Edits, Columns & Analysis - February 2007

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‘Airports here on a rapid growth curve’
Jyoti Verma
Financial Express
Feb 25, 2007
John D Kasarda is an advocate of the theory of ‘airport cities’. The theory, better known as Aerotropolis, has an airport as the central figure in the commercial development of an urban city with the population and business revolving around it—much similar to the ancient concept of planning cities around ports or crossroads.
The distinguished professor of management and director of the Kenan Institute of Private Enterprise at University of North Carolina’s Kenan-Flagler Business School says that cities built around international airports are better positioned for global trade and competitiveness.
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Let professionals manage merged airline
Economic Times
Feb 24, 2007
The merger of the two state-owned airlines Indian and Air-India (A-I) is welcome in that it did not make sense to maintain two separate companies in an industry such as aviation where size is a big advantage.
That said, let us be clear that mere pooling of the two very different airlines is not going to create a concoction that is magically different, unless there is a thorough overhaul allowing professionals, and not bureaucrats, to run the new entity. On the face of it there are enough synergies to be had from the merger.
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Retail boom at airport
Manisha Singhal
Daily News & Analysis
Feb 23, 2007
Soon you may be able to watch Swiss chocolate being made while you wait to catch your plane at the Mumbai airport. This is the international prize-winning concept of the Nuance Group AG, a major in retailing industry, which it proposes to bring to the Banglore airport as well. Closer home, retailer Shoppers’ Stop and Nuance Group AG as its venture partner are among the five short-listed bidders for a contract to set up duty-free retail outlets at the Mumbai international airport.
Airport retailing world over is big with about 60 per cent of the revenues earned through commercial activities at the airport. In India this market is right now in a nascent stage with a strong growth potential. Internationally, this is about a $200 million-strong market and the growth can be sustained even if the amount spent by passengers remains the same for next eight years.
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Want to buy a wing today?
C Jayanthi
Financial Express
Feb 23, 2007
A man, who by his own admission is passionate about his aviation business, Manav Singh also keeps in touch with ground realities by indulging in another passion of his—eating dhaba food while zipping around the country.
Singh, who is fond of the ‘Great Outdoors’ is a pioneer of sorts in the country. He introduced the concept of chartered aircraft through a new company he registered in 2004, called Club One Air of which he is the managing director. He also introduced the concept of fractional ownership of an aircraft in the country in August 2005—almost a decade after he started his aircraft business. Read The Rest >>>

Low fuel tax must for flying high
Atreyee Dev Roy
Financial Express
Feb 19, 2007
Civil aviation is arguably the only sector after telecom that has brought about a dramatic change in the lifestyle of the common man. No longer are air fares prohibitive, especially with low-cost airlines giving traditional full fare carriers a run for market share and air space.
For the consumer party to continue, the aviation industry has submitted a long wish-list to the finance ministry. Some of these—declared goods status for aviation turbine fuel—are part of the list every year. Some others, like extending tax benefits for consolidation merit attention, particularly given the phase the industry is in today. On the policy front, the government has already talked about hiking foreign direct investment limit in certain areas. Given the way India is rapidly globalising, perhaps, there is now a case for allowing foreign airlines to acquire stake in domestic carriers.
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Coming up: India's big airport cities
Ravi Teja Sharma/Business Standard
Rediff
Feb 17, 2007
For very long our airports have been deliberately planned outside city limits. One can't say they have been neglected, but surely they were never top priority. But going by some important facts, it's compelling to take a re-look. Consider this: 40 per cent of the value of world trade now goes by air (and this is just under 2 per cent of the total trade, by weight).
In India, 35 per cent of the country's trade by value goes by air. The government has foreseen some of this potential and so we see modernisation plans at major Delhi and Mumbai airports, which are already underway. Hyderabad and Bangalore, in fact, will be two brand new greenfield airports. If we go by Dr John D Kasarda, director, Kenan Institute of Private Enterprise at the Kenan-Flagler Business School, University of North Carolina, airports represent the "fifth wave" of changes in transportation infrastructure that have shaped commercial development over the past three centuries: the first being seaports; the second, rivers and canals; the third, railroads; and the fourth, highways. "Aviation will drive development in the 21st century just the way cars did in the 20th century," he predicts.
