Edits, Columns & Analysis - June 2007

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A ‘powerful’ aviation policy?
Sudipto Dey
Economic Times
June 29, 2007
New Delhi: Now that the new aviation policy, Vision 20:20, is under review by a group of ministers (GoM), one needs to ponder a little over the role of the government under the new set-up. One would expect the civil aviation ministry to play the role of a facilitator with adequate checks and balances along with an empowered regulator to oversee the sunrise sector of aviation. However, there are two important elements in the proposed policy which would eventually vest a lot of discretionary authority with the powers-that-be in the corridors of Rajiv Gandhi Bhavan. For one, the policy advocates a case-by-case approach to allow private domestic carriers to fly abroad.
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For a mouthful of sky
VIVEAT SUSAN PINTO
Financial Express
June 28, 2007
UB Holdings’ acquisition of a 26% equity stake in Deccan Aviation a month ago was strategic in a number of ways. Not only did it signal the end of the downward spiral of the latter reeling under losses of over Rs 2 crore per day, it also hinted at something larger — the industry at last was cleaning up the mess it had gotten into. Fours years ago, it was Air Deccan’s inaugural flight from Bangalore to Mumbai that opened up numerous possibilities for both aviation companies and travellers.
For once, average middle-class Indians could contemplate flying across India without worrying about the steep costs involved. And aviation companies, of course, could tap into a hitherto unexplored market.
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INDIA INC
Breaking barriers
CAPTAIN GOPINATH
Managing director, Air Deccan
Financial Express
June 28, 2007
The way I view aviation is a departure from how others view the same. If India is to be a developed economy, and I am a firm believer that it will, then aviation has to be an integral part of the growth story. I don’t think one can escape this reality at all.
Why am I saying this? That’s because we have 800 million people living in small towns, 600,000 villages and 500 airports in the country. Many of these places are not on the aviation map of the country. We should be tapping into this domain if we want our growth to be sustainable. There’s no point having a Bombay-Delhi airline.
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How many airports can a city afford to have?
V. JAYANTH
The Hindu
June 25, 2007
New Delhi: The public sector Hindustan Aeronautics Ltd. (HAL) and public opinion in Bangalore have suggested the retention of the existing HAL airport for the city, even after the new greenfield airport becomes operational on April 2, 2008 at Devanahalli. The distance from the core city seems to be the main criterion for voicing this demand. Such a move obviously has major consequences and may violate the terms of agreement reached with the consortium developing the new airport 2; the Bangalore International Airport Ltd (BIAL).
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Titans clash over India Inc skies
Cuckoo Paul
Economic Times
June 25, 2007
Mumbai: At a high-powered India lunch hosted by Airbus chief operating officer John Leahy at the Paris air show last week, seated around the table laden with champagne and French food were India’s civil aviation minister Praful Patel, Airbus executive vice-president Kiran Rao, Air India chairman V Thulasidas, Jet Airways chairman Naresh Goyal and UB Group chief Vijay Mallya. All eyes were on who among the invitees would get the prime seat next to Leahy—a place reserved for Airbus’ favourite customer.
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‘No one will lose jobs'
Tehelka
June 23, 2007
Air-India’s executive director (finance) S. Venkat tells SHANTANU GUHA RAY that he is confident the merged entity’s management will sort out disparities between the employees of the two national carriers.
The merger looks like a long haul. How are you handling it?
The merger is being planned carefully and deliberately. Joint working groups have been formed in all business and functional areas to plan and execute integration over the next 18-24 months. Accenture is facilitating the development of integration plans and the overall plans are being reviewed regularly by the CMD and an integration steering committee, which consists of senior management from both airlines and representatives from the government.
