Tuesday, December 29, 2009

Isro to join project for passenger plane

India’s space agency will be made a partner in the country’s Rs2,500 crore passenger plane project so it can share its technology expertise, infrastructure and programme management skills and help avoid the mistakes and delays seen in previous projects.

The so-called regional transport aircraft, or RTA-70, being designed to carry 70-90 passengers on short-haul routes, is India’s ambitious attempt to build a civilian plane and bridge the gap in aeronautical expertise with countries such as China and Brazil.

The Indian Space Research Organisation, or Isro, “will be part of a consortium,” said G. Madhavan Nair, chairman of the research council of National Aerospace Laboratories, or NAL, a public-funded agency focused on civil aerospace technologies. “NAL will lead the project.”

Nair, a former head of Isro, said the plane project would be run by an independent commercial body, with public and private partners, including an overseas aerospace firm. He did not name the private firms.

The plane project is yet to get government sanction but is listed in the science and technology plan in the 11th Plan that ends in 2012.

Once approved, the plane project will take around six years to build and be certified for operations, said C.G. Krishnadas Nair, president of the Society of Indian Aerospace Technologies and Industries, or Siati, a body that promotes home-grown enterprises in the aerospace and defence sectors.

So far, India’s attempts to build civilian planes has had little success. NAL has built two civilian planes so far: Hansa, a two-seater trainer, is being flown in some flying clubs but is not a commercial success yet. Saras, a 14-seater plane project in the works for nearly two decades, has been suspended till an inquiry is completed into the crash of a prototype in March that killed two pilots.

In the late 1990s, military plane maker Hindustan Aeronautics Ltd, or HAL, and Franco-Italian manufacturer ATR dropped a plan to make turboprop planes jointly in Kanpur, citing limited market opportunity.

But economic growth since then and the boom in India’s civil aviation sector has presented a fresh opportunity to build planes locally. NAL officials say the sweet spot would be planes that can carry 70-90 passengers over the short haul (up to 1,000km, say, Bangalore to Mumbai) and does not compete with planes of large firms such as Boeing Co. or Airbus SAS.

Currently, only NAL and HAL build planes in India. In December, Mahindra group become the first private Indian conglomerate to acquire the capability to build aircraft when it bought two Australian aerospace firms for up to Rs175 crore over five years.

For the RTA-70 project, HAL is the manufacturing partner and firms such as Infosys Technologies Ltd and the local unit of US technology firm Honeywell International Inc. are building some technology components, Satish Chandra, convenor for the RTA programme at NAL, said in a lecture on 30 September.

The plane is expected to consume around 30% less fuel than existing 70-100-seater passenger aircraft, and have half their maintenance costs through the use of special sensors and coatings. RTA-70 will be able to land and take off on small runways and use satellite navigation, Chandra said.

“We should make use of all resources (in aerospace) within the country. The aim is to make the project a success,” said Nair of Siati.

In addition to building rockets and launching satellites, Isro is building a capsule to carry astronauts into space and later to the moon; some of the facilities and technologies it uses for projects such as these could complement NAL’s plane programme. NAL, too, builds and tests technology for Isro’s programmes.

While Isro’s record of building rockets and launching satellites has improved over the years, it has seen its share of delays. The Geosynchronous Satellite Launch Vehicle, or GSLV rocket, with an indigenous cryogenic engine, was set for launch by January but has been delayed by at least a year.

Analysts caution that Isro’s bag is full with projects, including planetary and manned space missions, and even if it is used as a partner, the lead agency should take on the onus of completing the project.

“Why just Isro, you can use any resource available in the country, but the least you should do is to have one person or agency that should be accountable (for the project),” said retired Air Marshal T.J. Master, chairman of Master Aerospace Consultants (Pvt.) Ltd, an aerospace advisory. “It should be made a commercial success and that should be the drive.”

Thursday, December 10, 2009

Indian Ministry of Civil Aviation: non-metro airports...

Development works by the Airports Authority of India (AAI) has been completed at various non-metro airports and in many the work is scheduled to be completed by 2009-10. This information was given by the Minister of Civil Aviation, Shri Praful Patel in Rajya Sabha. The details of development works completed by AAI at various non-metro airports are as follows: Vizag (Andhra pradesh)- construction of new integrated terminal building; Guwahati (Assam)- extension of runway; Mangalore (Karnataka)- construction of new integrated terminal Building; Agati(Lakshadweep)- construction of new integrated terminal building; Raipur (Madhya Pradesh)- construction of new apron; Khajuraho (Madhya Pradesh)- construction of new apron at; Aurangabad (Maharashtra) - construction of new integrated terminal building; Nagpur (Maharashtra)- construction of new international arrival hall and expansion of existing terminal building; Amritsar (Punjab)- extension of runway, expansion of apron and terminal building, construction of new terminal building; Jaipur (Rajasthan)- construction of new international terminal complex; Udaipur (Rajasthan)- construction of new terminal building complex and new apron; Madurai (Tamil Nadu)- extension of new apron; Trichy (Tamil Nadu)- construction of new integrated terminal building; Agartala (Tripura)- expansion of apron, strengthening of existing runway and construction of technical block; Agra (Uttar Pradesh)- renovation of terminal building; Dehradun (Uttarakhand)- construction of new terminal building, apron and strengthening and extension of runway. Development works scheduled to be completed in Financial Year 2009-10 at various non-metro airports are as under: Portblair (Andaman & Nicobar Island)- extenion and strengthening of apron; (Raipur (Chattisgarh)- construction of new terminal building; Ahmedabad (Gujarat)- construction of new international terminal building; Ranchi (Jharkhand)- construction of new integrated terminal building; Trivandrum (Kerala)- construction of new international terminal buiding; Bhopal (Madhya Pradesh)- construction of new integrated terminal building; Indore (Madhya Pradesh)- construction of new integrated terminal building; Pune (Maharashtra)- extension and modification of terminal building; Imphal (Manipur)- extension of apron; Dimapur (Nagaland) - extension of apron and construction of link Taxiway. Coimbatore (Tamil Nadu)- expansion and modification of existing terminal building, consruction of part parallel taxi way and extension of apron; Madurai (Tamil Nadu)- construction of new integrated terminal building; Lucknow (Uttar Pradesh)- construction of new international terminal building and new apron, expansion of existing apron; Varanasi (Uttar Pradesh)- construction of new integrated terminal building including aerobridge and extension of apron; Chandigarh (Union Territory) - construction of new terminal building; Khajuraho (Madhya Pradesh)- construction of terminal building. of terminal building. (a): Airports Authority of India (AAI) operates and Airports Authority of India (AAI) operates and maintains 87 operational and 29 non-operational airports including 23 civil enclaves at defence airfields and private airports for air traffic operations. In addition to above, Government of India have given 'in-principle' approval for setting up of new Greenfield airports at Navi Mumbai, Sindhudurg in Maharashtra, Mopa in Goa, Bijapur, Simoga, Hassan and Gulbarga in Karnataka, Pakyong in Sikkim, Durgapur in West Bengal and Datia/Gwalior in Madhya Pradesh. There is no such estimation made. However, Airports Authority of India (AAI) has plan to incur expenditure of Rs.12434 crores for modernisation of airports and air traffic services across the country during XIth Five Year Plan period (2007-2012).Two Greenfield Airports each at Bangalore and Hyderabad with an investment of Rs. 2400 Crores and Rs. 2920 crores have been made operational in 2008 under PPP. Besides,development of IGI Airport, New Delhi and CSI Airport, Mumbai with estimated cost of Rs. 8975 crores and Rs. 9802 crores respectively has been undertaken under PPP.

