Edits, Columns & Analysis - September 2006

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Analysis: Volatile fuel rates hit airlines
MIKE OBEL
United Press International
Sept 29, 2006
WASHINGTON: Global commodity markets are punishing some airlines that loaded up on too much insurance against the very volatility of those markets.
Recently, jet fuel prices have dramatically changed direction: In the last six weeks, they have tumbled about 20 percent and are near a six-month low. While some carriers are benefiting from that drop, others are not.
The difference has to do with how much of that price insurance, a financial strategy called "hedging," each airline bought. Hedging protects buyers from rising costs by locking in current prices for future purchases, purchases that presumably will happen when prices have risen. The strategy keeps a lid on expenses when prices actually rise, something airlines must be very used to by now.
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Maintenance special report: Service culture
Brendan Sobie
Airline Business/Flight International
Sept 26, 2006
Airlines seeking to outsource aircraft maintenance are increasingly being courted by the original manufacturers, but will the new generation of all-inclusive service packages bring them cost pleasure or cost pain?
Boeing has grabbed plenty of headlines this year with the creation of GoldCare, a broad package of life-cycle management service for the new 787 twinjet. The regional aircraft manufacturers have also rolled out all-inclusive packages of after­market services and Airbus, although reluctant to sell maintenance services, has established a network of preferred maintenance providers.
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Deccan Aviation: Turbulent weather
Niraj Bhatt / Mumbai
Business Standard
Sept 26, 2006
Mumbai: The Street was expecting Deccan Aviation to turn in a loss of around Rs 150 crore for the 15 months ended June 2006. But the amount has been more than twice the estimate at Rs 340 crore. For the year ended March 2006 too, the loss at Rs 230.29 was way higher than anticipated.
While higher aviation turbine fuel costs—which were up at 48 per cent of sales in FY06 compared with 30.3 per cent in FY05 and 56 per cent in the June 2006 quarter-were the biggest culprit, other costs too have gone up.
For instance, employee remuneration is up around 400 basis points, while operating expenditure — including leases — have gone up by about 500 basis points.
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Airlines head for meltdown
Bipin Chandran & P R Sanjai
Business Standard
Sept 25, 2006
New Delhi\Mumbai: India might be one of the hottest growing aviation markets. But are domestic carriers flying into bankruptcy as they face cut-throat competition and woo customers with rock bottom air fares?
The numbers tell a grim story. Naresh Goyal, founder chairman of Jet Airways, said airline companies together would lose a staggering Rs 2,200 crore this year, or Rs 6 crore every day, for flying over 75,000 passengers.
And last week, Air Deccan surprised most analysts when it announced a whopping Rs 340 crore loss for the 15-month period ending June 30, 2006, much higher than what they had predicted.
But the scenario could get worse.
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Hello, flight control...
Business Standard
Septr 25, 2006
New Delhi: With the pioneer among low-cost carriers (LCC) wiping out half its net worth in a short 15 months, it is time to take a long hard look at an aviation sector that seems to have got caught in very rough weather. For, the country’s largest (full-service) airline’s chairman told his shareholders last week that, while Indian carriers had been expected to lose Rs 2,200 crore during the year, this figure would climb as more low-cost carriers entered the market. Since Naresh Goyal is presumably including in his numbers those of Air-India and the foreign operations of Indian Airlines, this translates to loss levels equalling 10-12 per cent of turnover. Any business with those numbers is going to have a short life.
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More proactive policy will help aviation market
Financial Express
Sept 25, 2006
That full cost airlines are reporting losses is no surprise, given the mounting pressures to offer price discounts in a market that’s seeing intensified competition, coupled with the high costs of aviation turbine fuel and rising manpower costs thanks to shortages. While the coming season will improve passenger load factors, and some lowering may be seen in ATF prices as crude prices came down recently, the larger issue is how the market plays itself out over the next two or three years, which logic says should bring industry consolidation, even as players aggressively create innovative strategies to survive against the Indian realities.
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Air Unworthy
Editorial
The Times of India
Sept 25, 2006
So the government wants to create a clutch of world-class international airports on the lines of Schiphol, Changi and Dubai by the time the Commonwealth Games roll around in 2010. This is great news, but only if it also remembers to address some awkward technical realities on the ground, otherwise the projects might never fully take off as intended.
For instance, two major back-to-back air disasters were recently averted, thanks primarily to on-board aircraft avionics and pilot reflexes when neither should have been called into play in the first place.
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Air call centers fly into trouble overseas
Laurie Berger
Chicago Tribune, US
Sept 24, 2006
Pity the poor passengers who must phone airlines to do anything these days -- change a reservation, redeem vouchers, get an upgrade or track lost bags.
It can take seemingly forever to get a live agent. If you do, the agents are a world away, in Jamaica, India, the Philippines or Lithuania. And these operators in overseas call centers, airlines acknowledge, are sometimes ill-equipped to meet the demands of harried U.S. travelers.