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Slow progress in merger
V. Jayanth
The Hindu
Feb 18, 2007

Chennai: When the Union Cabinet cleared the merger of the two national carriers — Air India (AI) and Indian Airlines (IA) — the Civil Aviation Ministry put a March 31 deadline to the exercise. Though a lot of groundwork has reportedly been done, it remains to be seen if that deadline can be met. Even if that is done, the aviation authorities in Government and the two airlines have a daunting task to ensure that the process comes off smoothly and successfully. Obviously, the Government and the Group of Ministers in charge of the merger plan want it to be a successful model and a profitable one at that.
Sources in the two airlines say that the process appears to be well under way, though they do not want to hazard a guess on whether they can complete the process by the end of next month.
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Opportunity as threat
Express TravelWorld
Feb 17, 2007
Indian aviation is turning out to be more talked about than tourism itself these days, which is interesting given that it was usually considered its reliable subset. It is this phenomenon and the opportunities and challenges therein that a clique of aviation experts converged to ponder at an event organised by this publication. The inferences were telling. The sector is growing by more than 20 per cent annually, more planes are on the way, air travel is commonplace even for the middle class and is generating an enterprising excitement, similar to the one in the US before it cemented its place as the world's biggest aviation market. Low cost carriers have made air travel a household affair and elevated the Internet to an increasingly approachable platform for booking flights. Then again, India, as strikingly unique a market as it is, its pitfalls are also unfortunately endemic.
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Awaiting...the aerotropolis
Ravi Teja Sharma
Business Standard
February 17, 2007

New Delhi: For very long our airports have been deliberately planned outside city limits. One can’t say they have been neglected, but surely they were never top priority. But going by some important facts, it’s compelling to take a re-look. Consider this: 40 per cent of the value of world trade now goes by air (and this is just under 2 per cent of the total trade, by weight).
In India, 35 per cent of the country’s trade by value goes by air. The government has foreseen some of this potential and so we see modernisation plans at major Delhi and Mumbai airports which are already underway. Hyderabad and Bangalore, in fact, will be two brand new greenfield airports.
If we go by Dr John D Kasarda, director, Kenan Institute of Private Enterprise at the Kenan-Flagler Business School, University of North Carolina, airports represent the “fifth wave” of changes in transportation infrastructure that have shaped commercial development over the past three centuries: the first being seaports; the second, rivers and canals; the third, railroads; and the fourth, highways. “Aviation will drive development in the 21st century just the way cars did in the 20th century,” he predicts.
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Too fat to fly the Indian skies
Financial Express
Feb 17, 2007
Beauty image obsessions are just going WAY too far. Indian Airlines has been suspending their female flight attendants for being overweight. Their justification is that they need to save the company image. One company executive actually said, “Why would you fly with us, if other airlines have better looking staff? I don’t know about you, but I am usually looking for the cheapest ticket and couldn’t care what the flight attendants look like. But I guess creepy businessmen flying around Asia may feel differently.”
Eleven employees, recently grounded for putting on too much weight, claim that the airline has changed its vision of the Indian feminine ideal — abandoning the more buxom prototype in favour of a more westernised, skinny model, which staff see as ‘unattainable’.
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The airline market’s demand for youth
Financial Express
Feb 17, 2007
Could India have turned more market adaptive than the US? From the muted response in the Indian blogosphere to the news of Indian (Airlines, that is) nudging all its air hostesses over 40 into voluntary retirement, this would seem to be the case. The American blogosphere has turned into a fist-wavosphere on provocations far more lame. Indian bloggers are much younger, of course. Also, the domestic carrier’s generosity—a Rs 25-lakh VRS cheque—has sweetened the deal. But it is still tempting to interpret this as an airpocket-free cruise for market forces.
This is to be welcomed. Having recently got itself an image overhaul with its aircraft sporting a bright blue wheel on its tail-wing, Indian has still found itself hard-pressed to compete with spiffier private airlines. Jet, with an average cabin crew age of 24, has been ahead for years, but now even the no-frills Air Deccan has nosed ahead.
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Flights of reality
P R Sanjai
Business Standard
Feb 15, 2007
Mumbai: To match the needs of its growing economy, India could need 2,000 aircraft in the next 10 years.
India will require 1,500 to 2,000 aircraft in the next 10 years, against the current 300-odd aircraft. According to Union civil aviation minister Praful Patel, the Indian civil aviation market is set to log an annual growth of 25 per cent in the next decade.
“This is translated into a requirement of about 1,500 to 2,000 civil aircraft, and $75 billion of hardware business,” Patel said on the sidelines of an international conference on aviation, organised by FICCI as part of Aero Show 2007.