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SMOOTH TAKE-OFF STILL UNCERTAIN
June 22, 2007
Tehelka
THE AIR-INDIA-INDIAN MERGER IS SITTING PRETTY ON PAPER. BUT WAGE AND CAREER MOVEMENT ISSUES ARE GREY AREAS THAT MUST BE RESOLVED TO AVOID A DOGFIGHT. SHANTANU GUHA RAY AND HARSHA BARUAH REPORT
INSIDE THEIR small office that lies close to Delhi’s cacophonous domestic airport, trade union officials of Indian (formerly Indian Airlines) sipped tea while debating post-merger blues even as hundreds of harassed passengers awaited information on flights disrupted because of a countrywide flash strike which lasted over two days (June 13-14).
That the strike would severely dent Indian’s image as one of the most reliable airlines in the country and force many commuters to shift to private airlines did not feature in the talks that continued till late night. The issue, for India’s largest airline union that has a 14,000-plus strength, is simply the merger and its after-effects.
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Thiagarajan, world's youngest airline CEO
PR Sanjai
Business Standard/Rediff
June 22, 2007
Stelios Haji-Ioannou was just 28 when he started EasyJet in UK, thereby earning his place in the Guinness Book of Records for being the youngest chairman of a scheduled airline.
M Thiagarajan, a pilot, was just 27 when he floated Paramount Airways, based out of Madurai, which launched commercial flights on October 19, 2005. This makes Thiagarajan the youngest airline CEO in the world.
But Thiagarajan, who hails from an illustrious family - he is the grandson of Karumuthu Thiagarajan, a pioneer in the field of textiles and founder of the Bank of Madura - is keener on celestial navigation than Guinness records.
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Regional Airports, Cargo Fuel Development In India
Jennifer Michels
Aviation Week, US
Jun 22, 2007
Airport development, especially construction of or upgrades to many existing regional airports and new cargo facilities, is a priority of the Indian government and a means to rapidly developing its aviation sector.
Speaking Thursday in Washington before the U.S.-India Business Council, Praful Patel, minister of civil aviation for India, said, "Our primary focus is to first work actively on the infrastructure front." One of the problems is that the country does not have airline hubs, and does not fully use all of its airports, he says, noting that most of its international airline traffic comes through Dubai and Singapore, and "we need to correct that."
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Indian strike - privatisation is the answer
Sushma Ramachandran
Indo-Asian News Service
KalingaTimes
June 16, 2007
The civil aviation industry remains in a turmoil with the latest short term strike of the public sector carrier Indian creating chaos for consumers. Though the strike was thankfully resolved within a day or two, it created headaches and heartburns for the flying public who still regard Indian as the most "reliable" airline in the country. This reputation has been badly battered as people of all walks of life who had to reach destinations on urgent work had to suffer undue hardship.
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Let all airlines fly abroad
Economic Times
June 15, 2007
The civil aviation ministry’s proposal that even start-up airlines be allowed to fly overseas has not come a day too soon. The needless eligibility criteria — which includes at least five years of domestic flying — has created a policy bias in favour of established Indian carriers and foreign airlines. Ostensibly, the eligibility norms were put in place to ensure smooth operations and compliance with safety norms, and are rooted in the experience with the first round of private carriers. These private airlines were flying aged, one- or two-aircraft fleet, lacked credibility and systems, and perhaps fell short on safety too.
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Lateral flying
Financial Express
June 15, 2007
The aviation event of the week was not the strike by Indian Airlines’ employees. It is, rather, the new opportunities thrown up by fresh moves reportedly made by the aviation ministry to open up the skies still further. For a start, there will be another wave of competition in the local market, with foreign airlines—including Malaysia’s Air Asia, the Gulf-based Air Arabia and Thailand-based Nok Air—entering to fly various Indian routes. This should act as a market stimulant, forcing existing domestic airlines to turn more efficient and innovative in response. In turn, this should spur growth. Given the scintillating pace already set by the last round of sky-opening in 2004, this would be an added cause for exhilaration—at least for Indian air passengers.
