CH cover Oct new:cover novemver NEW.qxd
DO YOU HAVE BAGGAGE FOR SORTATION? www.vanderlande.com
The parts don’t make the whole!
n all this brouhaha about the Commonwealth Games, everyone’s forgotten about the literally smooth ride that the contingents have been getting at the point of first contact: the spanking new Terminl 3 (T3) at the Indira Gandhi International Airport. In normal times, there would have been palpitations at the arrival of this mass of humanity in a compressed period of seven days into the country and their departure a fortnight later. Not this time, though. Those who have done the rounds tell us that, in fact, the huge terminal has come as a massive welcome fizz for the incoming sportsmen and women. But does it make us feel any better? Not at all, considering the travel advisories and the caution notes issued by the Olympic Committees and governments as a warning to the contingents travelling to India. On the one hand, we want to make Delhi a major regional hub that will attract tourists and transit traffic by the hundreds of thousands and, on the other hand, you have such a monumental embarrassment. How do you reconcile the two? You have a situation where you have put up a global scale infrastructure project (T3) in a record of 36 months and on the other hand, you can’t create a Games Village that is not even one-fourth the size of this project in 48 months. And wonder of wonders, an overbridge — that will be a footnote in a project like the T3 — comes crashing outside the main stadium. So what’s that got to do with a modern airport? Simple. An airport is the first point of contact as well as the last point of contact. It has to be efficient, convenient with plenty of
CRUISING HEIGHTS October 2010
feel-good elements. But it cannot replace the other parts that will make for the whole. Sadly, Delhi is a city under siege. At the moment the idea is to get on with the Games and somehow manage it efficiently. But what happens once the Games are over? There will be recriminations and then, perhaps, we shall get back to our usual sloth and inefficiency. That’s why India is incredible; because we have failed to realise that it’s the whole that matters and not the parts. A stinking loo in the
MAKING A MARK: A file photo of Civil Aviation Minister Praful Patel during an inspection of T3.
far-away Games Village can do as much damage to your hub ambitions and your tourism dreams that it’s not funny. No wonder no one’s even talking about T3!
Off the cuff
Content 2-3 march CH 2008 final new.qxd
Pilot fatigue and rest
The US Federal Aviation Administration recently announced a landmark proposal to fight fatigue among commercial pilots. Last year, the FAA had identified the issue of pilot fatigue as a top priority during the Airline Safety Call to Action following the crash of Colgan Air 3407 in February 2009. Since then, an aggressive effort has been launched to create a new pilot flight, duty and rest proposal. Currently, US pilots follow different rest requirements for domestic, international and unscheduled flights. The proposed rule would eliminate these distinctions. The proposal also sets different requirements for pilots based on the time of day and number of scheduled segments, as well as time zones, type of flights, and likelihood that a pilot is able to sleep under different circumstances. The proposal defines “flight duty” as the period of time when a pilot reports for duty with the intention of flying an aircraft, operating a simulator or operating a flight training device. A pilot’s entire duty period can include both “flight duty” and other tasks that do not involve flight time. The FAA has proposed to set a nine-hour minimum opportunity for rest prior to the duty period, a one-hour increase over the current rules. The proposed rule would establish a new method for measuring a pilot’s rest period, so that the pilot can have the chance to receive at least eight hours of sleep during that rest period. Cumulative fatigue would be addressed by placing weekly and 28-day limits on the amount of time a pilot may be assigned any type of duty. Additionally, 28-day and annual limits would be placed on flight time. Pilots would have to be given at least 30 consecutive hours free from duty on a weekly basis, a 25 per cent increase over the current rules.
WHIRLING TO GLORY
Pawan Hans — It’s a low profile institution, but the most profitable amongst the PSUs under the Civil Aviation Ministry. In the last three years, the chopper corporation has set a tearing pace under CEO R K Tyagi. A look at its growth and future plans.
Will India be ever able to boast of a thriving helicopter services industry? A report. A sneak peek at PM’s visit to temple town for laying foundation of the Tirupati airport. Plus: The Kingfisher saga. CRUISING HEIGHTS October 2010
At one point of time, almost all airlines in India wanted a large slice of the MRO pie. But recession has upset the plans. The question that is being asked is: “Is there honey in overhaul?”
BUSINESS IS GOING PLACES N
Planman Marcom / ACE / 07/ 2010
Indiaâ€™s first International Cargo Airline, soon to launch scheduled International Cargo Operations
Your business is going places. We make sure it reaches cruising heights. Spanning 150 countries, meeting varied logistic needs, delivering cargo across destinations, ACE. Accelerating Business Dynamics. Envisaged and incorporated by Indian visionaries with more than 250 years of collective experience.
Accelerating Business Dynamics
Aryan Cargo Express A Subsidiary of Aryan Cargo & Express Logistics Pvt. Ltd.
www.acex.in A-87/88, Road No. 4, Mahipalpur Extn., New Delhi- 110037 India | Tel: +91-11-47184545 | Telefax: +91-11-47184520
Content 2-3 march CH 2008 final new.qxd
contents ARTICLES NEWS VIEWS EDITS INTERVIEWS CLIPPINGS PROFILES NEWS DIGEST
CRUISING HEIGHTS Volume V No 6
Editor-in-Chief K SRINIVASAN Managing Editor
TIRTHANKAR GHOSH Consulting Editor
Philip Lewin, Country Manager — India, American Airlines talked to CRUISING HEIGHTS about the business, the India market and AA’s code-share with Jet.
CHOCKS OFF p42
Jet Airways has made a remarkable comeback, thanks to its judicious planning and now needs to plan its future carefully.
Special Correspondent (Mumbai)
ROOHI AHMAD Copy Editor
ASHOK KUMAR Reporters
JASLEEN KAUR, PUNIT MISHRA Design
RUCHI SINHA, PRADEEP JHA, SHIV, JITENDRA RAWAT Picture Editor
PRADEEP CHANDRA Photo Editor
A close look at the cargo potential that India provides to Finnair. Plus: According to Jay B Shelat, Jet Airways, Jet’s cargo ambitions as a dedicated freight carrier remains on hold. Once the market conditions get better, the carrier would certainly look at it.
British Airways’s Chief Willie Walsh flew into India with a mission to expand the BA footprint, code-share with Kingfisher and more.
H C TIWARI —————————— Publishing Director
ROHIT GOEL Director (Admin & Corporate Affairs)
RAJIV SINGH Subscription
JAYA SINGH, BABITA SHARMA (Mob. 9650433044)
RENU MITTAL For advertising and sales enquiries, please contact: +91-9999919071, 9810030533 Editorial & Marketing office:
Ferrying freight around the world used to be a man’s prerogative. Not any more! Now, women pilots too have created history in the sky!
Wondering what’s happening with the airlines and air service providers? We bring you a wide spectrum of domestic and international updates that will keep you informed about their plans, performance, initiatives and special deals.
Cover Design: Ruchi Sinha
CRUISING HEIGHTS October 2010
Newsline Publications Pvt. Ltd., D-11 Basement, Nizamuddin (East), New Delhi -110 013 , Tel: +91-11-41033381-82 All information in CRUISING HEIGHTS is derived from sources we consider reliable. It is passed on to our readers without any responsibility on our part. Opinions/views expressed by third parties in abstract or in interviews are not necessarily shared by us. Material appearing in the magazine cannot be reproduced in whole or in part(s) without prior permission. The publisher assumes no responsibility for material lost or damaged in transit. The publisher reserves the right to refuse, withdraw or otherwise deal with all advertisements without explanation. All advertisements must comply with the Indian Adver-tisements Code. The publisher will not be liable for any loss caused by any delay in publication, error or failure of advertisement to appear. Owned and published by K Srinivasan 4C Pocket-IV, Mayur Vihar Phase-I, Delhi-91 and printed by him at Nutech Photolithographers, B-240, Okhla Industrial Area, Phase-I, New Delhi-110020.
Periscope 4-5 March 2008.qxd
Small is beautiful
We are currently evaluating three airports in three smaller cities in the country, which we will be looking at building and operating. Delhi and Mumbai were mega airports and now the growth will come from airports in smaller cities, which we plan to tap. VINAYAK DESHPANDE, President and COO, Hindustan Construction Co Ltd, on the decision to enter the business of building and operating airports.
LETTERS TO EDITOR
The cover story (Long haul for air cargo, September 2010) was Ready for 100 % interesting to read. August 1 saw a law-mandating 100 percargo flight? cent screening of cargo transported on passenger aircraft in US which was welcomed by all the aviation watchers in the world. The landmark step can easily be emulated in India also and can reap rich dividends only if the government takes necessary step in this direction. The growing terrorist attacks can easily be preemptied if 100 per cent cargo screening is allowed in India as in the future air cargo activities will be expanded on a large scale. Rekha Dhir, Panipat September 2010
Bad recovery! The recovery in demand has been faster than anticipated. But, as we look towards the end of the year, the pace of the recovery will likely slow down. GIOVANNI BISIGNANI , Director General and CEO, IATA, stating that air traffic recovery starts to slow in July.
LIKE THE US, WE TOO HAVE 100 PER CENT CARGO SCREENING ON OUR PASSENGER FLIGHTS BUT ARE OUR SECURITY SYSTEMS READY TO TACKLE CARGO TERRORISM?
Illustrations: Rajeev Kumar
(Fleet building gets a push, September 2010) presented very interesting analysis of the two giants of the airline industry about the freighters. The story illustrated that air cargo sector will need almost 3,000 freighters in the next two decades itself, which tells about (would-be) meteoric rise of air cargo industry in the future. As a result, the logistics industry would be greatly benefitted thereby percolating the moolah to the people. And Airbus and Boeing stands a good chance to latch on the opportunity, the opportunity of a lifetime! But surely in the end, air cargo industry would win. Kumar Rakesh, Siwan
The spotlight story (Hello ladies, September 2010) illustrated some very interesting facts about air hostesses. Air hostesses lead a very strenuous and hectic life. They have to maintain a strict and disciplined comfort level all through their life because of their nature of work. And the attire which they wear has to be in consonance with that. The new dresses introduced by IndiGo and Jetlite exemplify that fact. The designers have done a great job by visioning the dresses elegantly. Air hostess and cabin crew would surely cherish these stylishly designed dresses forever. Kudos to designers. Meher Malik, Patiala
The current numbers are because of the strong growth we’re seeing in the market. Air India has got the benefit that everyone has got. KAPIL KAUL , India Chief Executive, Centre for Asia Pacific Aviation on Air India’s improved report card.
Partnering growth It is our endeavour to make customer experience the best it can be, and this partnership is another step towards that objective. IndiGo Airline President, ADITYA GHOSH on IndiGo Airline’s partnership with TATA AIG.
Money talks! Land is like a gold mine and we are unlocking its value now. G M RAO, Chairman, GMR Group, on the plans to monetise airport land holdings and thereby grow revenues.
All correspondence may be addressed to Editor, Cruising Heights, D-11 Basement, Nizamuddin (East), New Delhi -13, OR mail to firstname.lastname@example.org.
CRUISING HEIGHTS October 2010
Positive development We don’t want to open with construction work going on all around us. The Delhi airport will become happening once all the hotels open up. UTTAM DAVE , Development Head of Accor Hotels India on opening IBIS at IGI.
Periscope 4-5 March 2008.qxd
Time to get mad
the airport by unexpected fees for checking bags, requesting a seat, getting extra legroom, or flying standby. Nearly a third (29 per cent) said they were surprised often or nearly every time they travel via air by such fees. Two-thirds (65 per cent) said such fees placed some or a great deal of unexpected financial strain on their budget for the trip. A nearly unanimous 99 per cent of respondents said that they thought airlines should be required to disclose all of their fees in advance on every website that sells airline tickets. When asked to rank the fees they found most annoying, respondents rated carry-on baggage fees the most annoying, followed by seat reservation fees, checked baggage fees, and telephone reservation fees.
The US-based Consumer Travel Alliance (CTA), Business Travel Coalition (BTC) and the American Society of Travel Agents (ASTA) recently released the results of an online survey of 1,396 fliers who were surprised and angry with hidden airline fees for services like checked baggage, advance seating and priority boarding. Responding to traveller anger, the groups announced the launch of a new website, http://MadAsHellAboutHiddenFees.com, that will allow travellers to tell their own hidden fee stories and sign a petition to the US Department of Transportation (DOT) urging it to take action to require airlines to disclose those fees in advance. The groups also announced that they were marking September 23 as â€œMad As Hell Day!â€? The hidden fees survey found: Two-thirds (66 per cent) of respondents said they had been surprised at
LOOKING GLASS Sorry, Captain! Those ladies in designer wear are not going to bring tea or coffee for you. They are real models and not our cabin crew sashaying down the aisle.
Expanding its wings We are looking at expanding our domestic capacity by 10-15 per cent. NIKOS KARDASSIS, CEO, Jet Airways, sharing the expansion plans of the airlines during the 18th annual general meeting.
Welcome back! We have contacted 400 people (who left the company since October 2008) and out of them, nearly 200 have re-joined us. SUDHEER RAGHAVAN, Chief Commercial Officer, Jet Airways, on asked about the number of its former employees, who left during the economic slowdown, re-joining the carrier.
CRUISING HEIGHTS October 2010
Off the Record oct NEW.qxd
Photo: H.C. Tiwari
OFF THE RECORD
THE JET-SET CLUB AND ITS MISSING MEMBERS
o wonder Vijay Mallya was breathless when he arrived at the Kamal Mahal in Maurya for the CII-hosted meeting with International Air Transport Association (IATA) Chief, Giovanni Bisignani.As head of the CII Committee on Aviation, Mallya’s presence was a must for the event. In any case he is the newest member of the IATA. “I just arrived at seven this morning from Miami,” Mallya was overheard telling a guest and added, “I am leaving later today for Durban.” The South African sojourn was to cheer his team, Royal Challengers who were playing the Champion’s League semi finals in that city. It’s another matter that they lost, but that’s the effort that Mallya makes and that’s his lifestyle: peripatetic, on the move, office in the sky, the one of a kind modern day Howard Hughes type. There is one fundamental difference, though; Mallya speaks well, is forever in the spotlight, doesn’t shy away from the good fight and has the bravado of a Sumo wrestler.
His guest, Bisignani is another peripatetic globetrotter. By the time you
HAPPY MEETING OF MINDS: (L-R) IATA India head Amitabh Khosla, Giovanni Bisignani, Vijay Mallya and Boeing's Dinesh Keskar
read this piece, the IATA DG would have travelled twice across the world from Singapore to Canada and back to Singapore via Europe. No wonder he is tired and has decided that enough is enough and that it is time for him to put up his feet and take it easy. The next IATA AGM in June is likely to appoint his successor although it is still not clear when he will hand over the baton — immediately or over a period of time, slowly and gradually. In that sense, this fourth visit of his in the last eight years to India is, perhaps, more like a farewell call although he wasn’t able to meet his favourite person Praful Patel during the trip. But he is a bit disconsolate that he hasn’t had the time to “see” India. He has great affection for the country and describes the new airport at Delhi as “unbelievable”.
But one must confess that this event doesn’t compare with some of the earlier ones that Bisignani spoke at. For one, the number of heavyweights was much less. Two of his distinguished members, Naresh Goyal and Arvind Jadhav, were absent. Of course, there
CRUISING HEIGHTS October 2010
were others from Jet and AI present, but it was not the same. In fact, on earlier occasions both Goyal and the then AI CMD V Thulasidas were at the forefront of organizing the event.Thulasidas is no more at AI, Goyal is overseas and well, Jadhav… has anyone seen him anywhere lately? He is too busy with his own agenda to devote time to industry affairs. There was DG, DGCA, Nasim Zaidi, unobtrusive and low profile as always, AAI Member S C Chatwal, the top brass from Kingfisher including Manoj Chacko and Nandini Verma, Saroj Dutta and Ragini Chopra from Jet Airways. It is difficult to fathom an IATA event in our country without the IATA members in attendance.
Finally, a word about the presentation. Bisignani’s content, as usual, was outstanding. The graphics were brilliant (they have someone special in Geneva who does the power points for them) and offered plenty for one to ponder and think. You may agree or disagree, but there is no doubting the man’s intellect or his ability to call a spade a spade and make his perspective known to you-evocatively and with conviction and passion.
Off the Record oct NEW.qxd
Dayanithi Maran Photos: H.C. Tiwari (Clockwise from bottom left) Dr Nasim Zaidi, Praful Patel, V P Agrawal and M Nambiar
he General Assembly of the International Civil Aviation Organization (ICAO) is going to be a humdinger for India this year. And literally the entire top brass Arun Mishra will be at Montreal for the conference: Civil Aviation Minister Praful Patel, DG of the DGCA Dr Nasim Zaidi, AAI Chairman Vijay Prakash Agrawal, Civil Aviation Secretary Madhavan Nambiar and Joint Secretary Prashant Sukul. Anchoring the Indian team at the Montreal end is Arun Mishra, the former JS in the Ministry who moved to ICAO after finishing his stint at Rajiv Gandhi Bhawan. By the time you start reading this, the event would be over, but it is important because India is a member of the ICAO Council and our term is up for renewal this year. The election takes place every three years and usually, it’s a canter for us. But not wishing to take any chances a top-heavy team led by the
Minister will be in the Canadian capital to make sure things go fine. The FICCI Civil Aviation Committee will be hosting a reception that mantriji will attend and there will generally be a lot of back slapping and one-on-ones to make sure things go smoothly (the elections are on October 2).
For Secretary Madhavan Nambiar, it will be an ICAO month literally speaking. Earlier in September, he was in China for a conference on Air Laws that was again organised by ICAO. Laws governing aviation or the air transportation sector are increasingly getting complex and complicated, governed as they are by environment issues, passenger rights and sovereign issues. It’s a bit of an irony that the former secretary in the Civil Aviation Ministry R K Singh these days is seriously pursuing this segment not only as an academic but as a professional in the private sector. He has a natural headstart considering that he was in the Ministry of Civil Aviation for years before he quit two years back. And irony of ironies, he should have been the one at Montreal but for a curious twist of fate that saw his candidature spiked by the bureaucracy and Arun Mishra getting the green signal instead.
CRUISING HEIGHTS October 2010
MARAN BROTHERS IN TOULOUSE
ccording to someone who has the dope on the Maran brothers, their visit to the Airbus headquarters at Toulouse was a polite and politically correct meeting with the movers and shakers of the European aircraft manufacturing giant. Both Kalanithi Maran and younger brother, Union Textile Minister Dayanithi Maran got a presentation on the Airbus family of aircraft and unconfirmed reports suggest that they met with the top brass of the airline including Kiran Rao and John Leahy. Did they have an opportunity to meet Tome Enders? Some say there was a brief meeting, others say it was in-depth and detailed. Our report is that it was a fleeting exchange of pleasantries. We’ll brief you as soon as we have an update.
CH sub from:IIIrd cover.qxd
.qx er NEW
Welcome to Cruising Heights
emv ver nov
er CH cov
CRUISING HEIGHTS has been part of the Indian aviation scene for many years now. In this period, we have established a name for quality reporting and analysis on issues relating to every aspect of the aviation business.
0 April 201
ve r no
Madhavan r Nambia ry, Secretay of Ministr ation Civil Avi
, r Ross Wilbu , WL Ross Head . & Co
rwal y Agga t Sanja SpiceJe CEO,
VER ING O WARR
Patel Praful r, Civil Ministe ion Aviat
el Praful Pat r, Ministe ation Civil Avi
DINAD AITRURNIN AROUTH? E
av d Jadh Arvin Air India CMD,
ED DASTHHE GROUND lasidas van Thu Vasude D, Air India CM Former
Jadhav Arvind India CMD, Air
D SO ID EACTE JOK ULL D RE R NATU JAFJALL A ATION TO Y HA S EY ING L AVI R AREL S SLY A S NATIONA NT ANYTH LE R RUTH ING INTE WE LEAR G BRIN EES. HAVE PTION? U N ITS K THE DISR FROM
THE MANGALORE CRASH HAS RAISED QUESTIONS ABOUT ‘CRITICAL’ AIRPORTS, AIR SAFETY AND THE STATE OF THE COUNTRY’S AVIATION SECTOR.
One of the first true aviation magazines of the country, CRUISING HEIGHTS was started with the idea of supporting professionals in the airline business to make informed choices on a variety of subjects—from ground handling to cargo to airport development—all of which are transforming the Indian aviation scene in mind-boggling ways. We also target the general reader—the educated Indian who is keen to be an informed Indian—to know what's happening in the aviation business. So, the magazine is professionally written in a style and manner for everybody to understand. Published twelve times a year, CRUISING HEIGHTS reports in depth on all facets of the aviation and aerospace environment in the country and also as events affect us from overseas. Dedicated news and regular feature sections in each issue on airlines, airports, policy and personalities.
Join our aviation loving family…
Please accept my subscription for 12 issues of Cruising Heights
Name____________________________________________________________________________________________ Address____________________________________________________________________________________________ Ph. No.______________________e-mail__________________________________________________________________ Payment
Cheque/DDNo. _________________________________________________________________________________________ Drawn on____________________________________________________________________________________________ _________________________________________________________________________________________________________________ No. of Issues
Signature of Subscriber..................................... Cheque / DDs should be drawn in favour of
NEWSLINE PUBLICATIONS PVT. LTD. Send your subscription to Newsline Publications Pvt. Ltd., D-11 Basement, Nizamuddin (East), New Delhi -110 013 Contect us on : +91-11-41033381-82, e-mail: email@example.com
Off the Record oct NEW.qxd
e saw quite a few entrepreneurs entering the cargo and logistics arena in the last few years. Some have stayed on while others have not been able to start at all. CRUISING HEIGHTS’ readers will remember the hype and the speed with which the Hyderabad-based express and logistics service provider Gati tied up with Air India around the end of 2007. At that time Air India handed over a Boeing 737 to Gati that was used to operate daily cargo flights on the Delhi-Mumbai-Bangalore-Delhi sector. Four more planes were given to Gati. Almost two years down the line, Gati’s Mahendra Agarwal had a change of heart: he terminated the wet
COFFEE AND CARGO lease agreement with Air India although the strategic alliance for the cargo movement business continued. Over the last year or so, Gati lost around Rs 65 crore in its bid to run freighter services and taking future positions on Swiss and Japanese currencies. Perhaps, the company is not doing well at all. Why else would anyone want to take it over? Though Gati Managing Director and CEO Mahendra Agarwal has denied it, reports are flowing thick and fast that restaurateur, investor and External Affairs Minsiter S M Krishna’s son-in-law V G Siddhartha has made a move to buy out Gati. Don’t know who V G Siddhartha is? Well, he is the owner of the Café Coffee Day outlets. With his interest in eateries, Siddhartha has several hotel properties including Serai in Sakleshpur and Cicada in Kabini. New ones are coming up in Mangalore, Mysore and Varkala in Ker-
ala. Owning a logistics company would make sense since a considerable amount of goods and perishables would have to be moved on a daily basis. Siddhartha has the financial clout: He has $200 million (about `1,000 crore) that he raised earlier this year from a number of Private Equity players and buying out the Rs 630-crore Gati would be no problem at all. It does not need a little bird to tell us that Siddhartha is following the likes of Mukesh Ambani, who started off his retail stores and then was hunting V G Siddhartha around for a cargo freighter fleet till he found Deccan 360’s Capt G R Gopinath. The similarity does not end there. Siddhartha like Big Brother Ambani has ambitions to start a daily. When his father-in-law was Governor of Maharashtra, he had showed interest in buying off Mid-Day but the deal did not work out. Logisitics, hospitality and media: Whoever says the cargo business is not really the kind of business to get into would better think again. Meanwhile, we will keep you updated on the GatiSiddhartha saga. FROM OUR FILES: At the flag-off, Civil Aviation Minister Praful Patel waving the Gati flag is watched by Mahendra Agarwal (on Patel’s right), the then CMD of Air India V Thulasidas, Indian Airlines’ cargo head Anita Khurana (she heads the cargo division of Air India now), Gati Director K L Chugh (on Thulasidas’ right) and former Indian Airlines chief Vishwapati Trivedi (standing right at the top)
CRUISING HEIGHTS October 2010
Photo courtesy: Bell helicopter
ill India be ever able to boast of a thriving helicopter services industry? Perhaps, not, according to the Rotary Wing Society of India (RWSI). Though the Society did not say so in as many words, the caution it expressed while listing the issues that confronted the healthy growth of the helicopter industry in the country clearly suggested such a scenario. The observation of RWSI relates only to the development of the private sector in this line of business. The Society’s President, Air Vice Marshal (Retd) K Sridharan, recently said at a conference organised in Delhi by the Asia Pacific Aviation Media Association (APAMA), “Unless infrastructure like heliports are put in place urgently there will be no growth in this area for the private sector.” Yet another official of the Society remarked that a committee had indeed been set up under the Joint Director, Directorate of Civil Aviation (DGCA), R P Sahi, which had submitted its recommendation nearly two years ago. It specifically sought allotment of land from both Delhi International Airport Limited (DIAL) and Mumbai International Airport Limited (MIAL) for separate helicopter enclaves. But neither DIAL nor MIAL agreed to it as
WILL IT THRIVE WITHOUT
THE PRIVATE PLAYERS?