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Rationalisation of taxes on ATF to benefit aviation sector
Moneycontrol.com
Feb 15, 2007
In the aviation sector two major factors, which will have a positive impact on the sector are: A) Rationalisation of ATF taxes, which attracts sales tax ranging from four per cent to 25 per cent in the states needs to be harmonised and ATF declared a deemed good, making it eligible for four per cent central sales tax.
B) Government raising the ceiling for foreign shareholding in the aviation sector.
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Chopper bug bites more players
Praveena Sharma
Daily News & Analysis
Feb 14, 2007
Bangalore: Capt G R Gopinath, managing director of budget carrier Deccan Aviation Ltd, considers his helicopter business the jewel of his airline business crown. And he isn’t the only one who thinks so. Indeed, sensing an opportunity in the segment, quite a few players are hopping onto the chopper business for a joy ride, even as the existing players have drawn up plans to expand.
Such enthusiasm amongst the players has prompted Textron’s Bell Helicopter to project a growth of 15% annually over the next five years and an even higher growth after that. “What is expected to spur this growth is massive demand from offshore oil and gas companies, charter service firms and corporate houses,” says B S Singh Deo of Bell Helicopter.
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All for flying and flying for all
JEH WADIA
Financial Express
Feb 14, 2007
The year 2006 was a very eventful one in many ways for the Indian aviation industry in general, and for me personally as GoAir completed one year of operations, too. The year witnessed some important and favourable developments for the Indian economy, especially the aviation industry. Today, India is touted as the world’s second most vibrant aviation market after China, putting it on the aviation radar of just about every business in the world. The key driver for the enormous growth has been the economic upswing, which has led to a higher propensity to fly in the domestic air travel market, which is projected to triple to $51 billion by 2011 from $16.3 billion in 2005-06. Additionally, with the emergence of a number of low cost carriers (LCCs) that provide better connectivity at low fares (at par with air-conditioned coach train travel), air travel has become the most convenient and popular mode of transport in India—preferred not only by the business traveller, but also by the average middle class family on its way to a favourite holiday destination.
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The healing nature of failure
Ajai Shukla
Business Standard
Feb 13, 2007
New Delhi: Aero India 2007, India’s biggest ever air show, terminated in Bangalore on Sunday. Costing over Rs 100 crore, most visitors agreed it was a spectacle. But the displays, the bands, the line-up of top line fighters and transport aircraft, the flags of 33 countries fluttering in balmy Bangalore and the delegations of businessmen from the world’s largest arms corporations—none of these could mask the embarrassingly obvious fact that in 60 years since independence, India has achieved little in building up its indigenous defence industry.
Defence Minister AK Antony bravely paid lip service in his welcome address: “Aero India aims to provide a platform for [the] Indian aerospace industry to showcase its capabilities to the global audience.” The one thing clearly showcased was that large portions of “India’s aerospace industry” are better at building plastic mock-ups than systems that fly. Hindustan Aeronautics Limited (HAL), having rented probably the largest space in the entire exhibition, created an inadvertently symbolic display.
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Dogfight for lucrative Indian warplane deal
Sudha Ramachandran
Asia Times Online, Hong Kong
Feb 13, 2007
Bangalore: More than 500 aircraft manufacturers from around the world were in Bangalore last week wooing India with their wares. While ordinary Bangaloreans were being dazzled with awesome aerial displays, officials were being courted assiduously at the city's Yelahanka air base. With deals worth billions of US dollars in the offing, it was the dogfight for the contract for fighter aircraft that dominated Aero India 2007.
Aero India 2007 - India's answer to Britain's Farnborough Air Show were from abroad - a 10% increase over participation in the previous show in 2005. But more than the numbers, it was the names of the participants that were impressive. All the top aircraft manufacturers were here last week for a piece of the coming action in Indian skies.
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For regional routes, airlines may’ve to split
Praveena Sharma
Daily News & Analysis
Feb 05, 2007
Short-haul jets are profitable, but not if they have to bear the overheads of bigger ones
India’s airlines are making big plans to enter the more profitable regional routes, but they are coming up against a dilemma: should they operate as one airline or two?
Over the next few months, Air Deccan, Kingfisher and Air Sahara will be adding several short-haul jets to run their regional routes. Kingfisher will be taking deliveries of 33 ATRs in the next few years while Air Sahara president Alok Sharma has announced the acquisition of 10 CRJs.
