that are equipped with a new generation of cargo handling and storage equipment systems. The central idea of the concept is the use of the lightest possible but most durable components for building stackers, racks or roller beds, including lightweight designs for walls, floors and warehouse roofs.
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Wanted: Connectivity to boost trade A suggestion to boost intra-regional economic cooperation has been mooted and if it is done, the economy of the SAARC nations would be benefited. he Confederation of Indian Industry (CII) has suggested that a conducive atmosphere be created to boost intra-regional economic cooperation, including trade in goods and services and investments. Of special interest to the air cargo fraternity in the country is the body’s focus on logistical connectivity between India and its seven South Asian neighbours: Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka. The call from Chandrajit Banerjee, Director General of CII — the country’s premier business association — pointed out that India’s economic growth and the rise of its large middle-class “can have a positive spillover effect on economic opportunities for our South Asian neighbours”. While recommending that new areas of economic cooperation have to be found out, the CII has singled out logistical connectivity along with services, energy and electricity as areas that the South Asian Association for Regional Cooperation (SAARC) countries need to look into. According to the CII, the corridors of southern India-BangladeshNortheast India, Northern India-Nepal-BhutanBangladesh-Northeast India, all other South Asian countries through India to Sri Lanka, and all other South Asian countries via India and Pakistan to Afghanistan can be connected through air and
T
all other links. Banerjee said that “for too long, members of the SAARC have deprived themselves of the benefits of regional economic integration. With one-fifth of the world’s population, the SAARC region is home to two-fifths of the world’s poor. However, it accounts for only 3 per cent of global output and 2 per cent of world exports. Intraregional trade has stagnated at around 5 per cent of its total trade, compared to over 50 per cent in East Asia and around 20 per cent in Latin America. Even Sub-Saharan Africa, with poor transport and telecommunication infrastructure, scores over South Asia, with over 10 per cent of its trade being intraregional”. Emphasising the fact that regional economic cooperation was an acknowledged tool for regional prosperity, the CII Director General mentioned that the potential of regional economic cooperation was recognised by SAARC in 1993, when the South Asian Preferential Trading Agreement was signed. Since then, it has evolved
Chandrajit Banerjee Director General of CII
into the South Asian Free Trade Area (SAFTA) in 2004, coming into effect in 2006. Bilateral and subregional trading agreements also exist between various members. “At the previous Summit in Thimpu, the commitment to implement SAFTA was reiterated and a SAARC Agreement on Trade in Services was signed,” said Banerjee. Three areas offer large potential for economic cooperation: the services trade, energy cooperation, and logistical connectivity. “The development of logistical hubs that facilitate the flow of trade across the region would greatly reduce the costs of doing business. Such hubs should be multi-modal, incorporating containerised and non-containerised cargo and moving via rail, road, air and shipping links. These logistical hubs would connect critical regional corridors, especially with countries having no common borders. Private sector connectivity must be systematically encouraged,” he said. Meanwhile, Pakistan’s belated action to grant MFN (Most Favoured Nation) status to India has
“The development of logistical hubs that facilitate the flow of trade across the region would greatly reduce the costs of doing business (in the SAARC region).”
CRUISING HEIGHTS December 2011
come at the right time. According to estimates, the potential for trade between the two countries is approximately $6 to $8 billion a year while illegal trade routed through Dubai is estimated to be $3bn$4bn a year. Simply put, the MFN move can, said the CII, transform the trading environment of the region as a whole. India’s trade with SAARC countries has gone up from $6.9 billion in 2005-06 to $15 billion in 2010-11. As for air cargo, Indian airports have a few direct links with the South Asian ones. The present government rules mandate five years of domestic experience and a 20aircraft fleet before a domestic carrier can fly overseas — even to the South Asian neighbours. Now, carriers like Jet Airways, Kingfisher Airlines and even low-cost carrier SpiceJet fly to Colombo (Sri Lanka) and Kathmandu (Nepal). The quantum of cargo ferried by these flights is negligible. Perhaps, the latest SAARC Summit will help ease restrictions on trade between neighbours. The first moves for direct connections between the SAARC nations and Indian destinations have been made by low-cost carrier SpiceJet. CEO Neil Mills told CRUISING HEIGHTS during a recent conversation, “Our concentration will be more on the SAARC nations… We have applied for (permissioin to fly to) some of those… I don’t want to talk about that since they are just a wishlist.”
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TIMELY MOVEMENT: F1 cars being unloaded at Delhi Airport.
High on the success of moving the F1 paraphernalia in record time, Delhi airport achieved another first when it hosted a Code-F freighter. The airport has, in fact, lined up a series of enhancements that will improve the present cargo infrastructure and put it in the same leagues as other airports around the world. ven as the dust settled down on the first-ever Formula 1 race in India that were staged near Delhi, the Indira Gandhi International Airport’s (IGIA) cargo section was busy creating another record — the first being the clearance of the F1 paraphernalia in record time — to become the first airport in the country to play host to the only Code-F freighter from Boeing. Flown in by British Airways, the aircraft started operations from the first week of November on the London Stansted-Hong Kong-Delhi route. Delhi airport is equipped to handle Code-F aircraft operations. In July last year, Emirates successfully operated an A-380 as a commercial flight into the airport. While on the airport capacity side, Terminal-3 and its associated facilities were built for Code-F-compliant aircraft, runway 11/29,
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connected taxiways and cross taxiways are all Code-F compliant. The ability to handle 747-8 Code-F freighters will boost the airport’s ambition to become a major cargo gateway. While airside infrastructure is required to complement the development of city-side infrastructure, the existing cargo terminal is being upgraded and a second Greenfield cargo terminal is under construction. Additionally, there are plans to develop a cargo village to provide facilities for forwarders and logistics players. Investments have been made in both the Brownfield and Greenfield terminals. While electric transfer vehicles for stacking and handling of pallets along with the latest equipment such as narrow aisle stackers and batteryoperated fork-lifts have been brought in for the Brownfield terminal, the
Greenfield terminal has been designed with the latest Automatic Storage and Retrieval Systems (ASRS). The Brownfield Terminal, in addition, has automated truck dock doors with automated truck dock levelers; volumetric scanners that help capture the number of packages, weight and volume details of a consignment, state-of-theart X-ray machines, automated lowerable bases that helps in efficient buildup of pallets and a barcoding system. Along with the introduction of three new parking bays, IGIA estimates that cargo movement will grow at 15 per cent. In fact, the airport aims to touch the millionmetric-tonne mark by 201415. The automation at the terminals is being done in phases and the final phase is likely to be completed by 2015. After the completion of these phases, the airport’s
CRUISING HEIGHTS December 2011
cargo terminals will have a total cargo handling capacity of approximately two million metric tonnes. Ever since the airport was handed over to the GMR group, its cargo handling has increased from 38,9490 MT in 2006-07 to 60,0045 MT in 2010-11. CAGR has also shown an upward movement from 8.48 per cent in 2006 to 9.03 per cent in 2011. There has been a growth of 18 per cent and 11 per cent in cargo and ATMs, respectively from July 2010 to March 2011. The airport presently handles 10-20 freighters per day with a more effective and efficient system in place than it was in 2006-07. The upward rise in volumes was primarily due to:
Introduction of 100 per cent Electronic Data Interchange (EDI) at the international side. This has made the existing processes more effective and efficient.
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Organised trucking services. According to an IGIA spokesperson, the handling of the F1 cars and equipment by a specially dedicated cargo team has set a benchmark for the country’s other airports. While special arrangements were made to ensure a smooth flow, the logistics exercise was race critical and high value. More than volumes, it was the time factor that was the key in making the logistics support successful. That is, perhaps, why the F1 was a huge event for IGIA in terms of prestige. This was the first of its kind event happening in the country and handling the time-bound and ‘noscope-for-error’ logistics at the airport was something that the airport authorities had completed successfully. I Prabhakara Rao, Delhi International Airport Limited’s (DIAL) CEO, said that Formula1 preparations was not just an event. It was “a moment of immense pride for the airport to play a lead role of providing logistical support for such a renowned event. DIAL was in constant touch with the F1 organisers since December 2010. In fact, the F1 logistics team that internationally reviews all logistics arrangements at various hosting countries visited IGIA cargo and were fully satisfied with the arrangements. The F1 was taken up as a priority project and there was a dedicated team for the project to ensure that everything went off smoothly. The dedicated team studied how similar cargo movements were done globally at other venues and
Delhi Cargo: Up, up and away 12000000 10297085 10000000 Cargo Tonnage (Metric Tones)
Common User Domestic Cargo Terminal (CUDCT) made operational in May last year. After this was done, domestic traffic increased considerably.