SINGAPORE VS NY: SOUNDS FAMILIAR! Singapore recently won the Best Airport in the World honour at the international Skytrax World Airport Awards in the passenger category. If there was an award for worst airport it would have to be New York. What Singapore does understand and New York does not is that an airport is like a brand’s packaging and design.
Inside view of Singapore’s Changi airport
The first impression of a country is its airport. It’s the gateway to all the other brand values of that country. I realised this even more on a recent trip to New York and then coming back home to Singapore. Contrast and compare New York’s JFK and what it says about America’s brand and Singapore’s Changi Airport and what it says about the Singapore’s brand. After a 20-hour flight from Singapore and arriving in New York, I am met by a two-hour wait just to get through immigration. There are nine lengthy rows of visitors queued up and only one row of Americans lined up trying to get into the country and yet they both have 10 separate entry points. What made this worse was that there were plenty of officials sitting around in booths that could have been used to deal with people chatting to their fellow colleagues in full view of everyone queuing who were getting increasingly agitated. One needs to bear in mind what visitors must have had to go through either to get a visa or register on the new visa waiver website before this point. Visitors still have to have all their fingers and thumbs finger/thumb printed — from both hands. Then a photo is taken. Then you’re allowed in. By this time
CRUISING HEIGHTS October 2010
they reportedly felt or found helicopter safety. But then the official of the Society operations as not profitable. said helicopter operators are also very He said that it had been heard that the concerned about safety. He then pointed out DGCA suggesting a separate helicopter at the world’s busiest airports at JFK, Paris, corridor in Delhi and Mumbai. Frankfurt, etc. All these One may ask as to why there is airports handle more traffic a mention of only Delhi and than Indian airports but there Mumbai. Simple: these two is total harmony between metropolises alone account for both the helicopter and fixed95 per cent of the total wing aircraft operating helicopter traffic or to use simultaneously. industry parlance — heli Are they not concerned operations — in India. But the about safety? “We are only DGCA’s good word ran up killing the helicopter industry against the wall erected by the in India by such mindless Air Traffic Control under the Air Vice Marshal (Retd) considerations,” said the K Sridharan aegis of the Airports Authority society official. of India (AAI). As the Society members If this kind of situation continues, then said the Air Traffic Control (ATC) has we will end up having only a ‘Sarkari’ played spoilsport. helicopters industry be it state-owned The ATC noted that it cannot give direct Pawan Hans Helicopter Limited (PHHIL) routing to helicopters. For instance, if one or those owned by the military. wanted to fly to Jaipur by helicopter from Specifically, they said (incidentally, most Delhi airport, the helicopter pilot would be top members of the RWSI were earlier in forced to fly along the runway and then for the Air Force, Navy or the Army) it was another 50 kilometers to the north and then heartening that the Ministry of skirt around the opposite direction before Civil Aviation had finally set proceeding to the destination, Jaipur. Thus up a big heliport at Rohini in instead of reaching Jaipur from Delhi in one Delhi and another “temporary hour, the ATC regulations would make the heliport near Akshardham in flight time between 1.30 hours and 1.40 Mayur Vihar or East Delhi”. The RWSI said hours. So there is unnecessary fuel burn for in allocating or earmarking the Rohini 30 to 40 minutes. heliport to PHHIL, the private sector had Sometimes, the helicopter pilots have to again been cut off and any private sectors remain grounded for nearly an hour — even role in heli-tourism out of India’s capital after starting their engine — because fixed had been effectively curbed. wing aircraft are either moving in the taxiTrue, PHHIL can do little. But then way after landing or before take-off. why destroy competition when full Obviously, the ATC is very concerned about competition has been allowed and the stateyour luggage has been offloaded from the conveyer belt and if you’re lucky, it is still there. Then you queue up again to go through customs. At that point, you have to find a cash point (one for the terminal), there are no shops, no cafes in the arrivals terminal. Then you have to find your rental car (you have to take two more trains to find it), then you have to escape New York... slowly. It took three hours to get out of New York through the snail-like traffic. After a 20-hour flight from New York and arriving in Singapore, I am greeted by no queues, dozens of entry points (for everyone, there is no separation of visitors/residents) as well as electronic unmanned arrivals points for residents and employment pass holders (amazing invention which very few other airports use). I have entered Singapore from airplane to luggage collection in four minutes. I am greeted by open shops, restaurants, cash points and rental car outlets as well as a convenient taxi rank. Checking-in at Singapore airport takes minutes and your bags are whisked on their way for you. Checking-in at New York airport takes minutes and then you’re told you must take your own bags to a secondary point where you queue up for 30 minutes while the officials put all your bags through a security device very slowly. Well one of them was doing this while five sat
owned Air India has been forced to come to its knees? Perhaps, these were strong words and a leading member of the Society hastened to add that private helicopter operators can use this heliport. So far so good. But if you look at the official press release of the Parliamentary Consultative Committee Meeting attached to the Civil Aviation Minister, it clearly said that the heliport was for PHHIL. This has no reflection on the performance of PHHIL, which is the only gem under the Ministry of Civil Aviation. It has been making consistent profits (see cover story) and has not gasped for breath like Air India. As on date there are 254 civil registered turbine-powered helicopters in India and over 600 military helicopters. Even the safety record of civil helicopters in India has been good and in the last 20 years, it has remained less than nine per cent with 100,000 hours of helicopter flying for majority of the period. From 1953 to 1986, commercial use of helicopters in India was restricted to small aviation companies that were involved in crop spraying roles and communication. In 1986, the Central Government formed the Helicopter Corporation of India which was later re-christened as Pawan Hans Helicopters Limited (see cover story). In a way between 1986 and 2010, the growth story of India’s civil helicopter industry has been modest. In the private category, there are 15 operators with a fleet strength of 23 helicopters and there are 66 commercial operators with a fleet of 195
New York’s JFK international airport
around behind the security screen and chatted to each other in full view of the queue. New Yorkers appear to be 10 times the size of a typical Singaporean and move 10 times slower and one can imagine how long this process took.
CRUISING HEIGHTS October 2010
NEWS DIGEST helicopters. In the government and semi- in by civil helicopters in India with government categories, there are 16 Delhi leading Mumbai. operators with a fleet of 28 helicopters Unlike the civil aviation industry, and one para-military operator with a where the airlines tried to keep pace or fleet of eight helicopters. In all, there are even exceeded the GDP growth in terms 98 operators with 254 turbine of inducting more aircraft and reaching helicopters. Among the 66 commercial new destinations, the civil helicopter helicopters with a fleet of 195 industry as stated earlier has not kept helicopters, the energy sector accounts pace with India’s GDP growth. But in for 25 helicopters, which are deployed in this second round of GDP growth (after logistics air support on the west coast of the nearly 30 months of economic India besides another 10 to 12 slowdown from 2008 to mid- 2010) that helicopters deployed for similar logistics has begun from fiscal 2010-2011, the support on the east coast civil helicopter industry where the Krishna-Godavari expects to see a sizeable oil and gas fields are located. increase in business provided These generate billions of right infrastructure support is dollars of gas business for extended by the government. Mukesh Ambani’s Reliance Independent of this, there Industries Limited. will be definitely higher The industry expects the growth in the helicopter fleet number of helicopters to be operated for logistics support deployed for oil and gas in the offshore oil and gas logistics support on the east fields. For instance, nearly R P Shahi coast to rise sharply in the 30 exploration blocks have next three to four years. Besides those been awarded to various companies in deployed in the west and east coasts, the the last round of new exploration and remaining 158 helicopters are used for licensing policy (NELP). Helicopter corporate travel, charter, pre-election support is already required for flying, heli-tourism, pilgrimage and exploration activities that are under way other services such as film shooting and in 12 oilfields where oil has already been aerial surveys. The manufacturers whose discovered. Helicopter support will also helicopters are being used for civil be required for speculative surveys in purposes include those made by Bell, new blocks off the east coast and the Augusta, HAL, Eurocopter, Kazan, southern tip of India. It is strongly Lama, MD Helicopters, Sikorski, believed that the usage of helicopters in Robinson, Enstrom and Schweiger. the energy sector — particularly offshore Delhi and Mumbai account for more — is expected to nearly double to 75 than 95 per cent of flying hours logged helicopters by 2015. Once in departures, waiting at Singapore airport is a pleasure. Once in departures waiting at New York airport is a bore. There is everything at Singapore airport you could wish for, open shops, food courts, restaurants, cafes, information venues, wi-fi. There is nothing at New York departures. A smattering of tacky souvenir shops, no cafes, no restaurants, no wi-fi, one closed bar, one shop selling drinks but no tea, one convenience shop that didn’t take a card and nothing else. So which of these airports accentuates their respective country brand? Which one communicates positive modern values? Which one says that they are an efficient and dynamic country who put visitors first? Which one welcomes you and makes you feel comfortable? Which one communicates very positive brand values and which one makes you wish you never arrived in America? (From an angry blogger in Brand Republic)
HOME ALONE! When manufacturers and high-profile CEOs talk of a single-pilot aircraft, there is plenty of debate on the issue, but what is evident is that no one is buying it as yet. Embraer in June said it was looking to provide single-pilot operation for commercial passenger jets in the 2020-2025 time frame. Vice-president for airline market intelligence Luiz Sergio
CAUGHT DRINKING AGAIN! GO HOME In the strictest action ever to curb drunk flying in India, pilots reporting to work tipsy will soon stand to lose their flying licence and their jobs. The Directorate General of Civil Aviation (DGCA) has finalised new rules under which a pilot caught tipsy for the first time will have his or her flying licence suspended for three months. And if caught again, the pilot’s licence will be permanently cancelled. Simply put, that means the pilot can fly afterwards only as a passenger but never inside the cockpit of an Indian carrier. The new provisions are being put in place through a civil aviation requirement, that will bring even ‘attempted flying’ under the ambit of the DGCA action. So far, the regulator could have acted only after a rule was breached by an inebriated pilot entering the cockpit or operating a flight before being detected. After several rounds of brainstorming sessions to tackle the issue of drunk flying that directly impacts flight safety and passenger lives, DGCA Chief Dr Nasim Zaidi has finalised this two-fold punishment. Under the new rules, the punishment for senior pilots like trainers and examiners is even more stringent.
Chiessi told Flight Global that they were looking to provide “single-pilot capability, at least in the 2020-25 time frame”. With the roll-out of next-generation air traffic management systems in Europe and the USA, by 2020, Chiessi says Embraer is preparing for the possible introduction of airliners designed for single-pilot operation by as early as 2020. He cautions, however, that much work needs to be done Michael O’Leary CEO, Ryanair to persuade the travelling public, regulatory authorities and unions that the concept is feasible. “It’s very difficult to predict that this is going to happen, but I believe that we will have to provide capability for eventual implementation into the real world,” says Chiessi, adding, “airlines are not coming to us with the idea — this is more a vision that we have. We believe that it is technically possible, but we don’t know if it is going to be accepted by the public and the authorities.” Some lower-end business jets such as Embraer’s Phenom family are already certificated in certain states (in the US) for
CRUISING HEIGHTS October 2010
ingfisher Airlines (KFA) has sort of denied that it has scrapped its deal with the US-based global aviation consulting firm Seabury Group LLc signed in February 2010. KFA hired the consulting firm to help it restructure its operations and to arrest its poor financial performance. However, the confirmation of the deal going off seems evident from the decision of the KFA board which met on August 31, 2010 and authorised the airline to raise `5,000 crore through one or more financial instruments. The board has also given a mandate to SBI Caps to conduct the financial restructuring of KFA.
HAVE THE GOOD
single-pilot operation under Part 91 rules, but customers sometimes demand a two-pilot crew even if it is not required. “With the electronics you can make a lot of the (cockpit) functions automatic,” says Chiessi, adding “If you take the checklist of a conventional aircraft, for every 10 items you have, there are one or two on the Phenom. Every other action is being taken care of by the electronics.” As a follow-up to Chiessi, Ryanair’s Michael O’Leary has gone one step further and said he would ask regulators for permission to staff flights with only one pilot — a big moneysaving move. Prior to this O’Leary had suggested that short haul flights could have passengers standing than sitting. Outraged critics slammed both ideas as “impossible and ill-advised”. The Boeing 737s that Ryanair flies are certified for two pilots at a minimum and a one pilot operation means Boeing redesigning re-equipping and having the aircraft to be flown with only a single pilot. The standing-room-only idea is non-workable because the 737-800 is certified for a maximum 189 passengers, based on emergency exits and evacuation times. Ryanair already has 189 seats on its 737-800s. As the Wall Street Journal said: “There would be plenty of people who would buy cheap tickets and not worry about how many hearts are beating behind the locked cockpit door. But even
if you really stepped up the automation in the cockpit of big jets, and perhaps provided a means for someone on the ground to take control of a distressed jet and land it safely, it’s hard to see how the risk would ever be worth having crew costs.” “We’ve had instances where one pilot has died or been severely stricken, and the other has had to land alone or with help from a flight attendant or off-duty pilot. Those instances are basically handled routinely — no one gets hurt. And there are plenty of instances of cockpit equipment breaking. Computers break, instruments freeze up, information conflicts, judgments have to be made. It can get very busy in a cockpit no matter how much automation is in place.” “We have drones flying over battlefields and firing missiles that are piloted by someone sitting in a bunker half a world away. We send unmanned space ships to distant planets. In those cases, we are protecting lives by not having pilots on board. In commercial aviation, it’s hard to see how relying on a single pilot will ever be safer than having two pilots in place, or how the savings would ever be worth the risk.”
DOMESTIC TRAVEL FINITO? Domestic air travel could become “the choice of the minority” with some cities not being linked by air at all, says the chairman
CRUISING HEIGHTS October 2010
Photos: H.C. Tiwari
Dr Vijay Mallya, Chairman and CEO, Kingfisher Airlines
NEWS DIGEST By December 2010 or early 2011, the airlines is planning to raise around `1,650 crore that includes `500 crore through a domestic offering and around `1,150 crore through GDRs. Further loans of `650 crore will be converted into preference share capital. The airline promoted and run by Dr Vijay Mallya (recently he also won for himself a seat in Rajya Sabha and soon became a member of the Parliamentary Consultative Committee attached to the Ministry of Civil Aviation) has claimed that its capital restructuring and better operational matrices has upped its mood. All of these will help KFA lower its debt burden that stood at `6,000 crore on March 31, 2010. A bulk of the debt comprised long term loans. The KFA board authorised its equity share capital to be increased from `900 crore to `1,650 crore. While the Reserve Bank of India (RBI) has indicated to banks that it could initiate steps to restructure the debts of Indian domestic carriers on a case-to-case basis, which includes Kingfisher besides Air India and others (Jet Airways has formally not sought any debt restructuring and even indicated that to the bank). The steps mentioned above may help Kingfisher reduce its debt burden by nearly `2,300 crore at best and `2,000 crore at a not-sooptimistic estimate. These steps will bring in greater functional ability to Kingfisher’s operations. In the first quarter April-June 2010-11 fiscal, Kingfisher Airlines’ EBITDA (earnings before interest, taxes, depreciation, and amortisation) was `177 crore of which the
domestic EBITDA more than doubled to around 13 per cent from six per cent during Q1 in the previous financial year. Its revenues jumped 29 per cent and load factors rose to 81 per cent compared to 70 per cent. The load factors on its international flights increased to 77 per cent. But sources informed that the bankers are now awaiting the nod from the RBI on certain issues for clarity and the airlines include KFA. At the same time, the banks are also in a hurry that this happens sooner than later because of Kingfisher’s plan to raise money through equity as stated. In view of this lenders may even expect Kingfisher to make advance repayment of loans should KFA’s performance better the timelines drawn up by lending institutions. Officials of KFA say that the airline has been able to save nearly `552 crore. Of this about `100 crore was reportedly saved by replacing expat pilots by Indian pilots. Overall, the non-fuel cost reduction has been to the extent of `552 crore. On September 1, 2010, Kingfisher Airlines had 83 expat pilots as against 180 a year ago. Though the difference in salary packages of Indians vis-a-vis expats is not more than 20 per cent, the fact is expat pilots carried more they got higher allowance after taxes. Among other cost reduction, Kingfisher reduced lease cost by redelivery of non-operational aircraft and lease renewals at lower rentals. As a result, it saves `176 crore through these measures. Further cost controls, including renegotiation of contracts resulted in a saving of `246 crore. Taking all of these into account, i.e. pilot cost, lease cost
Photo courtesy: en.academic.ru
of the Association of Train Operating Companies (ATOC) in the United Kingdom. ATOC director of corporate affairs Edward Welsh made the remarks as his organisation released new figures, indicating Brits travelling from city-to-city are more likely to take the train instead of flying. ATOC says the economic climate has fostered an 18month boost in intercity rail travel as people take up offers on cheap rail tickets. The figures show that: From Birmingham to Edinburgh, market share has gone up from 14 per cent in 2008 to 31 per cent in June this year. From London to Manchester, market share has gone up from 69 per cent in 2008 to 85 per cent in June this year. From Birmingham to Glasgow, market share has gone up from 15 per cent in 2008 to 27 per cent in 2010 this year. From London to Glasgow, market share has gone up from 12 per cent in 2008 to 21 per cent in June this year. Said Welsh: “If these trends continue, we can expect domestic air to become the choice of the minority, with flying between some cities disappearing altogether.” The figures show that between 2006 and 2009, total journeys by rail on the ten most popular domestic air routes went up by 31
and cost saving on renegotiated contracts saved KFA `552 crore. It may also be pointed out here that during 2009-2010, Kingfisher Airlines rationalised its domestic operations resulting in 20 per cent cut in domestic operations and six per cent reduction in international operations. It also shifted capacity from Kingfisher Class to Kingfisher Red, its low fare/cost arm, which now accounts for 63 per cent of its capacity deployed. Overall, the number of its aircraft was reduced by 20 per cent to 64. Its aircraft utilisation was up by 11 per cent to 12 hours for all the three variants of its A319, A320 and A321 besides the 10.30 hours for its ATRs. Buoyed by this seeming turnaround Kingfisher Airlines is now all set to become a full member of the OneWorld Alliance by late 2011. OneWorld is one of the three global airline alliances, the other two being SkyTeam and Star Alliance of which Air India expects to become a member by the second quarter of 2011. Kingfisher became a member-elect of OneWorld in June 2010 after completing the formalities relating to the membership agreement. British Airways CEO Willie Walsh said BA was sponsoring Kingfisher Airlines’ membership of OneWorld (see special report on BA). It would mentor and support it all through till it became a full-fledged member. Meanwhile, BA entered into a code-share agreement with Kingfisher with effect from September 15, 2010, which will give access to numerous points beyond London to Kingfisher customers.
per cent while those using air travel dropped by 20 per cent. The volcanic ash cloud also plays a part in the statistics in the first half of 2010 but interestingly the figures show that rail market share remained higher after the ash cloud on the 10 most popular domestic UK air routes. This indicates that many people switched to rail out of necessity but then stuck with the transport choice after the crisis was over. Said Welsh: “It is clear that a fundamental shift in the way that people get around the country is
CRUISING HEIGHTS October 2010
AAI MOVES FORWARD AT
ON EXPANSION MODE: (L-R) E S L Narasimhan, Andhra Pradesh Governor, Prime Minister Dr Manmohan Singh and Civil Aviation Minister Praful Patel at the stone-laying function at Tirupati airport.
It’s red tape time of a different kind — ribbon cutting — to inaugurate the swanky new terminal at Madurai and pulling the curtain to lay the foundation stone at Tirupati airport. While the Prime Minister did the honours at the temple town, Home Minister P Chidambaram was the chief guest at Madurai. In Tirupati, the Airports Authority of India (AAI) is spending `300 crore on the project wherein the existing
domestic airport is being upgraded into an international one. When the integrated terminal at the Tirupati airport is put in place, it would lead to upgradation of facilities at the existing airport to provide for international operations, he said. The airport will be a boon to pilgrims from neighbouring countries like Singapore, Malaysia and Sri Lanka. It would also contribute to Tirupati emerging as a major religious-cum-
taking place. Ever greater numbers of people choosing rail travel to get between our big cities is good news for the environment, and shows the importance of the railways in supporting the economy. The volcanic ash cloud led to a spike in rail journey numbers as train operators laid on extra services to get people around the country. But this merely accelerated a trend seen in recent years, most notably last year, when tough financial times led people to opt for the train.
tourist hub, said Dr Manmohan Singh. The Prime Minister called upon the state government, Ministry of Civil Aviation and Ministry of Tourism to work in close tandem to achieve the objective. In Madurai, the terminal building has won rave appreciation from both the Home Minister and the Civil Aviation Minister Praful Patel. Chidambaram also suggested that the Civil Aviation Ministry should work to provide connectivity to Madurai from all important cities. The country is developing fast under the UPA regime with a constant growth rate of nine per cent and civil aviation should grow at the same pace as air travel is no more a luxury but a necessity, he said. Praful Patel in his address, said that the AAI was modernising Madurai, Tiruchy and Coimbatore airports on par with international standards and after the massive modernisation at Chennai airport, at a cost of `2,000 crore, Chennai would compete with other airports at New Delhi, Bengaluru, Mumbai and Hyderabad, he said. There is a public demand to fly international flights to benefit people flying to international destinations, especially to Singapore, Dubai and Malaysia. He also assured that international flights from Madurai would become a reality soon. “Besides, we will develop air cargo facilities as it will greatly benefit agriculture and industrial sectors,” he said.
U-CON: UNITED AND CONTINENTAL MERGE The world’s biggest airline has got clearance for take-off with shareholders of United Airlines and Continental Airlines backing a multi-billion dollar merger that will create a carrier dwarfing rivals on both sides of the Atlantic. The combined airline, which will adopt United’s name, is forecast to have $30bn of annual revenue, carrying 144m passengers a year to 59 countries. It will be larger than Europe’s top carrier, Air France-KLM, and will overtake its US rival, the newly merged combination of Delta Airlines and Northwest. Investors met to vote on the tie-up at twin meetings at Continental’s headquarters in Houston and at United’s base in Chicago. At Continental’s gathering, 98 per cent of votes were cast in support of the share-swap deal, despite concerns among unions about job losses, plus opposition in some circles to the abandonment of United’s signature “tulip” logo. In a compromise thrashed out between the airlines, the combined operation will be called United and based in Chicago but will adopt Continental Airlines’ logo of a yellow globe on a blue background. But the issue of livery has aroused controversy among some of United’s customers: one Boston-based frequent flier, Timothy Jasionowski, has started a campaign to save United’s red and blue tulip logo.