But running two kinds of aircraft under the same airline is close to hara-kiri. Reason: your overheads double.
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More profitless growth
Praveena Sharma
Daily News & Analysis
Feb 05, 2007
Despite air traffic taking off, high costs and inadequate infrastructure are keeping the industry in the red
The aviation sector may have taken off with robust air traffic growth, but it has yet to cross much turbulence before it is finally airborne. Today, it is one of the fastest growing sectors in the country, but explosive capacity expansion, high cost structure and inadequate infrastructure are keeping the industry in the red.
In 2006, domestic carriers flew 25.50 million passengers, 31.44% more than the 19.40 million flown in 2005. However, this exponential growth has not translated into profits for the players.
As things stand today, airlines are struggling hard to keep their heads above the water.
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Low-cost air fares the new standard
G Thomas
Malaysia Kini, Malaysia
Feb 5, 07
I have read too much nonsense about low-cost airlines vis-à-vis the high cost variety (better than calling them ‘full-fare’) to remain silent. Initial media reports some years ago about budget fares reflected shock; how could it be done? More recently came the rationalisation of institutional resistance -there must be a catch; they are not comfortable, delays are common, there are no frills (whatever that means).
In the past year I have flown Lufthansa, Jet Airways and AirAsia. Lufthansa was by far the most uncomfortable experience. For the 13-hour flight, we economy-class passengers were packed in like sardines with leg and elbow room insufficient for a slightly-built Asian. This is not only unfair, it is unethical because health issues arise when people sit in aircrafts for hours.
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By 2010, LFCs will control over 70% of the market share’
Rajesh Naidu
Financial Express
Feb 04, 2007
From an early path-shower to the LFCs players, Air Deccan has transformed to a second largest formidable player in the sector. Despite a weak listing, the company has kept its momentum going. Some excerpts from a conversation with GR Gopinath, MD, Deccan Aviation:
What do you think about the overcapacity issue in the aviation sector? Will the industry be able to narrow down the difference?
Our experience has shown that we have underestimated the Indian market and overcapacity is not an issue but a part of the industry's growth process. New air carriers are constantly generating new demand and stimulating more travel. It is estimated that by 2023 there will be a market for 570 more aircraft in India and this may further have to be revised upwards. Passenger traffic is expected to go up by at least 250% by the year 2010.
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‘Capacity growth above 25% impacts yields’
Rajesh Naidu
Financial Express
Feb 04, 2007
Commanding the highest marketshare in the industry, Jet Airways has been traversing its growth with caution. Though it has experienced volatile times, the company is poised for a turnaround, says Jet CEO Wolfgang Prock-Schauer. Excerpts:
Will the low fare carrier model work in India? Your opinion.
The environment for the low fare carrier model in India is less conducive as in Europe or the US, the reason being that 80% of the cost of an airline operation in India is independent of the business model. There are no secondary airports available in the country, where the landing and handling charges are cheaper and turnaround times quicker. So, all airlines pay the same landing and handling charges. Also, the aircraft related costs (eg, lease rentals) and pilot costs for all airlines are similar and fuel costs are the same.
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Airlines Travelling light
Rajesh Naidu
Financial Express
Feb 04, 2007
On a normal Monday morning at the Mumbai or Bangalore airport, you could see a crowd building up. By peak hour, the airport resembles a railway platform where passengers are clamouring to board the airplane and get a seat.
The airline industry in India has now been able to lure the critical mass of travellers who now prefer flying than travelling by rail. India’s domestic air travel has grown to 25.5 million passengers as compared to 10 million a decade ago. And the habit is only going to increase at a faster pace with the Centre for Asia Pacific Aviation (CAPA) estimating 60 million passengers by 2010.
A mix of a rising upwardly mobile population and a host of low fare carriers (LFCs), who have closed the gap of air travel with upper class rail fares, have caused the surge.
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Conflict over the cities, tension in ATCs
Ajai Shukla
Business Standard
February 3, 2007
New Delhi: It is 8.30 am, rush hour at New Delhi’s Palam airport. Thousands of business travellers are checking in for flights that will get them to their destinations at convenient hours.
While outgoing flights are allotted places in the departure queue, the aerodrome control tower officers, hunched over their radar screens in Palam’s air traffic control (ATC) tower, are telling the pilots of incoming aircraft the order in which they will land.
It is a tense but well-practised procedure. With one of Palam’s runways handling incoming traffic and the other being used for take-offs, no plane spends more than twenty minutes in the queue.