8000000 5633337
6000000
4000000
2901145 1336665
2000000 605481
426263 0 20
08
-0
9 20
09
-1
0 20
10
-1
1 20
11
-1
2 20
12
-1
3 20
13
-1
4 20
14
-1
5 20
15
-1
6
International
ensured that best global practices were deployed for the event. The CEO also said that other than the F1, additional cargo was expected. This was in line with DIAL’s defined vision to make IGIA the cargo gateway for India, by providing the state-of-theart cargo infrastructure, supported by world-class operational service standards…” The enhancements and improvements notwithstanding, the reported moves of the airport operator to hike user tariff by almost six times have unsettled a number of carriers. A number of foreign airlines have said that if the hike does take place, they will have to move away from Delhi. These airport charges
I Prabhakar Rao CEO, Delhi International Airport Limited
20
16
-1
7 20
17
-1
8 20
18
-1
9 20
19
-2
0 20
20
-2
1 20
21
-2
2 20
22
Domestic
include aircraft landing and parking, ground safety and handling services for passengers and cargo, and fuel supply for aircraft. According to DIAL officials, the airport incurred a loss of about `800 crore this year because tariffs had not been revised since 2001. Foreign carriers are a worried lot. Finnair’s Director for the Indian subcontinent, Kari Stolbow was quoted as saying: “Delhi is an important destination, but this kind of move may force airlines to look around for other possibilities.” In addition to enhancing the facilities at the airport, the operators of the airport chalked out plans to establish a warehousing facility near the airport. In fact, such a facility has been demanded by the freight
“DIAL’s defined vision is to make IGIA the cargo gateway for India, by providing the stateof-the-art cargo infrastructure, supported by worldclass operational service standards…”
CRUISING HEIGHTS December 2011
-2
3 20
23
-2
4 20
24
-2
5 20
25
-2
6 20
26
-2
7 20
27
-2
8 20
28
-2
9 20
29
-3
0
Total
forwarders for a long time. Today, a small warehouse, operated by the local chapter of the Air Cargo Agents Association of India (ACAAI), does exist but it is totally inadequate to keep up with the high cargo volumes moving through the airport. What prompted the airport operator to chalk out the plans for the warehouse was the recommendation of the Planning Commission, which “makes an assessment of the material, capital and human resources of the country, including technical personnel, and investigate the possibilities of augmenting such of these resources as are found to be deficient in relation to the nation’s requirement”. That assessment views the setting up of dedicated air cargo villages. These cargo villages around major airports have an integrated cargo infrastructure and provide forward and backward linkages. Reports point out that the Delhi airport operators hope that the warehousecargo village would be better than those available at Hyderabad’s Rajiv Gandhi airport where the international aircargo complex is spread out over an area of 10 acres.
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Tips to boost pharma exports A recent study by DHL and the Organisation of Pharmaceutical Producers of India looks at the hurdles facing the high-value perishable pharma sector and suggests ways for the country’s infrastructure to overcome these impediments. A report. ndia’s pharmaceutical and biotechnology prowess has, over the last few years, attracted the world. The air cargo industry had been making most of this attraction. The segment has a huge potential — the country is the sixth fastest growing life sciences and healthcare consumption market in the world — but there are major hurdles in its growth as a recent study has pointed out. The study conducted by DHL with the Organisation of Pharmaceutical Producers of India (OPPI), “Transforming Life Sciences Logistics in India”, looked at the competitive landscape of the life sciences industry and analysed how logistics could be a crucial enabler of the growing segment in India.
I
GROUNDWORK: Kochi International Airport will have a large perishable centre that is being developed primarily for exports to the Middle East.
The study focussed on fundamental issues and offered solution ideas with thought leadership. The study analyses how India can achieve a worldclass life sciences logistics setup and highlights 12 assets and enablers that need to be implemented to achieve world-class life sciences logistics in the country.
Christoph Remund CEO-DHL Global Forwarding, India
These include setting up dedicated pharma zones at airports, implementation of Goods and Services Tax (GST), faster co-ordination amongst all groundhandling agencies, multi-user warehouses and shared reefer vans and ocean freight containers. Maintaining the supply chain integrity by using the latest technology
“We examine India’s life sciences logistics setup and provide a realistic roadmap for India’s growth in the life sciences logistics sector.”
such as RFID, GPS and anticounterfeit equipment would greatly improve the standards for life sciences logistics in the country, according to the study. Talking about the study, Christoph Remund, CEO DHL Global Forwarding, India, said, “India is well positioned in the Life Sciences and Healthcare sector both as a producer and as a consumer of pharmaceuticals. In this study we closely examine India’s life sciences logistics setup and benchmark these against the best practices prevailing across the globe. Thus, we are providing a realistic roadmap for India’s growth and progress in the life sciences logistics sector in the future.” The country, according to
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the study, is well positioned in the life sciences sector, as a producer, exporter, and a consumer of pharmaceuticals and has been registering strong growth in the manufacturing of medical devices. It is expected to grow at an estimated rate of approximately 12 per cent in 2011-12. Perhaps, what is important is that the study shows how the country, although seen as a cost competitive market for logistics, might be lagging behind China and even the European Union (EU), if additional costs due to logistics inadequacies are taken into account. These are inefficiencies that exist in state-border delays, tolls and lost time due to paperwork. Delays at the state borders often run into 24 hours, while transit across borders in China takes only 15 minutes to 2 hours and almost no time in the EU. According to the study, the domestic Indian life sciences market is currently valued at `2767 billion and is set to grow to `3127 billion by 2015 reflecting a 13 per cent CAGR growth, making India in the top ten fastestgrowing life sciences and healthcare consumption market in the world. As an exporter, India is expected to see double-digit growth of 23 per cent CAGR until 2015, thus cementing its dominance in the life sciences market globally. Given these high growth figures the importance of this industry to the Indian economy cannot be undermined. Companies are also using logistics as a source of competitive advantage to accelerate product reach to the rural market. As a result of these global trends, Indian life sciences logistics needs to focus on driving cost efficiencies; striving for global quality standards and improving end-to-end supply chain integrity. In order to
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POISED FOR THE FUTURE: RGIA's special 'Pharma Zone' facilitates export of pharma goods from Hyderabad
achieve this, India would first need to ‘become competitive’ by firming up the foundation and implementing the more transformational logistics solutions, and thereafter move into ‘best-in-class’ by closing the remaining gaps. The exhaustive analysis undertaken by this study clearly indicates how the life sciences logistics framework can be re-defined to have cost-effective supply chains, global quality standards and a strong focus on supply chain integrity. If the existing inefficiencies in logistics are rapidly addressed, India can well exploit the opportunities that the life sciences segment holds for the country. On its part, the government has worked out plans too, to set up dedicated pharma zones at airports and seaports to facilitate import and export of pharmaceuticals around two years ago. It was decided then that pharma zones would be initially set up at
Tapan Ray Director General, OPPI
airports in Delhi, Mumbai and Chennai and would have dedicated areas only for pharmaceutical products. The Airports Authority of India (AAI), for example, that handles 125 airports — big and small — has launched a programme to set up centres for perishable cargo. While such centres exist at Kolkata and Chennai airports, the government has initiated a policy to encourage cold storage facilities at airports and perishable centres have been set up at Amritsar, Coimbatore, Guwahati and Lucknow airports. Aware of the potential of pharma exports, the privately-controlled Rajiv Gandhi International Airport (RGIA) launched the country’s only dedicated pharma zone in an airport at the beginning of this year. Said Hemanth D P, Chief Operating Officer at GMR Airports, “With double-digit export growth of pharma in terms of percentage in the
“Supply chain and logistics are essential enablers for the life sciences industry… The study proposes actionable recommendations to make India more competitive.”