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Where Indians are preferred
Rasheeda Bhagat
Business Line
June 15, 2007
In April 2007, Mahmood Al Kooheji, Deputy Chairman on the Board of Directors of Gulf Air, the national carrier of the Kingdom of Bahrain, announced that the airline loses about $1 million a day. Taking other factors into account such as the cost of servicing loans, the accumulated losses of the airline would total $675 million this year. In this background, the Indian operations of the airline should be a huge boon, considering that it enjoys an 80-83 per cent load factor. In fact, as Rajeev Nambiar, General Manager of Gulf Air’s India operations put it, “All the Indian routes do very well for Gulf Air; actually by choice we are one of the most favoured airlines for Indians.”
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Managing ground realities
Hindustan Times
June 14, 2007
The decision of about 13,000 ground staff of Indian (Airlines) to go on strike could not have come at a more inopportune time. Only the other day, it was seen as a born-again company, following the announcement of its merger with Air-India and talk of a grand vision. For a public sector giant stuck for decades with an ailing fleet, aging crews, lack of pilots and demanding customers, this year’s developments seemed like harbingers of hope and revival. But the strike reminds us that there are miles to go for the airline before it can call itself a serious player.
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Flying Low and High
Times of India
June 14, 2007
Paradoxically, even as India's long-fettered civil aviation sector was all set to take off with strategic mergers and
buy-ins, some 12,000 ground staff of the state-owned domestic carrier, Indian, went on a sudden strike paralysing the airline’s services all over the country. This goes to show that the Indian skies will continue to experience a bumpy ride till increasing competitive efficiency helps to clear the air. There are signs that this is happening.
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‘India’s budget carriers have not followed international practices’
Yassir A. Pitalwalla
Livemint
June 14, 2007
With India emerging as the world’s fastest growing aviation market ahead of China, airport operators, financial investors and global airlines are all scrambling for business here. Mint caught up with Andrew Miller, chief executive officer of the Australia-based Centre for Asia-Pacific Aviation (Capa) Consulting, on his views on where the Indian aviation business is headed. Capa is the region’s leading source of market intelligence and consulting, helping companies plan market entry strategies and assist in raising capital.
Edited excerpts >>>

Smooth landing?
Priya Kansara
Business Standard
June 10, 2007
Mumbai: Although the aviation industry is looking up post-consolidation, investors should either adopt a wait and watch approach or invest keeping a minimum three year perspective.
If you are an air traveller, then brace yourself up to pay more for the air fares as they are expected to rise, thanks to the recent spate of consolidation moves with the most recent one being the buy-out of Air Deccan's majority stake by Kingfisher Airlines.
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On stewardesses and the way they look
Jamaica Gleaner, Jamaica
June 6, 2007
A ruling by an Indian Supreme Court judge last week has echoes of an issue in Jamaica just over a decade ago when a British import as head of Air Jamaica sought to impose an age, weight and size regime for the women who would be stewardesses on the national airline.
In essence, this chief executive officer wanted young and sexy women in the cabins of Air Jamaica it was never quite put that way.
In the face of a public outcry, and the prudence of his board, the managing director backed down. At least, it didn't become formal policy at Air Jamaica.
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India`s aviation continues with strong growth
Travel Daily News International, Greece
June 06, 2007
The Indian domestic market is showing no sign of reducing its aviation activities, with a 25% increase in the number of flights scheduled for May 2007 compared with the same month last year. According to the latest statistics from OAG this represents an additional 8,631 flights and an astonishing 1.7 million extra seats available to people travelling within India.
This ranks India in third place in the Top 10 list of countries with the highest number of additional flights in May this year compared to the same month in 2006, behind China and the USA.
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Consolidation in the air
Business Standard
June 06, 2007
New Delhi : No matter what the industry, consolidation is usually driven by economies of scale, cost efficiencies and the need to tap other synergies. These should benefit consumers, except for the fact that consolidation also gives new pricing power to the players who dominate a market. In the domestic aviation market, consolidation is following the classic route of taking out of business the unviable players who have been price warriors, so consumers end up paying more in a consolidated market structure—Kingfisher Airlines, for instance, has already said that it will try and raise fares. Conclusion: the happy days of low, low air fares may be coming to an end. Except that the aviation business is prone to surprises.
