Dealing with Challenges at Air India

Air India has been going through a major transformation over the past two years. It has been inducting new aircraft for the first time in well over a decade, has introduced new long-haul flights and in-flight products that are getting decent reviews, has merged its operations with the former Indian Airlines, is modernising IT systems and is preparing to join the Star Alliance. In reality it is all long overdue, as Air India had been stagnating for so long. Chairman and managing director Raghu Menon is the first to admit that the change process should have started long ago, but as he puts it: "It is better late than never." India's air transport market has itself seen massive change over the past five years, since Air Deccan was launched as the country's first low-cost carrier. Its success led to the launch of many more airlines, which in their fight for market share brought airfares down sharply, resulting in huge growth in demand. At the same time the government opened up air services agreements to allow foreign airlines to operate more services to India, and began modernising airport infrastructure at last. The new players put immense pressure on state-run Air India and Indian, which had long been regarded as employment machines with apathetic staff, ageing aircraft and outdated in-flight products. The plan was to create a true network carrier operation to help the combined entity compete effectively with the new players. Air India had until then focused on international services while Indian focused on the domestic market, with some international services to Southeast Asia and the Middle East. "The merger is one of the best things that has happened. It has made us an airline of competitive scale in the region, in the South and Southeast Asian region. The main gains that we anticipated have turned out to be quite realistic, particularly the network synergies and the synergies in operations, and despite all doomsday predictions the human resource merger has also been of great ­benefit," says Menon, who only became ­chairman and managing director earlier this year after moving over from the Ministry of Civil Aviation. Air India still has real problems and some rival airlines say privately that its change process has largely been cosmetic without addressing the real issues of ­improving the balance sheet and cutting staff ­numbers. Officials at Air India feels other way costs have been reduced due to the enlarged entity's increased purchasing power. Offices abroad are being merged, and there has been a significant revenue boost which has exceeded all expectations. The feed is the major positive development. Its trying to ensure that the traffic from the domestic network feeds into two major hubs of Delhi and Mumbai, from where most of our international operations take place, so that passengers travelling abroad as well as passengers coming to India are able to get good seamless connectivity. The route duplication is almost completely removed. Also the duplication in offices and personnel in various locations has been removed, helping a big saving in cost. Financial benefits are impossible to quantify as the carrier does not release earnings at timely intervals since results must first be ­presented to Parliament. The last published accounts were for the year ended 31 March 2007, when Air India posted a loss after ­several years of profitability. It admits it is still losing plenty of money. Insiders say it lost more than Rs20 billion ($406 million) in the last financial year and the civil aviation minister himself was recently quoted as saying losses could hit Rs30 billion this year. One of the assurances which the government gave at the time of the merger was that there would be no retrenchment of employees. Another major problem is with information technology, particularly the lack of a single reservations system. This means that although only the Air India name is now used, the old Indian Airlines code remains. Passengers booking online, for example, still need to choose their flights from one of two websites. Changing this is a priority and a new booking system should be in place by the middle of 2009 from vendor EDS which will allow the two airlines to merge fully under the Air India code. Pushing it to speed up the implementation is the fact that it is due to join the Star Alliance in 2009. Air India will be the first Indian carrier to join an alliance and this should give it an edge over its competitors at home, all of which are struggling financially as a result of increased costs, overcapacity and a recent drop in demand. The tougher times have led to major changes in the operating environment and over the past two years there has been a wave of consolidation. Aside from the Air India-Indian merger, Jet Airways acquired the former Air Sahara (now JetLite) and Kingfisher acquired the former Air Deccan.These three groups now control 77% of the market by passenger numbers. Air India is looking for injection of equity,as its equity base is very low. The second proposal is for a soft loan. Air India holds a lot of promise and should not be underestimated. It is an airline which has performed for over 75 years, and with the transformation that is taking place it will perform even better.

interview...

As promised I am finally publishing the Interview with MyJet CEO Mr. Sudheer Nair. It can viewed by clicking here... It was an email based interview which was a part of couple of mail sent to him. I thank him to replying all the questions. New concept of Air Charter will be started by MyJet. Hope readers will enjoy it.

Indian Aviation: lost & gone...