CRUISING HEIGHTS December 2011
last five years and the same projected for the next couple of years, we (at Hyderabad) realised the need to focus on this segment of the market.” With pharmaceutical exports growing at a fast speed in Hyderabad — according to Hemanth, growth was reported at 30 per cent — the pharma zone can provide temperaturecontrolled handling for more than 30,000 tonnes of pharma products annually. While the zone has officials from the drug controller’s office and the Customs department, Lufthansa Cargo has been providing the capacity for transport of temperature-sensitive cargo with the carrier’s OptiCoolers. With the thrust on perishables, the concerns expressed by OPPI about the poor cold storage facilities at the country’s major airports and seaports will lessen. Pharma majors have been demanding infrastructure and service as per Good Manufacturing Practices (GMP) for export and import of pharmaceuticals. Tapan Ray, OPPI Director General, was of the view that pharmaceuticals are treated like just any other product at ports. Commenting on the study, he said, “Supply chain and logistics are essential enablers for the life sciences industry to achieve cost and time efficiencies and ensure the right product reaches the right consumer at the right time. The joint study by DHL and OPPI proposes actionable recommendations to make India more competitive and achieve global competencies in life sciences logistics. These will address changing market dynamics, like expiring patents for blockbuster drugs, the growing need to reach hinterland areas and increasingly stringent regulations requiring compliance to global standards.”
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SkyCargo’s 777F sets new record Pushing the limits without compromising on safety, Dubai-based Emirates freighter recently transported the heaviest single item ever.
HEAVY LIFTER: Emirates SkyCargo's Boeing 777F that carried the 21-tonne oil part from Iraq to Dubai.
mirates SkyCargo, the freight division of Emirates airline, has set a new record for the heaviest recorded single item ever carried by a Boeing 777F. Weighing at 21.157 tonnes (including packaging), the item — a specialised valve used to seal, control and monitor oil and gas wells — was just short of the aircraft’s 21.624tonne limit. The blowout preventer — which was transported from Iraq’s Erbil International Airport to Dubai — would normally be transported by sea, but the customer required a faster solution. The shipment — 2.25 metres by 1.9m by 1.9m — tested the capabilities of the aircraft and staff to the full. “Carrying cargo of a weight so close to the B777’s limit was very challenging,” said Nihal Wickrema, Emirates’ Manager, Freighter Operations &
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Charters. “The highest level of care and precision planning was required by ground-handling operations at both airports. The weight had to be spread along the aircraft’s structure and the shape of the item was such that it could potentially have rolled during the flight so we had to ensure there was sufficient restraint in every direction.” Emirates SkyCargo worked closely with dnata, the ground-handling agent in Erbil, the customer — Starlight— and its delivery agent in Erbil. “This operation was a great showcase of the expertise of everyone involved,” added Wickrema. “We always try to find a solution to even the most challenging customer requirements. It was a stern test of our operational capabilities so it is satisfying to have successfully completed the job, which is now testament
to an enhanced level of service that we can offer customers.” Behind SkyCargo’s fleet management is Hiran Perera, Emirates’ Senior Vice President, Cargo Planning & Freighters. In a recent interview to a cargo ezine, he pointed out that with more freighters being inducted in the Emirates fleet, there were risks and complexity of operations. Emirates is today a global airline and not merely Europe and Asia-centric as it not too long ago. Perera mentioned that the B777-300ERs were freighters in disguise. “SkyCargo can carry 20-25 tons of freight with a full load of passengers — that’s more than on some full freighters. Emirates now operates fifty-four of these 300ers, and we were one of the initial customers for the 300ERs.” He also said that the SkyCargo team “drove
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the cargo aspect of that B777 and quite a few others, including the A380 and A330-200 — we pushed the manufacturers to enhance the offering and capability of the airplanes for air cargo… because the B777 is so great, the economics are so good, and because that is the kind of airplane that, from a passenger perspective, is suitable for those routes, we do operate them to places from Dubai like Sao Paolo, San Francisco, Los Angeles, etc.” As for the A380, though it had made its name as a new-wave passenger plane, the question that has been continually asked is: Can the A380 work for cargo? To that Perera said that Emirates had 15 A380s and the “cargo capability of the airplane is much better than we expected it to be. We are able to carry 13-15 tonnes on an average on the A380”.
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CARGO JOTTINGS was already on track to meet the deadline with 51 of the locations it serves e-freight compliant and this latest milestone is further testament to the progress being made. “The transition to e-freight is a massive challenge for both the industry and Emirates SkyCargo. Change of this scale requires time and many steps have been made, but this really is a giant stride forward,” said Pradeep Kumar, Emirates’ Senior Vice President, Cargo Revenue Optimisation & Systems. “Eliminating paper AWBs from our hub demonstrates our commitment to meeting IATA’s deadline and bringing enhanced operational efficiency to the supply chain.”
Lufthansa Cargo kicks off innovation campaign
TECH-SAVVY: Emirates SkyCargo has taken innovation campaigns to a new high.
Emirates SkyCargo hits 100 per cent Emirates SkyCargo recently added further momentum to the quality drive by announcing that electronic air waybills (eAWBs) are now being used for 100 per cent of shipments from its Dubai hub. The IATA e-AWB initiative aims to remove the requirement for paper air waybills (AWBs) — the contracts used for the transportation of air cargo. By eliminating the need to print, handle or archive the paper AWB, the simplified air freight process brings benefits to businesses throughout the supply chain. The IATA e-AWB scheme is one part of the e-freight push— a collective industry goal, also facilitated by IATA, to remove paper AWBs, as well as every other document and certificate, by the end of 2014. Emirates SkyCargo, the freight division of Emirates airline,
Lufthansa Cargo is offering customers the industry’s first-ever tracking app for smartphones. The free app enables forwarders to track the status of their freight shipments, quickly and easily, at any time. Lufthansa Cargo has developed the system, which is available under the search term “Lufthansa Cargo” in app stores, for use on Blackberry, iPhone and Android devices. Simultaneously, Lufthansa Cargo is also launching an innovation platform for the airfreight industry. The dedicated online portal www.innovation.lufthansa-cargo.com is to be utilised in the coming weeks to develop innovative solutions and future visions for ecological products and processes in the airfreight business. It is addressed principally to airfreight customers as well as logistics experts and academics. Upto December 19, participants can put forward new ideas and approaches for discussion in the forum. The proposals will be evaluated by a jury of experts and prizes awarded for the most innovative suggestions and ideas. Included in the attractive prizes is a training session in a flight simulator.
The relief aid of 1,000 shelter toolkits included tools and hardware, which will enable victims and aid workers to help repair and reconstruct damaged and destroyed homes. The shelter kits were provided to the Indian Red Cross Society by the IFRC, and funded by the international organisation’s Disaster Relief Emergency Fund (DREF). FedEx Express transported the aid weighing approximately 25,000 pounds from Kuala Lumpur, Malaysia to Delhi, India, using the A310 aircraft and delivered the kits to Indian Red Cross Society representatives in Sikkim by a SOCIAL AGENDA: In India, FedEx’s CSR activities have spread far and wide. special ground delivery. “The damage caused by the September earthquake in the FedEx delivers help to earthquake victims Himalayan region necessitated an immediate humanitarian In response to the devastation caused by the earthquake in response. FedEx is honoured to offer its humble support to the Himalayan region, FedEx Express recently delivered victims of Sikkim. By delivering the shelter tool kits to 1,000 shelter tool kits to affected families in Sikkim. This affected families in the region, we stand in solidarity with charitable initiative was organised in collaboration with our trusted partners, India Red Cross Society and the IFRC, International Federation of Red Cross and Red Crescent as they honourably assist the community’s reconstruction Societies (IFRC) and Indian Red Cross Society with the aim process,” said Kenneth F Koval, Vice-President, Operations, of offering shelter relief to victims of the earthquake. FedEx Express India.
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Further details on the tracking app and innovation platform are available on the re-designed Lufthansa Cargo facebook page at www.facebook.com/lufthansacargoag, an ideal opportunity to network and converse with the cargo carrier. Aside from access to direct contact with Lufthansa Cargo, the page offers users interesting information and entertaining games.
