SpiceJet signs on i-Vista to build its brand digitally

SpiceJet, India’s most preferred low fare airline appoints i-Vista Digital Solutions to handle its online marketing initiatives. i-Vista Digital Solutions is a leading enterprise digital marketing company that has been entrusted with this national mandate. i-Vista Digital Solutions will provide the following solutions for SpiceJet: § Conceptualize, design and develop online collaterals. § Perform off-page and on- page optimization leading to enhanced visibility for the SpiceJet website. § Identify and effectively utilize social media platforms for increased customer- connect to build brand ambassadors. § Online reputation management and tracking of consumer sentiments. § Comprehensive search engine marketing programme to enhance visibility of SpiceJet text ads. According to Anish Srikrishna, Sr. VP and Head of Marketing, SpiceJet Limited, “We at SpiceJet believe that online engagement with our customers is key to our success. Our website continues to be a key channel of distribution and information for our customers. We wish to enhance our online presence to build our brand, understand our customers and drive more traffic to our site. i-Vista Digital Solutions has the relevant expertise in digital brand building and marketing and can offer creative and technology solutions for our current needs. We are happy to have them as our partners.” “We won the SpiceJet business because of our ability to deliver advanced solutions in the internet space. We help our customers leverage the power of the internet and leave an indelible impression through our unique and well-rounded approach to the business. Our solutions for SpiceJet range from a variety of brand building activities, social media strategy and comprehensive analytics to help the airline achieve their mission,” said Narayan Rajan, CEO, i-Vista Digital Solutions.“If you also take into account that 1 out of 3 TV watchers will also be accessing the internet at the same time, you begin to see how effectively combining your offline and online campaigns can ensure your message reaches your customer. i-Vista has been in the digital business for the last 13 years and has built an enviable track record.

Wings on fire

Paramount Airways is all set to enter the big aviation league. An airline that has been operating what it calls an all-executive-class fleet, is now in final stages of talks with Bombardier and ATR. In not more than two months, by February 2010, Bombardier's Q400s or ATR's turbo props - 10 aircraft in all - will adorn the fleet of the south-Indian carrier. The target for paramount is simple. All ground work is through to operate the turbo props predominantly in Tier II and Tier III cities. Some of the cities that have been shortlisted are Pondicherry, Mysore, Salem, Bellary, Rajamundry etc., all in south India to start with. The number of destinations the airline covers will then increase from the current 17 to 40 by 2011.With a bare minimum fleet of 5 aircraft (all Embraer) the company has maintained the best passenger load factor among all airlines in the country. Paramount is also the only Airline in India that have seen Rs 79 cr profits as of March 2009. Come October 2010, when the airline completes 5 years of its operations, it will spread its wings overseas. Negotiations are already complete with Airbus to buy 10 of their 321 aircraft. The planes are to be acquired at a list price of USD 90 million. The deal is to be funded by the European Central Bank through a 12 year loan.The Airbus 321s will all be used for the company's international flights. Initially, Paramount will fly to South-East Asian destinations like Singapore, Kuala Lumpur, Bangkok, Penang and Middle East designations like Dubai and Abu Dhabi.