Airlines see blue skies in FY11 on cost cuts, improved traffic

India’s airlines are expected to post aggregate losses of around $2 billion (Rs9,260 crore) in 2009-10, largely on account of excess capacity and high fuel prices, but most of them are looking forward to a better, even profitable, 2010-11 on the back of their own cost-cutting measures and an increase in passenger traffic. The growth has already started coming in. If the current situation prevails, the next financial year will be good for airlines. Most importantly, the gap between demand and supply will disappear in the year. Demand could outstrip supply by 2014. That marks a significant turnaround for a sector plagued by overcapacity in 2008-09 and part of 2009-10. The aggregate loss of India’s airlines rose 44% to Rs8,557.37 crore in 2008-09 and the airlines expect to post a loss of a similar magnitude this year. Meanwhile, passenger traffic in the country, the fourth highest in the world after that in the US, China, and Japan, fell in 2008-09 on the back of high tariffs; it also fell in the first part of 2009-10. (Negative outlook: The aggregate loss of India’s airlines rose 44% to Rs8,557.37 crore in 2008-09 and the airlines expect to post a loss of a similar magnitude this year.) However, most airlines have started posting better results in recent months. Jet Airways (India) Ltd, the country’s largest airline, showed a 33% increase in its domestic passenger traffic in November, compared with the same period last year. The airline’s international passenger traffic has also registered a growth of 19% in November. Even in what is typically the lean season for Indian airlines, Jet Airways managed to clock an operating profit of Rs44.24 crore for the quarter ended 30 September. However, its net loss in the quarter widened to Rs406.69 crore from Rs384.53 crore a year earlier, largely on account of a five-day pilots’ strike and lower airfares. The Indian aviation market is growing realistically at 4-5% currently, compared to the levels of 2007-08, which was the boom period. The issue of overcapacity has been addressed. That’s an opinion that is seconded by analysts. The airline sector is exhibiting strong recovery, with an increase in passenger traffic and bottoming of yields. This, along with stable oil prices, is expected to lead to (the) sector turning profitable by next year. “I have always been very optimistic about the Indian market. All signs are that traffic is improving but we also need to see an improvement in yields. The yield improvement will come as capacity is constrained and I am sure we will see another wave of orders (for planes) in 2011-12,” said Kiran Rao, executive vice-president, marketing and contracts, for aircraft manufacturer Airbus SAS. Not everyone agrees with that. Airline CEOs (chief executive officers) are always optimistic and they will expect profit every year. As long as the growth is artificial and fares do not cover the cost of operations, profitability will be a question. An industry analyst, who did not want to be identified, pointed out a potential problem arising from Indian carriers cancelling or deferring orders for aircraft. “Most of the carriers have deferred their aircraft acquisition plans. If the revival is true and if they fly back to black, they will miss the wave of next boom.” Over the past month, shares of Jet Airways have risen 19.68% and closed at Rs560.45 each on Wednesday on the Bombay Stock Exchange. Shares of Kingfisher Airlines Ltd rose 15.06% to close at Rs60.35 each, and those of SpiceJet Ltd zoomed 31.22% to close at Rs55.90 each in the same period. The exchange’s benchmark Sensex index has risen by 3.8% in the same period and ended Wednesday at 17125.22 points.

Monday, December 7, 2009

DGCA deregisters 3 Paramount aircraft...

Directorate General of Civil Aviation (DGCA), has deregistered three of the five aircraft in the fleet of Chennai-based Paramount Airways Pvt. Ltd. This is the second time since last year that the regulator has deregistered aircraft at the behest of lessors owing to defaults in lease payment. GE Commercial Aviation Services (Gecas) last year confiscated three aircraft from Kingfisher Airlines Ltd, the country’s second largest private airline, for this reason. In October Gecas had sought to de-register Paramount’s aircraft and DGCA was considering the move. Four-year-old Paramount, with a market share of around 2%, largely flies within southern India, using its leased fleet of Embraer 70-75 seater aircraft. “Air traffic control (ATC) has already been informed of the registration numbers of the aircraft today,” said one of two top government officials. The second government official said the airline has told DGCA that the aircraft should not be deregistered as the carrier has won a case over lease payments in London against Gecas. “We will not go on hearsay,” the official said. “When the original copy of any such order comes, then we can register them again with the relevant charges.” A Paramount Airways official who spoke on condition of anonymity confirmed that there was an order to deregister the aircraft but reiterated that the airline has won a case over the issue in London. Paramount will present its case to DGCA, this official said, adding that he expects the planes to keep flying. Paramount’s aircraft carrying the registration numbers VT-PAD, VT-PAE and VT-PAF have been deregistered, according to the officials. The three aircraft were part of a lease agreement with Gecas dated 29 July 2005. The airline is currently operating around 20 daily flights after two of its aircraft were grounded in the past three months due to engineering issues, said another airline official who asked not be named as he is not authorized to speak with the media. Gecas’s spokesperson could not be reached for comments by email or telephone. DGCA’s spokesperson was not available to comment.

Monday, November 30, 2009

Unused Airports in India...

There are 32 airports belonging to Airports Authority of India (AAI) which are non-operational (Unused). They are Cuddapah, Donakonda and Warangal in Andhra Pradesh; Passighat in Arunachal Pradesh; Rupsi in Assam; Jogbani, Muzaffarpur and Raxaul in Bihar; Bilaspur in Chhattisgarh; Deesa in Gujarat; Chakulia in Jharkhand; Mysore in Karnataka; Khandwa, Panna and Satna in Madhya Pradesh; Akola, Solapur and Jalgaon in Mahrashtra; Shella in Meghalaya; Aizwal in Mizoram; Jharsuguda in Orissa; Kishangarh in Rajasthan; Vellore in Tamil Nadu; Kailashahar, Kamalpur and Khowai in Tripura; Asansol, Balurghat, Behala and Malda in West Bengal & Jhansi and Lalitpur in Uttar Pradesh. Expenditure incurred on the maintenance of some of these 32 non-operational airports during the last 3 years as well as the loss incurred at these airports are as under. The expenditure made and loss occurred (Rs. In lakhs) are in bracket:- For the year 2006-07 – Cuddapah (10.51,10.47), Jogbani (0.50, 0.50), Jharsuguda (78.77, 78.11), Kailshahar (1.24, 1.24), Vellore (6.95, 6.93), Balurghat (4.81, 4.51), Behala (24.88, 24.88) and Malda (23.07, 22.76); for 2007-08 – Cuddapah (14.50, 14.48), Jharsuguda (83.73, 83.37), Vellore (11.12, 10.81), Balurghat (10.48, 10.48), Behala (51.36, 43.64) and Malda (36.48, 36.48), and for 2008-09 – Cuddapah (42.33, 41.86), Mysore (13.88, 13.88), Jharsuguda (154.79, 154.79), Vellore (18.78, 18.79), Balurghat (10.76, 10.76), Behala (112.59, 112.59) and Malda (56.41, 56.41). Cooch Behar in West Bengal and Akola and Solapur in Maharashtra were made operational in the last three years. Mysore Airport in Karnataka will be made operational in 2009-10. This information was given by Shri Praful Patel, Minister of Civil Aviation in Lok Sabha.