ESC Group charts plan for India The ECS Group, which claims to be the world’s largest GSSA, recently reinforced its determination to develop stronger ties with the subcontinental market by opening its first offices in India. The company plans to extend its range beyond the existing 47 locations spread through 30 countries which it currently operates from. The Mark Pulling ECS Group’s Mumbai and Delhi locations are fully operational with plans in place to develop further outstations in the country as its business grows. The South Asia market represents around five per cent of the global air cargo market in tonnage terms and India represents its most thriving market. The company’s launch customers include airlines with global GSSA agreements with ECS, including Ukraine International Airlines, Brussels Airlines, and Camair and ECS Group. While it has appointed Rajendra Dubey as Country Manager, India, Mark Pulling has taken on the additional role of Regional Director, Middle East and Indian subcontinent. Said Pulling, “India is a thriving and dynamic market. It is also a strong player in the hi-tech and pharmaceutical industries that produce prime air cargo traffic. We are making this investment in India partly in response to the requirements of our existing airline customer base and also because of the rapid expansion that is being projected for the market.”
Cathay receives Boeing 747-8 freighters Cathay Pacific Airways has begun taking delivery of its new fleet of Boeing 747-8 freighters. The airline said it was expecting 10 of the new-generation aircraft with four being delivered by the end of this year. Cathay Pacific Director Cargo, Nick Rhodes, said, “Cargo is a very important part of Cathay Pacific’s business, accounting for around a third of our revenue in a good year. They will play an important role in our continued efforts to develop Hong Kong as a leading international air cargo hub.” Cathay Pacific is the first Asia Pacific airline to take delivery of a B747-8F. The new freighter features a high-lift, low-drag wing that enhances payload and range performance, a simplified flap system to reduce noise and maintenance costs, and what is described as the most advanced commercial aircraft engine available, the GEnx2B67. Rhodes pointed out that the aircraft would greatly
Blue Dart Q3 registers sales of `388.84 cr Blue Dart Express Ltd. recently unveiled its financial results for the third quarter (Q3). The company posted ‘29.75 cr. profit after tax for the quarter ended September 30, 2011. Income from operations (inclusive of fuel surcharge) for the quarter ended September 30, 2011 stood at ‘388.84 cr., an increase of 32.40 per cent over the corresponding quarter of the previous year. Anil Khanna, Managing Director, Blue Dart Express Ltd. said, “As always, our teams have worked very hard and I would like to thank our passionate and dedicated employees, our loyal customers and the governmental agencies and the industry bodies for their unstinted support and backing. Blue Dart is committed to provide customers world-class and benchmarked services, we are steadfast in our efforts to remain an employer of choice and be a trend-setter in the industry.”
Pakistan elected to FIATA Presidency Bubar Badat, former Chairman of Pakistan’s logistics association PIFFA, was elected to the presidency of FIATA in the General Meeting held in Cairo during the Global Congress, according to a press release issued by FIATA recently. He has been a V P and board member of FIATA since 2007 and has now been elected unopposed to the Presidency as the Senior Vice President, bagging a seat for Pakistan on the Presidency of this global logistics organisation. FIATA founded in 1926 is headquartered in Zurich and is the world’s largest non-governmental organisation in the field of international freight logistics and transportation. It represents thousands of logistics and international freight forwarding organisations employing approximately 10 million people.
improve the efficiency and payload of Cathay Pacific’s ultralong-haul freighter services, particularly on North American routes, and at the same time reduce the environmental impact of its operations. The aircraft is also around 30 per cent quieter than its predecessors. New cargo manager: Naveed A Khan has been appointed Cathay Pacific Airways’ Cargo Manager-Western India. Khan will oversee cargo sales and revenue for Cathay Pacific and will responsible for the development and execution of cargo sales strategy for the region. Khan has been with Cathay Pacific Airways since Naveed A Khan July 2008 and handled passenger sales. He later became the Marketing Communications Manager for three years.
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GLOBETROTTING
‘PLEASE OPEN THE DOOR’
Why are you kicking me? A Russian citizen with an Armenian last name said he was prevented from boarding an Azerbaijan Airlines flight to Baku. Sergei Gyurdzhyan, wrote in his blog that the airline’s staff told him that there were instructions from the management that passengers with Armenian surnames were not to be registered. Gyurdzhyan, Head of Export Sales of AvtoVAZ, was due to fly from Moscow to Baku to open a Lada showroom. Gyurdzhyan presented a Russian passport and explained that he was
born and lived most of his life in Moscow — to no avail. His travelling companion, Dmitry Shumakher, a Subsidiary Director at AvtoVAZ Lada International, was also prevented from boarding after complaining of racial discrimination towards Gyurdzhyan.
Privacy
B
Furore at 36 000 ft
In a rare incident, an Advertising Manager on an EasyJet flight to Belfast from London created a furore when he started screaming at a stunned air hostess who had politely asked her to put a seatbelt on her infant child. Foulmouthed Suzanne Mandry then launched a torrent of abuses at a cabin crew manager who asked her to calm down. Shocked passengers on the easyJet flight looked on in horror as the advertising manager created a scene. After the plane touched down, Mandry, who had flown with her three young children, was charged with two counts of making threatening comments to a crew member. In the court, she pleaded guilty to the charges and was fined £400. Mandry, with an address at Orchardville Crescent in the Finaghy area of south Belfast, UK, cried throughout the proceedings. “I was on the plane with my three children and I was in no way confrontational. The only thing I demanded from the cabin crew was an apology over how I had been treated. If I was so badly behaved, why haven,t easyJet banned me from flying with them? Why weren,t the cops called? Why wasn,t the captain alerted?” she asked the court.
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A Delta Airlines flight from Las Vegas was grounded after an Atlanta-area man allegedly attempted to open an emergency exit above 30,000ft. Richard Joel Garber was seated on board Flight 1702 when he tried to pry open a cabin door once the plane had reached cruising altitude, investigators said. Passengers reportedly tackled the suspect to the ground and notified the flight crew. The aircraft returned to Las Vegas without further incidents. The Atlanta Journal-Constitution reported it was about an hour into the flight when
concerns
elieve it or not, a Transportation Security Administration (TSA) screener was fired after leaving a note telling a passenger to ,get your freak on, girl,. This incident happened at Newark Airport. The screener,s flippant note was a weird shoutout at lawyer and Editor Jill Filipovic, who was lugging around a vibrator in her bag as she boarded a flight at Newark Airport. Filipovic, an Editor at www.Feministe.com, was passing through the airport on her way to a conference in Ireland. After she made it
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through security, she noticed the note, written on a paper with TSA identification on it, in her bag. She tweeted about the note, sending the TSA scrambling to identify the writer of the naughty letter. “I am still fairly shell-shocked (and not in a good way) by the amount of attention this has gotten, especially since it,s turned from what I thought was a ,funny anecdote with bigger political point, into a very different animal,” she tweeted. In the meantime, TSA initiated action to remove the individual from federal service. “Like all federal employees, this individual is entitled to due process and protected by the Privacy Act. During the removal action process, the employee will not perform any screening duties,” TSA issued the statement.
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Love at first flight
Garber, who was sitting in one of the emergency exit seats, tried to open the latch to a door over the wing, sending passengers into a fit of panic. TSA spokesman Jon Allen said the agency was notified about the incident. The flight returned safely to Vegas, McCarran Airport, where Garber was arrested by the FBI.
It was a rare sight for passengers when a fellow passenger named Arvin Shandiz proposed to Alexandra Williams over the plane,s intercom system. It happened on a Delta flight from New York to their Chicago hometown. Shandiz, an Options Trader, used the in-flight loudspeaker to make his proposal in front of fellow passengers. He stood in front of the cabin as he announced: “Good evening everyone, my name is Arvin, and I,m on this flight with a beautiful young lady I met almost two years ago flying Delta Air Lines.”
Inflight bout
A 63-year-old United States man was arrested at Gander International Airport, Canada, after an American Airlines flight was diverted to the central Newfoundland town due to reports of an unruly passenger. The man, from Kentucky, was restrained on American Airlines flight 98 that had been heading to London, England, from Chicago. RCMP officers were told alcohol, abusive language and violence were involved in the incident onboard the flight. RCMP members from the local detachment, along with the Gander RCMP’s Border Integrity Section, took the man into custody. He was charged under the Aeronautic Act along with additional criminal charges for mischief over $5,000 and causing a disturbance.
