Edits, Columns & Analysis - October 2006

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EDITORIAL: Times of India
Yes, Minister
Times of India
Oct 30, 2006
The customer is king, but it helps when he is also a minister. When Praful Patel, the Union minister for civil aviation — who was to fly Air-India to Mumbai from London after a private trip — found recently that the London-Mumbai flight wasn't ready for take-off even 30 minutes after the scheduled time, he flew into a temper: Shape up, or ship out, he said.
The minister dumped Air-India and elected to take a Jet Airways flight home, which is what any irate or inconvenienced passenger would have liked to do. Whether the minister's smooth transfer to another airline was facilitated because of his ministerial position and whether or not his ticket was paid for, is not known.
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Gulf's budget airlines rise to the challenge
Saifur Rahman,
Business News Editor
Gulf News, United Arab Emirates
Oct 30, 2006
Dubai: Budget carriers are beginning to make a dent in the Gulf's growing aviation sector, traditionally dominated by the full-service airlines.
Currently Air Arabia, Jazeera Airways and Air India Express have entered this nascent market, while a number of new players are going to start flights within the next few months to serve this captive but growing sector. Despite increasing competition, most no-frills flights remain almost full due to capacity constraints.
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More cheap flights to India could come Singapore's way
TODAYonline, Singapore
Christie Loh
More cheap flights to India could come Singapore's way, and fares could be as low as half the usual price.
.Air India Express, the first Indian low-cost carrier to fly here may offer Hyderabad, Bangalore, and Trichi, on top of its current Chennai-Singapore service.
."It shouldn't take much time because the aircraft we ordered are on their way from November onwards," the airline's chairman Vasudevan Thulasidas said yesterday when asked about the timeframe.
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CASE STUDY
Turbulent times for airlines
Financial Express
Oct 28, 2006
On September 28, 2006, the Minister of State for Civil Aviation, Praful Patel, held a meeting with the various carriers to discuss the growing losses in the Indian aviation sector. The minister said that there would be closer scrutiny of new applications before issuing licenses to new carriers.
In an effort to increase market share, the carriers had resorted to offering tickets at highly discounted prices. While the passengers benefited, the industry as a whole was faced with mounting losses. In August 2006, Spicejet had reported a net loss of Rs. 414.2 million for the first year of operations. In September 2006, Deccan Aviation, that operates Air Deccan, India’s largest LCC , reported a loss of Rs 3.4 billion for the 15 month period ended June 30. Jet Airways, a full service carrier, had also reported a net loss of Rs one billion for the half year ended September 30 against a net profit of Rs 1.6 billion for the same period the previous year.
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"Commoditising air travel was our main objective": GoAir's Raj Halve
EyeforTravel.com
Oct 27, 2006
New Delhi: There is enormous scope for growth in India's air traffic over the next few years as low fare carriers spread their wings to encompass more destinations with greater frequency, feels Raj Halve, chief commercial officer, GoAir.
"We see a situation wherein supply growth will create its own demand over the years and hence expect a very healthy growth of traffic of over 25 percent per annum over the years," said Halve.
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Retail chains circle over Indian airports with outlet plans
Anuradha Himatsingka & Writankar Mukherjee
The Economic Times
agencyfaqs.com
Oct 26, 2006
Kolkata: Modernisation and privatisation of Indian airports appear to have opened up new vistas for Indian retailers. Most of them, if not all, are working on their business strategies to grab a slice of this emerging business, either independently or through partnership with foreign specialised airport retailers.
While players like the Future Group and Shoppers' Stop have already entered into JV agreements, others like Trent's Landmark and Ebony are believed to be exploring options. The agreements come in the wake of expressions of interest being sought from retailers for opening up outlets within Mumbai, Delhi and Bangalore airports. Modernisation of Hyderabad airport is also on the cards.
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Airlines Employees Adopt Campaign Declaration
People's Democracy
oct 28, 2006
IT is now the tenth year since the last settlement governing the service conditions of the Indian Airlines employees came to an end. But the management goes on keeping mum in so far as revision of the pay scales, carrier progression and other service conditions of the employees are concerned. And at the same time the workload goes on increasing and the Airlines staff are compelled to bear it. However, there is no restriction whatsoever for the top brass of the Airline management and bureaucratic. They go on enjoying unrestricted facilities and higher remunerations.
The question is: How long are the employees to tolerate this? That question has now been resolved in a seminar held by the employees in Mumbai on October 14.