Wednesday, November 25, 2009

Thursday, November 19, 2009

Falcon 7X approved for India

Dassault Falcon is expecting a surge of orders from India following announcement that the French manufacturer has received a type certificate for the Falcon 7X from India's civil aviation authority. Falcon 2000 and 900 models are already certificated in India and around 16 large-cabin Falcons are in service in the country. The first Falcon 7X in India will be delivered in January 2010 to Religare Voyages, a charter company based in New Delhi and part of a multi-billion dollar integrated transnational promoter group straddling financial services, diagnostics, health and wellness, and IT services, globally. Religare Voyages operates a Falcon 2000, together with smaller jets and turboprops.
A dozen of other large-cabin Falcons including several 7X aircraft are on order for customers in India. The performance of the Falcons are especially valued in India, where short airfields, elevated runways and high temperatures are common. Dassault has also established in the last few years a spares centre in Mumbai, along with a customer service team based in Mumbai, a liaison office in Delhi, and service centres approved by the Indian civil aviation authority. "India has been one of our strongest markets over several years so Falcon 7X type certification is of real significance," says John Rosanvallon, Dassault Falcon president and chief executive. "As the country's economy continues to strengthen, there will be an increasing need to connect India efficiently with other major centres of trade around the world. For example, the Falcon 7X provides direct, non-stop access from Chennai, India with London City airport."

Wednesday, October 14, 2009

Paramount Airways flying in rough weather

Aircraft lessor GE Commercial Aviation Services (Gecas), an arm of General Electric Co. (GE), has asked India’s aviation regulator to de-register three Embraer jets leased to Chennai-based Paramount Airways Pvt. Ltd, after the airline defaulted on payments for the aircraft. Indian carriers have been under financial strain with at least $1 billion (about Rs4,800 crore) in losses in the fiscal year ended March, resulting in defaults on aircraft payments. Simultaneously, the global economic recession has meant that lessors suffering a credit crunch are pushing hard to extract payments. Last year, Gecas confiscated three aircraft from Kingfisher Airlines Ltd, the country’s second largest private airline, owing to non-payment of dues. In a letter dated 25 September to Paramount and the Directorate General of Civil Aviation (DGCA), Gecas says the airline “has failed to remedy the events of default referred in the notice and as at the date of this notice there still remains $215,540.18” in dues. Paramount has informed DGCA that it has already paid 65% of the sum and has a deposit of about $15 million with Gecas, including a $5 million safety deposit and the balance towards maintenance reserve. “As per the contract, Paramount is entitled to refund to the tune of $1.27 million,” it said. A Paramount official said on condition of anonymity that the airline has asked Gecas “to offset the rentals against the reserves”. He added that the matter is being resolved through talks. Paramount, which has a 2% share in the domestic market, runs a fleet of five leased Embraer jets. It has kept its operations limited and manageable so far, unlike other carriers that have outpaced the local industry’s growth. Gecas has sought back three of these aircraft, leased as part of a 29 July 2005 agreement. Gecas said in its letter to DGCA that it has the option to terminate the leases if Paramount continued to default on payments and operate the aircraft in breach of its grounding notice dated 24 September.

Saturday, September 19, 2009

Cleaning aircraft-cabin air

ONE concern of travellers is that flying can make you ill. Despite soothing reassurances from airlines that the air inside an aircraft’s cabin is as clean as it can be, hundreds of people cooped up in a small space for a long time increases the risk of catching an infection. Viral diseases such as swine flu have spread quickly around the world by air. There are also pollutants to worry about: some airline staff claim to have been made seriously ill by engine fumes leaking into the cabin. A new development could help passengers and crew breathe more easily. It can be fitted during a routine overnight service and uses less power than a light bulb, but is capable of zapping just about all the bacteria, viruses and other biohazards in cabin air—as well as destroying chemical contaminants and pollutants. And it also removes nasty smells.
Staying alive
Air has to be pumped into the fuselage of an aircraft once it flies above 3,000 metres (9,800 feet) because from there the air outside starts to become thin with too little oxygen to keep people alive. In the early days of commercial flight, when piston engines turned propellers, electrical generators were used to provide the power to pressurise the cabin. But with the arrival of faster, higher-flying jets, aircraft-makers found it more efficient to pressurise the fuselage by “bleeding” some of the air entering the compressor stage of the jet turbine (before it is mixed with fuel and ignited). At first only fresh air was taken from the engines. But as jets have become more fuel-efficient, air bled from the engine has been mixed with recycled air from the cabin. This is because the big fans mounted on modern “high bypass” jet engines achieve thrust more efficiently by sending a larger volume of air around the turbine rather than through it. With less air available in the compressor, any that is bled off means the turbine has to work harder, which in turn increases fuel consumption. Typically an airline will strike a balance by using a 50:50 mixture of fresh and recirculated cabin air, although pilots can reduce the amount of fresh air to save fuel. Some are thought to cut it back to only 20%. The mixed air is maintained in the cabin at a pressure which is equivalent to an altitude of 2,500 metres and is passed through what are called high-efficiency particulate arrest (HEPA) filters. Provided they are well maintained, HEPA filters will trap most microscopic particles. But some things can get through, especially tiny viruses. The new AirManager system is said to kill 99.999% of pathogens in a single pass. Even on a short flight of about one hour, the cabin air will pass through the filters around 30 times. David Hallam, inventor of the technology and a director of Quest, says the device works by generating a non-thermal plasma (sometimes called a “cold plasma”) using a high voltage to strip electrons from some of the molecules in a gas. The plasma is confined using an electric field and the cabin air is passed through it. The free electrons disrupt the molecular bonds of any particles in the air, causing them to break up into electrically charged pieces. An electrically charged filter then traps the bits like fly paper. It has tested it with five European airlines that operate BAE’s small regional jet and recently obtained certification for an airline to fit the units to a Boeing 757. “There is a very tangible difference in the quality of air being breathed according to aircrew,” says Sean McGovern, who runs BAE’s regional-aircraft business. The companies will now offer the system to operators of other Boeing and Airbus aircraft. Each unit costs about $16,000. Two are needed on a BAE regional jet and five on an aircraft like the 757. By allowing air to be recycled more safely, the devices could pay for themselves within a year by reducing the amount of engine-bled air that is needed and hence fuel consumption, says Mr McGovern. Another advance that will make flying more comfortable in the coming years is the greater use of carbon fibre, especially by Boeing and Airbus, to make aircraft fuselages. Carbon fibre is stiffer than aluminium, which has long been used to make aircraft, and does not suffer from metal fatigue. One reason cabin pressures are kept low at the moment is to avoid stressing the fuselage too much. The use of carbon fibre will make it possible to pressurise cabins to a higher, more comfortable level. Nor does carbon fibre corrode, so the air inside the cabin will not have to be kept quite so dry—which often leaves passengers with a wrung-out feeling after a long flight. And with recent advances in power electronics, Boeing has decided that it is now more efficient to go back to using electrical generators to pressurise the air in the cabin. This change will start with its forthcoming (and much-delayed) 787, which is supposed to fly for the first time by the end of the year. That will put an end to the trade-off between air quality and fuel consumption. As all these developments start to reach the market, passengers may start checking not just flight schedules and fares before booking a journey but also their airline’s cabin-air quality.

Tuesday, August 18, 2009

India's Airline Industry Goes From Boom to Bust...

A few years ago, India's airline industry was flying high. A booming economy made India one of the fastest growing and most competitive aviation markets in the world. Six new carriers launched while established airlines laid on new routes and bought new jets. In the last four years, Indian carriers ordered 400 Boeing and Airbus jetliners worth about $37 billion.

Brace for impact. The global recession has hit air carriers everywhere, but a sharp decline in passenger numbers is especially bad news for India. With oil prices rising to $73 a barrel, Indian airlines — which carry just 2% of the world's passengers — could sustain more than $2.5 billion in losses this year, accounting for one-fourth of the projected $9 billion in losses for the entire industry, according to the International Air Transport Association. Weighed down by overcapacity, debt and the government's refusal to provide bailouts, Indian carriers are being forced to slash their operations and reduce ticket prices. "Indian aviation is undergoing a regime change in just four years," says chief executive officer of the Center for Asia Pacific Aviation.