Its been a couple of months that I am not active with my posts. I know that its long due to give a good post & share a great piece of knowledge. Being working with Club One Air & watching closely my fav. sector has only given me a lot of disappointments specially with the growth of this industry. Like every body else I can also blame high ATF prices & blah-blah... I just want to know the base of this halt in growth. Are airlines to be blamed just like ATF hikes, I personally dont think so. In my opinion, Govt. is to be blamed for its double standard policies, be it development of airports, giving permissions to airlines to fly abroad or entry of new airlines. Govt. made such a hoopla about regional airlines, what happened to them. None of them has taken wings. In the past it self so many low cost airlines started but, nearly all of them are in the stage of dying. 

Who is at fault???

The Low Cost Charters (LCC)...

Just imagine getting the services of Air Charters in the cost of business class air tickets. Yes, this is going to be possible very soon. Till now we only discussed about the low cost model of the scheduled airlines. Today I will discuss about the low cost model in air chartering. Air chartering which was considered to be exclusive, is soon will be in the reach of middle class people. This can be done with VLJs i.e. Very Light Jets (more info about VLJs from wikipedia). There are already a few companies trying to get VLJs in India. These are :

MyJet India

Club One Air

Invision Air

MyJet & Club One Air are going to start their services soon. In fact, MyJet will offer per seat on demand which is very unique & first of its type in India, where as Club One Air will offer high end services (matching its present offerings). Not much information is there about Invision Air.

Watch out for MyJet !!!

Pilots in India often fail alcohol tests

Around 50 pilots each year in India are being grounded because they had consumed alcohol before taking a flight, the country's civil aviation authorities.

The Director General of Civil Aviation (DGCA), a body controlling airline operations in India, said dozens of pilots are found to have consumed alcohol during routine pre-medical tests every year.

India is one of the fastest growing aviation markets in the world with dozens of new airlines competing with each other everyday, often resulting in pilots forced to fly at short notices.

The country has about 4,500-5,000 commercial pilots, and another 2,500 are undergoing training. Civil aviation rules specify that pilots and cabin crew cannot consume alcohol 12 hours before taking a flight. A pilot can be grounded for three months and he can lose his license if he repeats the mistake again. Some times flights have to be canceled because of drunken pilots.

CRJ 700 in India

The first CRJ 700 Aircraft entered in to service in India with Air India Regional. The 70- seater is flying six days a week between Delhi-Raipur & Delhi-Vishakhapattanam. Load factor is repoetrd to be nearly 80 percent. With Increasing jet fuel prices & drastic decrease in Air travel, lets wait & watch for how long it will able to have a high load factor?

Deccan with Kingfisher...

A few months back I promised that I will review Deccan website. To be very honest I didn't found any thing different or special to share. Every body knows it now has a feel of Kingfisher but, thats only the feel & nothing like Kingfisher. A jingle was there initially & I could not find it now. Infact, I downloaded it but, its not peppy. They have removed the history of the airline from their website, very sad. They have decreased the check-in weight to 13 kg. I have not flown in Deccan since, its merger with Kingfisher but, some of my close friends don't give healthy review for it. Same old story of being late. Now, the latest about it what I feared earlier. Deccan will cease to exist.

Aircraft Fractional Ownership & India...

I was wondering why I have never posted about any of the charted airlines, even though i did my internship in a charted airline. Let me break this unsaid rule. With so much hype of B-jets (entering in India, Tata has stake in this) & Netjets offering what is known as Aircraft Fractional Ownership (AFO). Being the only person in India (i think so) who has done a project on Aircraft Fractional Ownership (I did a my Internship with Club One Air on the project titled - "Feasibility of Aircraft Fractional Ownership in India"), i believe its my duty to tell my readers about this AFO thing. The concept of AFO can best known on Netjets website, as this company introduced the concept to the world. I would like to cover issues pertaining to AFO in specifically in India. These issues are a roadblock to this concept-

1. Inappropriate Infrastructure.
2. Charted Flights are not allowed to take off on busy timings.
3. Secondary preference given to charted flights.
4. Even Indian Corporates love to have discounts in AFO, how these players will overcome that.
5. Indians dont love to share thier vehicles, how they will share an aircraft.

Well I will not discuss my findings but, these are the million dollar question to be answered.

Shutting Down HAL Airport...

Pressure on the government to keep Bangalore's HAL airport running is beginning to gain ground. While much of the angst is over traffic snarls, the arguments are substantive and deserve attention. The government on it's part is committed to close the current airport. It has signed a concessional agreement (CA) with BIAL where one of the terms is to not allow any other airport within 150 kms radius of the new one.