You want some, get some
In a bizarre incident, an intoxicated airline passenger, who was banned from a flight to Portland, hit an officer in the face while under arrest at the security checkpoint. TSA agents noticed that Pena was drunk and had an officer come take a look. Authorities decided to let Southwest Airlines take the call on whether or not Pena could fly. When an agent asked Pena to sober up and take a later flight, he refused. Pena started shouting at TSA agents at the security checkpoint and hit one officer across the face and cut another officer’s hand
And then he presented Williams a ring, as she tearfully accepted to applause from the cabin. Alexandra Williams described the proposal as ,magical,. She told the Chicago Sun-Times: “It was magical to say the least, and it,s been a fairy tale from the moment we met.” In celebration, Delta presented the couple with a bottle of champagne.
while in handcuffs. The passenger even threw himself on the ground to avoid getting into the back of a police car. “To be so intoxicated, and become not just rhetorically combative, but physically combative changes the entire environment,” Albuquerque Aviation Police, New Mexico Chief Marshall Katz said. Pena, however, said, “I was actually already at the airport and had checked my bags.” To which the Chief Marshall replied, “The best advice in the world is the free advice. Don’t drink and drive, and don’t come to an airport drunk. It,s just a bad idea.”
‘I am not a psycho’
A flight bound for Toronto had to make an emergency landing in Winnipeg because of an aggressive passenger who tried to light up a cigarette. The Air Canada flight was on its way from Edmonton to Toronto when one of 148 passengers became physically and verbally abusive. Winnipeg police, Canada, said a male passenger appeared to be intoxicated and attempted to light a cigarette while the plane was in the air. A female crew member tried to intervene but the male continued to be aggressive and belligerent, so crew members had to restrain him in his seat to ensure the safety of passengers and staff. Police officers arrested the passenger after the plane landed in Winnipeg. Afterwards, the plane resumed its journey to Toronto. Byron Pinksen, 41, was charged with damaging or interfering with a navigation facility, causing a disturbance, uttering threats to cause death or bodily harm, mischief endangering life, interference with a flight crew member and consuming liquor other than liquor provided by an aircraft operator.
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SNIPPETS
DOMESTIC AIRLINES Jet connects Madurai with Bengaluru, Chennai JET AIRWAYS recently introduced an additional flight between Madurai and Bengaluru/Chennai. Except for Tuesday and Saturday, Flight 9W 2769 will leave Madurai at 1225 hrs and will arrive Bengaluru at 1340 hrs, and will be able to provide onward connections to other destinations on the airline’s network. On the return leg, 9W 2770 will depart Bengaluru at 1410 hrs and arrive Madurai at 1525 hrs. On the Chennai-Madurai sector, the daily flight 9W 2725 will depart for Madurai at 1035 hrs and arrive at 1155 hrs. On the return leg, except for Tuesday and Saturday, flight 9W 2726 will depart Madurai at 1610 hrs and arrive Chennai at 1730 hrs. Similarly, flight 9W 2726 on Tuesday and Saturday will depart for Madurai at 1225 hrs and arrive at 1345 hrs. Goyal conferred Belgian national honour: In a unique honour, Belgium conferred the “Commandeur of the Order of Leopold II”, one of the country’s highest civilian distinctions, Naresh Goyal, Chairman, Jet Airways, for his meritorious service and efforts to foster CAPACITY BUILDING: (L-R) Minister-President of business and Flanders, Kris Peeters; Naresh Goyal, Chairman, Jet Airways Group and Belgian Ambassador H.E. cultural ties with Pierre Vaesen. Belgium. This distinction has been conferred on him by H.E The King of the Belgians. In recognition of Jet Airways’ contribution to India’s business and cultural ties with Belgium, the Belgian Ambassador H.E. Pierre Vaesen handed over the Commandeurs Cross of the Order
of Leopold II in the presence of the visiting Minister-President of Flanders, Kris Peeters. Also present at the glittering ceremony to celebrate the Kings Day in New Delhi and to witness the event were heads of missions and members of the diplomatic community from varied nations as well as Indian officials and captains of the Belgian and Indian industry. Commenting on the conferment of the high civilian distinction to Naresh Goyal, the Belgian Ambassador H.E., Pierre Vaesen said, “I warmly congratulate you on being conferred this highest distinction, which is a recognition of your remarkable career in global aviation and of the lead taken by you in helping establish and nurture Indo-Belgian cultural and economic ties. Our King and the people of Belgium wish to pay their tribute by conferring this distinction on you.” Chooses Amadeus Ticket Changer for ticket flexibility: Amadeus and JetLite will implement the Amadeus Ticket Changersolution, allowing travel agencies in India to change and modify flight bookings in just seconds. In a first for India, Amadeus Ticket Changer is designed to automatically manage the necessary calculations to reissue a ticket, and to store the results in the correct ticketing formats. Amadeus Ticket Changer allows all kinds of itinerary changes, including date, flight and routing, and processes a vast range of tickets, giving the end-consumer unprecedented control over their itineraries. Tickets for several different passengers can all be changed at the same time in one transaction and with the multi re-issue functions and unlimited number of successive changes can be made to the ticket before departure. Commenting on the agreement, Sudheer Raghavan, Chief Commercial Officer, Jet Airways, said, “JetLite is delighted to partner with Amadeus. While our guests may now more easily control and modify their itineraries at their convenience, Amadeus Ticket Changer will also help provide us with streamlined process to handle various policies and simplify the entire booking process.”
BIAL eyes more hub traffic
expansion, which will add a design capacity of 8 million BENGALURU International Airport is aiming to attract more passengers and lift annual design capacity to 20 million hub traffic and provide a sustainable alternative to Singapore passengers. The terminal expansion is scheduled to open in and the Gulf hub airports for traffic to Australia and New December 2012. Zealand. Organises Children’s Day treat and events: Bengaluru Assistant VP, Head-Airline Marketing and Aviation International Airport Limited (BIAL) recently started the Contracts Girish Nair told ATW festivities around Children’s Day that, “Bengaluru International with a central theme termed Aspire. Airport is the natural gateway to The theme was translated through South India owing to our vocational tours of the airport strategic geographical wherein children receive the positioning in the middle of opportunity to understand the various South India. The average job functions existing at the airport distance between all the and create their own aspiration for a regional airports is lower in particular role. Additionally all comparison to other three major children passing through the airport south Indian airports.” “But we on Children’s Day received a are also the natural gateway to specially created sketch book titled Asia, specifically for Europe One Day At My Airport. INSIGHTFUL TALK: A BIAL official having an interaction with the to Australia and New Zealand children 45 children from the NGO, IGI on Children’s Day. traffic that is currently being were spotted at the airport cheering a hubbed over Singapore and by the big Gulf carriers over their Pilot who spoke to them about his journey into the profession. hubs. But Europe to/from Australasia is actually a straight line Other BIAL employees engaged in CSR activities involved over Bengaluru. Thus we provide a more efficient route.” the little ones with storytelling, mimicry and a grand Bengaluru is in the middle of a major passenger terminal vocational tour of the airport.
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Honeywell APUs to power GoAir A320s
BRACING FOR NEXT LEVEL: A GoAir aircraft in flight.
HONEYWELL has extended its agreements with Indian low-fare airline GoAir for the installation and maintenance of Model 1319A auxiliary power units on 10 more of the airline's new Airbus A320s. The agreement calls for Honeywell to install the new APUs between 2012 and 2014. It builds on the company's existing 10-unit APU contract with GoAir, and puts it in charge of APU maintenance across the entire GoAir A320 fleet until 2018. The U S company claims its 131-9A will deliver GoAir a 3.4per cent fuel burn benefit and a 10-per cent power advantage over competing APUs, while also allowing it to cool or heat the cabin two minutes faster. GoAir has derated most of the APUs on its existing fleet, so it will now be able to achieve a total fuel burn benefit of 4.5 per cent per aircraft duty cycle over its original settings, said Honeywell.