That change includes deferring aircraft deliveries, cancelling orders, rationalizing routes and trimming staff to stave off financial collapse. "It's going to be tough, but we mean business," says Praful Patel, India's civil aviation minister. At the same time, three of the country's largest carriers — state-owned Air India, and private players Jet Airways and Kingfisher — are trying to attract more passengers by turning their full-service domestic fleets into budget businesses. In January, India's budget airlines fleet totaled 75 jets, compared with 120 full-service planes. The Center for Asia Pacific Aviation's Kaul reckons that by the end of the year, the skies will be dominated by up to 160 low-fare jets as companies switch to budget operations.

Hardest hit by the economic downturn has been national carrier Air India: It reported annual losses of $1 billion in the fiscal year ending March 31, along with an accumulated debt of $3.5 billion; that debt load is expected to rise to $7 billion by 2012 if it takes delivery of 111 new aircraft already on order. Air India alone accounts for 10% of the total projected losses for the global airline industry this year — even though it carries just 0.35% of global traffic. Air India is suffering from an aging fleet and a bloated staff roster of 31,000 permanent employees and 20,000 contract staff; its labor costs amount to 18% of its total operating expense, the highest ratio in the world, according to Patel.

With no bailout help from New Delhi in sight, Air India is bidding to bring its profitable international budget brand — Air India Express — to Indian turf. Air India Express, which has been flying routes to the Middle East and Southeast Asia for the past five years, will configure 10 of its 57 planes for budget flights by September, says Air India managing director Arvind Jadhav. The company plans to increase the number of budget flights a day from 25 initially to 43 by October. Ticket fares will be down 25% making it attractive for fliers. The logic, says aviation minister Patel, "is to fill up seats and operate at lower costs." Unlike its parent, the profitable Air India Express operates as an independent company with lower overheads. Besides, with no business seats they will be able to pack in more people at a time when the passenger count for all airlines is down 30% since last year.

Following similar logic, private players Jet Airways and Kingfisher, owned by the liquor baron Vijay Mallya, are expanding existing budget operations to try to increase business during the economic downturn. They aren't starting from scratch. Both airlines already had rechristened budget carriers — Jet Lite and Kingfisher Red — acquired in 2007. Now they are transferring capacity to the economy fleets. Kingfisher Red jets are flying more routes; as a result, about 75% of all domestic passengers that now fly with Kingfisher are traveling budget class, up from 50% a year ago. Meanwhile, Jet Airways, India's oldest private player, has converted some of its jets by removing all business-class seats and rebranding them as JetKonnect — giving the company two budget brands. "It gives us the flexibility and speed to deploy capacity and reverse it to meet changing trends," said Sudheer Raghavan, chief commercial officer of Jet. Launched in May, JetKonnect offers 40% lower fares and plans to take the current 130 flights a week to 160 by October.

Officials for both carriers say they hope to resume normal operations once the economy rebounds. But analysts say that may be difficult because the industry has yet to solve a basic problem: too many airlines flying too many flights in a country that, despite its economic growth, is relatively poor. India's airlines are now crowding into the budget market, just as they crowded into regular and premium air travel services a few years ago. "With everybody fighting for the same piece of business, this could once again create overcapacity and fuel fare wars," says Ankur Bhatia, executive director of Bird Group, a New Delhi company that provides technology to the travel industry. Lowering fares may attract more travelers but it may not improve the overall financial health of the industry. "To make profits while shifting business models, the airlines have to think, act, breathe and be low cost," Amitabh Malhotra, managing director of investment bank NM Rothschild & Sons in Mumbai. "That doesn't happen overnight." Adds Patel, India's aviation minister: "This time every airline will learn a lesson the hard way."

Wednesday, August 12, 2009

India as Global Aviation hub...

India’s aviation industry is in a mess.

Pick up any of India’s main papers and stories abound about India’s airlines losing $2 billion in the last financial year. NACIL, the publicly-owned company that runs Air India is in particularly bad shape. The government has rejected a request for a $3 billion bailout package. Instead, the government wants to overhaul AI’s management within a month and has started the hunt for an experienced chief operating officer. With accumulated losses as of March 31 that total a staggering $1.5 billion, for the first time in its history the airline delayed paying its salaries in June. None of the other large carriers, including Jet Airways and Kingfisher, are faring much better. Those two have taken excess capacity out of the market and reduced overheads. Airport operators, oil companies, hotels and others have either threatened to introduce or already are operating cash-and-carry regimes with carriers that have, in some cases, significantly exceeded their credit limits. The spectacular growth rates of 30% to 40% that enticed airlines to ramp up aircraft orders and to devise unsustainable (but until not too long ago universally followed) strategies of buying market share by discounting tickets and adding capacity are now history.

In such a scenario, is there any chance that India will emerge as a global aviation hub?

Looking at its metropolises, including the megacities of Delhi and Mumbai, India should already sport at least one major global aviation hub. Both cities have populations approaching 20 million inhabitants. Delhi is the country’s political capital and arguably its second most important commercial hub. It also does not suffer from the severe space constraints afflicting Mumbai’s Chhatrapati Shivaji International Airport. In fact, the masterplan for Delhi’s Indira Gandhi International Airport envisages a capacity of 100 million passengers at the end of its development. The capital hosts embassies of most of the world’s countries, international schools, good hotels and entertainment facilities, a rapidly growing infrastructure and, if one includes the satellite towns of Gurgaon and Noida, more head offices of multinational companies than any other city in India. Until today, infrastructure has been a major handicap. Lack of efficient connectivity between the domestic and international terminals made transfers from domestic to international flights (and vice versa) an unpredictable nightmare for passengers and airlines. With the airport’s development and the construction of an integrated domestic/international terminal this problem will be resolved by the middle of next year.

“Capacity reduction is still lagging behind demand.”

However, their poor shape and the relatively small size of India’s airlines compared with majors such as Emirates, Lufthansa or Singapore Airlines — all with their already well-established hubs and route networks — will make it difficult for any desi carrier to assert itself. The merger of Air India and Indian Airlines was conceptually the right way forward. It was aimed at giving the state carrier the size and route network to effectively compete with its domestic and international challengers. Unfortunately, the marriage between the two airlines was never properly consummated and hardly any of its envisaged synergies have materialized.

So what should India’s aviation industry do to extricate itself from this mess?

To begin with, the airlines will have to start addressing the problems that they themselves have caused. This process has already started with Jet and Kingfisher deferring orders for new aircraft, mothballing new deliveries or, where possible, leasing or selling them to foreign carriers. In short, with the exception of some of the low cost operators, a significant amount of capacity has been taken out of the market. Jet has transferred much of its remaining capacity to its economy-only Jet Konnect product as well as to its low cost subsidiary JetLite. Kingfisher has followed the same strategy by shifting passengers onto its no frills Kingfisher Red product. On another front, a truce in the price wars has yet to be reached. Yet capacity reduction is still lagging behind demand. With all airlines chasing bums on seats, charging prices that will cover costs and hopefully leave a margin for profit remains difficult in such a hotly-contested market. We will surely see more consolidation or bankruptcies in the medium term. This is precisely an area where the government should step in. Before the elections, the Ministry of Civil Aviation contemplated allowing up to 49% foreign domestic investment in domestic airlines. This would include foreign airlines as potential investors – something that is currently explicitly prohibited. It seems obvious that in an industry where average profit margins do not exceed 1.5%, the most likely investors would be other airlines seeking to strengthen their market position, increase their route network or realize economies of scale. Since the elections, however, nothing more has been heard of this proposal.

Another deterrent: The cost of fuel, which in India is among the highest in the world. At current prices, fuel accounts for 45% to 50% of operating costs in India. While the central government has instructed the public-sector oil companies to provide generous credit terms to the airlines, it could do more by naming fuel a declared good which attracts a uniform 4% sales tax.