CRUISING HEIGHTS October 2010
Traffic Data Oct o.qxd
TRAFFIC DATA VARIOUS REASONS OF CANCELLATIONS ARE INDICATED
MARKET SHARE Airline-wise details of market share of scheduled domestic airlines for the month of August 2010 are as follows:
CAPACITY VS DEMAND Analysis of capacity (ASKM) and demand (RPKM) data on year-to-year basis indicates that trend of increase in both the capacity and demand continued in the month of August 2010 also.
continue to fill planes VARIOUS REASONS OF PASSENGER COMPLAINTS
PASSENGER GROWTH Passengers carried by domestic airlines from January to August, 2010 were 339.09 lakh as against 284.24 lakh in the corresponding period of year 2009, thereby registering a growth of 19.3 per cent.
CRUISING HEIGHTS October 2010
Traffic Data Oct o.qxd
CANCELLATIONS The overall cancellation rate of scheduled domestic airlines in the month of August 2010 has been 3.1 per cent. Airline-wise details of cancellations are as follows:
PASSENGER COMPLAINTS DURING THE MONTH During August 2010, a total of 1,078 passenger related complaints had been received by the scheduled domestic airlines. The number of complaints per 10,000 passengers carried for the month of August 2010 has been 2.8 carried. The airline-wise details are as follows:
espite the lean season â€” follows the summer holiday season and and combines with the monsoons â€” passenger growth in domestic airlines grew at a modest 9.64 per cent in the month of August. An analysis of capacity (ASKM) and demand (RPKM) data on yearto-year basis indicates that the trend of increase in both capacity and demand continued in the month of August 2010 as well. The total domestic passengers carried by the scheduled airlines of India in the month of August 2010 were 39.89 lakh. Passengers carried by domestic airlines from January to August 2010 were 339.09 lakh as against 284.24 lakh in the corresponding period of year 2009 thereby registering a growth of + 19.3 per cent. The break-up for the month of August 2010 is Air India (domestic): 7.30 lakh, Jet Airways: 7.79 lakh, JetLite: 2.99 lakh, Kingfisher: 7.97 lakh, SpiceJet: 5.02 lakh, GoAir: 2.26 lakh, and IndiGo: 6.56 lakh. The percentage share of the carriers in the month of August 2010 is Air India (domestic):18.3 per cent, Jet Airways: 19.5 per cent, JetLite: 7.5 per cent, Kingfisher: 20 per cent, SpiceJet: 12.6 per cent, GoAir: 5.7 per cent and IndiGo: 16.4 per cent. The seat factor of the domestic airlines in the month of August 2010 was Air India (domestic): 65.5 per cent, Jet Airways: 70.4 per cent, JetLite: 73.2 per cent, Kingfisher: 80.9 per cent, SpiceJet: 70.3 per cent, GoAir: 72 per cent and IndiGo:74.5 per cent. The month of August 2010 observed comparatively lower seat factor primarily due to lean season. The overall cancellation rate of scheduled domestic airlines for the month of August 2010 has been 3.1 per cent.
Passenger complaints during the month
SEAT FACTOR The seat factors of various scheduled domestic airlines in August 2010 are as below:
During August 2010, a total of 1,078 passenger related complaints were received by the scheduled domestic airlines. The number of complaints per 10,000 passengers carried for the month of August 2010 was 2.8 carried. Jet Airways recorded the highest number of passenger complaints while NACIL(I) and alliance was the lowest in terms of passenger complaints. Most of the passenger complaints relate to lost baggage, staff misbehaviour and refund of air ticket.
The month of August 2010 observed comparatively lower seat factor primarily due to the lean season.
The overall On-Time Performance (OTP) of scheduled domestic airlines for the month of August 2010 has been 87.6 per cent. Reasons for delay have been analysed, and it has been found that majority of delays have been attributed to 'Reactionary'. At the time of compilation of this report, OTP data of 55 carriers was received. The overall On-Time Performance (OTP) of these 55 carriers for the month of August 2010 has been 73 per cent in departures and 69.5 per cent in arrivals.
CRUISING HEIGHTS October 2010
IS THERE â€˜HONEYâ€™
IN OVERHAUL? T
he Maintenance, Repair and Overhaul (MRO) business globally suffered a severe knocking in the last two-and-a-half years because of the economic recession, scaling down of capacity by airlines and severe cost-cutting. But none of it meant any kind of compromise on maintenance cycles. All it meant was since fewer
Is the MRO business as hot as it was perceived in the heydays of Indian aviation in 2005-06? Not so, believes R Krishnan, and argues that it will take a while for the business to mature and blossom in the subcontinent. CRUISING HEIGHTS October 2010
aircraft were flying, fewer needed to be maintained. This was also the time when few global carriers preferred to park their big birds in the deserts of Arizona, US. The market even for new aircraft purchases suffered during the period 2008 when recession hit globally till mid-2010 when there were signs of slight pick up in the US and Europe though the re-bounce was much faster in Asia-Pacific, particularly India, China, Singapore etc. The recession if one may say reached a flat ground though one does occasionally hear of a double dip in the US threatening the recovery process being witnessed in other parts of the world. Notwithstanding this, it seemingly appears that better days are ahead for the MRO business. According to TeamSAI and Ascend, the civil aviation MRO market will end the year 2010 with a business of nearly $42 billion which is a 7.5 per cent rise over the previous year. This does not mean that things are fine for all MRO establishments. The prolonged downturn took its toll and may take in the
Before one looks at India, it will be of interest to see the developments in other parts of the world so that the oftenexpressed sentiment that MROs in India can make money through third party customers will appear like pure kite flying. According to a Frost and Sullivan report, based on a ten-year MRO profile, beginning 2000, China earned 10.3 per cent of Asia-Pacific MRO revenue in 2000. This rose to 21.5 per cent equal to what Singapore earned in 2009. Japan which was the third largest MRO revenue earner dropped from its earlier share of 16.6 percent to 16 per cent a decade later. This meant a virtual stagnation in the case of Japan where its once famous carrier JAL sustained serious losses nearing bankruptcy. It is now slowly coming back with official support. In terms of MRO spends by airlines in their respective countries, US with $15.6 billion was the largest MRO spender followed by Western Europe with $10.4 billion, AsiaPacific $5.6 billion, China $2.3 billion, South America $2 billion, Africa $1.5 billion, Eastern Europe $1.2 billion and
India $444 million. Because of the small base, the MRO business in India grew by 11.5 per cent. There are many views ranging from high growth on small base to a virtual explosion in MRO business in India. But there is a wide consensus among aviation circles that it will take quite a while before India MRO business acquires global scale and size or even begins to rival China’s MRO development. Between TeamSIA and Ascend projections and that of Frost and Sullivan, there is a small variation of give or take a billion dollar by 2020. According to latter’s estimate, Europe is expected to see a two per cent annual growth in its MRO revenues, North America 0.2 per cent, China 8.2 per cent, India forecast at 8.9 per cent and rest of Asia-Pacific, excluding China and India at 3.2 per cent. Closely follows Middle-East with annual revenue growth estimated at 6.1 per cent. What is clear as per estimates of most studies is that the core of aerospace MRO activity is shifting to Asia with China and India
MAKE UP TIME: A file picture of an aircraft under maintenance.
coming year as well. The forecast by TeamSAI and Ascend projected an annual average growth of 4.4 per cent over the next decade up to 2020. While from now on to 2015 the MRO business would grow by 3.4 per cent, it will then pick up to 5.4 per cent annually between 2015 and 2020. Accordingly in value terms the MRO business will grow from $50 billion in 2015 to $65.3 billion by 2020. It was pointed out that MRO unit costs calculated on the basis of 1,000 available seat miles have been dropping since 2001. While exchange rate fluctuations had their impact, the improvement in process and technologies had its own downward pressure on costs. But with the arrival of newer generation engines, though airlines using them save on fuel consumption, they nevertheless cost more to maintain.
From now on to 2015 the MRO business would grow by 3.4 per cent, it will then pick up to 5.4 per cent annually between 2015 and 2020 CRUISING HEIGHTS October 2010
providing the lead. The question to be asked: Is India indeed on the doors of a major MRO revolution? There is no straight answer to this and at best one can only say yes and no. A report by Pricewaterhouse Cooper and CII in 2009 noted that India’s MRO segment is expected to grow by 10 per cent to reach $800 million by end 2010 and further rise to $2.6 billion by 2020. But this projection is over-estimated considering that MRO in India did a total business of only $444 million in 2008 and this was also the year when mid-way the global recession hit India and its aviation sector an even more lethal blow forcing many domestic carriers to cancel or postpone their orders for new deliveries placed with Airbus and Boeing. At the height of first aviation boom in India during 2005-06 not a day passed
FOCUS without every second domestic carrier calling a news conference to announce its grand plan to set up an airframe MRO followed by one for engine, components etc. In fact, the domestic carriers even forgot if they were in the business of flying or engineering. The recession setting in from mid-2008 in India settled all those ambitions and practically every carrier got into serious debts as demand disappeared on account of high fuel price driven high fares. Some semblance of order began to get restored from the fourth quarter of 2009 and once again in 2010 so far, India has seen more than 20 per cent growth in domestic carriage. But for a change no airline is now salivating at the prospect of an MRO as they did during the aviation boom. This is not surprising that most airlines are knocking at the doors of RBI and SBI to seek a debt restructuring. In such a situation for them to talk of new Separate Business Units (SBUs) would not only look silly but would indeed by foolish. So are we back to square one as it was before, with the state-owned merged Air India once again providing the lead in MRO business followed by GMR which is still struggling to put its MRO unit on a firm footing. The only three MROs for airframe that are likely to come up are: Boeing-NACIL(I) or Air India Joint Venture MRO at Nagpur for which 50 acres of land has been acquired in Nagpur airport; EADS-NACIL (I) or Indian Joint Venture MRO at Delhi; and GMR-Malaysian Airlines Engineering MRO at GMR Hyderabad International Airport Limited (GHIAL). Besides these, we have been hearing of a JV between HAL and Timco of the US for setting up an integrated MRO for airframe as well as for engine overhaul at the HAL airport in Bengaluru. Another first in the private sector MRO has been already set up by Air Works in Hosur near Bengaluru. Air Works MRO has already received DGCA and EASA approval as well as the FAA’s. In the early part of 2009, Duke Aviation Engineering had its ground-breaking ceremony at the multi-modal airport at Nagpur. But within six months, the main promoters dropped the project and it was shelved. Nor has anyone heard of Jet Airways or Kingfisher Airlines even referring to their own MRO. In 2006-07, GoAir announced that it had tied up with ST Aerospace to set up a countrywide network with Mumbai as the base for airframe MRO. More than three years have passed
VOLUMINOUS BUSINESS: Boeing’s Shanghai facility is still not making money.
The only three MROs for airframe that are likely to come up are Boeing-NACIL(I), EADS-NACIL(I), and GMRMalyasian Airlines Engineering MRO CRUISING HEIGHTS October 2010
there is no news of it and GoAir has not openly said that the proposal has been shelved, which, aviation circles say, has indeed been put on the backburner. It may be pointed out here that soon after Arvind Jadhav took over Air India in May 2009, he went on to lay the foundation stone for an MRO at GHIAL. Not much has been heard about it since then. It was originally supposed to be a maintenance centre for Airbus A320s. Subsequently, Air India’s engineering department felt the area be used for setting up a maintenance base for wide-body 777s as well. But nothing came of this either. Air India has nearly completed construction of a hangar at Trivandrum airport to provide maintenance support to Air India Express’ Boeing 737-800s. Less than half-an-hour flight to Kochi, CIAL is planning to have its own MRO. Again not much progress has been made on this project. The much talked about Boeing MRO is finally beginning to see the light of the day. Boeing while committing to sell 68 aircraft to Air India in 2006 had under-
TAXES UNSETTLE THE COSTS rnst & Young in its report has estimated that India's aircraft fleet would go up from 375 in 2009 to 600 in the next five years. With an additional 1,000 jets flying domestically and internationally in the next 20 years, there was good scope for MRO business in India. Notwithstanding the availability of skilled manpower which may become scarce should the socalled MRO explosion indeed happen. There are some other serious issues that could well hamper the free growth of MROs in India. The incidence of high taxes, customs duties and shortage of skilled manpower will surely hinder the ambitious plans for large scale MROs in India. It has been stated that servicing an aircraft in India entails a service tax of 12.5 per cent which overseas MROs do not charge. Importing spares/components entails levy of customs duties of up to 50 per cent besides a 12.5 per cent VAT. In places like Mumbai there is also an additional Octroi of four per cent. So while a “C Check” ( a half overhaul of an aircraft done every 18 months) on an A320 is estimated to cost ` 2 crore abroad, the estimate in India because of these levies could be as high as `3 crore. Thus, India's cheap labour cost will be more than neutralised by imported spares and components.
taken to spend $100 million for setting up an exclusive airframe MRO in JV with Air India. It was in June 2010, that the Maharashtra Government-owned Maharashtra Airport Development Company signed a lease deed with Air India to allot 50 acres of land at the multimodal airport at Nagpur. This was declared SEZ area which will save the MRO from the kind of levies that are crippling (see box) and hence will preserve its competitive edge. We understand, Boeing has already appointed the Indian arm of the US-based CBRE (real estate related conglomerate) as its project management consultant and has already circulated the RFPs for the `500 crore MRO project whose civil works alone are expected to cost `375 crore and the rest would be used for procuring the crucial equipment needed for the airframe MRO. About seven or eight companies have received the RFP that includes L&T as well. According to the current work schedule, the company that will ultimately get the contract will begin the ground
CRUISING HEIGHTS October 2010
COMPLEX PROCESS: Maintaining an engine is attending to a million parts at one go. Tough!
breaking ceremony, or should we say digging operations, from January 2011 and the whole MRO complex is expected to be ready by end-2012. The Boeing sponsored MRO, which will be run and managed by Air India, will have two hangars to accommodate two Boeing 777s (one 777 in each hangar) or six Boeing 737s or three 737s in each hangar. This MRO will be mainly dedicated to Air India’s 68 Boeing aircraft comprising 18 (now 17) B737-800s, eight B777-200 LR, 15 B777-300 ER and 27 B787s. As per the plan, this MRO will also cater to all regional Boeing fleets in South-East Asia and Dubai, provided the price is right for the airlines wanting to send in their planes. The second MRO being planned is a JV between NACIL(I) and EADS and one of the 15 member MRO companies that have teamed up with Airbus. While EADS and NACIL have firmed up their ends, the business plan has been submitted to the government and soon thereafter, a third pure MRO players from among the 15 members will be inducted as a partner. Most probably, it could be ST Aerospace. Even this MRO will be dedicated fully to Airbus narrow-body aircraft or A320 family. In due course, it could be extended to wide body like A330s. As per the agreement signed between NACIL and EADS, the JV will become a member of Airbus MRO network. According to EADS, this facility, which is to come up in Delhi, will also cater to the markets in South-Asian Region and neighbouring countries. By 2013, as per EADS calculation, over one hundred single aisle narrow-body aircraft and around 10 wide-body aircraft per year would be
FOCUS (required) maintained and the centre would employ about 300 Indian technical personnel. The only private and third party-oriented MRO is Air Works which set up its brand new facility in Hosur, near Bengaluru as we said earlier. One of its promoters Ravi Menon said the MRO has already got DGCA and EASA certification. DGCA has given it approval to work on ATR 42-500 and ATR 72-500 and Kingfisher Airlines has already begun to get its ATRs serviced and maintained at the centre. DGCA has also approved Air Works to conduct major checks on B 737 NGs. The company is spending $50 million at the same place to build a hangar for wide-body aircraft. This new hangar is expected to become operational by the
an agreement with Sharjah based Aerostar and set up the branded “The A Team”. The Sharjah based Aerostar will canvass business on behalf of Air India which will offer its Mumbai facility to provide engine repair services. The jet engines covered include GE CF 6-50 and 80 series, P&W 4000 series, GE 90 series and CFM 56-7 series as also CFM56-5 series in future. Independently, in March 2010, CFM officially opened its CFM 56 maintenance training centre in GMR’s HIAL Aeropark SEZ. This was done to support its customers throughout India and the region. This state-of-the-art facility which mirrors facilities in the US/China/France will provide hands-on-training for staff on CFM56-5B and CFM56-7B engineers. Once the centre is fully operational it will
WORKING HARD: Air Works engineers at work on a plane in their Hosur setup.
end of the first quarter of 2011. Besides the airframe MROs, Air India has also signed a JV agreement with GE Aviation for a $90 million aircraft engine maintenance facility in Mumbai. It may recalled here that Air India set up its engine overhaul facility in Mumbai way back in 1966 and it began to offer its services for third party customers in 1999. Air India is the only airline in India that has the expertise for engine overhaul. As per the JV deal, GE will provide technical support while Air India will provide MRO services for GEnx-1B engine. Air India will invest $70 million as per the agreement signed in March 2010 with GE. The GE-AI joint venture will licence Air India to perform maintenance and overhaul work on the GEnx-1B engine which is also to power Boeing 787 or the Dreamliner. Air India has already signed
Air India has also signed a JV agreement with GE Aviation for a $90 million aircraft engine maintenance facility in Mumbai CRUISING HEIGHTS October 2010
have the capacity to train 500 students annually. This facility is in the same SEZ where GMR is setting up its airframe MRO in JV with MAE. The 50-50 JV is expected to become operational by early 2011. It will have one hangar for wide body aircraft and two hangars for narrow body aircraft. Recently Jet Airways agreed to invest Rs 45 crore in this JV and also get its aircraft maintained at this MRO. But what is not explicable is that the same Jet Airways had also signed a 10 year agreement with ST Engineering of Singapore and whose subsidiary is ST Aerospace. The $750 million contract was signed in March 2010 by Jet Airways Executive Director Saroj Datta with ST Aerospace in Singapore. Under this deal, ST Aerospace will maintain Jet Airways and JetLite’s CFM engines based on hourly contract. This agreement also envisages commissioning of an “entire hospital shop” at Jet Airways’ hangar in Mumbai airport. The two together will build an engine shop there. ST Aerospace scope of work will involve off-wing, on-wing and on-site support as well as technical and annual maintenance support to the fleet of both Jet Airways and JetLite. To conclude we can say confidently that it will take quite a few years before India will be able to get anywhere near China or Singapore. With new/substantial expansion taking place in MROs located in South East Asia (mainly Singapore) and the Gulf like Dubai and Abu Dhabi besides Qatar in Middle East the possibility of India becoming a MRO hub for this part of the world appears over-ambitious. It may be of interest to know that Boeing’s first MRO set up in joint venture with China namely the Boeing Shanghai Aviation Services which is fully certified and running is not making money. Rather it is reported to have lost money. Even well established MRO HAECO in Hong Kong lost money in 2008-09 and 2009-10. It is planning to set up another unit to perform heavy checks on A320s. Thus to bank upon low labour cost in India to attract third party business seems like a pie in the sky. Even within India, one may ask: why is it that Jet Airways and SpiceJet — serious Boeing customers — are not seeking a tie-up with Air India’s upcoming airframe MRO in Nagpur? The two private carriers say as they are not sure what would be the priority in terms of servicing between state owned carriers aircraft and those owned by the private carriers. Maybe we are in for new air pockets but this time they will be just over ground.
interview american airlines 2.qxd
INTERVIEW The year 2009 was not such a great year for the aviation industry across the globe, but Philip Lewin credits the Indian economy for keeping airlines’ operations afloat. He feels he is at a great moment in India’s history. As the country head of the world’s second largest airlines in terms of passenger miles transported, Lewin is keen to tap the yet-to-be-explored India market. He spoke to CRUISING HEIGHTS about the business, the Indian market and AA’s code-share with Jet. Excerpts from the conversation:
How was business in 2009? Everyone was complaining that capacity and yields were all low. The year 2009 was challenging for the industry as a whole and American Airlines was not alone in facing a tough time at a global level. Almost all markets were affected by the downturn, particularly Europe, the United States and to a lesser degree Asia as well. I think the impact on our operations in India was mitigated to a large extent by the underlying growth in the Indian economy. There is a lot of untapped demand for air travel from India to the US, and this allowed our India operations to come through 2009 relatively unscathed. Although load factors dipped marginally, overall business performance remained quite strong. We fly regularly with load factors in the high 80s and low 90s. India is an increasingly high volume market, and we see an opportunity for strong recovery in 2010. Broadly speaking, we are very happy with our performance in 2010 to date. You said there was an untapped demand in the market. Do you think there is still that demand in the India and US sectors? Absolutely — look at the speed at which the Indian economy is growing, primarily led by the growing middle-class where there has been a considerable increase in disposable income. This presents an ideal opportunity for increase in outbound travel. I strongly believe that there is a lot more growth to come between India and the US in a number of different market
segments. We are optimistic about the prospects of the India-US market, and hopefully, the growth will create significant opportunities for us as an airline as well.
Q You are, therefore, not in the price war game…
Not really. The DNA of American Airlines is very much focussed on the premium segment. So, the crucial segments in the market for us are the premium travellers, such as corporates and HNIs, which are somewhat less price sensitive.
You said the load factors were in high 80s and low 90s. How much of this is taken away by the Premium Class? Premium classes account for a significant share of demand. With the deepening business relationship between India and the US, we are witnessing a growth in senior managers from Indian organisations travelling to the US in premium cabins. Having a First Class cabin is also an advantage as it allows us to cater to the increasing number of high net worth individuals travelling from India, as well as senior corporate executives. You operate daily flights from Delhi. Do you feel that you could do with more flights? We are satisfied with the coverage we have at this stage in India. Although India is a strongly growing market, it is important to avoid creating over-capacity. We have seen before how the airline business can suffer when there is too much capacity, and it is important to take a disciplined approach. We want to make the most of the opportunities that Delhi and Northern India offer before we look at the possibility of expanding to other parts of India, which we feel continue to be well covered through our code-share and interline partners. Moreover, connectivity via Delhi will be further improved once the domestic carriers
THERE IS A LOT MORE GROWTH TO BE HAD BETWEEN
INDIA AND US
PHILIP LEWIN, COUNTRY MANAGER, INDIA, AMERICAN AIRLINES, TOLD TIRTHANKAR GHOSH
CRUISING HEIGHTS October 2010
interview american airlines 2.qxd
move into Terminal 3, as it will allow customers to transfer between flights without changing terminals. Aside from the rest of India, the rapid growth and development we are seeing within Delhi and NCR alone also makes me feel very confident about the future of this region in its own right. Lastly, the Boeing 777 that we operate on our non-stop flight from Chicago is flying at the limits of its economical range coming here to Delhi. We are investing significantly in a fleet renewal programme that hinges on two aircraft types — the Boeing 737-800 for medium-haul services and the Boeing 787 ‘Dreamliner’ for long-haul operations. Once we receive the 787s, which are scheduled for delivery from 2014, these may open up opportunities for further long-haul flying from India. Are you happy with your code-share with Jet? How beneficial has the codesharing been for American Airlines? We have a strong and mutually beneficial partnership with Jet. We have a well-established code-share with Jet Airways, which covers a number of key domestic destinations in India, ensuring a good regional presence and strong connectivity to our network through New Delhi and Brussels. We are also looking forward to Kingfisher becoming a member of the oneworld Alliance, of which American is a founding member — this will help us in further penetrating the Indian market.
interview american airlines 2.qxd
INTERVIEW The importance of student segment varies from airline to airline. A key point that American has to consider is that a large share of our seating is taken up by the premium cabins on our B777s. We have 14 First Class, 37 Business and 194 Economy seats. This means we have to very carefully manage our presence in the leisure and student segments. I am aware that there are other airlines that make special offers to students, but the kind of underlying demand that we have for our flight is such that we do not feel the need to be as active in this particular segment.