Air India celebrates Children’s Day HUNDREDS of differently-abled children, destitute elders and even HIV positive kids had a memorable day when Air India and Rotary Club of Cochin Airport with the support of various organisations and corporates arranged a free air travel from Kochi to Kanyakumari and back on Sunday, the day
before Children’s Day. The special passengers were accompanied by Excise Minister K Babu, CIAL M D V J Kurien, dignitaries, executives and mediapersons. Celebrities from film field, magicians and musicians entertained the kids and the elders on board the flight. The AI arranged Malayali crew members on board who interacted with the passengers and made the journey comfortable and relaxed, AI Deputy Manager (CC) Aby George said. The crew members rendered free service. Rotary Club of Cochin Airport, the brain behind the unique programme, organised the air travel for the third consecutive year. The Rotary Club chose a few elder persons from different old age homes for the fight journey this year. Thirty students from different normal schools joined the physically and mentally-challenged students on board as volunteers. They assisted differently-abled students and provided an opportunity for the normal students to understand the difficulties and needs of the poor handicapped and elder persons. Woos economy flyers to travel business class: Targeting additional revenue of `1000-1,200 crore annually, Air India woos economy flyers to travel business class by selling them upgrade coupons. The new initiative, which is part of the national carrier’s turnaround plan, BETTER SERVICE: Air India is wooing travwould be launched ellers to fly ‘Business’ during the winter schedule and available for both domestic and international travellers, airline sources said. The prices of these upgrade vouchers would range from `4,000 to `6,000 in the domestic sectors and $200-300 for the international flights to and from destinations like London and Toronto, according to the airline sources.
MIAL publishes punctuality report card
responsibilities, the ministry asked the Mumbai International FREQUENT FLYERS from the city can now study an airline’s Airport Limited to publish the list. punctuality record online before making their travel plans. Celebrates Children’s Day: As part of the celebrations Acting on a directive from the Civil Aviation Ministry, the on Children’s Day, special events were organised by MIAL. It Mumbai airport operator has started publishing a monthly consisted of free consultation with Pediatricians for children punctuality report card of domestic carriers on its website travelling through CSIA with the assistance of Kohinoor www.csia.in. Hospitals. In addition, “The information will children were also offered on empower passengers in the spot free random blood making choices,” said a Civil sugar testing. A total of 91 Aviation Ministry official. children were part of the free Since April, the ministry consultation and pediatrician has been pushing the idea of activities while a total of 183 publishing such data in the children were administered public domain. However, it polio drops. took about four months to Apart from medical implement it because it could checkups, children were also not reach a consensus on who given gifts like drawing books should be the nodal agency. along with crayons and soft Considering the Directorate toys. Standees throughout the General of Civil Aviation terminals were placed at (DGCA), the aviation strategic locations, enabling regulator, is short staffed and passengers to avail of the burdened with other SKILL DEVELOPMENT: A child gets a drawing book on Children’s Day. service.
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INTERNATIONAL AIRLINES Cathay ushers in Mumbai-Hong Kong flights PASSENGERS TRAVELLING to Hong Kong from Mumbai can experience absolute luxury with the introduction of First Class on the Mumbai-Hong Kong sector. From October 31 2011, Cathay Pacific aircraft plying on this route will feature a three class cabin configuration. The First Class product creates the ambience and convenience of a five-star hotel room, giving passengers greater individual control over the immediate environment should be taken to a new level. The new First Class cabin highlights the importance of Cathay Pacific’s premium passengers to the airline by providing more space and more privacy, creating the feel of a private relaxation suite. The seat in First Class can be used as an armchair, a chair
Emirates’ St Petersburg launch marked CELEBRATIONS for Emirates’ newest destination spanned two hemispheres with St Petersburg being the airline’s theme for the Emirates Melbourne Cup in Australia. ELEGANT: Emirates Melbourne Cup-winning jockIn Melbourne, ey Lemaire celebrates with connections of Dunaden. Also pictured, left, is Richard Vaughan, all eyes were Emirates' DSVP Commercial Operations Worldwide focussed on Flemington Racecourse for the 151st running of the Emirates Melbourne Cup, known as the ‘race that stops a nation’. At the same time, Emirates celebrated the start of its service to the 115th destination on its network by hosting guests in its trackside St Petersburg-themed hospitality marquee. A few hours after Dunaden beat Red Cadeaux to win the Emirates Melbourne Cup, Emirates flight EK137 departed from Dubai International bound for St Petersburg. On board the inaugural were Thierry Antinori, Emirates’ Executive Vice-President, Passenger Sales Worldwide; Salem Obaidalla, Emirates’ Senior Vice President, Commercial Operations, Europe and Russian Federation; and Pradeep Kumar, Emirates’ Senior Vice President, Cargo Revenue Optimisation and Systems.
Flydubai boosts UAE and Russia cooperation SENIOR FLYDUBAI executives and members of the Russian Business Council in Dubai and Northern Emirates met at the Dubai Chamber of Commerce and Industry to discuss the impact of increasing air links to emerging destinations in Russia on inter-country economic development. Chaired by Ghaith Al Ghaith, CEO of Flydubai and Dr. Igor Egorov, Chairman of the Russian Business Council, which operates under the auspices of Dubai Chamber, the meeting was attended by the media and Atiq Juma Nassib, Senior Director, Commercial Services Sector, Dubai Chamber. With the UAE
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lounge or an extra long and wide bed. The bed is one of the largest provided on any commercial airline and added comfort comes courtesy of a plush mattress, duvet and lumbar massage function. An ottoman in the suite and an extendable table mean passengers can invite friends or colleagues to join them in their suite inflight. Passengers can enjoy a cinematic experience with the bigger, highly adjustable 17-inch 16:9 personal television and noisecancelling headset. Three contiguous working surfaces and 110V AC power supply are provided, allowing the suite to be quickly converted into a workstation. All cabin baggage can be stowed in the suite itself, providing easier access to personal possessions.
increasingly being viewed as an ideal platform for Russian businesses to extend their reach to new markets, the roundtable was organised to examine the existing UAE/Russia trade and tourism relations and discuss ways in which to strengthen bilateral ties. Flydubai’s presence in Russia was highlighted as one of the foremost contributing factors to the growth of investment and economic development between the two nations. GOLDEN HANDSHAKE: (L-R) Dr. Igor Dubai’s pioneering low Egorov, Chairman, Russian Business cost airline recently Council; Ghaith Al Ghaith, CEO of flydubai; doubled its network in Atiq Juma Nassib, Senior Director, Commercial Services Sector of the Dubai Russia to four points with Chamber. the addition of flights to Kazan and Ufa. The new routes along with existing destinations Yekaterinburg and Samara provide direct, affordable and convenient flights to the four cities that have had no or few direct air links previously. Signs $20 million maintenance support contract with Honeywell: Flydubai recently signed a Maintenance Cost Agreement with Honeywell worth more than $20 million, to provide maintenance support for the carrier’s auxiliary power units (APUs) installed on its growing fleet of Boeing 737-800 NG passenger aircraft. The ten-year contract provides Flydubai with a stable, predictable maintenance structure that reduces costs associated with ad-hoc maintenance work and unscheduled airframe grounding. It also extends the operational availability of the fleet which currently stands at 20 aircraft. Flydubai has another 30 Boeing 737-800 NG aircraft on order. Ghaith Al Ghaith, CEO, Flydubai, said, “With one of the highest fleet utilisation rates in the industry, we need to ensure that our aircraft fully support the operations schedule and Honeywell’s timely responses will safeguard this. This contract will also help flydubai maximise our operational efficiency to maintain our excellent performance record.”
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Turkish Airlines’ tennis push
Lufthansa customers can save and donate
TURKISH AIRLINES added a new asset to its sports sponsorship portfolio by becoming the official airline partner of the TEB BNP Paribas WTA Championships, the season-ending finale of the WTA (Women’s Tennis Association). “Turkish Airlines has been a great partner to the WTA’s World No.1 Player Caroline Wozniacki and it’s great that they’ve decided to further extend their sponsorship of women’s tennis,” said Stacey Allaster, Chairman and CEO of the WTA. “Having one of the INTO THE SKIES: Caroline Wozniacki giving the thumbs up after the flying best airlines in Europe join a experience at Turkish Airlines. great roster of partners of the TEB BNP Paribas WTA Championships shows the power of women’s tennis as a global marketing platform.” “Turkish Airlines is a great supporter of mine and I am glad that it has become a partner of the WTA’s most prestigious event of the year,” said Caroline Wozniacki. “Turkish Airlines offers me a great flying experience each and every time and I am grateful for all of its support.” “We are happy to host world’s number one woman tennis tournament in our country and support WTA Championship in Istanbul,” said Zeki Çukur, Corporate Communication Senior Vice President of Turkish Airlines. “It is also nice to see Caroline Wozniacki, Brand Ambassador of Turkish Airlines on the top of this prestigious tournament list. We wish her to gain great success in the tournament.”