At present, it is up to individual states to charge fuel taxes as they see fit. Some of them are charging well over 30% – a figure that keeps on rising in absolute terms as fuel prices go up. Internationally, aviation fuel does not attract any levies in many major markets. For India, this means a distorted market, putting its carriers at a relative disadvantage especially on international routes and making technical or fuelling stops in India for international carriers non-viable.

Furthermore, service tax and other levies have been a bone of contention between the airline industry and the government. A review and streamlining of the entire tax regime would surely be a sensible thing. Getting the fundamentals right is obviously a prerequisite for the establishment of a successful hub. To date, India has been fairly liberal in its approach to so-called bilateral agreements which regulate how many flights and/or to which points carriers from two contracting countries can serve. This is a good thing. An open bilateral regime stimulates competition and traffic growth as the examples of Singapore and Dubai have shown. It is also instrumental in bringing down the cost of travel and promoting economic growth.

For the sake of its national economy, the current plight of the national carrier should not discourage India from keeping its aviation market open. Instead, liberalization should be used as a tool to make its industry more competitive and its national carrier a leaner, more focussed and especially a more customer-centric organization.

Air India has taken a couple of encouraging steps. It has selected a European hub at Frankfurt, its first outside India. It is phasing out its unreliable fleet of old B777s and B747s. It has been selected as a member of the Star Alliance and is in the process of joining. That will give Air India a greater reach into the coveted U.S. market in addition to its flights from India. It is through its alliance membership that Air India could widen its appeal and route network from India to the rest of the world.

Overall, India either has or is building the necessary ingredients for establishing a successful aviation hub, most likely in Delhi. But to fulfil that promise will require a broader partnership involving alliance partners, regulators, airport operators and local authorities to overcome the many hurdles that remain.

Tuesday, August 11, 2009

BJETS delays aircraft deliveries as economic crisis bites

Asian fractional ownership firm BJETS has asked manufacturers to slow the delivery of the business aircraft it has on order due to the ongoing economic crisis.

The company, which is backed by USA-based investment firm Briley Group and Indian Hotels, operator of the Taj brand of luxury hotels in India and part of the Tata Group conglomerate, ordered 20 Cessna Citation CJ2+s, nine Hawker 850XPs, 11Hawker 900XPs, and 10Hawker 4000s last year. It had planned to take delivery of all the aircraft within five years.

However, it had only five aircraft in its fleet at the end of 2008, down from the seven it envisaged, says chief executive Mark Baier. BJETS will have 11-12 aircraft by the end of 2009, below the 15 it originally targeted. Several will be managed aircraft, he adds.

"Clearly, it is a smaller business than what we envisioned a year ago. But that is expected given the economic climate and tight credit situation," says Baier. "We began to talk to the manufacturers about delaying deliveries just before the stock markets crashed and as demand faltered. That was a good move as we can now manage the delivery schedules better."

The company, which places jets in Singapore for the South-East Asian market and Mumbai in India for south Asia, has attracted some fractions since it began operations last September. While its block charter and traditional charter businesses are slowly growing as well, BJETS is also moving into the aircraft management business.

"We did not expect so many owners to turn to us for quality management services. We will begin to manage several aircraft this year," says Baier. "The charter business is holding up. Some companies and top executives are shelving or delaying plans to buy business jets, but they still keen to on the idea and so turn their interest to the charter market."

BJETS is also trying to offer value added services. In India, for example, it has an agreement with helicopter operator Global Vectra Helicorp - which has seven helicopters available for charter - to provide access to destinations in the country without a landing strip.

"This association will strengthen our product offering in terms of accessing more destinations that do not have a landing strip but offer a helipad. While BJETS can access over 120 airstrips in India already, our partnership with Global Vectra will enable our customers to fly to all those destinations that cannot be reached by other aircraft," says Baier.

Saturday, August 8, 2009

Study says airport fees in India among the lowest in world

Even as airlines hit out at private airport developers against the "exorbitant" charges being collecting from carriers, the Association of Private Airports Operators (APAO) — comprising private airport operators of India — has come up with a study that puts operating costs at major Indian airports as among the lowest when compared to other major airports around the world.

"The association wishes to clarify the misconception that airport charges in India are amongst the highest in the world," it said. In a survey conducted in 2008 by Jacob Consultancy, which specialises in aviation consultancy, Mumbai airport was ranked 50th in a sample of 50 worldwide representative airports. "This indicates that charges at Mumbai (Delhi airport has similar charges) were amongst the lowest," said APAO secretary general K L Kanthan.

Mumbai's charges are 16 per cent of what Toronto — which charges the maximum fee — collects from airlines. However, airlines do not buy the argument. "There are three components to airport charges. The passenger service fee (PSF), the navigation charges and finally the airport charges. Taken together, it forms a substantial chunk of our operating costs," said a senior official from Air India.

The APAO has also argued that airport charges in India were increased by 10 per cent only once after eight years against the aggregate inflation of 48 per cent, based on average annual cost inflation of 5 per cent. "The fact is that airport charges in India constitute only about 3.25 per cent to 3.5 per cent of total operating cost of airlines as compared to ATF (aviation turbine fuel) which constitutes 40 per cent of the costs."

However, according to Centre for Asia Pacific Aviation (CAPA), while there has to be a recovery model in the billions of dollars being invested in these airports, the introduction of airport development fees (ADF) and user development fees (UDF) came at a very wrong time.

"Airlines in India should understand that such investments need to be absorbed. But from their point of view these new charges came at a very wrong time when the industry was in bad shape and the extra costs passed on to passengers could not be absorbed by them”.

"Unlike airlines, which have the flexibility of focusing on profitable routes and reducing capacity, airports have to maintain the same level of service and facilities irrespective of numbers of passengers. Investment in airport capacity needs to be done with a 5-10 year future horizon to take care of future growth in traffic," the APAO statement said.

India's struggling airlines

“FLY the good times,” urges the slogan of Kingfisher airlines. But for India’s commercial-aviation industry, these are far from good times. On July 31st the Federation of Indian Airlines (FIA) threatened a one-day strike to put pressure on the government to save its seven members from going bust. As the government mulls a bail-out for one of them, the moribund state-owned Air India, the FIA is demanding that it also help privately owned airlines by lowering taxes on jet fuel, which are especially high in India. In response, the government warned airlines against inconveniencing passengers and offered talks. The FIA said it would put the strike, scheduled for August 18th, “on hold”.

Until recently India’s private-sector airlines, which carry more than 80% of domestic passengers, were lauded as a symbol of the country’s spectacular economic growth. But growth began to stall in 2007, when rapidly rising fuel prices pushed up fares and the economy slowed. In the first half of this year, airline passenger numbers fell by 8% to 21.1m. Last year India’s aviation industry lost more than $2.5 billion—about 25% of total world airline losses despite accounting for only 2% of global traffic. This year is set to be as bad.

For Kingfisher and its main competitor, Jet Airways, both full-service carriers, times are especially tough. Kingfisher, which reported a net loss of 2.43 billion rupees ($51m) in the quarter to June, owes more than 9.5 billion rupees in unpaid fuel bills and is surviving on bank loans. Jet Airways recorded a net loss of 2.25 billion rupees in the same period.

High fuel costs certainly exacerbate Indian airlines’ woes. Fuel tax is set by most of India’s states at 28%, whereas in much of the rest of the world aviation fuel is untaxed. The airlines want it to be declared an “essential commodity”, making it eligible for tax at 4%. A handful of states, most recently Rajasthan, have cut jet-fuel taxes to 4% in a bid to encourage airlines to establish local services. But others, including two of the most important, Maharashtra (home to Mumbai) and Delhi, are reluctant to follow for big airports: the tax is a valuable source of revenue out of which fuels used by the poor, such as kerosene and diesel, are subsidised.