American Airlines woos its passengers by providing a comfortable air journey.
Do you feel that reaching Chicago on a direct flight from Delhi hampers your growth? One of the reasons is that the Indian diaspora is concentrated in New York. We are happy with our Chicago gateway for a number of reasons. First, there is a strong local demand from Delhi to Chicago primarily because there is a large Indian population in the Chicago area as well. Secondly, Chicago is one of our primary US domestic hubs, offering connectivity to some 150 destinations within North America. A significant percentage of our customers travel from Chicago to points beyond. Our overnight flight is one of the first international arrivals in Chicago of the day, allowing customers to reach their final destinations across the USA by late morning. The fact that we have such convenient connectivity to all major destinations within the US is a major advantage. New York is a very significant market for America, to which we offer convenient connections via Chicago, as well as European gateways such as Brussels and London. But I do not think that serving Chicago nonstop as opposed to New York puts us in any way at a disadvantage. That brings me to another point: pricing. The Economy Class passengers have been affected by the “one bag policy”, especially students travelling from India to the US, a big chunk of your fliers …
How do you see the future?
I am cautiously optimistic. I realise it’s an overly used phrase in the industry these days, but if I look at 2010, I feel quite confident that we will see a healthy recovery. I feel optimistic about the underlying growth in business between India and US, from which our route will benefit directly. The new Terminal 3 will also give Delhi and India a significant advantage. All in all, I am hopeful that we will turn the corner within the next few months.
CRUISING HEIGHTS October 2010
Has the infrastructure or the lack of it hampered American Airlines? Of course, now you have the brand new T3 in Delhi... I wouldn’t describe it as “hampered”. American Airlines has history of serving rapidly growing markets such as India, and we were able to put that to good use when we started operations here five years ago. I am delighted that Terminal 3 has opened — it is representative of the
Inflight meals served to the American Airlines’ passengers.
enormous progress made here in recent years. The landscape has changed dramatically in Delhi in just a year and a half that I have been here — for example the expansion of the metro and rapidly improving road network. It is really interesting to see this all coming together. Day-by-day, Delhi is becoming more accessible and an easier city to get around and do business in.
cover story oct NEW.qxd
Photo : H.C.Tiwari
THE UNDISPUTED LEADER IN HELICOPTER SERVICES, PAWAN HANS HELICOPTERS LTD (PHHL) HAS TRANSFORMED INTO A NIMBLE, MARKET DRIVEN PSU UNDER THE DYNAMIC R K TYAGI. AS IT COMPLETES 25 EVENTFUL YEARS, K SRINIVASAN EXAMINES ITS CHEQUERED HISTORY AND THE OUTLOOK FOR THE FUTURE.
R K Tyagi
cover story oct NEW.qxd
uring the Commonwealth Games there will be at least half a dozen helicopters whizzing around Delhi each day. And Ravindra Kumar Tyagi will have something to do with each one of them. If it’s the BSF Dhruv that’s on an aerial sortie making sure all izz well, its Tyagi’s men who will be flying them and his engineers, keeping them in fine fettle. And if the broadcasters, SIS Live, need to swoop down from one venue to another with their HD equipment, be assured he will be flying them too. As the 54-year-old head of India’s Public Sector Pawan Hans Helicopters Ltd (PHHL) states: “We fly, we maintain and we service, choose what you want us to do. We are there for you.” And if Tyagi believes that he wants to speak to his head of ops in the western region, all he needs to do is go to the conference room and get into a video conference with his colleague in Mumbai. The company is completely digital and each evening the operational figures and the financial breakdown from each sector arrives real-time at the headquarters. The company has spent over `10 crore on beefing up its IT backbone and that’s just the beginning. It is far more than what was spent in the last 25 years. In many ways he’s fortunate that he was dealing with a ministry that was positive and completely supportive in backing his blueprint. In fact, Civil Aviation Minister Praful Patel has said time and again that it was time for Pawan Hans to “enlarge and expand its role” considering its outstanding track record as a PSU. It’s a paradigm shift for a company that for years has lived in the shadow of Air India and Indian Airlines and believed that as the country’s premier and largest chopper institution its job was simply to provide its services primarily to the government and anyone else who wanted it. Take it or leave it. Not so anymore. Earlier this year, Tyagi, a dyed-in-the-wool former Oil and Natural Gas Commission (ONGC) superstar - he was just about finishing a course in management at Hyderabad’s prestigious Indian Business School (IBS), a course for future ONGC leaders-when he was chosen to head Pawan Hans three years back, told anyone who cared to listen that in three years India will be a 500-helicopter country and Pawan Hans would be the lead player by a long mile. As a first step in that direction, earlier this year, as a silver jubilee gift, Tyagi ordered Rs 500 crore worth of fresh hardware that will include 15 helicopters, the first such major purchase in its quarter century of existence. It wasn’t difficult to convince the government considering the
THE TOP BRASS: (Left to right) Ram Krishan Manager (IS), Munish Bhargava-Senior Manager(Corporate Affairs) and Executive Assistant to CMD, Sanjiv Bahl-General Manager(Finance), R K Tyagi -Chairman and Managing Director, Deepak Kapoor-GM (Engineering), C P Singh GM (IT), Sanjiv Agarwal - Co Secretary, Sanjay Kumar Deputy GM(Marketing) and Capt R P S Mahal -DGM (OPS). They are pictured here at the Today’s Traveller gala awards in Delhi in late September.
PHHL has undergone a paradigm shift. A change indeed for a company that for years lived in the shadow of Air India and Indian Airlines and believed that as the country’s premier and largest chopper institution its job was simply to provide its services to the government CRUISING HEIGHTS October 2010
corporation had paid dividends from day one. These 15 choppers will bolster its fleet to 44 and he hopes that in the next 25 months he can expand the fleet size to 55. But as he says: “There is a limit to the fleet you can own.” Perhaps, that’s one reason why in the last 36 months, he has slowly repositioned Pawan Hans as a corporation that not only flies but is willing to offer you a bouquet of services from which you can pick and choose what you want. But before Pawan Hans could offer these services, the company had to get its act together. Three years back the company dispatch reliability was a poor 66 per cent; it has now improved to 82 per cent and the objective is to get into the high nineties. But Tyagi is sanguine: “I really do not know the problems and constraints faced in the past,” he said and added, “We improved our serviceability in a year which is not a joke.” What the management discovered was a huge waiting period for AOG (aircraft on ground) spares. So they started working backwards. If the choppers were flying say 9,000 hours in a year, you know how many T and G inspections are scheduled. If you know it, you also know by unit replacement what are the spares needed. So why not go backwards and put the items on re-order? As a result the AOG waiting of 100-115 days got reduced to seven days. Next was the procedure. AOG spares over a certain limit were approved by the Chairman and Managing Director. “I said, can you do away with this item? (They said) No, you have to buy it. Then why do you wait for the CMD to buy it? Approve it. You place the order and if you want to be very safe you send me a list on a monthly basis. You want me to ratify it — I will ratify it. But for God’s sake don’t wait for the CMD’s approval,” said Tyagi. Naturally they’re defined their books on delegated continued on page 40
Inspiring views everywhere you look. A dream come true. www.newairplane.com/welcome
Inspiring views everywhere you look. A dream come true. www.newairplane.com/welcome
cover story oct NEW.qxd
“ WE ARE PATRIOTIC, GIVE US A CHANCE ” R K TYAGI, CHAIRMAN AND MANAGING DIRECTOR OF PAWAN HANS HELICOPTERS LIMITED, MAKES A STRONG CASE FOR EXPANDING THE HELICOPTER INDUSTRY IN THE COUNTRY, IN THIS CONVERSATION WITH R KRISHNAN AND K SRINIVASAN. EXCERPTS: On the fleet size Today, we are having 47 helicopters. In two years, we should be handling 500 helicopters. We will own 55 of these then, but in this business, ownership is irrelevant. The idea is to have the entire canvass of helicopter services; you cannot survive only with a fleet. We made a representation to Delhi Police last year. I am saying you want to buy, operate and maintain please do so. Whatever of these three you don’t want to do, you hand over to me. Example: two Search and Rescue helicopters for ONGC; they had given a mandate to us that you buy and we’ll pay you money and then you have a 10 years contract for operation and maintenance. What we are telling the clients is that we are ready to serve you in whichever way you want us to serve you. As far as our own helicopters are concerned, there will be a limit to the buying. We had hardly 21 helicopters for a long time with revenues of about `200 crore. In the last three years, profitability has grown tenfold and revenue has doubled. Now for a company which has a revenue of `400 crore we are spending about `500 crore in acquisitions. We are getting 15 helicopters. But the point is, can we really commit more than `500 crore investment for a company that in 25 years has not made any investment? The moment this acquisition is done and this business is expanded, if we go to the market and say this is our performance and this is our dream, picking up `1000 crore will not be difficult. Not only are we making money, we are also improving our performance.
On the mix and the bouquet of services We are talking to Eurocopter — that is French. We are using Bell helicopters — that is US. We are using Mi-172, which are Russian. In terms of services, it is
varied: In Powerline, we are now going for helicopter-based examination of the entire Power Grid. We are making a beginning from northern India. The idea is to locate the breakdown pressure points before they occur. We will be doing the border roads for the Border Roads Organisation. We are already working with IMD (Indian Meteorological Department) and NTPC (National Thermal Power Corporation). Oil India, for the first time, is using helicopter for pipeline surveillance in the north eastern part of the country. It is the same with gas authority: helicopters are being used for
In the last three years, our profitability has grown tenfold and revenue has doubled. For a company which has revenue of `400 crore we are spending about `500 crore in acquisitions.
CRUISING HEIGHTS October 2010
pipeline surveillance all along HBJ gas line. So all these new applications are coming. Take the Border Security Force (BSF). Initially, they placed their trust on us for four Dhruv helicopters. We maintain and operate it for them. We are giving a solution to Coast Guard: you tell us your requirements. We’ll cater to it. We have gone and made a presentation to the National Highway Authority. They create highways but what about those who meet with accidents on highways? In 2007, four lakh accidents took place. Thousands of vehicles pass through toll points, charge `1 more and out of that you provide helicopter services. Take the NDMA (National Disaster Management Agency). We are making a presentation to them. We are saying that this country is divided into 18 zones. It is true, that today the armed forces are coming and helping you. Take the Surat floods. First, NDMA will give a message to the Indian Air Force, their helicopters will come. After a day, some board will be established, then they will go for a purchase locally and then the aid will start coming. Is it really the way you help people? No. I was in Bombay when the Surat floods came. Within 30 minutes, we were airborne. We went over Surat, dropped everything (food, water, etc) to whosoever was on the rooftop. It is those first crucial 12 hours, the person who is on the spot and a person who has authority to do these things, will be most effective. So we are talking to NDMA, we are talking to National Highway Authority, we are talking to BSF, we are talking to MHA and almost everybody who can make use of helicopters. We said you have 600 districts, why don’t you position one helicopter in every district? Your quality of governance will improve immediately. Even if you put one helicopter in every commissionerate, what happens?
cover story oct NEW.qxd
On the silver jubilee and the future Whatever we have done for the last 25 years, I am confident we’ll achieve in the next 25 months. Helicopter flying in the country was not taking place because there were infrastructure issues. In Delhi, you can have a helicopter but if you want to fly to Meerut from here, you will need coordination work of three days. And even entering into the airport for passenger facilitations and other things are issues. Thanks to the DGCA and Airports Authority of India, now helicopter corridors have been defined for Delhi and Mumbai to start with. Next, where do we park? Parking at airport was a big issue. DDA gave us 25 acres of land. Central Government realised the need and gave us funding. They gave us grant and equity. So the country’s first state-of-the-art heliport is coming up on 25 acres at Rohini. Now, we know what role helicopters can play. This time two helicopters of BSF will be doing the surveillance over Delhi. The plans are that we will be maintaining and operating those two Dhruv helicopters. Besides that, we have earmarked four helicopters for news-gathering, for capturing the events and the Commonwealth Games will make use of those helicopters. There is an organisation known as SIS Live that has been given the broadcasting rights. They will be flying basically over Delhi and covering the events.
into the industry from day one. So, last year we started a maintenance school in Mumbai. Then we realised that safety is a big issue not only for us but for others also. So we have started this National Institute of Aviation Safety. We have already made a presentation to Coastguards and very soon you will see Pawan Hans contributing to coastal surveillance. Our biggest plus point was convincing the Border Roads Organisation. Air Force has its own commitments; they are not able to really cater to BRO. We talked with Air Force and BRO. We said we are equally patriotic, give us a chance. We have made a beginning where one helicopter will be transporting materials for building the roads. If this experiment succeeds, then for the first time in civilian sector these kind of jobs will be outsourced.
On human resources We are starting a Helicopter Academy in Pune. We have already taken 10 per cent equity in Gondia and we are in talks with CAE. We have picked up 10 per cent equity in NFTI and we are in talks where they should be able to give at least 10 helicopter pilots every year to the country. At a rough estimate, we need about 30 pilots per year. As things are going today HAL is able to turn out 3-4 pilots a year. The rest are all coming from Air Force, Army and Navy and getting in through conver-
On the expanding footprint Slowly, as I see it. Take for example the law and order issue. Till now this role was being done by Army and Air Force. Now, for the first time the BSF has come forward and they have deployed four Dhruv helicopters which are operated and maintained by Pawan Hans. We said, you buy and we’ll maintain and operate for you. What we are offering to people is: you buy (the) helicopters and hand over all your maintenance and operation… It is the same way we are operating and maintaining the helicopter of the Gujarat government. This model is growing. We are now talking about joint ventures with other companies... we have been discussing with HAL. We have said, now you have seen our capability in maintaining the Dhruvs. Earlier when a private vendor was operating, the Dhruv availability was 50 per cent, but now we are giving 80 per cent plus. Why? We have developed the systems. We know where the bottlenecks will be. We have anticipated them, trained our people. Quality maintenance is also the key. We need people who can be put
For the first time, the BSF has come forward and deployed four Dhruv helicopters, operated and maintained by Pawan Hans. We said, you buy and we’ll maintain and operate for you.
CRUISING HEIGHTS October 2010
sions.We started our own scheme also where we encouraged our employees. We said we’ll give you loans; you go and complete your course in helicopter flying and we will employ you. Three of our technicians have passed this course and now they are flying helicopters for us. They take loans from the banks, we stand as a guarantor. So what is happening is Ministry of Civil Aviation and DGCA came forward for the removal of the bottlenecks in the infrastructure. They were the great enablers and DDA was very cooperative. They gave us the land. Then we created these EME schools, we created these safety schools. So whatever are the determinants of a successful helicopter plan are slowly getting in place.
On weaknesses and how to overcome them We recently deliberated on it. If we have to surpass CSC, which is a 300-plus helicopter company, we have to become smarter on people issues, on their skills upgradation and on information systems. We redefined our book of delegated powers, we redefined our inventory management. We involved manufacturers like HAL to fill in very frequently. I told Eurocopter, why don’t you send your person here and let him examine what is happening because I can’t afford delays. So if you have to become a 500-helicopter company, your inventory system has to be excellent. Today, we are operating 21 work centres within India. Tomorrow we must go outside. We must know how CSC operates in more than 35 countries. You have to have an IT system. In fact, that is what I have been telling people. Today, we do things orally. When you have more helicopters, will you be able to do the things the same way? No. Even the flight programme of the pilot will have to be given at least 50 days in advance. Everything is now integrated on the computers. We are training people like maintenance engineers. We are making efforts that after two years they are available to us, not only as good maintenance people, not only as good pilots but first as good human beings. If the Air Force needs 500 pilots every year, is it necessary that they should augment their capacity by training pilots? In USA, what would they do? They have private agencies. They train the pilots, who are then inducted into the Forces. Why will that model not work in our country? I am a PSU. I’m equally responsible. I said whatever the requirement of the Forces, why don’t you give me an estimate and after two years, I’ll start giving pilots to the Forces.
cover story oct NEW.qxd
COVER STORY continued from page 34
powers, streamlined their inventory management systems and got help from the manufacturer in streamlining the procedures. Moreover, the company started being ruthless about its dispatch reliability. If a commitment was undertaken then whatsoever be the bottom line, that promise was fulfilled. Most important, VVIPs learnt to trust Pawan Hans in that the pilots wouldn’t fly if it wasn’t safe. “In fact we refused some VVIPs. They telephoned me that your pilot has refused to fly. We talked to the pilot. He said a particular instrument wasn’t working. The VVIP said it (the instrument) is needed in the night. The pilot asked, what was the guarantee that he would return before night? So basically, it boiled down to dispatch relia-
bility, investment in their safety and giving respect to the people who are working,” said Captain Mahal who heads the operations at PHHL. There is also now a systematic training procedure in place where every pilot goes to France once in two years. For five days at a stretch they are on the simulators for ten hours each day. It’s a tough ask. Families are banned on these trips. Yes, if you want, you take leave and take your wife abroad on another trip, but not on this one. The logic is simple: after ten hours on the simulator you need to rest. In fact even after the simulator training you are not supposed to drive. No wonder all those who left Pawan Hans in the last five years are slowly returning to the organisation. Not just that, Pawan Hans has now set up a flying academy in Mumbai and has got
PHHL: MOVING AHEAD, A STEP AT A TIME
Pawan Hans has acquired 25 acres of land in Rohini Sector-36 from DDA for construction of Delhi’s first heliport. M/s Rites Ltd. was awarded the contract for preparation of the feasibility report for the project. The final report has been submitted. Signed an MoU with Indian Meteorological Department (IMD) for enhanced Safety of Helicopter operations in India. As per the MoU, IMD shall provide support to the helicopter services of PHHL at all the airports and will install and operationalise Automatic Weather Stations (AWS) for provision of meteorological data at remote locations or helipads. Awarded a contract by GAIL (Gas Authority of India Limited) for air surveillance of GAIL pipelines and other installations for a period of two years. MoU with DGCA for development of Helicopter Training Institute and heliport in Hadapsar Gliding Centre, Pune. Signed MoU with NTPC for providing services for a period of 10 years with full funds being provided by them. This helicopter would be provided to NTPC from the seven brand new Dauphin helicopters being acquired by PHHL. MoU with Andaman and Nicobar administration for introduction of sea plane operation in Andaman and Nicobar Islands. The operations would begin in October, 2010. Helipad constructed at Commonwealth Games Village. Awarded charter hire of three helicopters for crew change task at ONGC for a period of five years. Oil India Limited contract on the lines of the GAIL contract. Signed contract for hotline washing of insulators of Kanpur area for the Power Grid Corporation. DGCA approved training institute for helicopter technicians and engineers named “Pawan Hans Helicopters Training Institute (PHTI)” at Mumbai and is in the process of enrolling 30 students in the first batch. Pawan Hans has charter helicopter services from Shastradhara helipad to Shri Kedarnathji and Badrinathji in season (May- June and September-October). Deployed chopper for passenger services on Pahalgam-Panjtarni sector during current Amarnath Dham Yatra. The contract with HAL for O&M of four Dhruv helicopters owned by BSF. MoU with Indian Navy for inducting naval pilots in PHHL.
CRUISING HEIGHTS October 2010
into a unique arrangement with the Air Force to generate more seasoned and experienced pilots for the private sector. As Tyagi said, “The fact remains that today there are 268 helicopters. It is also a hard fact remains that today you have more than 700 pilots. The question is from where have they come?” The armed forces are the biggest suppliers of these pilots. Soon after Tyagi took over, Pawan Hans unrolled an ambitious expansion programme. At that time the one question everyone asked was: What about the manpower? What Tyagi did was sign an MoU with the Air Force. It was an ingenious scheme: the Air Force sent their chopper pilots to Pawan Hans a few years before their retirement on deputation. Here they seamlessly transferred their strengths to civilian flying, went back to the IAF after two years and retired in their midfifties. Now that they had converted they still had ten productive years of flying available, primarily to Pawan Hans who had put them through their paces. “We have employed more than 70 pilots in the last one year through this route,” said Mahal. This changed attitude is also evident in other segments of Pawan Hans primarily in driving business, marketing the company and walking up to the customer and not waiting for him to come to it. But it hasn’t happened overnight. While Tyagi himself is an indefatigable marketer, there is little doubt that Deputy General Manager Sanjay Kumar too had a huge role to play in this. “We are available 24X7 for our customers and no demand of theirs is too much us,” said Kumar. It’s evident in the business that the corporation has ratched up in the last few years. Apart from a slew of state governments, they have a formidable relationship with the ONGC, GAIL, Power Grid Corporation and an increasing number of other PSUs and private sector entities who have slowly come to respect their work ethics. These work ethics are the byproduct of the hours and hours of leadership meetings held in-house and away from location where group heads meet to ideate, analyse and assess the future. A first step in that direction was an organisation-wide survey and one-to-one interactions with senior executives of the company. Next came a feedback workshop where each participant was requested to identify 10 most prominent weak areas out of the SWOT analysis presented during the workshop, which he/she would like to be addressed on priority. In all, 96 responses were received during these workshops, based on which seven areas have been identified to be tackled towards the first ‘Priorities for Action’, based on the intensity of the responses.
cover story oct NEW.qxd
Based on the nominations received during the workshop, a task force was constituted, detailing out the scope, coverage and members who would work on the areas identified as ‘Priorities for Action’, and also to submit their recommendations. It is a consequence of this action plan that Tyagi is confident that Pawan Hans will achieve more in the next 25 months than what it did in the last 25 years. “Everything is now transparent and accountable. We know exactly what we are doing at any given point in time, the numbers in the bottom line and where we are moving. It’s all because every segment is working in tandem with the other,” said GM (Finance) Sanjiv Bahl, a key member of the core group. At the heart of the Pawan Hans transformation is its ability to grasp issues that are beyond the bottom line or the immediate health of the organisation. That would mean examining the macro markers and beefing them up to provide a holistic allround growth chart for PHHL. Take, for example, the deal with the Indian Metrological Department (IMD). The MoU will help not just PHHL, but literally every helicopter operator to access the latest weather reports. These will be installed by IMD at their cost, where information in real time will be available and will also be relayed. This is being put up at the helipad for the Commonwealth Games. As well as between Phata and Kedarnath where the clouds come from nowhere in minutes and complicate operations. “Then we said offshore is an area of major concern, so why don’t you install one such unit in offshore also?” said Mahal and added, “So we dis-
cussed with ONGC and they said, ‘Yes, we will be able to provide the space’.” The only service Pawan Hans will provide is transporting ONGC’s men and material wherever required. An offshoot of all this is the National Institute of Aviation Safety at Pawan Hans that will offer information across the board to literally every operator. Nonetheless, even with all these advancements, it is a tough call. On established routes the revenues are coming down — because of competition and lack of discipline. Take Amarnath, for example. When the programme was started, the rate was `9000 per person, per trip. Then it got reduced to `7000 and now it is `5000. At the same time operational costs are rising, maintenance cost is higher. Everything is rising. Even the cost of the pilot is rising. The offshore in India, these
PAWAN HANS ON GROWTH PATH
CRUISING HEIGHTS October 2010
BIRTH OF AN ORGANISATION: October 4, 1986, the then Prime Minister Rajiv Gandhi inaugurating the Helicopter Corporation of India.
oil companies’ contracts - they are 40 per cent lower than the global rates. Why? Competition and limited market. That’s what prompted the company to seriously look at expanding with a fixed wing operation in the north east. The idea was to start the services in the Andamans and the north east. “We changed our mind when we saw the downturn and the problems it brought forth. We thought we would consolidate our core area! In fact, like I said, in that time we had on an average 21 helicopters which were active in flying. But today we are handling 47 helicopters; 40 of our own and 7 of O&M (operation and maintenance) which we are doing for other agencies. So, basically it did not fit into our business model so that’s why we do not intend to go into the fixed range,” said R K Tyagi. But that’s not the end of the dreams. Two years down the line Tyagi hopes that Pawan Hans will have a fleet of owned and operated choppers totaling over 200 choppers and a non-scheduled seaplane operation in Goa and the Andamans. It’s a tall order. But two years ago if someone had said Pawan Hans would be here today one would have laughed. But it is R K Tyagi who is having the last laugh.