FLYING LUFTHANSA is now even more rewarding: When purchasing a Lufthansa ticket, MasterCard cardholders can now enjoy $60 or equivalent in local currency off the best available rate on all fare classes. Customers simply need to register on www.lufthansa.com/mastercardapmea to receive their promo code. The booking period is until January 31, 2012. The travel period is from now to May 14, 2012. Purchasing Lufthansa tickets with MasterCard, $25 or equivalent in local currency per transaction is contributed to HelpAlliance, an independent aid organisation. The Lufthansa/Mastercard offer is available in Australia, New Zealand, India, China, Hong Kong, Japan, Korea, Singapore, Malaysia, Indonesia, Thailand and Vietnam (Vietnam only: Purchase from ticketing office), Bahrain, Egypt, Kuwait, Lebanon, Qatar, UAE, Saudi Arabia and South Africa.
AirAsia and partners strike it big
SMILING ALL THE WAY: AirAsia Regional Head, Financial Services and Loyalty, Johan Aris (extreme left), with MITM representatives and key partners.
AIRASIA and AirAsia X together with strategic partners, Citibank, BIG, AIA Berhad and Multi-Purpose Insurans Berhad are participating in MITM Travel Fair from October 28 to 30, 2011. This will be the first time that the public will get an opportunity to get up, close and personal with AirAsia cobranded products and services via its strategic partners. Visitors will have the opportunity to learn about AirAsia INSURE Travel Protection Plan and Lifestyle Protection Plans, AirAsia unique co-brand credit card with Citibank and our very own Loyalty Programme called Big. Big is the “first of its kind” global loyalty programme where AirAsia members can earn Biggies (points) with every transaction to redeem free flights from AirAsia. Continues strong growth: AirAsia X has recorded another strong growth in the third quarter of 2011, carrying 0.62 million
BA wins award for charity support BRITISH AIRWAYS has been given a major award for the support it provides to charities around the world. The airline was one of three companies to be given a Word Tourism Award at a ceremony at the World Travel Market in Excel, East London before a specially invited audience. British Airways received the award in recognition of its annual investment of over £5m to support more than 50 charities and community programmes through free flights, cargo space and expert advice, around the world as well as in the UK. The World Tourism Awards are co-sponsored by American Express, Corinthia Hotels, the International Herald Tribune and Reed Travel Exhibitions to recognise ‘the extraordinary initiatives by individuals, companies, organisations, destinations and attractions for outstanding accomplishments in the travel industry’. passengers, an increase of 21.3 per cent over the same quarter in 2010. In terms of passenger traffic, AirAsia X grew by 27.2 per cent to 3.6-billion Revenue-Passenger-Kms (RPKs) for Q32011, achieving similar levels in the earlier two quarters and solidifying its position as the second-largest low-cost carrier in Southeast Asia. Its capacity grew by 17 per cent to 4.5-billion Available Seat-Kms (ASKs), resulting in a load factor of 80 per cent. This represents an increase of six percentage points from the same quarter in 2010, where it registered a load factor of 74 per cent. AirAsia X has been able to buck the trend of softening load factors experienced by other long-haul legacy carriers amidst the current economic climate. All routes that AirAsia X has operated over a year have yielded positive increases in load factor. Unveils green home at eco-friendly terminal 3: AirAsia Indonesia recently unveiled its sophisticated green home at Terminal 3, Soekarno Hatta International Airport in Jakarta. The state-of-the-art terminal, which formerly housed only Indonesian domestic flights, officially opened for international flights from November 17, 2011. “Terminal 3 is without question a public facility the nation can be truly proud of. The sophisticated terminal is a reflection of Angkasa Pura II’s commitment to creating a world-class airport, and will set a new environmental benchmark for airport buildings. We are particularly honoured to be the first airline to fly internationally from Terminal 3. Not only will the move boost operational efficiency, but more importantly, it will also elevate our guests’ travel experience to the highest level of comfort,” said Dharmadi, President Director of AirAsia, Indonesia.
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TRAVEL & TOURISM PAN Amsterdam: An art inspiring fair IF A GOOD painting to you is like a friend keeping you company, comforting and inspiring, then Amsterdam should be in your list of next quest. Visit Amsterdam this November from 20 to 27, AWE-INSPIRING: A Couple at the art exhi2011 at the RAI bition at PAN Amsterdam. exhibition centre and witness an art fair like no other at PAN Amsterdam. PAN Amsterdam has been the leading contemporary fair for art, antiques and design for almost 25 years now. This year it has come together with TEFAF Maastricht, the most important art and antiques fair of the Netherlands. What differentiates this fair with any other art fair is its unique range of relics which make it an inspiring place for anyone who loves beauty. In just one visit, art lovers can give their home an individual identity, collect gifts with a history or simply fall in love with the beautiful little cabinet or choose from an array of paintings to simply transform any wall for good.
India Travel Mart envisions great future THE GRAND success of the opening chapter of the annual India Travel Mart (ITM) in Srinagar expects more than 200 international and Indian buyers next year to promote tourism in a bigger way. This was stated by Minister for Tourism and Culture, Nawang Rigzin Jora and Minister of State for Tourism, Nasir Aslam Vani. The ministers were elated with the success of international mart in the valley and appreciated the efforts taken by the tourism department for the supporting role to promote inbound, domestic and outbound tourism for people in the state who are willing to explore new destinations. The forthcoming years will give a greater boost to the tourism sector. The ministers further assured that the Department would continue to support ‘India Travel Mart (ITM)’ for inviting buyers and sellers across the country and globe, to Srinagar next year.
They also emphasised on bringing the film industry to the valley and promoting the paradise through films. It was a couple of decades back when films were mostly shot on the exotic locations of Kashmir and popularising the exotic locations and the unique shikaras. Now time and situation being favourable, there is a major shift back from AGENDA SETTING: The India Travel Mart (ITM) in Srinagar has brought in happy time the time when the film for revellers. industry had moved international, shooting in Spain, Switzerland, Europe, to the valley where films like Mission Kashmir, 3 Idiots shot in Leh and Ladakh and the most recent being Rockstar.
Sands China reveals its new logo SANDS CHINA Ltd. recently announced the unveiling of the new Sands Cotai Central brand logo. A shimmering, gold-themed event was held at The Venetian Macao-Resort-Hotel with an audience of government officials, dignitaries, business partners and media in attendance. Edward M Tracy, President and Chief Executive Officer of Sands China Ltd., remarked, “Today, we celebrate the latest milestone of Sands China Chairman Sheldon Adelson’s vision for the Cotai Strip — further developing Macao into a leading business, leisure, travel and entertainment destination in the region and the world, with multiple brands, and multiple experiences.” The latest integrated resort offering from Sands China Ltd. is located at the centre point of the Cotai Strip, offering its guests pathways to adventure, fun and fortune, with hotels, meetings and convention space, retail, entertainment and dining facilities and two themed casinos. The introduction of Sands Cotai Central is bringing three new international hotel brands — Conrad, Sheraton and Holiday Inn —
Sterling Holidays launches Villagio Inn
Opens new resort Emerald Bay in Karwar: Sterling STERLING HOLIDAYS launched its 17th resort —Villagio Holidays launched its 16th resort — Emerald Bay in Karwar, Inn in Betalbatim, Goa. The new resort is Sterling Holidays’ an unexplored beach destination of Karnataka. The new resort second resort in Goa. Villagio Inn is a 58-room boutique is Sterling Holidays’ first resort in the state. resort located in Betalbatim; a charming, Nestled between the Arabian quiet village in South Goa. Serpentine Sea and the Kali River, Emerald roads flanked by lush fields, whispering Bay is an oasis for nature lovers. palm trees and an unpopulated ambience Located in close proximity to aside, Betalbatim also serves up some several natural attractions such as dazzling beachscapes. The picturesque Devbagh and Om beaches, the Kali Betalbatim beach, which is renowned for river white-water rapids and the its stunning sunsets, is within walking majestic Yana caves, the resort is distance from the resort. an ideal destination for families Perfect for a family vacation or a looking for a languorous vacation corporate getaway, Villagio Inn offers a amidst nature’s splendour. EXCEPTIONAL: An inside view of a room of Villagio Inn. blend of modern contemporary living Emerald Bay’s aesthetically with the best in traditional Goan hospitality. The 58 rooms of designed 58 rooms and suites are equipped with refined, this resort are decorated with the views of the swaying palm. modern amenities and offer spectacular views of the Pebbles and Sands, a multi-cuisine restaurant and a lounge meandering Kali River. The in-house multi-cuisine restaurant with a choice of outdoor dining or air conditioned indoor offers a potpourri of delicacies ranging from Indian and dining serves tempting cuisines and the finest of spirits that Continental specialties to Chinese and traditional Karwar treat you to unforgettable moments. cuisine.