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Fares will go up by USD 12-15 in time: Kaul
Moneycontrol.com
June 06, 2007
t takes two to tango and the Indian aviation sector is all set to takeoff to a new zone. After Air India-Indian, Jet Airways-Sahara, Kingfisher-Air Deccan, now Paramount plans to have a go at flying together with another airline. So, how does this consolidation change the dynamics of the Indian aviation industry and how does it benefit the Indian consumer? Director, SpiceJet, Ajay Singh and CEO, India and Asia-Pacific at Capa Kapil Kaul discuss this issue.
Excerpts from an interview given to CNBC-TV18
Q: How does this consolidation change the dynamics of the aviation industry and how does it affect players like you?
Singh: This makes the industry very efficient and if the consolidation happens, then it does two things - it increases yields because essentially airlines are able to rationalize their flights and take up the value of their fares and secondly, it reduces cost because people are ready to share infrastructure and thereby bring down unit cost.
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Merchant airports will boost aviation infrastructure
Atreyee Dev Roy
Financial Express
June 05, 2007
The success of low-cost carriers has changed India’s aviation profile as well as the outlook of both the government and airport operators. Changes in the policy are being considered to encourage greater investment in the sector and address the highly inadequate infrastructure. The government is planning to introduce a new policy on merchant airports, which will allow development and operation of airports completely by the private sector.
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Aviation gets healthier: But watch out for collusion
Economic Times
June 04, 2007
The 26% equity acquisition in the low-cost carrier Air Deccan by United Breweries Holdings, the company that runs Kingfisher Airline, has the potential to transform the industry and return it to profitability.
Aviation consumers are, however, likely to face pricier tickets with indications that the new investor appears keen on returning Air Deccan to profits. The rapid consolidation in the airline industry, Jet Airway’s acquisition of Air Sahara, merger of Air-India and Indian, and now a strategic relationship between Kingfisher Airline and Air Deccan, has handed over nearly 85% of the market to the top three.
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EDITORIAL/Times of India
Expanding Maharaja
Times of India
June 04, 2007
Air-India and Indian, the two merging government-owned carriers, are in the race to buy controlling stakes in Serbia's national airline. It is anomalous that while the Serbian government wants to privatise the state-run JAT Airways, the Indian government instead of divesting its own stake in Air-India, is planning to expand, making its eventual privatisation more complex. The worldwide trend is for governments to facilitate business, leaving the actual business to businessmen: out of a total of 210 national carriers, only 23 are fully state-owned.
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'Air Deccan helps our overseas plans’
C.H. Unnikrishnan
Livemint
June 04, 2007
Mumbai: Flamboyant billionaire Vijay Mallya, chairman of the UB Group, one of the country’s most diversified business houses with annual revenues of $2.17 billion, is not one who believes in resting on his laurels. After two strategic acquisitions in the past month in the whisky and airlines businesses, Mallya is busy plotting leverages, such as using Air Deccan to get Kingfisher into overseas markets and bringing in the White & Mackay whisky brands to India before Diwali.
Soon after announcing his latest deal, a 26% controlling stake in Deccan Aviation Ltd, which runs India’s first and largest low-cost airline, Air Deccan, Mallya sat down with Mint.
Edited excerpts>>>

Backend synergy to enable lower fares: Mallya, Gopinath
Moneycontrol.com
June 02, 2007
Mars and Venus finally in the same orbit; a day after the deal was sealed Vijay Mallya and Captain Gopinath discussed the deal with CNBC-TV18. They said that the two airlines now enjoyed a huge opportunity on saving in engineering and maintenance costs. This would reflect on costs too.
The two airlines will synergise in the backend while preserving the frontend, and that will enable both, Deccan and Kingfisher to be profitable, they said.