Krishnan’s col final.qxd
A R Krishnan
s the Indian aviation industry begins its upward climb again, how is it that no player is bothered by such constraining issues as high ATF prices, lack of infrastructure at the airports and air traffic control? I have raised these issues because these were specifically flagged by Jet Airways Chairman Naresh Goyal as the fundamental problems confronting the Indian aviation industry. While addressing the US-India Aviation Partnership Summit in Washington in November 2009, Goyal blamed these three as major contributory factors for the unsustainable losses Indian carriers were making even as the global economic bubble burst in early 2008 and spread to all parts of the world triggering off the worst global economic recession. The aviation industry was the worst hit but has since recovered at a much faster rate than the global economy itself. Even within the globe there are regions where it bounced back much faster — like in India — and is cruising at a speed of nearly 20 per cent in passenger traffic year-on-year except for the non-traffic month or slack season like monsoons, schools reopening, etc. In a way the recession period of 2008 and 2009 brought out the classic management
tion of new capacity indefinitely. Everyone knows the story of Air India and it need not be repeated. The carrier is still responding to the crisis and has itself become a crisis for the government. The others responded in different ways. Kingfisher, for example, grounded part of its fleet, diverted flights from its full service carrier Kingfisher Class to Kingfisher Red, its LCC version, and even postponed taking deliveries of the aircraft it had ordered. Maybe it has even deferred them — bordering on cancellation —indefinitely. SpiceJet and IndiGo did not have much problem as their fleet size in any case was small: less than 22. GoAir from day one managed to shrink and after nearly five years, it is supposed to be only a 10-aircraft fleet. This is one of the reasons for GoAir’s inability to fly foreign routes because the policy says a domestic carrier should have been in continuous operation for five years with a fleet of not less than 20 aircraft to be entitled to fly abroad. GoAir continues to be in hibernation mode. That leaves Jet Airways and JetLite, a much regretted buy-out by Naresh Goyal of what was once known as Air Sahara. It won’t be an understatement if I say that Jet Airways, given its fleet size and freshly-acquired Boeing 777-300 ERs,
When you smile, the
villains vanish! Jet Airways, given its fleet size and freshlyacquired Boeing 777300 ERs, responded quickly, intelligently and adequately to tide over the crisis, unlike other players 42
Jet Airways has made a remarkable comeback, thanks to its judicious planning. But, cautions R Krishnan, the carrier will have to think hard on how to counter the likes of SpiceJet and IndiGo, both of which are in the mode for big-time takeoffs. ability of different airlines to respond to the crisis to be ready on time to take off when good times began to return. Something of this sort started in India as evident from the last quarter (October-December 2009) figures with airlines registering higher passenger loads. It is here that care needs to be exercised before indulging in any simplistic analysis. When recession hit India formally in June 2008 followed by high global crude prices, Indian carriers accounted for 2.8 per cent of the total global traffic and 20 per cent of total worldwide aviation industry losses. With a puny fleet size, and small volume of passengers, it earned global honours by topping the list of loss-making airlines in any one nation. That was also the time when in response to the crisis, many carriers worldwide had begun serious cuts in deployed capacity and postponed acquisiCRUISING HEIGHTS October 2010
responded quickly, intelligently and adequately to tide over the crisis unlike other players. First JetLite deferred Boeing 737-800s deliveries for which orders had been placed before the recession set in. Even Jet Airways itself postponed taking delivery for its narrow-body Boeing 737 NGs. While it had its LCC in JetLite, it also carved out of Jet Airways a low-fare option in Jet Konnect and transferred to it some of its twin-class Boeing 737-800s after getting them fully reconfigured into all economy class. Jet Airways which has nearly 500 flights daily quickly shifted 110 of these flights to Jet Konnect which flew in tandem with JetLite, another LCC offering from Naresh Goyal. While no doubt Jet made losses in fiscal 2009-10, it managed to reduce its losses sharply and is now all set to move to the profit territory. With the aviation market picking up speed both
Krishnan’s col final.qxd
domestically and internationally, Naresh Goyal decided that Jet Konnect could restore some of the Business Class seats and to start with said it will have eight J Class seats. This was because at the height of the slowdown, most corporates froze Business Class travel by its executives and many began to patronise IndiGo and Spice. Not to lose out, Jet Konnect and JetLite upped their ante and aggressively attracted passengers. The Business Class seats in Jet Konnect came at a time when the corporates began to relax their economy drive and permit executives to fly Business Class provided the fares were not too high or equal to what was being charged by full-service carriers. Naresh Goyal did another smart thing. Not only did he manage to lease out his seven Boeing 777-300 ERs to earn `500 crore a year in lease rentals over the next three years, but also for a brief period wet-leased his A330 to Gulf Air for its operation from Bahrain to Bangkok/Singapore. He laid off nearly 1,800 employees of which many were cabin crew and also enforced salary and allowance cuts. Jet actually brought down the company’s annual salary bill, earned money from leasing its aircraft, transferred full-service catering aircraft to its low-fare/low-cost arm by reconfiguring them into all Economy Class, sell food in his LCCs, etc. The impact of all this was evident when Saroj Datta, a long-time associate of Naresh Goyal and Executive Director of Jet Airways, informed the RBI that his airline did not want any debt restructuring as demanded by other carriers. Instead, Jet wanted a quick clearance to its proposal from RBI to raise $400 million dollars from QIPs (Qualified Institutional Placement) mostly abroad. It wanted an okay from FIPB, the Ministry of Finance and RBI if it could use the foreign funds to pay off its high-cost domestic debt. Saroj Datta went on record to state: "It is not debt restructuring we are looking at. We have requested for certain relaxation in the ECB guideline." Now, Naresh Goyal is thinking of off-loading up to a further 20 per cent of his 80 per cent stake in Jet Airways held through his company Tailwinds, registered in the Isle of Man. It may be recalled that in February 2005, Jet Airways came out with its IPO and Naresh Goyal offloaded to public 20 per cent stake. At that time, the issue price of the IPO was `1,150 per share and was over-subscribed a few times. At the height of the recession and the all-time lows of BSE Sensex, Jet Airways shares dropped to `150 — nearly 800 per cent lower than its initial offer price. With the economy rising, the Sensex kicking back and the aviation industry attracting the flying public once again, Jet Airways share prices are now nearing `800 per scrip. Indeed, it has been a long haul down but a quicker haul up. Beginning 2009, Jet Airways saved $600 million in a year’s time of which $160 million came through network restructurings, $170 million through cost cutting and $270 million by cash conservation measures that included delayed repayment of loans and renegotiating concluded deals with vendors. The airline has been able to
COMFORT IN THE AIR: Jet Airways provides its passengers comfortable journey in Frst Class cabins.
integrate the codes of Jet Airways and JetLite that will allow seamless travel on its entire network. As of June 30, 2010, Jet Airways had a total debt of `13,500 crore of which `9,000 crore was aircraftrelated long term loans raised at much cheaper rates of between 3.5 per cent and 4.5 per cent. Jet has 41 planes on the book and the current market value of those planes is higher than its outstanding debt. The remaining `4,500 crore is Indian rupee loan raised in the last three years to fund working capital. Jet Airways has already begun recruiting back a few hundreds of those cabin crew who lost their jobs during the recession. On the face of it, Jet seems to be back with a bang. Naresh Goyal should genuinely be smiling unlike his usual PR smile. But what will happen to it when the adolescent LCCs grow up into big boys like SpiceJet which is now wanting to expand really big and IndiGo which wants to have a 150-aircraft fleet and grow from its present 28 A 320s to 36 by March 2011 and further to 50 by 2012? By that time even SpiceJet will have not less than 30 aircraft. Perhaps, we now will have to wait and see if the Indian aviation story really gets re-written the way it shaped up in 2005-06-07. It is one thing to get higher passenger loads when deployed capacity is small. But when the capacity really increases horizontally and vertically, there will be cut-throat competition including dropping fares and falling yields to get the price-sensitive Indian domestic passengers back on board. At that time once again, Naresh Goyal may be joined by his other industry colleagues will sing the tune he sang in November 2009 in Washington listing the three villains that had clouded the future of Indian civil aviation. (Veteran journalist and long time aviation watcher R Krishnan is Consulting Editor at CH. He can be reached at firstname.lastname@example.org.) CRUISING HEIGHTS October 2010
It is one thing to get higher passenger loads when deployed capacity is small. But when the capacity really increases, there will be cut-throat competition 43
story from Sun!
The SpiceJet story is all set to become spicier when it starts flying to foreign shores. R Krishnan reports on SpiceJet and Kalanithi Maran's ambitious plans to boost the Tamil ethnic network.
piceJet is all set to make its foreign foray from October 7 when it will launch its New Delhi-Kathmandu flights and subsequently Chennai-Colombo. Bookings have commenced and inaugural fares are so low that it has upset full-service carriers competing on these sectors. Whether competition will intensify further on these routes especially Chennai-Colombo remains to be seen, but for SpiceJet’s new owner Kalanithi Maran it will all be part of the Tamil ethnic network. It needs to be mentioned here that the Sri Lankan official carrier has an Open Sky access to Indian cities. This was a deal done during the Vajpayee regime and merely formalised by the succeeding UPA-I. Around that time in 2005, Air Lanka was 49 per cent owned by Emirates. The island nation’s airline made the best of the Open Sky agreement by mounting
Kalanithi Maran’s Colombo foray has unnerved Air India and partly Jet Airways too CRUISING HEIGHTS October 2010
dozens of frequencies to India. It deployed A330 to Delhi from Colombo, picked up passengers from other Indian cities as well and flew them from its home hub to Europe, mainly London. It also used to fly them to Dubai from where Emirates would fly passengers to its network destinations. However, Emirates sold back its 49 per cent holdings to the Sri Lankan government which today as a result holds 97 per cent in the airline and the balance three per cent are with its employees. A few weeks ago, the Sri Lankan President Mahinda Rajapaksa enquired from major aircraft manufacturers as well as airlines if they would like to recommend any strategic partner who could take 49 per cent holdings in the Air Lanka. And if a big carrier — whether East or West-based — does get in as a strategic partner then the economics of Indian carriers on the route could change. True,
Indian carriers are only interested in ferrying passengers to India and Sri Lanka. But Air Lanka can not only do this but also go beyond from most parts of India through its home hub. So, we need to wait and watch the strategy Kalanithi Maran as a businessman would take if any such thing indeed happened. In any case, his Colombo foray has unnerved Air India and partly Jet Airways. For him, it would be like playing on home ground. It is interesting to see that when SpiceJet, still backed by Wilbur Ross sought rights to fly to Colombo, the Ministry of Civil Aviation said ‘no’ because it would impact both Air India and Jet Airways. After Maran took over SpiceJet, it said ‘yes’. How will the Ministry respond if a new powerful strategic partner comes into Air Lanka and then uses its skills to exploit the Indian market by virtue of the Open Sky? As on date, Air Lanka has a fleet of just 12 aircraft which is a mix of A320, A330 and A350. A major part of its fleet parked at Colombo airport was destroyed a few years ago in a LTTE attack. Emirates moved out because it got most of what it wanted from the Indian government and friends in the Ministry of Civil Aviation directly. This area could become the bone of contention in the near future. So, Maran will not only have to draw up a strategy for North India but also one for South India that may include the Lankan launching pad to meet competition from traditional LCC rival IndiGo, which will complete five years in May 2011 and will then be ready for foreign flight forays. It may seem as a wild thought, for instance, though Kalanithi Maran did indicate clearly and, perhaps, even applied for a change in the airlines name from SpiceJet to Sun Airways, he also told a journalist that SpiceJet was a very strong brand in the North. So if we can speculate — would he have a sub-brand for the South that could combine as Sunny Spice or Spicy Sun. This is possible as after all even Naresh Goyal re-invented Jet Airways by suddenly coining the name Jet Konnect for the LCC space even when he had a full-fledged LCC JetLite. There are
FLEET EXPANSION Even as we wait and watch this space, Kalanithi Maran has got approval for inducting 30 more Boeing 737-800s after the Aircraft Acquisition Committee at its meeting on August 30, 2010 gave approval to this along with clearance for 14 A320s to IndiGo. SpiceJet has on date 22 Boeing 737-800s and Boeing 737-900s and another six 737s will join its fleet before 2012. The remaining 30 Boeing 737-800s will begin arriving from 2014. So in the next five years or so SpiceJet will have a fleet of 58 aircraft. It is very much possible that SpiceJet may order another 40 Boeing 737s to take its ultimate tally of owned aircraft to 100 which is akin to what IndiGo wanted before it received in-principle approval for acquiring 150 aircraft.
Though Kalanithi Maran applied for a change in the airlines name from SpiceJet to Sun Airways, he also told a journalist that SpiceJet was a very strong brand in the North
CRUISING HEIGHTS October 2010
also some serious geo-political concerns for India as Sri Lanka is fast becoming a major customer or client for China and Chinese companies. Cash-rich Maran is certain to go the whole hog and would like to repeat the success of easyJet or RyanAir or SouthWest, which has a fleet of 800 Boeing 737s and never made a loss in its 35-year history — not even during the worst recession of 2008, which continues till date in the US. Kalanithi Maran as promoter of Sun Network with over 77 per cent stake in it had pledged 6.63 crore shares or 21.87 per cent of his stake with FIs to raise money to buy 37.7 per cent stake in SpiceJet at `739 crore. He paid `739 crore to Wilbur Ross, Bulo Kansagra among others in June 2010 to pick up 37.7 per cent stake. By September, Maran had already redeemed 50.27 lakh shares of what he had pledged. His acquisition of 37.7 per cent shares triggered the SEBI take-over code, which mandates a 20 per cent open offer to be made to minority shareholders at the same price. However Maran offered to buy back 20 per cent shares at `54.60 per share which was more than what he paid to some promoters while acquiring 37.7 per cent stake. The buy-back offer was open from August 6 to 25, 2010. But a certain minority shareholder in one of the promoter companies, Royal Holdings, had reportedly raised objections that led to the postponement of the open offer. Maran has settled the issue with that shareholder and has written to SEBI. He has been expecting a reply that will help him proceed with the buy-back. But till the time of writing SEBI had not responded. In any case, with the general rise in the Sensex, the share price of SpiceJet had risen to `74, by September 18, 2010, which was nearly 20 per cent higher than the offer price by Maran. It is anyone’s guess if he would get any response should the buy-back offer be made at the same old price. Before the open offer was made, one of the bulk shareholders Ishtithmar, Dubai government’s investment arm, sold its 13 per cent stake. Even after this, two other big shareholders Goldman Sachs and Tata Group’s Ewart Investment continue to hold their six per cent and 5.5 per cent stake in SpiceJet. Ajay Singh, one of the original promoters, exited SpiceJet Board in August 2010 but has not sold his 4.5 per cent stake in the airline. He along with his family and friends reportedly hold 10 per cent stake. Meanwhile, the SpiceJet board has hiked the authorised share capital of the company from `415 crore to `500 crore.
Once the open offer is through, SpiceJet promoters Marans (this includes his wife, Kavery Maran who is also waiting to join the SpiceJet board along with four others) will even consider a rights issue. Once these steps are implemented it will help the company raise $50 to $60 million. Why does Maran require this money? Obviously, he has to place firm orders with Boeing to acquire 30 more Boeing 737-800s. For this, he has to make advance payments. Normally, it is supposed to be one per cent of the cost of the plane. What we don’t know is the price at which he negotiated the 30-aircraft deal. At the same time, hiking equity capital also allows him a higher debt-equity ratio, which means he will be able to raise more money from the airline itself rather than continue pledging his shares in Sun Network which in any case still remains pledged to the extent of `6.13 crore or just less than 20 per cent of his main company Sun Network. We had mentioned earlier that Maran on top of the 30 aircraft order may place an order for another 40 Boeing 737 NGs. This news has already unnerved Airbus Industrie which till the other day had claimed that it had the largest space among Indian carriers. It had sold to Indian Airlines, which is Air India now, Kingfisher, IndiGo, GoAir, etc except for Jet Airways group which includes JetLite and SpiceJet. We believe there is a serious difference of opinion that IndiGo has now found with its original aircraft supplier Airbus. Was it just a slip of the tongue that Rahul Bhatia in one of his rare press meets told journalists that he was happy with the in-principle clearance for 150 aircraft which he said could be of any make as he had not decided till now? When he announced the 100 aircraft fleet four years ago at the Paris Air Show,
(Above) Colombo Airport: SpiceJet is ready to take on the big boys; and (top) the new Boeing 737.
Maran could place an order for 40 Boeing 737NGs. This news has already unnerved Airbus Industrie CRUISING HEIGHTS October 2010
he made it a point that all of them would be Airbus A320s. Is Rahul Bhatia deliberately holding his cards back? Is it a tiff with Airbus or the fact that there are other options — Bombardier could enter the market with its new CSeries game changers that could seat over 125 passengers or even the Embraer with more than 100 seats or even the Boeing 737s. As if this were not enough, the French Ambassador in New Delhi met with the Marans, including Dayanidhi Maran, to complain: Why does SpiceJet not even look at Airbus A320s? It was because of official French pressure that the Marans met with Airbus Industrie top management, including Kiran Rao, John Leahy and, perhaps, Tom Enders. All these days the Franco-American war was being fought in Delhi or Mumbai. For the first time, the battle has shifted to Chennai. Meanwhile in the first week of October 2010, Neil Mills, former CFO of flyDubai (he was earlier in easyJet) will take charge as the new CEO of SpiceJet. Once the mandatory open offer is completed, Kavery Kalanithi Maran, M K Harinarayanan, J Ravindran, Samyuktha Sridharan and Nicholas Martin Paul will join the airline’s board. Kalanithi Maran and Bulo Kansagra are already on the board. SpiceJet’s interim CEO Kishore Gupta has stated that the domestic demand may grow at 16 per cent during the current year and will sustain at 12 to 14 per cent over the medium term. This growth will necessitate significant capacity addition. SpiceJet, therefore, has a bright future. Bulo Kansagra said the Boeing 737 NG is the most technologically-advanced singleaisle airplane that offers the best technical reliability and lowest operating cost, which is very vital for an LCC like SpiceJet. In Q1 that is April-June 201011 financial year, SpiceJet reported a net profit of ` 55.22 crore as against ` 26.34 crore in the same quarter of the previous fiscal. Revenue per passenger rose from `3270 to `3428 and could rise further. Its domestic market share of 13.2 per cent was based on a 21-aircraft fleet as against 27 of its rival IndiGo with a market share of over 16.3 per cent. Once the new team is in place, Kalanithi Maran not only expects to consolidate his presence in all of South India that is Andhra Pradesh, Tamil Nadu, Karnataka and Kerala but also a sizeable part of major trunk routes in the North. Besides he also expects to expand his foreign forays to the Gulf and SouthEast Asia particularly Singapore and Malaysia which has a huge presence of Tamils.
Final Metro 5 pages change.qxd
BUILDER BRITISH AIRWAYS’ CHIEF WILLIE WALSH FLEW IN TO MUMBAI RECENTLY ON A MISSION: EXPAND THE BA FOOTPRINT, CODE-SHARE WITH KINGFISHER AND CONSOLIDATE HIS DOMINANT POSITION IN THE INDIAN MARKET. HE WAS ALSO, WELL, HUNTING FOR AIRLINES. A REPORT.
Photo: Pradeep Chandra
ritish Airways (BA) first flew to India in 1929. At that time it was more of a test match (those were the days when cricket matches were timeless and not restricted to five days) and less of a journey — it took seven days and two planes, a train, and a flying boat — and 20 different stop-offs — to get from Croydon to Karachi. It is a different world 81 years later: India is BA’s largest market outside North America and it takes an overnight trip — nine hours and five minutes to be precise — to get from Heathrow to Mumbai. And you travel on a brand new 777-300 ER that’s super luxurious and fuel efficient. It will be soon coming to Delhi too. BA’s feisty
Final Metro 5 pages change.qxd
SPOTLIGHT Chairman Willie Walsh was on the inaugural flight of the first of the seven 777-300 ERs ordered by the company. “It’s a fantastic machine. When I started flying on a 737-200 they had 12,000lbs of thrust. But these are 10 times that,” he told journos who flew with him into Mumbai on the inaugural trip. This is the first BA aircraft to be fitted with the new World Traveller and World Traveller Plus cabins and a new in-flight entertainment system that offers over 700 hours of movies, TV and music options on demand. It is also the greenest in BA’s long-haul fleet, generating 15 per cent less CO2 emissions per seat than the Boeing 777-200. For those interested in numbers — traffic between the UK and US last year was 16.3m passengers compared with 3.3m between the UK and India. But the Indian growth numbers are in a canter. Traffic has almost nearly doubled in the last ten years (since 1999), while the US numbers have fallen from 18.2m in 1999. Till six years ago, Air India and BA had a free run on the India-UK route. They were the legacy carriers and the high density route was largely their domain. At that time there were just 19 flights per week between the two countries. BA had 19 flights while the Maharaja had 12 and Virgin Atlantic operated three code-share flights using AI slots. Civil Aviation Minister Praful Patel changed the equation with a landmark bilateral agreement six year’s back. Those 34 weekly services have grown to 108: 45 operated by BA (to Mumbai, Delhi, Chennai, Bengaluru and Hyderabad); 21 by Air India and seven by
Virgin Atlantic. The rest are run by two Indian carriers, Jet Airways and Kingfisher. Last year at the 80 years’ celebration, Judy Jarvis, British Airways’ Regional Commercial Manager, South Asia said: “It is an understatement to say that India and the UK have changed a great deal in the last 80 years, as has our industry. But we continue to serve both nations and will carry on in our part to forge a close relationship between India and the UK.” But it must be said that for such a long partnership, BA's media relations is abysmal. No one picks the phone at their Delhi office and getting to talk to Judy? Forget it. It's easier to talk to Willie Walsh. No wonder we are quoting her from last year! In Mumbai, Walsh initialed a codeshare with Kingfisher Airlines — a precursor to the airline becoming as full-fledged member of the One World Club. Walsh has literally shepherded Vijay Mallya through the process and it is evident that the two share a great rapport. A few hours before the 777 odyssey flew into Mumbai to tie up the code-share deal, Walsh flew Kingfisher First: it’s always nice to fly with your competitors to know what they do and how they do. “It was an excellent flight I must add from Heathrow to Mumbai and the service was very good,” said Walsh of the experience while chatting with reporters. It must have been pleasing to the King of Good Times. It’s part of the Walsh agenda to expand his footprint, bolster One World and build BA into a powerhouse airline, amongst the top five in the world. His formula is simple: cherry-pick brands that you can invest
HAVE A GREAT FLIGHT: Actor Dev Patel at the send off party for the launch flight of the 777-300 ER to Mumbai. Notice the bindi on the aircraft forehead?