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How do Indians differ from Europeans and Americans?
Eye For Travel
Oct 25, 2006
The Indian travel industry has some inherent differences and it shows in purchasing patterns, according to Raja Natesan, president and chief executive officer, Galileo India.
According to Natesan, one of the speakers during the inaugural Travel Distribution India 2006 conference here in New Delhi, says, “Europeans and Americans are a race that are far more self-contained. Indians like to deal with people. In e-Commerce the whole idea is to save transaction costs by turning to automation and cutting down on people interfaces. This in itself is a paradox for us Indians.
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Air carriers play tricks
Prabhjot Singh
The Tribune
Oct 24, 2006
Chandigarh: Screaming advertisements like “Fly to London for Rs 18,000 and to New York for Rs 33,000” notwithstanding, the actual ticket to any of these destinations would be 30 to 45 per cent costlier than the publicised fare.
These advertisements are not only misleading but also in violation of the provisions of the Monopolies and Restrictive Trade Practices (MRTP) Act, feel insiders of the trade.
For example, no international airline will fly you to London for less than Rs 26,000 and to New York for less than Rs 45,000.
International air carriers are not only resorting to cost cutting but also successfully evading service tax on the business done by them in India, they maintain, holding that the sufferers are both passengers and the revenue-earning departments of the government.
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Competition is best impetus for aviation sector
Gulf News, United Arab Emirates
Oct 24, 2006
What is the most probable result of a merger of two weak companies? A bigger weak company, for sure.
This simple truth has, in all probability, slipped the mind of the Government of India. The grand alliance between the country's two government-owned carriers is a pointer to that.
The merger of India's international airline Air India and its domestic counterpart Indian is aimed at creating a mega-carrier with a fleet of about 130 aircraft that could compete with global giants such as Singapore Airlines, Emirates and British Airways.
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INSIDE TRACK/
Fare game
Coomi Kapoor
Indian Express
Oct 22, 2006
The attempt to form a forum to protect the interests of domestic airlines seems to be falling apart even before it was put together. Representatives of 10 domestic airlines attended a meeting in Mumbai last week to evolve a common strategy since all are losing money. The meeting was initiated by Civil Aviation Minister Praful Patel keeping in mind the crisis facing the airline industry. The owners and CEOs made a gallant effort to bury longstanding rivalries and put on a friendly face for the get-together. Air India chairman V Thulasidas was unanimously appointed chairperson since he is considered the only neutral party as his carrier steers clear of domestic traffic.
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Regulations and airports
NRIPESH KUMAR
Financial Express
Oct 24, 2006
Airports are generally considered natural monopolies, as there are generally no substitutes or near substitutes for handling air passengers. In addition, there is a strong industry preference for concentration on a limited number of airports given the benefits that arise to airlines and passengers from economies of scale and increased service frequencies at the larger airports. For air travellers to or from a city, to have to use an airport other than the one located in or near that same city is inconvenient to the point that it becomes impractical. As a result, residents or visitors to the city can be forced to pay significant premiums for using the airport. This role of airports in the provision of an essential service to the public is similar to that of utilities. So, it is generally accepted that controls must be exercised over prices and service levels in order to prevent exploitation of the monopoly situation, as there is no market mechanism to achieve that.
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Why Lufthansa chose to pander to premium passengers
Meenakshi Radhakrishnan-Swami
Business Standard
Oct 24, 2006
Mumbai: It’s a nice life if you can afford it. Just 24 hours before your flight leaves home, your office calls a dedicated call centre and makes a booking.
When you reach Frankfurt or Munich, you are whisked away in a limousine to a nearby airfield where a small six to 10-seater aircraft is waiting. It’s all yours. No more queuing up in crowded airline terminals, dragging your luggage behind you, waiting for that connecting flight to Cologne, Nice or wherever: Lufthansa Private Jets can fly you to over 1,000 airports around Europe.
If that sounds too much like Lifestyles of the Rich and Famous, think again: almost all major Indian business houses have made use of this service since it was launched last year.
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A close call on Air India
Carol Pucci
Seattle Times, United States
If you're flying within India, aging, government-owned Air India is no longer the only choice. Privately owned Jet Airways is considered the top airline in terms of service, and now there's price competition from new discount airlines such as Go Air and Air Deccan. That's good news for Seattle. Boeing recently doubled its forecast for sales to India in the next 20 years.