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Aviation MRO industry holds immense potential for India
India Infoline.com
Sept 22, 2006
V Thulasidas, CMD, Air India says that that the exponential projected growth in the aviation sector will provide an impetus to the Maintenance, Repair & Overhaul activity in India
India's current growth phase in Civil Aviation provides India a unique opportunity to develop its nascent Aviation MRO industry.
In a statement, V Thulasidas, the Confederation of Indian Industry (CII) National Committee Chairman for Civil Aviation & CMD Air India mentioned that the exponential projected growth in the aviation sector will provide an impetus to the MRO (Maintenance, Repair and Overhaul) activity in India. According to a CII estimate, the size of the MRO business in India over the next 5 years is expected to be on average, US$400mn per annum.
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Maturing India outbound reveals new niches
Travel Daily News International, Greece
Sept 15, 2006
India is one of the fastest growing outbound travel markets in the world: 6.2 million international trips in 2004 (16% more than 2003) and preliminary international estimates for 2005 point to another year of strong double-digit growth, to almost 7.2 million.
Indian outbound travel to Asia Pacific destinations, for which PATA`s Strategic Intelligence Centre already has 2005 figures, grew 20% last year and has been growing 9.8% per year on average since 2001. There were 2.9 million Indian trips to Asia Pacific destinations in 2005.
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‘Online bookings are growing in non-metro cities’
Dhruv Shringi
(Founder & Executive Director Yatra)
Express TravelWorld
Sep 15, 2006
Yatra's founder and executive director Dhruv Shringi tells Bhisham Mansukhani, he believes his travel retail website is perfectly placed to tap the growing trend of Internet users relying on this interface to plan and book their travel
How has Yatra been received by the travel trade, airlines, hotels and end consumers?
The responses we have received so far have been very encouraging. We are witnessing high demand for airfares because of the special promotion that we are running with some of our airline partners which reaffirms our faith that there is a great opportunity for us to work on.
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AirDeccan’s small-town plan works
Praveena Sharma
Daily News & Analysis
Sept 14, 2006
BANGALORE: It was a business trip to Coimbatore that Bangalore-based hotelier Pradhan Ganapathy could not cancel. There was no train ticket available, and a Tatkal booking would have cost him Rs 1,400. He checked up the Air Deccan website, and was able to fly for just Rs 1,200 the same day.
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Five years after 9/11, A-Pac aviation altered in unexpected ways
UNI/The Hindu
Sept 15, 2006
Sydney: The Centre for Asia Pacific Aviation (CAPA) said on Thursday, the air transport sector continues to grow - particularly in Asia -- five years after the attacks of September 11, an assault that had the seeming potential to undermine air travel.
"A simple reality is at play," said its executive chairman Peter Harbison. "People still want and need to travel by air, a reality that will reach many more people in this region's emerging markets in the years to come as economies grow and incomes rise."
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Racism in the air
HASAN SUROOR in London
Frontline
Sept 12, 2006
WHAT do a British Member of European Parliament (MEP), an airline pilot and two university undergraduates have in common except that they are all British? Until a few weeks ago, if someone were to ask this question an instant response would have been: "They are all Asians, aren't they?" But now they have a new common bond. All four have been victims of covert racial profiling, the newest method being used by Western security services to pick out potential terrorists at airports and on trains and planes.
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Print, TV or OOH?
Aabhas Sharma
Business Standard
Sept 13, 2006
New Delhi: Domestic airlines are advertising a lot, but not in the media with the biggest numbers. Time for a memory check. Which was the last domestic airlines' TV commercial that you saw? The 150-second long Air Deccan ad? That's what a thoroughly unscientific straw poll confirms as the best recalled. But which else?
It's peculiar. The aviation sector is going helter skelter. Out-of-home (OOH) signposts and print ad-spreads abound. But how come so little of the advertising is on television?
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Indian aviation: gaining tailwind
JEH WADIA
Financial Express
Sept 12, 2006
As I write this, my first article for the Financial Express so close to 9/11, let me first say that air transport is the most modern, the quickest and statistically still the safest mode of transport.
The civil aviation industry in India has changed dramatically over the last decade. Until 1991, the Indian civil aviation industry was a state monopoly, dominated by Air India and Indian Airlines. The Indian government introduced the open sky policy for domestic players in 1991 and partial open sky policy for international players only in November 2004.
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Air Deccan: Always a trend setter
Kerala Online
Sept 12, 2006
Air Deccan's move to operate direct daily flights in the Delhi-Kullu sector, would be a real boost to the tourism-based economy of the Himalayan valley as it is a paradise on earth for many.
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Flying right
D. Murali
Hindu Business Line
Sep 11, 2006
Cost reduction, as a theme, came up immediately after safety, when Giovanni Bisignani, Director General and CEO International Air Transport Association (www.iata.org) spoke at a conference in Brisbane a few weeks ago.
"The industry is in the red," he conceded. The fuel bill for the global airline industry went up from $40 billion in 2002 to $91 billion last year, and is expected to touch $112 billion this year, said Bisignani, sounding the alarm bell.