CRUISING HEIGHTS October 2010
‘No’ NEVER THE ONE TO SHY AWAY FROM A QUOTE, WILLIE WALSH IS FEISTY, STRAIGHT FORWARD AND SIMPLY TAKE IT FROM ME. EXCERPTS FROM RECENT COMMENTS HE MADE AT HIS MUMBAI PRESS CONFERENCE AS WELL AS INTERVIEWS WITH LOCAL AND BRITISH NEWSPAPERS. On the health of Indian aviation Strong economic growth doesn’t mean profitable growth in the aviation sector. The airlines here have suffered a bit like the Western carriers. There has been an overcapacity here too, that needed to be worked upon. But now
Final Metro 5 pages change.qxd
things are changing. This industry has had discipline imposed upon it by the global recession as cost of capital has gone up. India is seeing a turnaround again as reflected by stock prices of many companies.
On the Indian market Fantastic customer base but still a developing market. A very competitive market that sees capacity pick up from the Middle East airlines such as Emirates. India is the second biggest international market for British Airways. We fly 45 flights to five Indian cities directly from Heathrow. I think the fact that we are flying our brand new (Boeing) 777300 ER aircraft between Mumbai and London Heathrow shows how important is this market to us. We will also fly 777-300 ERs to Delhi. We have a lot of opportunities to grow here. Joining Kingfisher will give British Airways’ customers an opportunity to enjoy (a) much larger network. We don’t disclose profitability. It is definitely one of the competitive markets today because of the strong direct competition between British Airways, Virgin Atlantic, Jet Airways, Kingfisher and Air India. And there is lot of indirect competition from Middle East carriers like Emirates. There were few profitable routes in 2009. We have seen (a) strong recovery and I am very optimistic about India.
are very ambitious and are looking to establish global hubs in the Middle East. Whether you can establish three hubs in such a small area is going to be a challenge, and I may well agree with that part--that there isn’t room for three in the Middle East--and that they may actually develop only two hubs that succeed in establishing a truly global presence. But I see it as just another bit of competition to British Airways, and I see the decision of the (UK) government not to build a third runway as being a positive for the Middle East because there is no question that the absence of a third runway at Heathrow will provide growth opportunities to further hubs in the Middle East. The next 10 years will be fascinating to watch in the Middle East. I campaigned long and hard for a third runway at Heathrow because I think the UK economy would have benefitted. If the government believes that you can stop growth in the aviation industry by not building a third runway at Heathrow, they are going to see that growth is going to continue, but the growth will just bypass the UK.
On consolidation Consolidation is needed in the industry. I saw a very interesting statistic recently at the International Air Transport Associations (IATA) annual general meeting (AGM). They showed there are over
On competing with the Gulf carriers The Middle East is fascinating. In this one area of the world, we have seen growth through this recession; demand has continued to increase. It is an important market for British Airways. Many of my European counterparts will bitch and moan about the way the Middle East carriers operate; they think that it is unfair competition. I don’t buy into that. Emirates [Airline] has been flying to the UK for over 20 years now. I just got a copy of its [financial] accounts the other day, and they look like a normal set of accounts to me. I have much more experience in dealing with Emirates, and have no doubt that they acted in a rational, commercial way in WARM HANDSHAKE: every way that I have With friend Vijay seen. Clearly, all of the Malaya who is now part of One World Middle East carriers
1,000 airlines in operation today… a total of 1,061 airlines and 574 of those airlines were created in the last 10 years. In the last 10 years our industry has lost almost $ 50 bn. As an industry we were only profitable in three of those 10 years. That is no way to a long-term success and a viable industry. So, consolidation will happen, there is no question about that. We are seeing the pace of consolidation accelerate significantly in the last two years. You are seeing consolidation in the domestic market in the United States, you are seeing consolidation within Europe, and you are seeing consolidation in Asia. It is only a matter of time before you see genuine crossborder global consolidation.
On the national carrier syndrome When I ran Aer Lingus in Ireland it was the national carrier owned by the government. I refused to look for financial assistance from the government. You have to tackle the fundamental problem within the business. If you are relying on getting state aid and a bailout then you are not going to tackle these issues because there are no incentives to tackle the issues. Governments should stand back and allow airlines to transform themselves. If they are not prepared to transform there are plenty of competitors in the market who will gladly fill any gap that is left. Countries do not need national airlines today. With the development of strong competition, there will always be somebody there to look after the consumer. The government should stand back and allow the market to operate.
On investing in India If the rules change, not just British Airways, all airlines around the world will look at the possibility to invest in Indian carriers. One of the benefits we have from the discussions we had with Qantas is we realised these are complex discussions but you can put structures in place that comply with the foreign ownership requirements. Our view is, over time, these barriers will be removed and it’s only a question of when.
CRUISING HEIGHTS October 2010
Final Metro 5 pages change.qxd
SPOTLIGHT in rather than build one from scratch. And his great working model? The Air FranceKLM experience: “I wouldn’t say that means we’re going to be reckless, we’re not, but I think we recognise that the Air France-KLM consolidation has been more successful than we would have imagined. You’ve got to look at what your competitors have done, and how they’ve been successful, and how they’ve achieved results, and say: Can we learn from that? And I think we’ve learned from what these carriers have done.” And was he trying that with the tie-up with Iberia? “We made it clear from the start that we did not intend to merge the two operations to make a single airline but rather retain the operating companies and, importantly, retain the brands,” he explains. “We’ve got two very strong brands.” The target is to create an umbrella that will triple its revenues within five years as costs are cut and revenues rise. The Spanish carrier brings valuable links to Latin America and the joint company will become one of the world’s top-five airlines. And with
During his recent Mumbai trip, Walsh said that he actually had a shopping list of 12 more airlines
Britain’s new Conservative government cancelling plans to build a third runway at Heathrow, Walsh sees Iberia’s Madrid base as a valuable new hub in his network. This truly is Walsh’s Indian summer. By the end of the year he would have left the hot-seat at BA to take over as chief executive of the newly-created International Airlines Group (IAG), formed from the merger of BA and Iberia. Once the merger is complete, BA shareholders will own 56 per cent of IAG, and Iberia 44 per cent. Believe it or not that’s not the end of the IAG dreams. During his recent Mumbai trip, Walsh said that he actually had a shopping list of 12 more airlines. The 12 is the pruned number from the original 40 that included both budget as well as full-service carriers. Walsh, in fact, said that detailed discussions have been going on within BA and Iberia in recent months regarding the scope and nature of possible deals. “We’ve looked at it initially with a view to full merger or acquisition rather than taking a minority investment in another airline. The continued on page 52
Photo: Pradeep Chandra
KINGFISHER MAY BECOME ONEWORLD MEMBER NEXT YEAR
DONE DEAL: British Airways’ regional commercial manager, Judy Jarvis, South Asia, CEO Willie Walsh and KFA’s executive vice-president, commercial, Manoj Chacko who drove the code share and the One World deal.
ingfisher Airlines (KFA), India’s second largest carrier in terms of market share, is likely to become a full member of the Oneworld Alliance by late 2011. The Oneworld Alliance is one of the world’s three largest global airline alliances with its central management team based in Canada. The Bangalorebased carrier became a member-elect of Oneworld in June, after gaining approval from the Ministry of Civil Aviation and completing a formal membership agreement. British Airways is one of the founding members of the Oneworld Alliance. There are currently 12 full members. Meanwhile, KFA has signed a codeshare agreement with British Airways
facilitating seamless travel to passengers who can also enjoy benefits while travelling on each other’s networks. The facility available from mid-September will help BA passengers to fly seamlessly into various sectors in India. According to the airline, its code will be placed on nine BA routes from Heathrow to the British region and continental Europe, while BA’s code will be placed on 11 domestic Indian routes and one route to Sri Lanka operated by Kingfisher Airlines. “The codeshare with British Airways will mean that our guests from India will now be able to fly seamlessly to nine new European cities,” said Vijay Mallya, chairman and chief executive, Kingfisher Airlines. CRUISING HEIGHTS October 2010
KFA, which has a market share of 20 per cent in the domestic space, will become one of the first Indian operators to be part of an international alliance. Willie Walsh said: “British Airways is Kingfisher Airlines’ sponsor, mentoring and supporting it through its joining programme in its bid to become members of the Oneworld Alliance. We will continue to support them in every way possible, so that they can become full members by late 2011.” KFA’s Executive Vice President, Commercial, Manoj Chacko, said, “We are on track to become full members and the process is on. The codeshare between BA and Kingfisher is the first step towards strengthening our business. It is a partnership between two big and equal brands.” The process of bringing on board a new member usually takes 18 to 24 months to complete. All the information technology systems of the new member have to be connected to those in the other Oneworld airlines, bringing its customer service, frequent flyer and distribution processes into line with the standards set by the alliance. KFA’s addition to Oneworld will link its network with India’s extensive domestic network. It will bring 56 cities onto the Oneworld map and is likely to expand the net global coverage of the alliance to more than 800 destinations in 150 countries.
Final Metro 5 pages change.qxd
SPOTLIGHT ambition is very clear that IAG will look to consolidate further,” he told journalists. Walsh said that he had rated each of the 12 on how difficult or quickly they could be taken over: “When looking at this list, we have taken a view on how difficult a transfer would be. Some would be possible almost immediately. Some may be very difficult.” Does he want the world’s biggest airline group? “It sounds like a good ambition to me,” he said. His critics wonder what makes the 48year-old Irishman tick. Logically, he should have been sent packing long back. From a £696m ($1.07bn) profit in 2008, BA plummeted to a loss of £358m for 2009 (for a month Walsh worked without pay and two years running has given up his bonus), there was the harrowing launch of Heathrow’s terminal V that saw the loss of over 50, 000 bags lost and 5000 flights cancelled (the celebrity Indian to lose his bags was Amitabh Bachchan), a high profile price fixing scandal and a continuing war with Virgin Atlantic. And if that wasn’t enough, he had a running battle with Unite, the labour union: “Unite have failed to ground British Airways, and we are continuing to fly and we are continuing to work. They have failed,” he mocked them time and again. Clearly Walsh loves a battle as is evident when he first earned his spurs at Aer Lingus, as a pilot and later as the chief negotiator of the Irish Airline Pilots Association and much later as CEO. Post 9/11, he ruthlessly cut 2500 jobs, pruned costs by 30 per
He loved the public spat with Richard Branson who said the approval was a ‘disaster’. Walsh said Sir Richard was moaning like “a cracked record.”
PLUSH OFFER: The 777 is fitted with the World Traveller and World Traveller Plus cabins and a new in-flight entertainment system that offers over 700 hours of movies, TV and music options on demand.
cent and earned the nickname ‘Slasher’ Walsh. Negotiations with Walsh are not likely to be easy. Critics describe him as intransigent, confrontational, even bullying. Walsh repositioned Aer Lingus as a low cost carrier (LCC) in competition with Ryanair and by 2004 the airline was in profit. Just a year later he moved to BA. What endears Walsh is the ability to ‘never say die’ and warm up to a battle at every turn. There are two classic examples of this tenacity. When volcanic ash grounded flights all over Europe, Walsh decided to take on governments by risking it all by flying on a BA 737 for over three hours to see how dangerous the ash was. It helped end the airspace ban. The other was the antitrust immunity to American Airlines and four international partners to form a global alliance. BA had been fighting for it for 12 years, but Walsh literally drove it day and night these past four-and-a-half years. The decision allows BA and its Oneworld partner, American Airlines, to more closely coordinate international operations in transatlantic markets. The airlines, both members of the Oneworld alliance, have twice before sought, and failed to win, immunity from anti-trust legislation in order to extend the terms of their co-operation. Supremely confident that this time they wouldn’t lose with the regulators, Walsh had 7500 staff undergo training at Heathrow, Dallas and New York. Those terminals, plus Miami, Chicago, Madrid and London Gatwick will be the hubs in a network flying daily to 500 destinations in 100 countries and serving 70m frequent flyers. He loved the public spat with Richard Branson who said the approval was a ‘disaster’ and the alliance a “monster monopoly”. Walsh said Sir Richard was moaning like “a cracked record”. For the record, the alliance will generate £5 billion of annual sales and account for a fifth of transatlantic traffic, making BA and AA closer competitors to the Star and Skyteam alliances. As he gets closer to creating a global conglomerate, Willie Walsh is getting close to retirement too. He has said for years that he would quit at 55. “I have always said to myself, going back a long, long time that I would like to retire when I was 55. That was mainly because I started when I was 17 so I thought that was a long enough time to be at work. It hasn’t changed. I remember saying this to somebody a number of years ago and they said ‘you’ll get close to 55 and then you’ll change it to 60, and then you’ll change it to 65’. People who know me would probably describe me as a workaholic,” he told one interviewer. A workaholic for whom India figures big-time in the overall scheme of things!
cargo COVER oct.qxd
CRUISING HEIGHTS AIR CARGO & LOGISTICS
Jet Airwaysâ€™ cargo division aims to increase its revenue share from cargo operations to 9.5 per cent of its total global sales in the next two years.
Is there need for a regulator? p60
Finnair on a high p56
The debate is on whether a regulator is at all necessary for the courier and express industry.
Nordic carrier is looking at Asia and India in particular to fill up bellyholds. Kuldip Singh Kharayat
Last in first out.qxd
LAST IN/FIRST OUT
IATA caution: Air cargo growth to slow down
“UNCERTAINTIES are rising about the economic outlook with talk of a ‘doubledip’, but current conditions in cargo markets remain positive,” according to IATA in its third-quarter Cargo EChartbook report. “Air freight has entered a slower phase of expansion, but the pace of growth in both volumes and yields remains above trend. Revenues have been growing strongly and, in many regions, cargo profitability is back to prerecession levels. The environment will get more difficult. Even without a ‘double-dip’, demand will slow and new capacity will put pressure on load factors and yields, the report said. International air cargo traffic grew at an annualised rate of over 20 per cent in the first quarter of 2010, before it fell to 11 per cent by July, but this still remains above the six per cent world trade trend. The IATA report said that Europe’s economic recovery was the weakest while at the buoyant end were the emerging economies in Asia, the Middle East and South America. However, there was a word of caution: “The surge of air freight in Asia
There are reports that the third-party logistics (3PL) market in the country is growing. According to estimates, 3PL will garner revenue of $4 billion by 2012. A lot of the development in the 3PL sector has been brought about by multinational companies, as a report, 3rd Party Logistics Market in India, mentions. However, the home-grown companies are catching up. Many of them have started managing their supply chain and adding more services to their portfolios. The report also mentions that India still has a long way to go and its 3PL is nowhere near the developed markets of the US and Japan, where use of 3PLs accounts for over 50 per cent of the total logistics cost. Even so, the Indian market has a lot of
and South America is now slowing, while trade across the Atlantic and from Europe to Asia is now catching up.” The report also mentioned that the business inventory cycle was over and the pinch would be felt by the air cargo sector. “Peak reductions in inventories came at the end of 2008, when the recession caused a surge in the inventory-sales ratio. After that, business slowed the pace of destocking and, from mid-2009, started to rebuild inventory, which caused the surge in airfreight. Now that the inventory-sales overhang has disappeared, business will only add inventory at the pace of final sales. As a result, airfreight growth will slow to the single figure growth to final sales.” The organisation said capacity was returning to the market, partly as a result of the expanding passenger fleet, but also because the freighter fleet was better utilised. So far, load factors remained high, it added.
No looking at the West THERE has been little improvement in the US unemployment situation: in fact, the number still hovers around the 10 per cent mark. Housing has also gone down and manufacturers are marking time. Is there chance for air cargo to show growth? Consolidators International (CII) CEO Julian Keeling said during a recent interview: “Retailers are taking their cue from shoppers’ reluctance to open their pocketbooks and have become very miserly in continuing to build up inventory. The supply chain seems to have snapped at the retailer’s warehouse.” According to Keeling, the integrators, particularly FedEx and UPS, built up their infrastructures in Asia at enormous cost and that seems to be paying off. FedEx, for example, has extended its closeout time from 18:00 to 20:00 for low-value shipments to Europe from Shanghai, Suzhou, Hangzhou, Julian Keeling Ningbo and Shaoxing. Quoting Chinese Customs, Keeling said China had exports to the EU of $236.2 billion last year — or 20 per cent of the country’s global total. That should send warning bells to the Indian freight community. It is time we looked around for markets other than the traditional ones of Europe and the US.
“When we established Global Logistics Network in 2003, it was with the objective of being a primary resource for the smallto-medium-sized freight forwarder that offers exceptional services in their local markets. Our emphasis is on quality over quality.”
President and founder of Global Logistics Network on the annual Conference scheduled to take place in Kuala Lumpur this month.
CRUISING HEIGHTS October 2010
Inside view of air cargo warehouse. potential because of the rapid improvement in infrastructure like ports, highways and bridges. Most of the domestic players, for instance, used the downturn phase to put systems and processes in place. Many have invested in setting up an automated warehousing business to usher in efficiency. Others still have been offering their services to other companies. In fact, these 3PL majors, expect to reap benefits of their experience and see up to 100 per cent growth of their services.
No cold shoulder to pharma In a move that could be a game-changer for the pharma industry, stakeholders in the pharmaceutical sector, have chalked out plans to enhance the infrastructure at international airports. ising pharma exports from India — the $12 bn pharmaceutical industry earns 40 per cent of its revenue from exports of off-patent generic drugs — have prompted the government to take notice and move to enhance the facilities available at international airports in the country. According to the Ministry of Chemicals and Fertilisers, there is an urgent need to either establish new cold chain facilities for drug storage at airports or enhance the present ones. One of the other reasons is the demand from pharma producers represented by the Organisation of Pharmaceutical Producers of India (OPPI) about the lack of proper cold chain facilities at airports. During 2009-10, the revenues of the Indian pharmaceuticals industry went up despite the global recession and financial crises: from $0.32 bn turnover in 1980 to approximately $21.26 billion in 2009-10. The country now ranks third in terms of volume of production (10 per cent of global share) and 14th largest by value, according to official sources. This has led the Pharmaceutical Exports Promotion Council (Pharmexcil) to plan offices and warehouses in the US, Europe, Latin America and Japan to help Indian drug exporters. Drug exports were likely to show above 15 per cent growth for 2009-10. The ministry concerned is believed to have identified 21 airports around the country for enhancement of cold
storage/chain facilities but the first phase will see improvements at Delhi and Chennai. The work is scheduled to be completed in a couple of years. While Delhi’s Indira Gandhi International Airport is managed by private operator GMR, Chennai is handled by the government-controlled Airports Authority of India (AAI). Talks between ministry officials and the airports’ management have begun and one of the demands that the airport operators are believed
appointed a committee to take a look at the present capacity in the 21 airports and suggest the manner in which the enhancement can be done. The committee has stakeholders from the pharma community, the departments of health, civil aviation, the AAI and private airport operators. The OPPI, in fact, has taken up the Cold Chain Management issue at airport with the government departments concerned for over three years now. It has
COLD CHALLENGE: Repeated demands by the pharma industry has prompted government to enhance coldchain facilities at airports for drug storage.
to have placed is the levying of a user-development fee for the space the airports would lease out for these special facilities. The ministry, the sources added, has impressed upon the management of the two airports to rush with the construction of the facilities and ensure that each one is of world-class standards. The government has also
held discussions with major stakeholders, like the Mumbai and Delhi airport operators from where between 80 and 90 per cent of the export and import trade of pharmaceuticals take place. Among the demands of the OPPI, in addition to providing cold chain facilities, were loading sheds and refrigerated vans for moving
CRUISING HEIGHTS October 2010
goods within the airports. The discussions were followed up with the establishment of four cold rooms at Mumbai. At Mumbai, where space is a major constraint, four cold rooms for pharma products were created in the latter part of 2009. It has also gone a step further and trained the staff to handle temperaturesensitive pharma products. In fact, the establishment of these rooms has sent freightforwarders sulking. Most of the general freighters are of the opinion that the cold chain rooms have taken away the prime space of the general cargo. MIAL officials, however, pointed out that as far as the cold storage for pharmaceutical products is concerned, it has to be realised that Mumbai is the capital for the pharmaceutical industry and the ministry concerned has been asking for the creation of such a facility at the Mumbai airport. At the Chennai airport, work is on to add an additional 26,000 sq m with an automatic storage and retrieval system (ASRS). That would provide the cargo complex with 58,000 sq m. In the expanded complex, there will be temperaturecontrolled cold storage rooms with special flooring, secure storage facility for dangerous and hazardous goods and a number of strong rooms for valuable cargo. Once the infrastructure is completed, the Drug Controller General of India (DCGI) will have control over the separate dedicated controlled environment, called a ‘pharma zone’, within the cargo premises at airports. — Tirthankar Ghosh
Kuldip Singh Kharayat Interview new.qxd
There is good “demand from Chennai and Kolkata for Nordic destinations
Kuldip Singh Kharayat, Area Director, Indian Subcontinent, Finnair Cargo, spoke to Tirthankar Ghosh about the cargo potential that India provides.
CRUISING HEIGHTS October 2010
Finnair’s India innings came quite late in comparison to other European carriers. The carrier launched direct flights between Delhi and Helsinki on October 30, 2006, only to be followed eight months later on June 27, 2007, with a flight from Mumbai to Helsinki, that has, however, been temporarily suspended since March 2009. This, however has not deterred the carrier to plan the launch of a freighter service between Helsinki and Mumbai next year. According to Kuldip Singh Kharayat, Area Director, Indian Subcontinent, Finnair Cargo, Finnair’s experience with cargo from Delhi has been encouraging. He believes that there is enough capacity out of Mumbai; hence the plans for the freighter services from the city. The freighter services from Mumbai could be a possibility. Finnair Cargo, in fact, has recently launched a freighter service to Hong Kong and Seoul. According to Antero Lahtinen, Managing Director, Finnair Cargo, the growing demand for cargo in the Asian market has provided the opportunity to the carrier to expand its capacity between Asia and Europe. The Delhi-Helsinki sector has done remarkably well on the passenger front. In fact, the six flights a week from Delhi have contributed to the carrier’s 26 per cent growth in Asian traffic this summer. Kharayat pointed out the USP of Finnair Cargo. To begin with, India to North Europe is a short distance and with Helsinki as a hub, it makes sense to fly cargo on Finnair “as we also have a very good onward connectivity — by road, sea and air”,
Kuldip Singh Kharayat Interview new.qxd
Has the lack of proper infrastructure created obstacles for the transportation of goods from India to Helsinki? There is lot of improvement happening but we still have a long way to go. India needs to have aggressive and timescheduled implementation of infrastructure development projects. India is a global IT solution provider but somewhere, we have not paid enough attention to in-house IT infrastructure which is not as advanced as in most of the developed nations. Until we have these in place and they are at par with global standards, the logistics chain will always have an element of unpredictability in it.
Kharayat said. According to the carrier, the overall cargo tonnage it carried grew 34 per cent from January to June this year. Excerpts from a conversation with Kuldip Singh Kharayat:
Finnair has done well in the IndiaHelsinki sector in passenger as well as cargo. What kind of tonnages have your aircraft been carrying on an average? The A330 is a very fuel-efficient aircraft but the payloadcarrying capacity of the aircraft drops with the increase in flying time. Delhi-Helsinki being the shortest flying time to Northern Europe, we get 17 tonnes of cargo with full passengers on board. The aggregate average is 15 tonnes-plus on flights out of Delhi.