Excerpts from the exclusive interview with Vijay Mallya and Captain Gopinath:

Q: Who is from Venus and who is from Mars, we heard you on the tape protesting when Captain said that you are from Venus, you were from Mars?

Vijay Mallya: I don’t think there is any point in going down the track of who is from which planet because right now, Kingfisher and Air Deccan are on the same planet.
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Consolidation in aviation; low fares may stay
Vinay Kumar
The Hindu
June 02, 2007
New Delhi: With Vijay Mallya, who heads Kingfisher airline and UB Group, acquiring 26 per cent stake in budget carrier Air Deccan, the rapidly expanding domestic civil aviation scenario has seen one more step towards consolidation.
After the recent Jet-Sahara deal and merger of the two State-owned carriers, Air India-Indian Airlines, slated to become operational from mid-July, chances are that the impact of the consolidation will be felt in the aviation sector only by this year-end in the shape of new market dynamics and synergies in various areas. JetLite, most likely a budget arm of Jet Airways and the new, merged public sector single-entity Air India will emerge in the aviation market soon.
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To focus on airport development, modernisation: GMR Group
Moneycontrol.com
June 01, 2007
V Jayaraman, Chief Operating Officer of property development at GMR Group says that the company is modernising the existing Delhi Airport and now are putting in Rs 3500 crore for the new runway.
Excerpts from CNBC-TV18's exclusive interview with V Jayaraman:

Q: How much land do you hold outside the Delhi-Gurgaon area and how have you valued that at?
A: We are into some exciting times here in the GMR Group, we are modernizing the existing Delhi airport and also building a new terminal . We have about 250 acres to develop, which is 5% of the 5000 acres plot.
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Will consolidation help fliers, airlines?
Ranju Sarkar
Hindustan Times
June 01, 2007
Life may not change overnight for the Indian flier as supply continues to be in excess of the demand, and Indian carriers will keep inducting new planes. This will keep fares down over the next 3-6 months.
But with the emergence of three big airline combines (Air India-Indian, Jet-Sahara and Kingfisher-Deccan), who will control over 80 per cent market share, the joy ride for Indian fliers may not last for long. ‘‘Once they are able to rationalise routes and integrate operations, fares will increase. From then on, fares are likely to stabilise, said an expert. For airlines bleeding from fare wars, the consolidation couldn’t have come at a better time.
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'UB deal is not about losing control'
URVASHI JHA & PP THIMMAYA
Economic Times
June 01, 2007
The combative low-cost air warrior was extremely upbeat about the ‘marriage’ with a high-profile full service airline and saw losing no control in this union. It was 4:45 am Monday morning, when the two airlines agreed to “bail out each other”.
Captain GR Gopinath , the pioneer of low-cost airline in India speaking to ET on various facets of this alliance said, “UB picking up 26% stake has nothing do with losing control as I have always played the role of an entrepreneur and let a CEO run the operations.” Excerpts:

Did you expect such a consolidation to happen so soon in the industry?
I did not expect this consolidation to happen till Vijay Mallya changed his offer. When Mr Mallya first spoke to me, I mistook him and spurned his offer as he wanted to acquire my airline, but later he came up with another offer.
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Making flying a common man's word
SUDIPTO DEY
Economic Times
June 01, 2007
New Delhi: Over the past three years, Captain GR Gopinath, the father of low-cost flying in India, has developed a strong resemblance to RK Laxman’s Common Man, the brand ambassador of Air Deccan, watching with astonishment the flightpath of India’s first no-frills carrier.
And now the Aam Aadmi is set to waltz with the (self-proclaimed) King of Good Times Vijay Mallya, joining another duo doing the partnership polka, Jet Airways and Air Sahara. All of which is more grist for the aviation mill as they are thought to be an unlikely pair — one the epitome of first-time aspiration, the other a flamboyant advocate of La Dolce Vita.
But there is a place in many Indians’ hearts for this former soldier and his much talked-about dream of making every compatriot fly at least once in his or her lifetime, echoed in Air Deccan advertising campaigns.
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