Article by Samuel Jacob

To know more please click on the title, for complete article.

History of low-cost airlines in India...

Knowing about my passion for Airlines one of dear friend send me a link. It had all the latest information about the low cost airlines in India. The ailines covered in that article are as follows -

• Air Deccan
• JetLite
• GoAir
• SpiceJet
• Indigo
• Air India Express
• Jagson Airlines
• MDLR Airlines
• Paramount Airways

I have not even changed the title of the article. Plz click on the title to read brief history of the above said airlines with present situations. Its a beautiful article on rediff.com

Freedom... I Doubt...

Ever noticed the Registration of Aircrafts in which you fly. There is one thing common in all & that’s all the registration starts from VT. So what actually does that mean. In good olden days, I am talking about British Raj period, all the aircrafts at that point were registered as Viceroy Territory. The Irony is that it still holds good & today aircrafts are registered for the short form of the same that’s our VT. None of the associated authorities have considered to think about that. We may have got freedom some 60 odd years back but, are we really free???

Developments in Indian Aviation

Important Developments in Indian Aviation -

• Four airlines given NOC to operate as Regional Airline – M/s. Star Aviation for Southern Region, Jagson Airlines for Northern Region, M/s. MDLR Airlines Pvt. Ltd., for Northern Region and M/s. Zav Airways for North-East/Eastern Region.
• Air India will become the full-fledged member of the Alliance formally by 2009, when the IT Integration and other issues will be completed. Specialized teams at Air India, Star Alliance and its member carriers are now working on the integration process.
• Approval given by Government to set up Greenfield airports in Kannur (Kerala), Navi Mumbai and about the international airport at Jewar, Greater Noida that is under the consideration.
• Andhra Pradesh State Government announced the reduction in the sales tax on ATF from 33% to 4%.

more details about Zav Airways can be taken from http://zavairways.com/

Future Airports in India...

Presently India have 460 airports n airstrips. The Govt. now plans to have nearly 500 airports n airstrips in India by 2020. This will include the ongoing redevelopment of currently unused airports or little used airports and development of greenfield and cargo airports. There are another 368 landing strips that function as makeshift airports for limited purposes. As many as 156 belong to the defence or semi-defence sectors and various state governments while 63 are owned by the private sector. The peculiar situation in India is that air traffic is concentrated at a few key airports. They include 16 offering international services and another eight that connect domestic sectors. These 24 airports together account for a whopping 94 per cent of traffic and the balance is spread over 36 smaller or regional airports. A very liberal aviation policy is requires to reach the target of 500 full-fledged airports in the country, which has to be backed by an aggressive programme to upgrade existing small airports. Airport development in India is expected to be largely a private sector play in the near future.

Some state governments like Andhra Pradesh, Karnataka and Maharashtra have also identified as many as 15 airports for development.

Private conglomerates already run some airports like those in Mumbai, Kochi, Bangalore, Hyderabad and Delhi.

taken from www.ibef.org

Hobby Flying in India

Commercial aviation in India is booming, as is the demand for professional pilots, but the development of "Hobby Flying" shows that the industry's growth is not restricted to the commercial side. Though infrastructure still serves as the key bottleneck, some 50 private aircraft were added over the last year to the country's flock of 208 general aviation aircraft, according to the Centre for Asia Pacific Aviation. A few resort-style aero-sports club expected to open. Dedicated flight schools are encouraging people not only to learn to fly, but to buy, and are seeing uneven interest with "more enquiries from women," according to Anil Thapar, director of Rajasthan Aero Sports Club. The club will serve to train new pilots, with private and commercial classes set to begin in May. As a developing market, general aviation is still perceived to be a very expensive hobby in India, and that is also leading to the development of the microlight market.

Indian Aviation in the new year...

Happy New Year... with this note let me point out some of the issues i am concerned about in this new year... -

• What if after the coming General Elections govt. gets changed & it keeps different views than the present one?
• What if the ATF (Aircraft Turbine Fuel) keeps on rising?
• Will the new MD of Air India be able to do what the present is dreaming of?
• Is some other LCC will have the same fate like that of Air Deccan (now known as Simplifly Deccan)?
• Will common man will still be able to take on the skies wit rising fares n taxes?

In the end just hoping that this yr turns out to be excellent one for the Airline Industry.