What does the cargo contain and is it all directed to Helsinki or to other places in Europe? Finnair is the only online carrier to North Europe out of the Indian subcontinent. This gives Finnair Cargo a competitive edge in transit to destinations in the Nordic and Baltic states that are our niche markets and focus
INDIA REMAINS FOCUSSED: Finnair Cargo has done well in the India-Helsinki sector and is still fully-prepared to increase volumes in the Indian skies.
areas. Finnair operates to 50 different destinations in Europe and also serves all major destinations in Europe through the road feeder services (RFS). There is lot of demand for US and Finnair operates daily into JFK from Helsinki. Through these flights, we are able to service our customers in New York and cities around the United States through interline partners and RFS. The main commodities are leather garments, made-ups, pharmaceuticals, handicrafts and carpets.
How much of the cargo is perishable goods? There are not enough perishable exports by air to
the Nordic and Baltic states at the moment. In the event of this demand growing in the future, Finnair Cargo has capabilities and is fully prepared to service its customers to transport such products.
Is there cargo traffic on the Helsinki-India sector? What kind of cargo are your flights bringing in? There is demand of infrastructure-related goods from North Europe to India. In imports, we are mostly transporting telecommunication equipment from Sweden and spare parts which are generally for Delhi, Chennai, Mumbai and Bengaluru.
CRUISING HEIGHTS October 2010
How do you look at the future? Do you feel that with more destinations in India for Finnair, there would be cargo growth? We have a presence in all major cities in India through our GSA. In fact, we are very active in Kolkata, Mumbai, Ahmedabad, Hyderabad, Bengaluru and Chennai. We are able to service our customers through our interline partners. There is good demand from Chennai and Kolkata for Nordic destinations and good pharmaceutical demand from Hyderabad and Mumbai to Baltic states and Russia. Air cargo is showing good growth trends and with additional capacity we will definitely be able to increase cargo volumes on Finnair flights. Our assessment is that India has the potential to become a global air cargo hub due to its geographical location and impressive economic growth. This will require developing gateways, cost-effective handling and simplifying customs procedures.
Soaring with cargo,
the Jet way If Jet Airways’ Naresh Goyal had his way, he would start his dedicated cargo airline today. But the recession has upset all plans. Even so, the carrier’s low-profile Vice President, Cargo, Jay B Shelat is up and about to ramp up the cargo services, as he told Tirthankar Ghosh. thers may have gone to town hyping and hawking their cargo products but Jet Airways has studiously maintained a low profile. This, despite the fact that Jet’s chairman Naresh Goyal is well aware of air cargo’s potential. “Currently, cargo’s contribution to our revenue is in the region of 7 per cent. We would like this figure to touch 10 per cent in the domestic sector in the near future,” he had said at a press conference in November 2007. A few months later, in 2008, he pointed out that “some 12 per cent of our revenue comes from cargo transportation. We are
planning to increase this share to about 30 per cent in the future.” At that time, it was reported that Jet was looking at creating a new cargo airline in collaboration with an European partner. Indeed, Jet’s cargo section has been working quietly to reach those magic figures. A confident Jay B Shelat, Vice President, Cargo, Jet Airways, pointed out to CRUISING HEIGHTS, “Our cargo division presently contributes 7-8 per cent of the total revenue. Cargo constitutes 12 per cent of Jet’s revenue from international operations and 4 per cent from domestic operations. In two years, we want to boost revenues from air cargo to around 15 per
cent and 6 per cent on international and domestic operations, respectively.” To achieve his target, Shelat had charted out a gameplan. Had he worked
Jay Shelat Chairman and Managing Director, Aryan Cargo Express
out two separate strategies: one for domestic and another for foreign? “The answer is ‘No’,” he said, and went on to explain that Jet had “a large number of
Jet’s cargo ambitions as a dedicated freight carrier remains on hold. The business is being analysed. Once the market conditions and the environment improves, we will take a look. — Jay B Shelat
CRUISING HEIGHTS October 2010
narrow bodies operating within our system. We use our morning capacity to serve the domestic market. However, we also use the same domestic capacity to feed our international widebody gateways, primarily Mumbai, Chennai and Delhi. We have our international departures where we focus on destinations abroad.” He said that the cargo section did not have a “clear two-cut policy but rather, a three-cut policy where we use our narrow bodies in the morning time frames for domestic consumption and our domestic network to feed our international destinations from Delhi and Mumbai. And then we have our local markets that support our strategy within our domestic network. The same process works in reverse. For example, when a shipment comes in from JFK going to Ahmedabad, it goes via Bombay and on to Ahmedabad by our frequency.” The strategy is working out: Jet Airways ferried 96,386 tonnes of cargo on global routes in 2009-10, a whopping 87 per cent increase when compared to 2008-09. But he is quick to caution, “Compared to 2009, our loads are 28 to 30 per cent higher. However, if you compare that to 2008, we are still short of hitting close to that target. From the yield perspective, our revenue yields have shown some growth in yield year to year percentages. However, if you again go back to 2008, we are not there yet…” Last year, he mentioned, “we all enjoyed high growth; the shipping lines were in short supply. Even though there was short supply but the demand existed.” Forecasts have pointed out that air cargo is expected to grow by 15 per cent on international routes and 6 per cent on the domestic sector in 2010-11 and Jet
Airways is prepared. Said Shelat, “We still have extra capacity that was there before the economic downturn in 2009.” One of his strategies: get back some of Jet’s aircraft that were leased out. “Some widebodies,” he mentioned, “went to the South East Asian carriers and some to the Middle East carriers and those are being redployed in the Indian market.” The way the business was moving was good. He reminded that “the fourth quarter of 2009 was exceptionally strong for most airlines in the world because of the recovery of the economy and the subsequent demand. Most shippers were caught off-guard because of the reduction in capacity in air and sea. That is the
capacity. That is beneficial to the consumer because it adds value to their supply,” he said. As for the rates shooting up and forwarders comparing rates of 2009 versus those in 2010, the cargo boss agreed, “Yes, they (the rates) are higher but they seem to forget what they were paying in 2008 and 2007. But we are not there yet. From a cost perspective, I think fuel is still hovering around $ 7880, which is higher than last year. It was then $ 68-70.” Looking ahead at the future, Shelat said that “the world is watching and waiting to see how the European and US economy recovers. These two economies are still an
Jet Airways ferried 96,386 tonnes of cargo on global routes in 2009-10, a whopping 87 per cent increase when compared to 2008-09. From the yield perspective, the revenue yields have shown growth in year-toyear percentages. reason for air freight demand being so robust for Q 4 in 2009.” However, Shelat said that he did not think “that kind of phenomena is going to occur this year because capacity has returned to normal in the sea freight market. The air freight market is maintaining growth when you compare figures quarter to quarter and things are still difficult.” Considering the present conditions to be somewhat difficult, Shelat is wary about the competition. He said that some good had indeed emerged from the recession. “I can’t speak of the other airlines in India but there is some sort of discipline in the market regarding adding
important part of the market, especially in India and that will have an impact on whether we have a good fourth quarter or a good first quarter next year.” What is worrying is that “there are no clear signs indicating which way the US and the European economy seem to be heading.” He went on to point out that “as far as the export figures of 2008 are concerned, we are getting closer despite the fact that the economies of Europe and US not doing well. The good thing is that local consumption in India has certainly picked up from the slack that was there in 2009. The robust economy that we
CRUISING HEIGHTS October 2010
had before the current financial crisis has somewhat returned. Is it 100 per cent?” he asked rhetorically. “No, but we are somewhere near,” he said optimistically, adding, “and as time marches on, we should be reaching 2008 targets.” In such a situation, was Jet planning to start the dedicated cargo airline Naresh Goyal had often talked about? Not yet. Said Shelat, “Jet’s cargo ambitions as a dedicated freight carrier remains on hold. The business is being analysed. Once the market conditions and the environment improves, we will take a look.” The environment that he was talking about was the infrastructure or rather the lack of it at various airports. “In this present environment, it is still difficult for Jet to launch a dedicated freighter service. The primary reason for that is that Jet does a decent job in delivering from airport to airport but in order to get into a dedicated freighter service, especially in this domestic market, I think one needs to go beyond the airport up to the main destination: the first and the last mile. That component in this present infrastructure is little difficult. In fact, reaching the last mile is difficult. Once infrastructure improves, we will think about it,” he said. However, there has been press reports that Jet have been talking to FedEx about a possible tie-up. Poohpooing such reports, Shelat emphasised, “We do not have any tie-ups with integrators and I do not see that situation changing in the near future.” He pointed out to the story in one of the newspapers last winter and said, “We work with Fedex, UPS, TNT, DHL and everyone else. Integrators are our customers but we do not have any specific tie-ups with any integrators like a JV.”
Does the express and courier industry need a regulator? The trend today is to appoint regulators for every industry. The express and courier industry is undergoing changes: a new regulatation is being formulated for the postal sector. Arpita Mukherjee, Parthapratim Pal and Ramneet Goswami point out that bringing in a regulator for the highly competitive express and courier industry would be of little use. he Department of Post is in the process of drafting a new regulation for the postal sector. This is a necessity since the present act regulating the sector â€” the Indian Post Office Act 1898 â€” is outdated. In fact, the earlier attempt to make an amendment to the act of 1898 received significant criticism from the courier companies, various ministries and industry associations. Private companies opposed various provisions of the amendment, including use of a weight-and-price multiple to define a reserved area for India Post in letter and express mail services segments, asking larger companies to contribute to USO (Universal Service Obligation) funding, proposing a roll-back of the foreign direct investment (FDI) from 100 per cent to 49 per cent and suggesting a regulator for this sector. While many of these issues are likely to be better addressed in the new regulation the need and the role of the regulator is still a bone of contention. Over the past few months, ICRIER (Indian Council for Research on International Economic Relations) has been conducting a survey on the express delivery services (EDS)/courier industry to understand the need of a regulator for the industry. The core issues discussed in the survey include whether the highly competitive EDS/courier industry, with no entry or exit barriers and multiple operators (more than 2,500 companies), actually needs a regulator or not. And, if at all there is a need for the regulator then who should be the regulator and
T In India, there is no common view across different segments of the courier/express industry and their clients on regulatory issues. 60
TOO MANY ARGUMENTS: Is there really a need to bring express and courier industry under the regime of a regulator?
CRUISING HEIGHTS October 2010
what should be its role and responsibilities. In India, there is no common view across different segments of the courier/express industry and their clients on regulatory issues. Large express/courier companies felt that EDS should be outside the scope of regulator. Around 59 per cent of clients did not disagree with the suggestion that government should impose some form of registration/licensing requirement to put a check on fly-by-night service providers. Smaller courier companies also felt that some form of registration from an independent
organisation will provide them security and credibility. However, they differed as to who should be the registering organisation â€” should it be a central courier association, regional associations, or should they register with an independent regulator? Most of those who support the proposal for registration argued that it should be onetime registration based on the payment of a nominal fee and should be valid for life-long. If it is a life-long registration then it is difficult to monitor service quality. For ensuring service quality, there should be some basic standards, which all companies have to follow and a periodic monitoring mechanism should be in place to ensure that companies compile with that standard. Such periodic monitoring also entails costs since the number of courier companies is much large. Moreover, since the courier industry/sector constitute a large number of small, familybased unorganised companies spread across India, it is difficult to monitor them unlike companies in sectors like telecommunications where there are only a few large corporates.
Overall, the survey found that the cost of registration and monitoring is likely to be higher for smaller companies than that for larger companies. Since smaller companies are more localised, they do not have large administrative departments, and/or a mechanised system of regular collection of data/information. These companies are already operating with tight margins and may have to wind up their operations. Since they are more labour intensive, it can adversely impact employment. Other arguments from supporters of a regulator include anti-competitive practices, address of consumer grievance, access to network, etc. The anti-competitive practices can be addressed by the Competition Act. Consumer forums can address consumer grievances and in a sector like courier, consumers have a wide range of choice of service providers. If the service provider does not provide quality services, then customer can easily change service provider and there is no cost associated with such a change. Tie-ups and strategic alliances are crucial among courier/EDS service providers but, unlike telecommunications, there is no scarce resource, which acts as an entry barrier and which can be monopolised. Thus, the argument for a regulator is weak in case of EDS/courier services. In this context, it is worth mentioning that the Planning Commission in its draft Regulatory Reforms Bill has proposed a regulator for Post (and not for courier) when the postal sector is liberalised. This is necessary since basic postal services are treated as â€œpublic goodâ€?: therefore, these have to be made accessible to one and all and at reasonable prices. In fact, the regulators in most countries have come up with privatisation of the postal sector to regulate any malpractices from the dominant incumbent national postal organisation. In most countries, EDS is outside the regime of postal regulator. The regulator has to be independent since the Department of Posts also has similar express services (Speed Post) like private operators and, hence, has a vested interest in this sector. Lastly, while in India, some officials seem to want a regulator for each sector, the regulatory experiences have been mixed. The requirement for setting-up of an additional infrastructure, which entails costs, will also have to be justified. Allocation of all scarce resources does not need a regulator. If competition fails then the regulator is justified. So far none of the private courier/EDS companies have raised such concerns. The question that rises in mind is: Is there really a need to bring a highly competitive EDS/courier sector under the regime of a regulator? (The views expressed in the column are personal. Dr Arpita Mukherjee is Professor at ICRIER, while Ramneet Goswami is a Researcher with ICRIER, and Dr Parthapratim Pal is Associate Professor at IIM, Kolkata.)
CRUISING HEIGHTS October 2010
Since the courier industry constitute small, family-based unorganised companies spread across India, it is difficult to monitor them. 61
CARGO JOTTINGS Kale now part of world’s largest solution provider
ONE of the country’s top solutions providers to the airline and travel industry, Kale Consultants, recently announced that the Spain-based Accelya Holding World S.L., a European IT and BPO service provider had acquired Kale’s promoter shareholding amounting to 35.61 per cent of the outstanding share capital of the company on fully diluted basis. The agreement is subject to governmental and regulatory approvals and is likely to trigger an open offer by Accelya to the shareholders of Kale. Vipul Jain, Kale’s Managing Director and CEO, will remain with the company and also play a strategic role in Accelya Group. He pointed out that Kale joining the Accelya Group would “provide new opportunities to Kale’s customers, employees and shareholders”. The acquisition of Kale will make Accelya Group the world’s largest solution provider for back-office processes related to the airline industry. The Group will have a truly global presence with delivery centres in four continents across the world. Philippe Lesueur, CEO, Accelya, said the two companies had enormous synergies and he was confident that together, they would innovate to create value for customers and the industry. The synergies between the two companies will benefit all stakeholders. Both companies are end-to-end solution providers to the airline and travel industry, and the agreement will bring forth opportunities to leverage respective strengths to gain wider market share and efficiencies. Kale will be able to utilise Accelya’s global presence, and in turn will provide its specialist domain knowledge, technology expertise and software products to the partnership.
AHMEDABAD saw the highest volume of gold imports. According to reports, 19.21 tonnes of gold were imported at the air cargo complex in Ahmedabad in July 2010. Samir Mankad, Managing Director of the Gujarat State Export Corporation Limited, said that the gold imports at air cargo complex, Ahmedabad, in July 2010, were more than double the yellow metal’s imports of nearly 9.3 tonnes in July in 2008 and 2009. Around 17.2 tonnes of gold were imported at the complex in July 2007. According to Mankad, gold imports at the air cargo complex for the first four months of the current financial year, i.e. between April and July, rose 32 per cent to 57.84 tonnes from 43.88 tonnes in the same period last year. Gold’s upturn resulted in a downturn for silver. According to GSEC, 27.77 tonnes of silver were imported at the air cargo complex between April and July this year, as against 135.55 tonnes in the previous year, a fall of almost 80 per cent.
Lufthansa Cargo’s new Chief Information Officer Roland Schütz (42) is taking over as Chief Information Officer at Lufthansa Cargo AG with effect from November. Dr Schütz, currently Chief Operating Officer, Infrastructure Services at Lufthansa Systems, succeeds Silke Lehnhardt (46). After 22 years at the Lufthansa Group, she is moving to a new post as Senior Vice President, IT Finance, HR and Group Headquarters at Deutsche Roland Schütz Telekom AG. The new CIO at Lufthansa Cargo, Roland Schütz is taking up his post on November 1, 2010. Schütz has a doctorate in physics and, since November 2005, has been Chief Operating Officer, Infrastructure Services, Lufthansa Systems. He previously held diverse, senior positions at Fiducia IT AG.
Tennis with FedEx
against specific opponents. This information, along with The ATP and FedEx Corp. have signed a three-year player videos, polls and more will be featured in a new agreement that brings FedEx on board as a new global section on ATPWorldTour.com named the FedEx Platinum Sponsor and Official Carrier of the ATP World Reliability Zone. Tour. The sponsorship will launch at the 2010 Barclays ATP Adam Helfant, ATP Executive Chairman and President, World Tour Finals at London's 02 Arena in November and said that FedEx was a recognised leader in sports marketing extends through 2013. and ATP was proud to be associated In addition to global marketing rights, with the international sports FedEx will become a sponsor of 17 ATP sponsorship. On its part, Andrew Self, World Tour tournaments in 12 different FedEx Express' Vice President, countries. FedEx has a history of tennis Marketing and Communications, sponsorship and currently sponsors Europe, Middle East, Indian Roland-Garros in France. Reliability of Subcontinent and Africa, pointed out performance will be a prevalent theme that the global nature of the ATP World across all activation and reinforced Tour complemented the activities of visually with FedEx brand exposure on the express provider since it served court at tournaments spanning four customers in more than 220 countries continents and on ATPWorldTour.com, and territories worldwide. “In addition the popular website dedicated to tennis. to the core attribute of reliability, men's FedEx will develop an enhanced professional tennis and FedEx also PEACE PAIR: Rohan Bopanna and Aisamanalysis of player match records providing share the characteristics of speed and ul-Haq Qureshi, the India-Pak pair, who went up to the finals of the US Open tourfans with added information on player precision making it an excellent nament. FedEx will be the new global success and consistency on different platform to communicate with our Platinum Sponsor and Official Carrier of surfaces, in pressure situations, and customers,” said Andrew Self. the ATP World Tour.
CRUISING HEIGHTS October 2010
Saviour dies in crash A RETIRED airline pilot who saved the lives of more than 100 passengers died alongside his son in a mid-air collision during an air race. Michael Willis, 73, of Stanmore, Middlesex, and 42-year-old James Willis, of Hillingdon, north London, were in a four-seater Mooney M20B aircraft when it crashed with sports aircraft over Havenstreet on the Isle of Wight on Saturday September 4.
No bad food, please The Mooney M20B broke up mid-air and plummeted into remote woodland, killing the pair. The sports aircraft, also carrying two men, suffered damage, but made it back to Bembridge Airport with both its occupants escaping serious injury. The planes were among 19 aircraft taking part in the Merlin Trophy races. An investigation into the accident has been launched by the Air Accidents Investigation Branch (AAIB).
IN a recent development, a passenger, who refused to eat the food provided by an airline following a flight delay fainted at the Fuzhou International Airport in the Fujian province. The China West Air flight, scheduled to fly from Fuzhou to Southwest China’s Chongqing municipality was delayed by nearly five hours due to a technical snag. Three passengers, including the woman, were not satisfied
Donated kidney goes waste PHILIPPINES medics had to throw away a donated kidney when a local airline refused to fly it. Cebu Pacific Air said it was protecting passengers from possible infection or contamination when it refused to allow the team who harvested the organ to carry the kidney in the cabin on the flight last month. Benjamin Balmores, President of the Philippines Society of Nephrology (PSN), said the kidney could no
ANNII Minogue was recently caught up in an air scare on a flight to Australia after the cloudy weather created a nightmare landing for the star. Kylie Minogue’s little sister was travelling on a plane bound for Cairns to film scenes for her UK television show ‘The X Factor’ when the pilot struggled to land the jet through dense fog. The ordeal was all
the more terrifying for the singer because she was flying with her two-month-old son Ethan. A friend of Minogue, who refused to share her name, was quoted as saying, “We had the most terrible landing. We were coming down to land and suddenly shot straight back up again. There was too much cloud and the pilot could not see the runway. It was all very scary.” CRUISING HEIGHTS October 2010
longer be used after doctors instead tried to drive it nearly 400 kilometres (250 miles) to its destination. “According to NKTI (the government-run National Kidney and Transplant Institute), this is the first time that the team was not allowed to handcarry the human organ,” Balmores said. Cebu Pacific said it offered to carry the kidney on priority cargo, but the doctors declined because the organ was too fragile. Candice Iyog, a spokeswoman for the airline said, “The way (the kidney) was packed was not in accordance with prevailing internationally accepted standards.”
Stop! I spilled tea!
Jailed for unruly behaviour A drunken jockey with a flying phobia who was abusive and “strange” on a flight from Malaga to Bristol has been jailed for five months by the court. It all happened when Cabin crew complained that they could smell alcohol in Andrew Cairns’ breath as he boarded the easyJet Airbus. They saw him drinking a clear liquid before he kicked and barged a flight attendant, stared at a female passenger and tried to wreck a smoke detector in the toilet. The concerned aircrew reported his unruly and rash behaviour to the aircraft’s captain, who radioed on to Bristol Airport to alert police. The accused has previous convictions for burglary, dishonesty and begging. As the saying goes, ‘Those that ignore history are doomed to repeat it.’
Pilots fake flying experience IT’S not just fake designer handbags and knock off shiny Rolex watches that people can master. Now it seems pilot licenses can also be added to the list. A recent investigation has revealed that 192 Chinese commercial pilots falsified their flying experience. Chinese authorities made the discovery when investigating a plane crash that killed 42 people and injured 52 in August 2010, the worst accident in six years. Until this crash, there had been no other major accidents as a result of stricter safety rules and a young fleet of mainly Westernmade aircraft. To meet the demand in the country’s booming air travel in recent years, the aviation industry has been desperate for expe-
A British plane en route to Poland was forced to make an emergency landing in Germany after a 56-year-old woman spilled a hot cup of tea on herself. The Ryanair flight from Liverpool to Poznan had to make an unsched-
uled landing in the northwestern city of Bremen. The British woman was treated for scalding at the airport and released — but not before the plane resumed its journey without her. She later took a train to Poland.
Illustrations by Rajeev Kumar
with the airline’s damage control measures, which included 200 yuan as compensation. The woman, along with the two other protesting passengers, waited at the airport till daybreak for a better deal and refused to eat the food offered by the airline, complaining the meal was too bad to digest. She subsequently dropped unconscious, and after receiving medical aid, was sent to a nearby hotel to rest. The three passengers finally agreed to board another plane to Chongqing, which departed a couple of hours later.
rienced pilots to join China’s friendly skies. “The rapid expansion of China’s civil aviation requires more commercial pilots, and the gap was usually filled up by those pilots who drive military aircraft, but transferred to commercial flights,” a Chinese pilot named Xu told the state-run China Daily newspaper. Pilots involved in the incident have had their licenses revoked or have been ordered to take extra training, according to the China Daily. But Chinese aviation authorities have warned that consequences await those who continue to fudge their flying experience.