But burdensome though the taxes are, they are not the only reason why India’s private airlines are suffering. Over-capacity should take much of the blame. “India’s airlines grew too big, too fast,” says Centre for Asia Pacific Aviation. Anxious to chase market share, the airlines priced tickets well below cost. By some estimates, they bought twice as many aeroplanes as the market could support. As competing airlines poached pilots and mechanics, staff costs soared. “It was all about ego rather than business,” says Captain G. R. Gopinath.

Today those egos are badly bruised and, in line with trends elsewhere, it is low-cost airlines that are taking an increasing share of the market. Of India’s three listed airlines, a budget carrier, Spicejet, was the only one to turn a profit in the most recent quarter. The other two are Jet and Kingfisher. Fighting back, Jet launched a no-frills subsidiary, Jet Konnect, in May; last year, Kingfisher took over Air Deccan to create Kingfisher Red. The budget carriers are hoping to ride the economic downturn by offering better value to corporate travellers. But in the longer term they are eyeing a much bigger opportunity: the 98% of Indians who have never flown.

Tuesday, July 28, 2009

Firemen declare Delhi's new airport terminal 'unsafe'

The Delhi Fire Service has declared the brand new departure terminal 1 D at the capital's Indira Gandhi International Airport (IGI) unsafe.

Delhi Fire Service chief R.C. Sharma has refused to provide a no-objection certificate (NOC) for terminal 1 D, citing many shortcomings during the two inspections conducted by his team in the past few months.

In his last report on May 13, Sharma cited six shortcomings. He said the ventilation system in the VIP lounge, baggage area and the office area was yet to be completed. Further, he stated, the exit route in the retail area should have a separate staircase or passage.

"In some places sprinklers are hidden in the false ceiling, which should be brought down. Some of the restaurants are under construction and are using wooden material. The wood works need to be painted with fire retardant chemicals. Necessary fire alarms or sprinkler system should be extended to these areas," Sharma noted in his report.

He further said systems at the new departure terminal could not be checked due to passenger movement and asked for arrangements to test the systems whenever possible.

But so far the Delhi International Airport Ltd (DIAL), a joint venture between the state-run Airports Authority of India and a consortium led by infrastructure major GMR, has not made any arrangements for the inspection of the systems.

In his report Sharma concluded that "terminal 1 D cannot be considered safe from the safety point of view till safety arrangements are fully completed."

Terminal 1 D, which is spread over 33,000 sq m, has replaced 1 B, the old terminal. It was opened for operations April 19. Kingfisher, Kingfisher Red and IndiGo, Jet Airways, JetLite and Spice Jet are operating from the new terminal, while GoAir, Air India and others are operating from terminal 1 A.

According to the airport officials, around 200 flights operate daily from the new departure terminal, which has been built at a cost of Rs.500 crore ($100 million). The terminal is able to handle 10 million passengers annually and is equipped with 72 check-in counters. It was inaugurated by Civil Aviation Minister Praful Patel.

The airport authorities had first invited the Delhi Fire Service officials April 8. At that time, the fire service wrote in its report that fire pumps and the fire control room were yet to be fully operational and that the sprinkler line was not charged with water at many places.

DIAL sent a report to the fire department May 4 stating that measures suggested had been complied with. The fire department again conducted an inspection and highlighted fresh shortcomings.

When asked why necessary clearance was not sought before the new terminal came into operation, DIAL spokesman Arun Arora said the terminal was absolutely safe for operations and for passengers.

"DIAL is very much alive to the required fire safety norms. We have been following all fire safety norms (domestic as well as international) for all equipment and procedures".

"All necessary documents have been submitted to the fire department and inspections have been carried out by the Delhi Fire Service officers. All observations and suggestions made by them were carried out by DIAL. The suggestions made by them during their subsequent visit to terminal 1 D are also being carried out," he added.

Arora said to ensure fail-proof fire safety DIAL has taken many initiatives.

"We have deputed 18 well trained firemen who keep patrolling all areas of the terminals - like the check-in area, airline ticketing areas and security holds. More than 50 fire hydrant outlets have been deployed inside and outside the terminal for greater safety," Arora said.

Though DIAL has been running the new terminal without fire safety clearances, the Delhi Fire Service was silent on why no action was being taken against the airport authorities. As per the powers conferred upon the fire department, it can cut electricity and water supplies to a building or even shut it down if the fire safety norms are not met.