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to the Cotai Strip, providing an expanded variety of affordable luxury to Macao visitors looking for a diversity of new experiences. A computer-rendered flythrough video of the upcoming resort features a footbridge that connects to sister properties The Venetian, Macao and The Plaza, Macao across the street.
Marina Bay Sands raises the bar MARINA BAY Sands has been booked for nearly 2,400 events to date, involving over one million participants. From the inaugural Women’s Fashion Week Singapore which will see entire halls decked out in seasonal themes, to the burst of colours in the upcoming 20th World Orchid Conference that is returning to Singapore after a 48-year hiatus, Marina Bay Sands continues to push the creative boundaries and raise the bar for the industry. “18 months after we first opened our doors, Marina Bay Sands is experiencing solid momentum in our MICE business. We’re at nearly full capacity for the trade show space, and are breaking our own records for the conference floors. With foreign delegates travelling to attend events at Marina Bay Sands, we’re seeing growing demand in our hotel as well as spillover benefits for other hotels. We are delighted to be delivering what we promised right from the beginning - to bring new shows to Singapore and elevate the MICE and travel industry to the next level,” said George Tanasijevich, President and CEO, Marina Bay Sands.
Small Luxury Hotels of the World on top SMALL LUXURY Hotels of the World (SLH) continues to enjoy positive growth in 2011, the brand’s 20th year of business. With sustained growth patterns visible in revenue, reservations and hotel membership, SLH looks forward to completing the year on a high. Currently at 27 per cent growth in 2011 YTD compared to 16 per cent in 2010, SLH has successfully continued to nurture its business at every level, including recently improving its club membership benefits and launching a dedicated travel agent competition. “Our anniversary year continues to see development across all areas of SLH. We are operating in very different times to when we began in 1991, and have had to evolve with the industry in order to grow. Increasing our geographical spread of properties has been an area of focus for us, and I am delighted to have welcomed 38 new hotels to our family since January 2011. This quarter, we’ve added some truly exciting new properties in emerging destinations such as India, China and South America which I hope agents will relish. 65 per cent of all reservations made via SLH’s booking channels are made by agents through the GDS, demonstrating the importance of the travel trade to our business”, commented Paul Kerr, Chief Executive Officer, SLH.
A fam trip for Indian travel agents TOURISM QUEENSLAND in collaboration with Malaysia Airlines recently organised a fam trip for key Indian travel agents and attended “Queensland on Stage Eastern Hemisphere 2011”. The fam was hosted in the beautiful locales of the Gold Coast and Tangalooma and Lady Elliot Island showcasing Queensland’s plush offerings to the Indian travel agents. The itinerary had an eclectic mix of sightseeing, adventure and fine dining amidst Queensland’s scenic locales. Hosted trade partners were treated to a wildlife and adventure experience at the BUILDING CONFIDENCE: Agents posing Currumbin Wildlife before taking up green challenge at Sanctuary and enjoyed Currumbin Wildlife Sanctuary Gold Coast. an adrenaline pumping ride at Paradise Jet-Boating. They fed wild Dolphins and rode ATV Quad Bikes at Tangalooma Wild Dolphin Resort, had a ride of their life on Buzz Saw, the newest ride at Dreamworld, enjoyed high tea at Skypoint Deck, tasted the best tropical fruits at Tropical Fruit World and also binged on shopping at Harbour Town. A guided Gold Coast hinterland tour with a visit to Cedar Creek Winery for a wine tasting and Glow Worm tour left them wanting more. The trade also got a memorable experience of Lady Elliot Island in the Great Barrier Reef snorkelling with green Turtles swimming around.
Sarovar Portico opens in Vaishali SAROVAR HOTELS recently announced the opening of Mahagun Sarovar Portico in Vaishali. This is company’s first apartment-style hotel in Delhi NCR, promoted by Mahagun Hotels Pvt. Ltd. Mahagun Sarovar Porticos’ 127 well-appointed guest rooms and service apartments focus on everything that a business traveller would need. This is reflected not just in the design details of the hotel but also in all the amenities and facilities that it offers. The rooms and apartments have smart interiors with a kitchenette, LCD television, electronic safe, closets with ample space and a well stocked refrigerator. Dining options include Tangerine — the multi-cuisine all day dining and lounge bar and Terrace Grill, the rooftop barbe-que. The hotel can host conferences, social-business gettogethers, and corporate events for up to 1000 guests.
A P P O I N T M E N TS JAYPEE HOTELS APPOINTS TAPAN NANDA
SUNIL V A JOINS OMAN AIR
Sunil V A has taken over as Country Manager-North India, Oman Air based in Mumbai. He comes with a wealth of experience in the airline industry and is responsible for all activities of Oman Air operations in North India, which includes stations— Tapan Nanda Mumbai, Delhi, Jaipur and Lucknow. He was previously Country Manager-South India based in Chennai. His association with Oman Air began in the year 1994 with the General Sales Agent of Oman Air.
Jaypee Hotels has announced the appointment of Tapan Nanda as Additional General Manager-Sales. Nanda, a hotelier with 18 years of experience in many aspects of the hospitality industry, has hands on experience with international hotel brands like Holiday Inn, Hilton and the Sunil V A Intercontinental. He will oversee travel sales business for Jaypee Hotels and ultimately develop business for the division.
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ot many of us know this but the Apollo 11 astronauts who returned after a successful flight to the moon thought it best to complete the paperwork to declare their cargo, as most of today’s international travellers do. In fact, the astronauts had to fill out a detailed Customs form. While it was not mandatory for them to do so, the astronauts did it — perhaps, to amuse future travellers. For those of you who need to brush up their memories about the Apollo mission to the moon, Apollo 11 was the first space flight that took Neil Armstrong and Edwin “Buzz” Aldrin, Jr, to the moon on July 20, 1969. The United States mission has been considered the major accomplishment in the history of space exploration. Remember those famous words: “That’s one small step for [a] man, one giant leap for mankind.” On the declaration form is a line that questions whether there was “any condition on board which may lead to the spread of disease”. The reply to that in typical bureaucratese is: “To be
LAST SOJOURN: Astronauts being retrieved from the Columbia space shuttle.
determined.” But then on hindsight, whoever typed those words must have been aware of NASA’s concern about moon dust. In fact, there are experts in NASA who record and study the effects of moon dust on the health of astronauts. The astronauts were quarantined after they landed in water 1,480 km southwest of Hawaii. It took two more days for the astronauts to actually return to Hawaii on July 26, where they were welcomed with a July 27
ceremony at Pearl Harbour. Indeed, what did the Apollo 11 astronauts have to declare? Moon rocks, moon dust and other lunar samples, according to the Customs form filed at the Honolulu Airport in Hawaii. The form was signed by all three Apollo 11 astronauts. They declared their cargo and listed their flight route starting from Cape Kennedy (now Cape Canaveral) in Florida with a stopover on the moon.
MOON WALKING: Buzz Aldrin, Lunar Module pilot on the moon during the Apollo 11 mission.
HIDDEN SECRET: The Customs form which was furnished by the Astronauts from the Apollo 11 mission.
Moon and a Customs form 74
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RNI No. DELENG/2006/16897 Posting Date. 8-9/12/2011 Reg. No. DL(E) 01/5294/2009-11