That is when the supervisor calls out, “Hindon airspace, closed below 150.”
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Bridging the gap
Shishir Prasad
Economic Times
Feb 03, 2007
It is January but at noon Nagpur is already beginning to feel like April. The city — flat, expansive and clean — is a just a bar graph on the horizon as the jeep swings off the road to Mumbai. It heads straight for a cacophony of assorted traffic stuck at the old railway crossing. Boxed in between two jeeps blaring election slogans of NCP and Congress and the posterior of an aging bullock, things aren’t looking pretty. “
Don’t worry we are going to build an over-bridge here very soon,” assures Abid Ruhi in a comforting voice. Mr Ruhi is the project manager for developing the special economic zone, which will house the international logistics hub at Nagpur. Once the GT express to Chennai chugs past, the crossing opens and hundreds of metres of shrub-filled lands lie on either side of the road.
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One-way ticket to airport awkwardness; no peanuts
Sujay Kumar
Daily Illini, US
Feb 02, 2007
I'm not quite sure what it is, but there's something about airports that I just can't stand. It's not a fear of terrorists or harsh security measures that mkes me cringe after hearing the words 'departure' and 'arrival.' Then why is it so awkward the moment I enter an airport?
Last winter break, as I traveled to India I searched for the cause of this phenomenon by examining my time spent in a few international airports.
In Chicago, my mother and I wade through the millions of confused travelers to the nearest official and we ask where to find the luggage check-in. He points directly behind with "duh" written across his face.
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Budget airlines take root in Middle East
Peyman Pejman
The Associated Press
International Herald Tribune, France
Feb 01, 2007
Sharjah: Gulf Arab countries, shedding their traditional reputation for opulence, are the latest to join the phenomenon of no-frills budget airlines that have transformed air travel in Europe and America.
The three chief Middle East budget airlines — Air Arabia, Jazeera Airways and Atlas Blue — have already grabbed 5 percent of the region's air travel market, and analysts say that portion is set to increase in coming years as booming Gulf economies attract more fliers.
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Mid-air collision: India`s tangled airspace
Ajai Shukla
Business Standard
February 01, 2007
New Delhi: At Hyderabad airport, you buckle into your seat for the late afternoon flight back to Delhi. The flight indicator tells you that Delhi is due north. It will be a straight flight, you believe. No time lost. You silently thank India’s revolution in civil aviation.
Wrong! In the cockpit, the pilot has set course south instead of north. Flying in wide circles south of Hyderabad, he climbs to 20,000 feet before seemingly heading for Goa. Ninety kilometres later he will move towards Pune, covering another 100 km before finally heading for Delhi. These inefficient diversions of civil flights at Hyderabad are caused because the airport is bordered by a vast swathe of restricted airspace belonging to the Indian Air Force (IAF) flying academies of Hakimpeth and Bidar.
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Fuel price cut to reduce 4% costs: SpiceJet
Moneycontrol.com
Feb 01, 2007
ATF prices are being cut by Rs 4000 per kilo litre. Commenting on the price cut, Ajay Singh, Director at SpiceJet states that the aviation industry may not pass on the fuel price cut to consumers. He further adds that the fuel price cut will reduce costs by 4%. Singh also says that they need to watch their competitors' move before cutting prices.
Excerpts from CNBC-TV18's exclusive interview with Ajay Singh:
Q: With regard to the just announced cut in aviation fuel prices, how do you see this panning out for your company, will there be improvement in margins?
A: Certainly, this is a significant cut and fuel is the largest part of the aviation cost. So a cut of about 9-9.5% would mean a 4-4.5% difference in terms of overall aviation cost. So it is certainly a welcome move.
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'We hope to break even in 2008'
Sudipto Dey
Economic Times
Feb 01, 2007
Delhi-based low-cost carrier IndiGo had announced its launch plans with a big-bang 100-aircraft Airbus order in mid-2005. It took more than a year for the first IndiGo flight to take wings in August 2006. After six months of operations, Bruce Ashby, CEO, IndiGo, takes stock of the carrier's performance and the challenges before Indian low-cost airlines. Excerpts from an interview with:
How has IndiGo performed over the six months since its launch?
Overall response to our product and service has been very good. Financially also things have gone as per our projections. Our average passenger load factor across the network has been in the region of 70%. Yields per seat are on expected lines — may be just about 5% off our projections.
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