Wednesday, July 8, 2009

Airline-Sector Woes Slam India's Highflier

Running an airline is a reliable way to lose money. The turbulent ride of India's Jet Airways shows why. Naresh Goyal shook up Indian aviation when he founded Jet in 1992. With punctual flights, new planes and friendly service, Jet was the first carrier here to truly modernize air travel.
Jet controlled nearly half the domestic market by early this decade, with most of the rest going to state-owned Indian Airlines. In Jet's 2004 fiscal year, as many of the world's carriers were still recovering from the Sept. 11 terrorist attacks on the U.S., it outpaced the industry with net profits of $33 million. Jet's initial public offering, in 2005, valued Mr. Goyal's 80% stake at $2 billion. Now, Jet is scrambling to stay aloft. Low fares from no-frills competitors ravaged revenue. Staff costs soared as rivals poached pilots and mechanics. Airport congestion in India made for a logistical nightmare -- forcing Jet to open an international hub 4,000 miles from home, in Brussels. Amid a glut of capacity, Jet's market share slid from a high of almost 49% in 2003 to roughly 25% this year. The airline started posting sharp losses in late 2007. Jet eked out a net profit in its latest quarter by selling assets, slashing costs and booking tax credits, but the outlook remains tough. "It's been hard," said Mr. Goyal, the 59-year-old founder, in an interview at his $15 million London townhouse. "We were making so much money, and now we're losing money." The carrier's woes began as India's economy boomed in 2005, thus highlighting a broader problem for the global airline sector: Even in good times, the industry struggles to generate sustainable profits. Jet Airways has struggled to capitalize on growth as it got squeezed between uncontrollable costs and increasingly unfettered competition. Jet's slide can be traced to a sea change in the global aviation business. Deregulation, the rise of Internet ticket sales and other factors have made it easier than ever for upstarts to challenge bigger, established carriers. In India, where state-run carriers and government policies stymied air travel for decades, the sudden transition proved tumultuous. Last year was particularly rough. The airline business floundered as fuel prices surged, the credit crunch hit and world-wide travel plunged. Jet is reacting by cutting staff, closing offices around Asia and reducing flight frequencies. Searching for profitable routes, Jet recently took planes from India's crowded domestic market and expanded service to Dubai. It soon plans to start flying to Saudi Arabia. Mr. Goyal cut his teeth in the airline business by working -- and sleeping -- at his uncle's New Delhi travel agency while he was an 18-year-old student. Seven years later, in 1974, he started his own agency, bankrolled by personal savings and a gold bracelet of his mother's that he pawned. As the Indian sales agent for overseas carriers including Air France and Hong Kong's Cathay Pacific Airways Ltd., he learned the ins and outs of upscale air travel. Jet was one of several carriers launched after India began deregulating domestic aviation in 1991, and initial competition was fierce. Jet survived as rivals failed, thanks in part to Mr. Goyal's longstanding links to foreign carriers with which Jet cooperated to fly international passengers. Although Indian law had granted state-owned Air India a monopoly on foreign flights since 1953, Mr. Goyal prepared for the day that Jet would be allowed to extend its network overseas. He entertained politicians, aviation officials and travel professionals in his London townhouse overlooking tony Regents Park. "I was convinced one day India would have to open up," he says. Anticipating the change, Mr. Goyal focused on creating a passenger experience to rival the world's best carriers. He poured tens of millions of dollars into cabin entertainment systems, ergonomic seats and staff training. He also turned the trend of outsourcing to India on its head by hiring American pilots, recruiting managers from leading Asian and European carriers, and unabashedly aping the innovations of up-market trailblazing airlines such as Singapore Airlines Ltd. "Naresh Goyal's policy of hiring expats broke the mold in India -- he was a pioneer," says Craig Jenks, president of Airline/Aircraft Projects, a global aviation consulting firm in New York. In 2004, India allowed private airlines to fly overseas. Mr. Goyal jumped at the opportunity. He ordered 10 Boeing 777s, and fitted the first-class cabins with spacious private compartments modeled after those created by Dubai's upscale Emirates Airline. Jet's initial public offering in 2005 was 16-times oversubscribed amid national enthusiasm for the airline and its whole industry. But Jet's success also spawned competition. Vijay Mallya, chairman of brewing and distilling giant United Breweries (Holding) Ltd., launched upscale Kingfisher Airlines. It was meant to double as a flying promotion for his top beer brand, Kingfisher. A tiny upstart launched in 2003, Air Deccan, proved even more damaging to Jet. Copying the no-frills approach pioneered by Southwest Airlines Co., it served secondary cities that Jet didn't touch. Deccan opened a floodgate by showing the low-cost model could work in India. In 2005, a group of entrepreneurs started a similar low-cost carrier, SpiceJet Ltd. That same year, a major Indian travel-services company started its own budget carrier, IndiGo. Mr. Goyal fought back by acquiring no-frills competitor Air Sahara, which he rebranded as JetLite. Indian carriers grabbed the spotlight at the 2005 Paris Air Show, the aviation sector's big industry event. There, they announced orders for planes valued at more than $15 billion. IndiGo ordered 100 Airbus airliners even before it secured government permission to start flying. Although Kingfisher had only been flying for two months, Mr. Mallya splashed out by ordering five Airbus A380 superjumbos, the world's largest passenger planes. India's growing middle class was helping tug the global aviation industry from its post-9/11 slump. "Everyone is talking about China," observed Airbus Chief Operating Officer John Leahy at the Paris Air Show that year. "But the biggest growth story we see is India." Foreign investors, financiers and leasing companies, all hungry for new markets, raced to bankroll India's breakneck airline expansion. Indians who had long squeezed onto wheezing, sweaty trains began jetting about the country. Jet soon faced another hurdle: India's outdated aviation infrastructure clogged up. Air-traffic delays added 10% to flight times and cost $80 million in wasted fuel during 2006, Jet executives said, and things were getting worse. "The average 70-minute domestic flight spends another 35 minutes circling," Mr. Goyal complained last spring. The lack of modern aircraft-maintenance facilities in India forced Jet to send planes overseas for routine upkeep, adding millions of dollars to its bills. The cost of retaining veteran mechanics, flight attendants and pilots soared as new rivals poached qualified staff. Even Jet's budget subsidiary, JetLite, and other no-frills carriers struggled. "There are no low-cost airlines in India, only low-fare, no-profit carriers," Mr. Goyal said at a Jet media gathering in 2007. Yet Indian carriers kept chasing market share by slashing fares and adding planes, even as losses ballooned. By last June, Mr. Goyal saw that competition had made business untenable. "We're all in trouble," he lamented at an industry conference, saying each domestic carrier should slash capacity by 30%. Kingfisher's Mr. Mallya scoffed that Mr. Goyal "doesn't know how to do math." But Kingfisher was losing so much money that it soon canceled airplane orders and new routes vital to its overseas expansion. In a sign of the industry's distress, the bitter rivals last October announced an alliance to share airport facilities, coordinate schedules and reduce capacity. The deal still faces regulatory approval. Mr. Goyal had enjoyed a major edge over rivals in one key battleground: overseas flights. Indian deregulation in 2004 opened up international routes only to private carriers that had flown domestically for at least five years. Jet's experience allowed Mr. Goyal to move first, launching flights to Singapore, London and Kuala Lumpur in 2005. Jet quickly grabbed traffic from state-owned Air India, which had struggled to compete globally due to its poor service. Wealthy Indians who had preferred foreign carriers such as British Airways PLC were glad to have a local alternative. Ajit Balakrishnan, founder of India's largest Internet portal, says Jet staff "deliver a superb product" on the domestic flights he takes weekly from Mumbai, and so he jumped at the chance to fly Jet overseas. The 60-year-old veteran advertising executive often books on Jet, which began offering service to New York-area airports in August of 2007. He recommends Jet to foreign friends for its "modern luxury." But Mr. Goyal's intercontinental ambitions faced huge obstacles at India's overtaxed airports. Flights from India to the U.S. or Europe require big planes to carry sufficient fuel, and big planes need lots of passengers to run profitably. In mature markets, airlines generally fill long-haul flights with traffic from many smaller planes arriving at a hub for connections. To coordinate this, airlines need lots of boarding gates, airplane parking spots and runways slots. India's major airports lacked all of them. Anxious to expand, Mr. Goyal hit on an unlikely option during a state visit to India by the King of Belgium in 2005: using the Brussels airport as a hub for North American-bound flights. The facility had sat largely empty since the collapse of national carrier Sabena four years earlier. Talks with Belgian officials at Mumbai's luxurious Taj hotel quickly yielded an action plan. "It was a proper business meeting with an agenda," recalls Mr. Goyal, who was more accustomed to India's glacial bureaucracy. Winning regulatory approval for the unusual arrangement from Belgium and the U.S. took months, but by late 2007, Jet's wide-body airliners were arriving in Brussels each morning from Delhi, Mumbai and Chennai, mixing passengers and departing again for New York's JFK International Airport, Newark Liberty Airport and Toronto. Another three planes did the same trip in reverse. The four-hour Brussels stopover lengthens passengers' trip time compared with a nonstop flight. It also forces Jet to move hundreds of passengers and their bags quickly through a foreign airport at great expense. But thanks to close cooperation with the privately owned airport, which was hungry for business, Jet was able to offer nine different connections between Indian and North American airports, compared with only three connections possible with nonstop flights. But as fuel prices rose in 2008 and America's financial problems rippled to India's outsourcing operations, Jet flights through Brussels grew emptier. Costs rose. Only weeks after adding a seventh Brussels flight last Oct. 31, from Bangalore, Jet reversed course on Nov. 25 and canceled the route, citing economic turmoil. Jet now serves 60 destinations, including 19 outside India. "The crisis has forced us to look much more closely at costs," Mr. Goyal said at his London mansion. Mr. Goyal says he remains committed to Brussels and predicts the North American operation will break even this summer. But many rivals doubt the long-term viability of a hub so far from home. "It doesn't work," says Pierre-Henri Gourgeon, chief executive of Air France-KLM SA, which operates huge hubs in Paris and Amsterdam. Successful hubs rely on big traffic volumes, which Jet cannot guarantee, he says In mature markets, airlines generally fill long-haul flights with traffic from many smaller planes arriving at a hub for connections. To coordinate this, airlines need lots of boarding gates, airplane parking spots and runways slots. India's major airports lacked all of them. Anxious to expand, Mr. Goyal hit on an unlikely option during a state visit to India by the King of Belgium in 2005: using the Brussels airport as a hub for North American-bound flights. The facility had sat largely empty since the collapse of national carrier Sabena four years earlier. Talks with Belgian officials at Mumbai's luxurious Taj hotel quickly yielded an action plan. "It was a proper business meeting with an agenda," recalls Mr. Goyal, who was more accustomed to India's glacial bureaucracy. Winning regulatory approval for the unusual arrangement from Belgium and the U.S. took months, but by late 2007, Jet's wide-body airliners were arriving in Brussels each morning from Delhi, Mumbai and Chennai, mixing passengers and departing again for New York's JFK International Airport, Newark Liberty Airport and Toronto. Another three planes did the same trip in reverse. The four-hour Brussels stopover lengthens passengers' trip time compared with a nonstop flight. It also forces Jet to move hundreds of passengers and their bags quickly through a foreign airport at great expense. But thanks to close cooperation with the privately owned airport, which was hungry for business, Jet was able to offer nine different connections between Indian and North American airports, compared with only three connections possible with nonstop flights. But as fuel prices rose in 2008 and America's financial problems rippled to India's outsourcing operations, Jet flights through Brussels grew emptier. Costs rose. Only weeks after adding a seventh Brussels flight last Oct. 31, from Bangalore, Jet reversed course on Nov. 25 and canceled the route, citing economic turmoil. Jet now serves 60 destinations, including 19 outside India. "The crisis has forced us to look much more closely at costs," Mr. Goyal said at his London mansion. Mr. Goyal says he remains committed to Brussels and predicts the North American operation will break even this summer. But many rivals doubt the long-term viability of a hub so far from home. "It doesn't work," says Pierre-Henri Gourgeon, chief executive of Air France-KLM SA, which operates huge hubs in Paris and Amsterdam. Successful hubs rely on big traffic volumes, which Jet cannot guarantee, he says. Mr. Goyal says falling Indian wages now give him a leg up, because labor accounts for only around 15% of Jet's costs, compared with more than 20% for most Western carriers. Still, he says Jet will refocus on cutting costs and expanding in less-competitive markets of Bangladesh, Nepal and Sri Lanka. "I want to learn how to buy my insurance for the next four years," Mr. Goyal said of his efforts to protect Jet. "I'm the biggest shareholder, so I suffer the most."