Struggling Air India looks to soar again

Air India, the national flag carrier that has accumulated thousands of crores of rupees in losses, is set to fly over uncharted territory hoping to reverse its fortunes in the new year. Arvind Jadhav, head of the National Aviation Co. of India Ltd (Nacil) that runs Air India, says he will use a combination of cost cuts, outsourcing, restructuring and spinning off under-utilized divisions into separate businesses to rewrite the account books of India’s oldest airline. But aviation experts are sceptical, claiming some of Jadhav’s ideas are unlikely to succeed and others are unlikely to be implemented because of Air India’s state ownership. As chairman and managing director of the beleaguered Nacil, Jadhav has the unenviable task of salvaging an airline that saw losses of Rs7,226 crore in fiscals 2008 and 2009. Air India’s outstanding debt stands at Rs16,000 crore, of which Rs11,000 crore is high-cost. It also runs a monthly cash deficit of Rs400 crore. Nacil has asked the government for a loan and equity infusion of nearly Rs15,000 crore, and is already showing signs of revival. To begin with, Jadhav plans to turn two of Air India’s divisions into independent profit-making ventures: engineering, which will become a full-fledged maintenance, repair and overhaul (MRO) firm; and cargo handling, which will become an integrated end-to-end logistics firm. “By April, we would be spinning off our engineering business unit into a different company,” Jadhav said. “This will straightaway take around 20,000 employees out of Air India’s books and Rs1,200-1,500 crore salary bill (with it).” Air India’s annual wage bill for 31,500 employees stands at Rs3,300 crore. Branching out - The engineering division currently services 100 planes a year, or just half its capacity. It is also unable to attract much business from rival carriers, and earns about Rs100 crore annually. But once turned into a separate business, it could make as much as Rs3,000 crore annually. Air India has already entered a strategic alliance with Sharjah-based Aerostar Asset Management FZC for marketing its aircraft engine overhaul facility. The two have created an engine MRO brand called The A Team, which already provides engine repair and management solutions to West Asian airlines. Air India is also in talks with logistics firms to build the support infrastructure for “door-to-door” logistics. “The idea is (to) spin off our cargo airline division into a separate entity and convert that into a complete logistics company that offers door-to-door services,” said Jadhav. Nacil has also entered into an equal joint venture with Singapore Airport Terminal Services Ltd to handle ground services at various airports in India. “If the subsidiaries are hived off and start earning the projected revenue, we will be getting Rs360 crore a month,” Jadhav predicted. Cutting costs - In a market where airlines are selling tickets below cost, Jadhav agreed it was tough to enhance revenues. “You cannot cut salaries, airport charges or catering charges overnight. So one will have to look at cost savings,” he said. He is already attempting this through network restructuring, rationalizing routes and aircraft deployment, and shifting a good number of employees based in US and European cities to India. “These measures have (also) helped in increasing revenues,” Jadhav said, adding that the company was expecting a net benefit of Rs378 crore in terms of cost reduction during the winter schedule of 2009 and Rs563 crore for the entire year. The merger of Air India with other state-run carriers Indian Airlines, Air India Express and Alliance Air will bring down costs further. The government gave its nod to the merger nearly three years ago, but operational delays have hobbled the move. Air India now runs its aircraft on all four operating licences. Jadhav pointed out a merger of such a large scale was not an overnight process. He was, hence, prioritizing the “front end merger”, which will mean the customers will deal with a single airline for all practical purposes, while the merger of books, workforce and so forth—the back end—would happen over time. In India and abroad, the carrier has combined booking offices of Air India and Indian Airlines to save on establishment costs. The office at the Jeevan Bharti building in central New Delhi, a prime location, has also been surrendered, saving approximately Rs5 crore annually. Air India has also withdrawn from some sectors on India–Gulf routes and has transferred them to Air India Express, as part of route rationalization. Wage worries - One will have to see how much can Jadhav do, considering the constraints of a government-owned airline. In the past, he had to drop several ideas, including wage cut. Slashing the massive wage bill has been the toughest task. Aviation expert and aerospace journalist Hormuz P. Mama is more sanguine. “The fact that Air India is a state-run airline does not mean that nothing can be done about it. There needs to be a compromise from the unions regarding salary cuts, a very inconvenient point that has been put on the backburner,” he said. Unless unions were willing to accept realistic concessions now, they could have to settle for a lot less in the near future. He suggested “manpower rationalization”, saying the biggest single source of expenditure was the “grossly bloated staff strength”. But such a measure is not on Jadhav’s radar, given what he calls are the airline’s “social commitments”. Instead, he is looking to outsource some functions. “Since we are an aviation company, we may not be able to give career progression to IT people. Therefore, we may identify certain services for outsourcing to other company after reaching an agreement on terms and conditions,” Jadhav said. Equity boost - Even if they are not substantial in themselves, the cost cuts have had a ripple effect. The government has agreed to infuse Rs800 crore as equity based on various cost-cutting measures. The airline currently has an equity base of Rs145 crore. “Bankers are confident on Air India but have some pre-conditions for restructuring the loan,” Jadhav said. “If the shareholder, that is the government, is willing to infuse additional equity, I could convince the bankers to restructure my high cost loans.” Air India is also toning up his fleet. Air India has phased out 11 medium-sized and six wide-body planes from its system in the current fiscal while inducting 29 new aircraft. “We have operated winter schedule with 56 planes against 67 aircraft in summer schedule without losing passengers,” Jadhav said, adding that better utilization of aircraft had resulted in substantial savings of Rs200 crore. By March 2010, three more Boeing 777-200s, two Airbus A310s and eight Airbus A320s will be returned or retired from the fleet, allowing Air India to induct brand new aircraft. Airlines worldwide are projected to post $5.6 billion (Rs26,152 crore) in losses in fiscal 2011, according to industry body International Air Transport Association, or Iata. Jadhav said he expected Air India won’t contribute to that figure. He agreed both organizational and financial restructuring was difficult, particularly so for a government-run company. “But we are hopeful of both,” he added.

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.”

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.

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.