And it's good news for travelers. Anyone who flies often in India will tell you to avoid Air India. Its service is government-issue, its safety record spotty, and it charges foreigners high prices.
I ignored what I'd heard because it had the flight times I wanted and it was easy to book tickets online from Seattle. But I learned my lesson.
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Low cost airlines need to form a monopoly: Gopinath
Moneycontrol.com
Oct 20, 2006
Would an alliance of airline firms to check price undercutting be regarded as anti-competitive and therefore actionable under competitive law, that’s the hot issue being debated. Ten airline firms got together in Mumbai on Monday at the behest of Air India to form the Federation of Indian Airlines and find ways to give passengers the best service.
The Association will agitate on common issues affecting the industry but there is a fear that the actual purpose is to stop price wars. Can and should the competition come in to check the price wars? Discussing this are Member Competition Commission, VK Dhall and Chairman & Managing Director of Air Deccan, Captain GR Gopinath.
Read the excerpts from an interview given to CNBC-TV18 >>

Airlines will look to the East
John Heffernan Business Correspondent, Daily Post
ic Liverpool, UK
Oct 18 2006
THE figure for airline passenger journeys this year will top 2bn, equal to a quarter of the world's population. And the rise of China and India ensures that this global growth in airline traffic will continue.
Both of these countries are expected to have doubled their share of the world's GDP in 10 year's time. By then they will have economies bigger than those of the UK, France and Germany combined.
Thus these Asian/Pacific countries will be where our future markets lie. And airports will be the gateway to get to them.
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Watch the cartel
Business Standard
Oct 18, 2006
New Delhi: Given the poor performance of most airlines, it is perhaps a welcome development that they have decided to come up with an industry body along the lines of a Nasscom—a body which can take up critical issues such as landing costs in Indian airports or high aviation fuel prices. Landing and navigation charges add up to around 5-6 per cent of an airline’s costs in the country. Given that the ministry of civil aviation has been a major factor in the meeting that took place on Monday—this meeting followed the one chaired by the minister a few weeks ago—it is apparent that the ministry would have put its weight behind a formal association of the airline industry. But anything beyond this will have to be viewed with suspicion.
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Some deaths can ensure survival
Ajay Shah
Business Standard
Oct 18, 2006
New Delhi: There are countries where CEOs of a trade can go to prison for participating in a meeting that may lead to cartelisation.
India’s airline industry is unhappy about low profits. Early indications suggest that the government will support the form of cartelisation that leads to higher profits. Private firms would of course like to have cosy profits, but there is no reason for the government to co-operate with this. The best policy framework, and the highest goal of economic policy, should be ruthless and ceaseless competition. There is nothing wrong with ups and downs of industry-level profitability. An industry is competitive only if some firms are in dire distress, and there is a regular pace of exit by weak firms, paving the way for entry by new firms.
From the viewpoint of consumers, the evolution of the Indian airline industry is a great success story. New kinds of competition have been injected into the market, and the cosy duopoly of Indian Airlines versus Jet has been broken.
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Air Deccan's strategies
Times Now.tv
Oct 18, 2006
Air Deccan is up for an image make over, while from low cost airlines it is gradually looking to map itself as low cost smart airlines. Air Deccan is also lining up expansion plans and reaching destinations which have not been yet tapped by other airlines. Air Deccan's Managing Director Captain G R Gopinath speaks exclusively to TIMES NOW's Santanu Ghosh.
Read the Interview >>

Promoting mergers
Financial Express
Oct 17, 2006
The government’s decision to possibly extend the benefits of Section 72A of the Income-Tax Act, 1961, to airlines to facilitate the merger of state-owned Air-India and Indian Airlines, is a welcome move. Under that section, a healthy company can absorb any accumulated losses and unabsorbed depreciation of a loss-making entity when the two merge.
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India's big idea
Siva Govindasamy
Flight International
Oct 17, 2006
Evidence of India's aviation boom is hard to miss - and the growing interest in air travel is fuelling demand for maintenance services to be performed in-country
Slogans like Kingfisher Airlines' "Fly the Good Times" and Air Deccan's "Simplifly" are aimed at the estimated 3 million who join India's middle class every year, in a country with a booming economy and a population that will become the world's largest in a few decades.