Indian Aviation dying steadily & quickly...

I was just going through the sites of couple of airlines to know the fare structure. I was surprised to see that the tax charged is more than Rs3500/- per ticket. The ticket price for Delhi-Mumbai on a GoAir flight was just Rs. 885/- & rest was the taxes. I still remember those days (just 6-7 yrs back) when one need to pay just Rs. 225/- as charges over a ticket. So who is responsible for this. I totally believe that its the Govt. All airlines are in red, whatever any body may say or claim but the truth us none of them is making money. All are losing tonnes of cash. Even for the condition of Air India, which is now struggling to even pay salaries. Govt. may say that it has liberlised the industry & has come up with Open Sky policy. All this is really bullshit. Aviation Ministers' have made crores & crores of money (present & past). No clear policies on any thing. Be it airport infrastructure or any other facility. There is no point that LCC airlines will survive in India. They need budget & smaller airports to operate. Future is really bleak for this industry, beacuse of Govt. apathy. Soon there will be a time that there will be 2-3 airlines (max.) if things dont change. All the rosy picture shown will just fade away. If govt do not do any thing concretely, trust me on this future is dark. A black spot.

Tuesday, June 30, 2009

Mid Year assessment of Aviation Industry...

Its exactly half of 2009, lets have a assessment of Aviation industry in India. This report has been take from IBEF : -

*Sector structure/Market size : With a growth rate of 18 per cent per annum, the Indian aviation industry is one of the fastest growing aviation industries in the world. The government's open sky policy has led to many overseas players entering the market and the industry has been growing both in terms of players and number of aircrafts. Today, private airlines account for around 75 per cent share of the domestic aviation market. India has jumped to 9th position in world's aviation market from 12th in 2006. The scheduled domestic air services are now available from 82 airports as against 75 in 2006. *Potential for Growth : The Indian Civil Aviation market grew at a compound annual growth rate (CAGR) of 18 per cent, and was worth US$ 5.6 billion in 2008. The Centre for Asia Pacific Aviation (CAPA) has forecast that domestic traffic will increase by 25 per cent to 30 per cent till 2010 and international traffic growth by 15 per cent, taking the total market to more than 100 million passengers by 2010. India's civil aviation passenger growth, presently at 20 per cent, is one of the highest in the world. By 2020, 400 million Indian passengers are likely to be airborne. By 2020, Indian airports are expected to handle more than 100 million passengers including 60 million domestic passengers and around 3.4 million tonnes of cargo per annum. Moreover, significant measures to propel growth in the civil aviation sector are on the anvil. The government plans to invest US$ 9 billion to modernise existing airports by 2010. The government is also planning to develop around 300 unused airstrips. *Airport Infrastructure : Mumbai and Delhi airports have already been privatised and are being upgraded at an estimated investment of US$ 4 billion over 2006-16.Greenfield airports are operational at Bangalore and Hyderabad. These are built by private consortia at a total investment of over US$ 800 million. A second greenfield airport being planned at Navi Mumbai is going to be developed using public-private partnership (PPP) mode at an estimated cost of US$ 2.5 billion. 35 other city airports are proposed to be upgraded. The city side development will be undertaken through PPP mode. Over the next five years, AAI has planned a massive investment of US$ 3.07 billion—43 per cent of which will be for the three metro airports in Kolkata, Chennai and Trivandrum, and the rest will go into upgrading other non-metro airports and modernising the existing aeronautical facilities. *Aviation Policy : Many policies supporting the infrastructure are now in place. 100 per cent FDI under automatic route is permissible for greenfield airports. For existing airports, FDI up to 74 per cent is permitted through automatic approvals and up to 100 per cent through special permission (from FIPB). Private developers allowed setting up of captive airstrips and general airports 150 km away from an existing airport. 100 per cent tax exemption for airport projects for a period of 10 years. 49 per cent FDI is permissible in domestic airlines under the automatic route, but not by foreign airline companies. 100 per cent equity ownership by Non-Resident Indians (NRIs) is permitted. overhaul (MRO) and training offer high investment potential. A report by Ernst & Young says the MRO category in the aviation sector can absorb up to US$ 120 billion worth of investments by 2020. 74 per cent FDI is permissible in cargo and non-scheduled airlines. The Indian government plans to set up an Airport Economic Regulatory Authority to provide a level playing field to all players. *Major Investments : Over the past year, various companies have shown an interest in the Indian aviation industry. US-based business jet maker, Hawker Beechcraft Corporation (HBC), opened its first authorised service centre in Delhi in partnership with Interglobe General Aviation with a total investment of US$ 8 million. Richard Branson, who controls UK carrier Virgin Atlantic Airways Ltd, has sought permission to start a domestic airline in India. GMR Infrastructure is looking to tap the growing corporate jet market in India with investment plans to the tune of US$ 151 million. It is also in talks with aircraft component manufacturers such as Honeywell and Safran to set up a components assembly plant in the country. The company plans to invest US$ 60 million for the proposed JV. US aircraft maker, Boeing Co, will deliver 100 planes worth US$ 17 billion over the next four to five years to India. *Road Ahead : The Indian aviation sector is likely to see clear skies ahead in the years to come. Passenger traffic is projected to grow at a CAGR of over 15 per cent in the next 5 years. The Vision 2020 statement announced by the Ministry of Civil Aviation, envisages creating infrastructure to handle 280 million passengers by 2020. Investment opportunities of US$ 110 billion envisaged up to 2020 with US$ 80 billion in new aircraft and US$ 30 billion in development of airport infrastructure. Associated areas such as maintenance, repair and

Sunday, March 22, 2009

Elections & General Aviation India...

With general eletions looming around in India, it brings a big hope for all charter companies which are facing the economic slowdown. As corporates have cut thier charter movement significantly, these elections are a big hope for all charter operators. With political parties ready to spend big bucks these elctions may become a boon for all the charter operators. Even regional parties are not shying away to invest in charters. Helicopters are favorites for all politicians as they can land on each & every voters back yard. Aircrafts (turbo-prop or Jet) are also a liked for fast movements. Hoping these elections may revive all charter companies.


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