Pilot throws tantrum over prawn curry HEARD the latest? An Air India pilot’s desire to have appam with prawn curry for lunch triggered a chain of events that led to an inordinate delay in his flight taking off. The Kochi-origin IC-519 was bound for Chennai via Bengaluru and suffered nearly seven-hour delay — the carrier took off with 138 passengers only at 9 pm as against the scheduled departure of 2.15 pm — with a bandwagon of angry passengers. After piloting IC-509, which landed at Kochi at 11.30 am, Captain Dinakaran was supposed to fly IC-519 out at 2.15 pm. “When the crew members were taken for lunch to Hotel Abad, which is a five-minute drive away, the captain demanded appam with prawn curry without touching anything on the buffet spread,” an airline source in Kochi revealed. When appam and prawn curry was served at his table after some time, he refused to eat it, and then denied operating the flight saying he had not had lunch. The flight was rescheduled for a 4 pm take-off, but the captain failed to show up. After finishing his meal at the airport restaurant at 4.30 pm, Capt Dinakaran reportedly said that he was stressed out and fatigued and would not be able to operate the flight. After much cajoling, the captain finally agreed to operate the flight that was set for take-off at 7.30 pm. Sadly, by then, an overused battery power unit of the aircraft drained out and a new one had to be flown in from Chennai. So the flight could take off only at 9 pm.
CRUISING HEIGHTS October 2010
Snippets Aviation august 25 final.qxd
DOMESTIC AIRLINES Jet to touch down at Milan
(Business Class) and 190 seats in Economy Class, Première JET AIRWAYS will commence daily non-stop flights from guests will enjoy a 180 degree flat bed with lumbar support the national capital New Delhi to Milan from December 5, and massage systems, oversized table, telephony, SMS, e-m2010. The service on the India-Italy route will make Milan ail and live text news to deliver a flying office and Onthe 24th international destination on Jet Demand Panasonic In-Flight Entertainment Airways’ network. The airline will introduce (IFE), among other amenities. this new service to the fashion and design Jet’s tech-seva: The airline has entered capital of the world using Airbus 330-200 into a 10-year business transformation and aircraft. information technology (IT) services deal Passengers travelling from Milan to worth $62 million with technology giant India will be able to connect to over 42 IBM. destinations on the airlines’ network within As part of the deal, IBM will support Jet India and will also have access to travel Airways with IT infrastructure and onwards to Jet Airways’ destinations of application support services, including Kathmandu, Dhaka, Colombo and further employee transition, data centre operations, onto Asian destinations like Singapore, central help desk support, server and storage Bangkok, and Hong Kong. operations, internet security services, Nikos Kardassis, CEO, Jet Airways, network management, SAP and other said, “Jet Airways is delighted to bridge two operating system. ancient and historical civilizations, which This will help Jet Airways improve and now play a very important role in the 21st integrate its IT systems improve its Nikos Kardassis century. We are confident that Jet Airways operational efficiency. will soon emerge as the preferred carrier on this popular Nikos Kardassis, Chief Executive Officer, Jet Airways, route given our unparalleled network in India and ever said, “This association will enable us to focus on our core expanding international footprint.” business and improve our operational efficiencies, besides Configured in two classes, with 30 seats in Première delivering a seamless customer experience.”
Benefits for Kingfisher members KING Club, the frequent flyer programme of Kingfisher Airlines, has entered into an alliance with HSBC, Sri Lanka, that will allow King Club members (who are also HSBC credit cardholders) to easily convert their HSBC reward points into King Miles. Commenting on this unique initiative, Anshu Sarin, Vice President, Guest Loyalty and Kingfisher Holidays, said, “At King Club, our vision is to deliver a host of unmatched and innovative benefits across the world to our members, in collaboration with leading national and international brands. The alliance with HSBC Bank, Sri Lanka, is yet another initiative that will expand the range of rewards that we offer to our King Club guests.” In line with the rewards conversion programme, King
Club members will need a minimum of 1,500 HSBC reward points (1,000 Mileage Rewards points and 500 Normal Reward points) to get 500 King Miles. To celebrate the tieup, King Club is offering lots of benefits to HSBC credit cardholders till November 25, 2010, including a credit of 20 per cent bonus King Miles on conversion of HSBC points to King Miles, 1,000 bonus miles on enrolment into the programme for those HSBC, Sri Lanka, cardholders who are not currently King Club members, an HSBC credit cardholder who purchases a return ticket in Kingfisher First on the Chennai-Colombo sector using the HSBC credit card for his/her family/friends, will get to fly free, and, a special 10 per cent off from the rack price on any Kingfisher Holidays package from anywhere across the airline network (this is valid till February 24, 2011).
CRUISING HEIGHTS October 2010
Snippets Aviation august 25 final.qxd
Fly safe with IndiGo IN a recent initiative, IndiGo has partnered with TATA AIG to offer its passengers an insurance package — Domestic TravInsure. Under the offering, IndiGo airline passengers, booking through the air-carrier’s portal, would get an insurance cover at a price as low as `129. The offering is available to all those passengers who have booked their tickets from August 24 onwards. The package is designed to provide complete ‘emergency accidental medical reimbursement’ to passengers in case of any unforeseen incident and also includes other covers that take care of routine worries associated with air travel.
Aditya Ghosh, President, IndiGo, said, “It is our endeavour to make customer experience the best it can be. This partnership is another step towards that objective. Domestic TravInsure, besides covering the passengers’ medical expense during any unforeseen incident, is affordable and optional too.” Gaurav D Garg, CEO, Tata AIG General Insurance Company, said, “Tata AIG is happy to partner with IndiGo. This tie-up will help us reach out to the IndiGo customers, helping them travel worry-free. This relationship will also help us strengthen our position in the domestic travel insurance market.”
AI to start daily Mumbai-Abu Dhabi flights EFFECTIVE November 1, 2010, the national carrier Air India will operate daily flights from Mumbai to Abu Dhabi to meet the growing demand for seats. Jagmit Singh, Manager, Abu Dhabi and Al Ain, Air India, said, “Air India is pleased to announce this increase in frequency on the Mumbai-Abu Dhabi route, which reflects our confidence in the Abu Dhabi market: a market which is progressing towards its impressive vision for 2030. We believe this is just the beginning of future successes and closer ties between our two countries.” These additional services raise Air India’s total number of flights to Abu Dhabi to 14, connecting the UAE capital with both Mumbai and Delhi. Air India will be operating on a daily basis with an A321 aircraft, offering both Business and Economy Class services. Ahmad Al Haddabi, Senior Vice President, Airports’ Operations at Abu Dhabi Airports Company (ADAC), said, “We are delighted to see that our airline partners are keen to expand their services to meet our passengers’ growing demand. At ADAC, we continuously support such initiatives, which assist us in offering our customers more choices and put us a step forward towards our goal in becoming a world-class airport.” Fly AI to Lakshadweep: Continuing with its mission of providing connectivity to lesser accessible stations, Air India has commenced operations from Chennai to Agatti in the Lakshadweep islands six days a week. Agatti will be the 64th destination on the domestic network of Air India. On Mondays, Wednesdays and Fridays, the airline will operate on the route Chennai-Kochi-AgattiKochi-Chennai, while on Tuesdays, Thursdays and Sundays on the route Chennai-Bengaluru-Agatti-Bengaluru-Chennai. The operation of the service on this sector will give a major boost to tourism promotion to the scenic islands. Passengers travelling from Delhi and Mumbai to Agatti will get same day connections in both directions at Bengaluru as well.
Amadeus extends agreement with Thomas Cook AMADEUS, a travel technology partner and transaction processor for the global travel and tourism industry, and Thomas Cook, a leading travel group, have announced a global distribution agreement extension for another five years. The addition of five new markets — India, Denmark, Finland, Norway and Sweden — brings the list of countries where both companies work together to 14. While the full list includes Austria, Belgium, Czech Republic, Egypt, France, Germany, Hungary, Netherlands and Poland. The migration of the new markets to Amadeus is due to be completed by the end of 2010. Rakesh Bansal, CEO, Amadeus India, said, “It has been our endeavour to provide the widest array of services and solutions to our partners. We are delighted that Thomas Cook has expanded their relationship with Amadeus in India. Partnerships such as these are an important step for constantly innovating and developing new unique solutions catering to
the demand from our customers and partners.” Rakshit Desai, Executive Director, Travel Services, Thomas Cook India, said, “We welcome Amadeus as one of our key partners. The constant evolution of new business solutions will help enhance value to our wide base of customers.”
CRUISING HEIGHTS October 2010
Snippets Aviation august 25 final.qxd
ULTIMATE SHOPPING EXPERIENCE: A world-class liquor, cosmetics and perfumes offer is at the forefront of the retailer’s product range.
Shopping extravaganza at T3 DELHI Duty Free Services (DDFS) — a joint venture company between DIAL (Delhi International Airport Limited), IDFS (Indian Duty Free Services) and ARI (Aer Rianta International) — has successfully opened 30,000sq ft of retail space at the new Terminal 3 at IGI airport, Delhi. DDFS offers an extensive range of products across all categories, including perfumes, cosmetics, liquor, tobacco, confectionery, and Indian products, the latter housed in a destination merchandise section called ‘Discover India’. The company describes the offer as an “unmatched retail environment in India”. Nicholas Goddard Palmer, CEO, Delhi Duty Free Services, said, “The DDFS aims to provide travellers a truly unparallel shopping experience in a unique and exciting retail environment. We have worked very hard to invest in specific training of our young and enthusiastic team members, sourcing the very best international and local products and brands, logistics, to ensure the product is delivered to the highest possible standard and in our pricing, which is internationally benchmarked. It’s not all about selling, we invite our passengers to experience, sample, taste and even learn from their visit…” There are several firsts that will be associated with India and with the DDFS, which include an awardwinning concept, started at the Larnaca airport, Cyprus, called ‘Uisge Beatha’, is now being launched in India.
Uisge Beatha “The Ultimate Malt Experience Zone” (Gaelic for “water of life”) is an innovative whisky concept developed to showcase malt whisky exclusively from Scotland that promises to provide the travellers an overwhelming choice and unique whisky experience. Another first for India would be the launch of a walk-in Humidor “Offering you the Best” at the airport. This has been designed to promote premium cigars from Cuba, Honduras and Dominican Republic. The Liquor and Tobacco sections have worldrenowned names such as Smirnoff, Moet & Chandon, Kurg, Charles Heidsieck, Johnnie Walker, Glenlivet, Glenmorangie, Clynelish, Marlboro, L&M King Size, Benson & Hedges and lots more. While, the perfumes and cosmetics have representation from all big names such as Dior, Chanel, Boss, D & G, Dunhill, Escada, Gucci, Hugo, Lacoste, L’Oreal and more being available there. In addition, DDFS space boasts of 36 LCD walls (52” each) and four video walls which take your breath away by the visual impact. In keeping with global trends, the uniform of the sales associates and other staff called ‘Jawahar Look’ has been designed by well-known designer Rajesh Pratap Singh. For a contemporary, hassle-free shopping experience, DDFS would soon launch its online footprint (www.delhidutyfree.co.in) as well.
CRUISING HEIGHTS October 2010
Snippets Aviation august 25 final.qxd
INTERNATIONAL AIRLINES Emirates connects Dubai to Senegal EMIRATES has strengthened its links to West Africa with the launch of a new direct service to Dakar. This non-stop air link between Dubai and Senegal will cut the present journey times to Dakar by around the equivalent of an eighthour working day, creating an easy, fast and convenient service for business and leisure travellers. Nigel Page, Senior Vice President of Commercial Operations, Africa and the Americas said, “This marks a new chapter in air travel between the Middle East and West Africa. Passengers travelling to and from Senegal will no longer have to face long detours to Europe or other parts of Africa to reach their final destination.” An Airbus A340-300 is being deployed on the route, offering 12 seats in First Class, 42 in Business and 213 in Economy. On the cargo side, Emirates will be transporting 65 tonnes of goods a week from various points on its global network, including oil industry equipment from the UAE; textiles from Asia, electronics from East Asia and Europe; and a number of products and garments from India. Dakar is the fifth new route to be launched by Emirates this year. Emirates sparks A380 activity: Emirates’ fast-expanding A380 fleet is generating interest from airports across the world as Manchester becomes the latest city to be served by the superjumbo. With this expansion, the airline is now the world’s largest operator of the A380 with 12 in the fleet. Maurice Flanagan, Executive Vice Chairman, Emirates Airline & Group, said, “This is a historic moment for Emirates as we bring our 21st century superjumbo to the North West 20 years after our first flight from the region. Our Manchester service has been an incredible success story, and we’re delighted to be opening the next chapter.”
NORTH WEST CONNECTION: Emirates’ cabin crew members disembarking from an A380 in Dubai.
Emirates now operates A380s on the routes, such as London Heathrow, Manchester, Paris, Sydney, Auckland, Toronto, Bangkok, Seoul, Jeddah and Beijing. Hong Kong will be added to that list from October 1 and on October 31, the A380 will make a much-anticipated return to New York.
EXPANDING SERVICES: (L-R) Delegates representing the inaugural flight to Dakar are Saed Al Awadi, CEO, Dubai Export Development Corporation; Amgd Awad Alkarim Idriss, Chief Administrative Office, Department of Economic Affairs, Sharjah Chamber of Commerce; Muhammed Riza, Manager Commercial Business Development for Africa, Emirates; Cheikh Tidiane Senghor, Director General of Air Transport of Senegal; Nigel Page, Senior Vice President of Commercial Operations for Africa and the Americas, Emirates; Essa Abdulla Albasha Alnoaimi, Ambassador and Director of African Affairs Department, Ministry of Foreign Affairs, UAE.; Cheikh Ibrahima Diong, Ambassador and Director General of International Cooperation of the Government of Senegal; Mohammadou Doudou, Ambassador of Senegal in Saudi Arabia; Abdourahmanne Diop, Ambassador of Senegal in the UAE; and Moustapha Yacine Gueye.
CRUISING HEIGHTS October 2010
Snippets Aviation august 25 final.qxd
SNIPPETS The sporting spirit of AirAsia
Cathay Pacific launches flights to Moscow
AIRASIA is the new title sponsor for the ASEAN Basketball League’s (ABL) 2010/2011 season. The eagerly anticipated second season of ABL is set to start on October 2, 2010 and playoffs are set to begin in February 2011. This is not the first time for the airline to be a part of the ABL. The airline was the official carrier for the ABL’s 2009/2010 season, flying participating teams and fans to competition venues around the ASEAN region. Tony Fernandes, CEO, AirAsia Group, said, “We are very excited and waiting for the new season to arrive and proud to be back in the ABL with a bigger role by being the title sponsor for the 2010/2011 season. When given the opportunity to be the title sponsor, we seized it immediately as we believe we can positively contribute to the development of the sport and provide the platform for ASEAN youths to shine. Together with our other initiatives in the region, the AirAsia ABL seemed the perfect fit.” The league format will kick off on October 2 this year with matches being played in Thailand, Singapore and Philippines, while the playoff finals are scheduled to begin in February 2011. Maintaining no fuel surcharge policy: AirAsia committed to keeping air travel affordable for all and has chosen to tackle fuel price hike with aggressive marketing and the strengthening of its ancillary business instead of relying on fuel surcharge to offset rising fuel cost.
Cathay Pacific Airways celebrated the inauguration of its thrice-weekly service to Moscow with a gala celebration in the city (Moscow) attended by 300 Hong Kong and Russian dignitaries, including government officials, aviation officials and business leaders.
GETTING SPORTY: (L-R) Wira Daim, Representative from Westport KL Dragons; Nadzaty Azma Azeez, Representative from Brunei Barracudas; Tony Fernandes, CEO AirAsia Group; Kolonel Lee Kak Kuan, Technical Director of FIBA Asia; Kuhan Foo, CEO of ASEAN Basketball League; Sim Sin Heng, Secretary General of MABA; Michael Johnson, Representative of Singapore Slingers; and, Azran Osman Rani, CEO of AirAsia X.
Kathleen Tan, Regional Head of Commercial, AirAsia, said, “Rather than impose a fuel surcharge, we use innovation to drive our costs down and are looking at various other revenue streams. Imposing fuel surcharge may be an easy way out, but it can also be an addiction in driving artificial revenue to a company.” The airline has been deriving healthy ancillary income from products such as Baggage Supersize, AirAsia Insure, AirAsiaGo, AirAsia Courier, Pick a Seat and AirAsia Megastore. Last year, ancillary income for the entire AirAsia Group was approximately RM 603.5 million, while as of the first half of 2010, the group’s ancillary income was RM 460.9 million.
A TOAST TO SUCCESS: (L-R) Tony Tyler, Chief Executive, Cathay Pacific; Donald Tsang, Chief Executive, Hong Kong SAR; and Ivan Polyakov, Chairman, Russia-Hong Kong Business Association celebrating the inauguration of its flights to Moscow.
The gala celebration was hosted by Cathay Pacific Chief Executive Tony Tyler with the Donald Tsang, Chief Executive of the Hong Kong Special Administrative Region, and Ivan Polyakov, Chairman of the Russia-Hong Kong Business Association, as guests of honour. Speaking at the gala dinner, Donald Tsang said, “The number of travellers in both directions have increased significantly since the introduction of reciprocal visa-free travel arrangements between Russia and Hong Kong last year, our economy rebounded fairly strongly from the global financial crisis in the first half of this year, and bilateral trade between Hong Kong and Russia more than doubled in the first six months compared to last year.” While Tony Tyler said, “We have long recognised the huge potential associated with Russia and have been looking for opportunities to enter the market for many years. I would like to express our appreciation of the tremendous work of the Hong Kong and Russian governments in making our new service possible.” Guests at the inaugural event enjoyed performances from Russian ballet dancers and musicians, and later watched Cathay Pacific’s signature “Walking on Air” stage show which showcases the airline’s history and its cabin crew uniforms through the years.
Etihad’s first female Captain THE United Arab Emirates is not exactly known as the land of opportunity for women, but its skies may be. The country’s national airline, Etihad Airways, just admitted its first female Captain, Sophie Blanchard. Captain Blanchard, a French national, took the controls of the left hand seat in the flight deck for the first time on September 8, 2010 for flight from Abu Dhabi to London Heathrow. She joined Etihad in 2007 as a First Officer, after initially flying for Etihad Crystal Cargo with Air Atlanta. Since joining Etihad, Captain Blanchard has been able to complete the necessary training and pass the rigorous checks to gain her fourth stripe. Captain Blanchard said, “It is a great privilege to become
CRUISING HEIGHTS October 2010
Snippets Aviation august 25 final.qxd
APPOINTMENT S SA to get a new CEO
PILOT IN PINK:Captain Sophie Blanchard is the first female captain of Etihad Airways.
Etihad’s first female Captain and be the first woman to take full command of a commercial flight. The company has been very supportive in my aim to become a Captain and I look forward to my first flight to London.” Etihad currently has 10 female pilots within its ranks and four female cadet pilots.
Air Arabia sets world record AIR Arabia, the low-cost carrier in the Middle East and North Africa, set a new world record when one of its A320 aircraft flew 30,000 flight hours in six years. Air Arabia received special recognition from Airbus, and was awarded for its operational efficiency and the new world breaking record. Adel Ali, Board Member and Group Chief Executive Officer, Air Arabia, said, “This award is an acknowledgement of Air Arabia’s operational excellence and service reliability. It is especially encouraging to receive this recognition by a prestigious aircraft manufacturer such as Airbus. Over the years, Air Arabia remains focussed on offering the best value to our customers, which means optimum utilisation of our resources, including the state-of the art Airbus A320 aircraft, which represents the heart of our fleet.” Combining financial strength and superior operational reliability, Air Arabia aims to expand the size of its existing fleet with the delivery of its 44 aircraft on order, starting end of this year.
SA best connects India to Africa Tauseef Khan, Acting Head - South East Asia, South African Airways, receiving Today’s Traveller Award 2010 for “Best International Airline Connecting India to Africa” from Kumari Selja, Minister of Housing and Urban Poverty Alleviation and Minister of Tourism, Government of India.
THE Board of Directors of Singapore Airlines (SA) has confirmed that Goh Choon Phong will succeed Chew Choon Seng as CEO when Chew retires in the end of December this year. Goh, 47, joined SA in 1990, served in senior management positions in Singapore as well as overseas, and is currently working as the Executive Vice President for Marketing and the Regions, having been appointed to the post earlier this year after four years as President of SA Cargo. He is also presently Chairman of SilkAir. Chew Choon Seng said, “The time is appropriate for renewal of the leadership in SA. I have had the privilege of leading this wonderful organisation for over seven years. Goh Choon Phong is a worthy successor. I am confident that, with the support of all colleagues, Goh and the rest of the management team will uphold SA’s core values, continue to build the business by working hard at satisfying customers and by rising to the challenges of the future, and keep SA at the forefront of the airline industry. The company will be in good hands.” Goh will formally take up the position of the CEO on January 1, 2011, and will join the airline’s board on October 1, 2010.
Fly Qatar twice daily from Delhi QATAR Airways has announced frequency increases on flights from Delhi, Amritsar, and Cochin to be phased in over a twomonth period, effective September 1. With an additional 14 flights a week from the three Indian cities, the airline raises the number of services between India and its Doha hub to 88 flights a week —representing a 20 per cent increase in frequency. Amritsar flights now operate daily services from four-aweek, in less than a year since the airline launched flights from the holy city. Cochin, currently served daily, gets an additional four-flights-a-week, but at the moment only two are operational and the other two will kick off on November 5. The beginning of the Northern Winter flying programme on October 31 will see the highly popular Delhi-Doha route securing an additional daily flight, taking capacity from the capital up to 14 services a week. With the new additional flights, each of the 11 Indian destinations will be served daily non-stop, except Delhi and Cochin, which will have a double daily service and 11 flights- aweek, respectively. Akbar Al Baker, CEO, Qatar Airways, said, “Taking into account the new upcoming frequencies, we will have stepped up capacity from India from 56 to 88 services a week since last year, which represents a remarkable 57 per cent increase in frequency between India and Qatar. With these frequency increases in India, and six new recently announced upcoming routes, we look forward to further global expansion to some great destinations over the next few months.” Qatar Airways currently covers 11 cities across — Bengaluru, Delhi, Mumbai, Hyderabad, Chennai, Cochin, Trivandrum, Kozhikode, Ahmedabad, Goa and Amritsar.
CRUISING HEIGHTS October 2010
Ladies with their noses in the air F
errying freight around the world used to be a man’s prerogative. Not anymore! When Commander Cristina Rossi, Senior First Officer Monika Koelling and First Officer Stefanie Daeubler took to the skies to pilot an Aerologic Boeing 777 Freighter from Leipzig/Halle Airport, the threesome created history. AeroLogic GmbH is a joint company owned by DHL Express and Lufthansa Cargo AG, each with a 50 per cent stake in the company that was founded in September 2007 with headquarters in Schkeuditz/Leipzig in eastern Germany. Their flight took them via Bahrain to Singapore before returning through
(Top) The three pilots pose for a photo-op in front of the Boeing 777-F they flew; (left) Tammy Zwicki and Monika Lutz from Jet Airways.
CRUISING HEIGHTS October 2010
New Delhi with an on-time touch-down in Leipzig/Halle. No wonder, a proud Flight Operations Manager Josef Moser exclaimed: “This is a premiere in international aviation. Never before has a freighter been crewed by three women pilots. We’re proud of the fact that Aerologic has so many women pilots.” Women account for around eight per cent of Aerologic’s pilots. “It is important to us not only that pilots can fly well, but also that they fit well in the existing team, be they male or female,” said Moser. Aerologic plans to hire a total of 160 flight crew. Currently, eight per cent are female. It is not only in the air that the ladies are literally shouldering the loads, they are on the ground too. In the US, a California-based air cargo company called Jet Airways (no relation to the airline) operates trucks and specialises in single -source logistics. The trucking company is headed by not one, but two women — Tammy Zwicki, the CFO and Monika Lutz, CEO — whose motto for success is: “Treat your customers the way you like to be treated.”
RNI No. DELENG/2006/16897 Posting Dt. 8-9/10/2010 Reg. No. DL(E) 20/5294/2009-11