Newer airlines such as Deccan, GoAir, Kingfisher and SpiceJet, as well as established carriers like Air India, Air Sahara, Indian Airlines and Jet Airways, have gone on buying sprees. Manufacturers like Airbus, ATR and Boeing are all reporting brisk sales, with at least 450 firm orders in the past few years.
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Vegas model set to take wing here
Times of India
Oct 15, 2006
New Delhi: Regional airlines may be a new concept in India, but in West, it's been a major business strategy. Some of the best air ticket deals in the US, for instance, are available on flights to Las Vegas as these fares are subsidised by the casino owners, some of whom also own these airlines. "India as an aviation industry is still evolving and experimenting with some established global concepts. While some of them may not just be right in the Indian context, some others, such as those focussing on specific regions, seem to be a perfect fit for a country that's so diverse and vast," says Kalpesh Parekh, a market analyst with ASK Raymond James.
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Flight for survival
The lack of a secondary airport network is impeding the growth of aviation
VIVEAT SUSAN PINTO
Financial Express
Oct 14, 2006
The Indian aviation industry is in a peculiar situation today. The growth in passenger and cargo traffic as well as the advent of low-cost carriers in the country has led to a mad scramble among new and existing operators for numbers resulting in a dramatic undercutting of fares. The problem is so acute that the ratio of discounted to full-fare tickets of carriers, especially, full-service operators, is steadily going up.
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New rules to benefit airline industry
K.R. Wadhwaney
The Tribune
Oct 14, 2006
The Civil Aviation Ministry has stipulated new set of ‘cruise’ rules so that airline industry displays ‘vibrant health’ instead of ‘sickly posture’.
Since liberation of skies in 1990, there has been mere loud talking. During these 16 years, industry’s general health is far from satisfactory. The concept of air travel has captured the imagination of even middle class people, but it has not brought much cheer to airlines which are sustaining operational losses.
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Enough room for more carriers on Indian skies
Moneycontrol.com
Oct 10, 2006
Indian carriers are eyeing many of the train travellers. But few have abandoned the tracks for air travel. A large number of people travel by train each year, while 18 million fly. So, it's hardly surprising that airlines are struggling to fill seats.
Experts say positioning is key. Indian carriers have divided the market into low-cost and premium segments. But there's hardly any segmentation. In developed markets like Europe and the US there are more than 2 dozen airlines. And many still fly because they try not to compete with each other.
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A dream come true for Mangaloreans
Moiz Mannan
The Peninsula, Qatar
Oct 11, 2006
The 180 who took the Air India Express flight from Dubai to Mangalore last Tuesday will certainly tell their grandchildren about it. Not that there was anything heroic about their deed, but they will be seen for long as living symbols of the triumph of a little big city over many odds.
Yes, the launch of the Dubai-Mangalore service has put Mangalore on the international aviation map and thus realised the dreams of hundreds of thousands inhabitants of the coastal region who are eager to spring out the shadow of Big Brother Bangalore.
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Language profiling causes arrests
Nathan Harrison
The Whitworthian
Oct 10, 2006
In the war on terror, racial profiling is not just for police and security personnel anymore. No, the nebulous threat of terrorism is systematically bringing out the paranoiac xenophobe that lurks within our own friends and neighbors.
On the last day of September, a 32-year-old man was placed under suspicion by an off-duty airline employee at Sea-Tac Airport after that employee heard him speaking a mixture of English and Tamil — a language native to India, Singapore and Sri Lanka — on his cell phone.
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Virmani’s crusade at Cargojet
Mark Pilling
Airline Business
Flight International
Oct 04, 2006
Business opportunities often arise from the woes of others. In the case of Ajay Virmani, the bankruptcy and subsequent demise of Canada 3000 in late 2001, although painful at the time, provided the springboard for this determined Indian immigrant to launch Cargojet, which has risen in just four years to become Canada’s largest cargo airline.
Virmani and his partners had invested some C$6 million ($5.3 million) for a 50% stake in Canada 3000 Cargo in August 2001. But the passenger side of the carrier was faltering, and it declared bankruptcy in November of that year. Virmani had two options: walk away or invest further and try to salvage and grow the business.
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Coulmn: JEH WADIA
A flight plan for growth
Financial Express
Oct 05, 2006
As India looks seriously at how the overall civil aviation sector can grow stronger and more profitable, it is an opportune time to look at the possibility of outsourcing in this sector and understand its potential benefits.