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Life After 9/11 for NRIs
India eNews
Sep 10, 2006
‘My life as an NRI has changed a lot since 9/11,’ remarked Abdul Ali who lives in the US. His friend, Joginder or ‘Joe’ Singh couldn’t agree more. All NRIs took a big hit with 9/11 five years ago when the terrorists struck New York and Washington.
In their daily lives, NRIs have suffered personal attacks due to their colour, appearance and dress. Young Indians are usually checked ‘randomly’ in security checks at foreign airports before boarding a plane and on arriving. After 7/7 and the British alerts in August, these checks have taken a sinister turn when every facial expression or language they spoken is reason enough for questioning.
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Flying safe in the air
Times of India
Sept 09, 2006
September 11 and 8/10 will always remain red letter days in the history of aviation terrorism. As terrorists find newer, innovative ways to carry out horrendous events, India, like other nations, is girding itself up to make airports safer.
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On board IC 814
Paromita Chakrabarti
Delhi Newsline
Sept 09, 2006
New Delhi: It’s been over six years now, but entrepreneur Romesh Grover can remember the week of December 24, 1999 with remarkable clarity. He was heading back to New Delhi from Nepal’s Tribhuvan International Airport on flight IC 814 after wrapping up a business deal, just in time for Christmas with his family.
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Airbus and Boeing Vie for India's Skies
Nandini Lakshman
BusinessWeek
Sept 07, 2006
With Indian carriers in expansion mode, the Western giants face each other to fill the growing demand for new airplanes
Few corporate rivalries are as heated as the one between Boeing (BA) and Airbus. The manufacturers are engaged in a mad mating dance with India's flagship and discount airlines alike to lock up orders in one of the fastest-growing aviation markets on the planet.
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Emergence of Airports as Attractive Business Centres
Frost & Sullivan
Business Wire India
Sept 06, 2006
Mumbai: Airports are becoming profitable business enterprises based on the increasing revenues generated by non-aeronautical commercial activities, in particular, retailing, car parking and catering. This trend is opening up opportunities for airport management firms and other companies keen on expanding their businesses in the catchment area of airports.
Currently, due to the demand from air carriers for the reduction of charges and the unwillingness of governments to offer subsidises, airports can no longer rely solely on aeronautical revenues to generate the resources needed for infrastructural improvements.
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IC-814: The Kandahar shame story
CNN-IBN
Sept 07, 2006
On December 26, 1999, a whole new drama unfolded at Kandahar, Afghanistan, soon after the hijacked Indian Airlines flight IC-814 landed there. Even as the plane came to a halt on the tarmac, the Taliban militia surrounded it with the hijackers still on board. For the 162 passengers and crew onboard IC-814, a long, fearful wait had just begun.
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Domestic airlines fly into an air pocket
Praveena Sharma
Daily News & Analysis
September 05, 2006
BANGALORE: An analysis of Centre for Asia-Pacific Aviation (CAPA) says yields and fuel management would be the flight path to profitability for airlines. It is because of these two factors that the IATA’s profitability outlook for European carriers for this year has flown past the Asia-Pacific region, despite the latter’s strong market growth and low labour cost.
Last week, the IATA slashed its profitability outlook for the Asia-Pacific region by $300 million to $1.7 billion. This upgraded Europe to industry’s most profitable region with $1.8 billion net profit.
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Online air tickets have a catch
Khushboo Narayan
CNN-IBN
Sept 05, 2006
Mumbai: Next time you book your air ticket online think twice. Chances are you may not get your refund back in time if you decide not to travel. Several consumers have been struggling to get their refunds for months.
Everyday, for the last nine months Manish Garg of Bangalore has been spending hours before his computer writing mails to Air Deccan. But he has not received a single reply as yet.
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Aviation Turbine Fuel High cost bleeds no-frills airline firms
P R Sanjai
Business Standard
Sept 04, 2006
Mumbai: The concept of low air fare has just got a hard knock with domestic airlines all set to impose the third round of fuel surcharge hike since May 1. This means fares will go up by Rs 750 in three months.
"The concept of low fare is under threat. Moreover, the government is exploring the idea of imposing a cess on air ticket to support HIV/AIDS awareness programmes," industry sources said.
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Flight cancelled - this is Aizawl airport
The Hindu
Sept 04, 2006
Aizawl: Mizoram's only airport here is in dire need of modernisation, as shortage of facilities lead to frequent flight cancellation, which is a common feature.
Numerous top guns from Delhi, including the Civil Aviation minister Praful Patel, were compelled to cancel their important engagements in Mizoram due to the cancellation of flights, thanks to the dilapidated condition of Lengpui airport, the only one in this hilly north-eastern State.
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Drinking water, dehydration, bathroom use big air travel issues
Michelle Higgins,
NEW YORK TIMES
Sept 03, 2006
AS TRAVELERS adjust to the new rules against carrying liquids onto planes, what about the most essential liquid, water? Before the London terror scare a few weeks ago, water bottles in a variety of shapes and sizes could usually be seen poking out of backpacks, carryalls and totes in departure lounges. Now that passengers must rely solely on what the airlines provide to quench their thirst, there's reason to be concerned that it may not be enough.
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