Organisations across the globe have preferred outsourcing to restructure their business and bring about huge cost savings for quite a few years now (look at how the BPO business has benefited millions in the call centre industry in India!). Exciting developments, like offshore and cross-border outsourcing, bring new implications to organisations looking to transfer their business processes externally.
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Executive Overview: Jane’s World Airlines
Mature airline consolidation
Jane's, UK
Oct 04, 2006
A number of the world's larger airlines, having overcome regulatory, shareholder and employee hurdles, have begun a new wave of consolidation. Although this has manifested itself in a traditional way, it is the size of the mergers (usually through common ownership holdings) that are taking place and the fact that they are happening across all of the continents.
East Asia has seen the reorganisation of the biggest airlines in China (2002), while both Cathay Pacific and Air China are currently seeking ever-closer ties; in Southern Asia, Air India is considering the appointment of consultants to prepare a roadmap for the merger of Air India and Indian Airlines.
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Airlines rally on falling oil
Bloomberg News
International Herald Tribune, France
Oct 01, 2006
SINGAPORE A rally in shares of Asian airlines could just be starting as fuel costs decline and travel booms in China and India, home to a third of the global population.
"The market will start looking at these stocks," said Yoji Takeda, a fund manager at RBC Investment Asia in Hong Kong. "Oil at current or even lower levels will benefit airlines, while the region's good economic growth means passenger numbers are growing strongly."
Air China and Korean Air Lines led the Bloomberg Asia-Pacific Airlines index to a 7.8 percent advance last month, the steepest gain since February 2004, while the Morgan Stanley Capital International Asia- Pacific index fell 0.5 percent. The industry gauge, tracking nine of the biggest regional carriers, added 0.2 percent last week for its fifth consecutive weekly gain.
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Booking a U.S. Flight? Simply Call India
Weblog/World Hum, US
Oct 01, 2006
Last week, I called United Airlines to check my mileage balance in hopes of booking an impromptu award flight. I was calling in the wee hours, when phone traffic was presumably lower, and, as I had hoped, my call was quickly connected from the automated system to a real person. After several attempts at pronouncing both the dates of my proposed departure and the destination city (Toulouse), I realized that I had been connected to an operator in India. To be sure, it’s nothing new these days—American companies across the board are cutting costs by outsourcing to the Subcontinent, and the airlines are no exception.
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Asia Takes Flight on Low-Cost Carriers
Assif Shameen
BusinessWeek
Oct 01, 2006
Taking a cue from Ryanair and EasyJet, budget fliers such as AirAsia and Tiger are opening up the skies over India, China, and Southeast Asia
Thailand has been the epicenter of political melodrama recently.
But a change of leadership hasn't changed the fact that big money is at stake when it comes to positioning the country as a transportation hub, thanks to the current boom in Asia travel. So coup or no coup, Thailand stuck to its planned opening on Sept. 28 of the country's $4.1 billion Suvarnabhumi Airport, located about 18 miles (30 km) outside Bangkok.
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Outsourced jobs returning home
NorthJersey.com, US
Oct 01, 2006
Raj Basak is a master at speaking to confused, sometimes cranky customers.
With a sleek headset strapped around his head, Basak, 29, provides detailed advice about pricing and the latest models offered by a major digital music and technology retailer. Despite the stress of one of the least sexy jobs -- answering a 1-800 hot line -- he clearly seemed relaxed while taking calls.
He should be. Basak exclusively takes calls in the comfort of his cozy North Haledon home, sitting at his corner desk just inches away from the mountain of pillows on his bed.
These workers tend to be more educated and skilled than traditional call-center employees, providing better service and more potential sales. Plus, they constitute the first cost-effective alternative to sending call center jobs overseas.
"I'm not ruling out off-shoring," said Todd Pawlowski of Virgin America, a start-up airline. "But we place great emphasis on people being able to connect with our brand. If we have people taking phone messages in India, chances are they will never have flown Virgin America."
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DIFFERENT STROKES
Clear the skies
Sucheta Dalal
Indian Express
Oct 01, 2006
The government has suddenly woken up to the fact that the clutch of private airlines that changed the Indian skies are bleeding profusely, even as they acquire aircraft, increase destinations, try to take over other airlines and cut ticket prices to corner market share. The government's proposed remedy of holding back permission for new airlines and curbs on fleet expansion is anti-consumer. It will only allow airlines to hike rates even as fuel prices are finally beginning to fall.
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