http://www.timesnow.tv/articleshow/2036280.cms
Airlines see red
Thursday, September 28, 2006 06:46:37 pm

 Cut throat competition and soaring jet fuel prices have taken its toll on the airline companies and has clipped the wings of country's aviation growth. Most of the low-cost/ non-frill airlines like Air Deccan and Spice Jet reported losses in the last year. Even Jet Airways reported loss in the previous year.

Taking note of the growing concern, Civil Aviation Ministry is on a red alert. To address the issue, Civil Aviation Minister Praful Patel is holding a meeting of all airline chiefs. It is likely that the government may intervene and put on hold fresh approvals for airline companies. The government might also ask established airlines to stagger out their expansion programmes in a bid to curtail the losses. Steep discounts offered by various airlines can be attributed to the fact that there is too much capacity available, which has resulted in sharp dip in air fares across the board.

In the last one year, the loss in the aviation sector is estimated at Rs 2,200 crore. This has caused undue worry to the players, who plan to be more pro-active to avoid a repeat of early nineties boom and bust cycle, which resulted in number of players, including East West, Damania and ModiLuft, go down under.

The moot question is, what effect it will have on the end-customer. It is likely that the era of cheap air tickets may not last too long and a part of the air traffic may move to Indian Railways. In addition, for the common man, it may mean an end to the days of cheap flying.

We give you a lowdown as to how fares have changed after the entry of low cost airlines into the Indian skies.

In 2004, a flight from Mumbai to Delhi costed around Rs 7000, which is currently available for Rs 2500. While, Mumbai to Bangalore costed around Rs 5000 two years back, and the same is available at half the price of Rs 2,500. Similarly, prices dropped across the sectors -- Mumbai to Chennai fare costed Rs 5000 in 2004, which is currently available for just Rs 2000 ; a Mumbai to Kolkata flight costed as high as Rs 8000, which is now available for just Rs 2600.

(Payal Raj) 
 

Air Travel has a certain class

Thank god to see it being restored.

www.uninews.com

Indian aviation needs to make its own mistakes to flourish: CAPA
by Sudipt Arora

Mumbai, Sep 29 (UNI)

The Centre for Asia Pacific Aviation (CAPA) today cautioned against India turning back the clock through increased regulation of aviation sector.
‘‘The industry needs to find its own equilibrium. Market exit and consolidation is the global norm,’’ said its executive chairman Peter Harbison while addressing delegates at third annual India and West Asian low cost airlines symposium.
His comments came a day after the government’s move to put a temporary moratorium on new airline licences.
‘‘I have one word of advice when it comes to preventing new airline entry -- Don’t. It is vital for India’s private airlines to find their own way to profit. Government intervention, unless there is a very clear and transparent framework, will very quickly undermine investor confidence. Not just in the airline industry, but also for airport investors and tourism infrastructure providers.’’
Indian aviation’s growth potential is far from being achieved and increased regulation will threaten to prematurely curb its development, he said.
‘‘This is not a time for regulatory fine tuning. The adolescent market has become a young adult and needs to make its own market mistakes in order to flourish. Looking in the rear-view mirror is no solution for the future,’’ said Mr Harbison.
The government’s job is to create a regulatory framework and put institutional mechanisms in place so that market forces can play their role, he said.  
Indian aviation is undergoing unprecedented growth, but profitability is being undermined through intense competition stimulated by new airline entry and significant new capacity being added by incumbents.
Yesterday, civil aviation minister Praful Patel said there was a temporary moratorium on new airline licences. ‘‘There will be no rapid roll-out of licences. I don’t want a repeat of 1991. There will be no blanket ban, but pending applications will go through very very high scrutiny,’’ he said.
Insisting there were no major applications pending for aviation licences, Mr Patel added that any fresh applications will also go through scrutiny of business plans.
During 1991-92, players like ModiLuft, Damania and East West went bankrupt. ‘‘Earlier, companies used to procure licences even before signing a lease for aircraft. We will change that. There is no shortage of capacity but there are infrastructure hitches,’’ he said.
To reduce the burden on the loss-making industry, the civil aviation ministry is lobbying with the petroleum and finance ministries to reduce taxes on aviation turbine fuel (ATF) which range from 8 to 24 per cent across states. ATF accounts for 45 per cent of operational costs in India against 20 per cent elsewhere.
The ministry also plans to introduce a quarterly review of financial and operational statements of airlines, as mandated by the Federal Aviation Authority in the United States.
Following a massive price war among airlines, the minister said though he did not want to impose any regulation on tariff cuts, companies should conduct their businesses in a way so that no airline went bankrupt.
Currently there are 13 airlines in India. Jet Airways incurred a loss of Rs 48 crore in April-June this year. Air Deccan reported a loss of over Rs 340 crore in fiscal 2005-06.
Experts say the aviation industry losses total up to Rs 2,000 crore annually. 

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Honeymoon over for no-frills airlines: expert
by Sudipt Arora

Mumbai, Sep 29 (UNI)

Prof Nawal Taneja, chairman of aviation department at the Ohio State University, today warned the Indian low-cost carriers (LCCs) that their honeymoon period is over as full service carriers begin to fight back.
He said LCCs that can develop into new generation carriers will grow to become global players. Those that do not will simply fail.
‘‘There are many opportunities but don’t kid yourself. There are even more challenges. It is going to be a little like the dot.com boom. There will be many failures but the few that survive are going to become global players.’’
Mr Taneja was addressing delegates who gathered here for third annual symposium on LCCs organised by the Sydney-based Centre for Asia Pacific Aviation (CAPA).
‘‘Two-third of legacy carriers around the world are asleep, but some are waking up. They will provide serious competition to LCCs that take them for granted. LCCs from India and other emerging markets must develop to become new generation carriers and take advantage of the opportunity to become global players,’’ he said.
‘‘Those who think they have got it made, well, let me tell you, the honeymoon is over. And those that think that full service carriers are dead will have some serious problems,’’ said Prof Taneja.

THE hidden agenda/SIGNIFICANT ANGLE TO THE MEETING!!!! 

The group that matters in Indian aviation today! 

(Copyright BusinessLine)

http://www.thehindubusinessline.com/2006/09/29/stories/2006092903760900.htm
CUTTING LOSSES: (from left) The Minister for Civil Aviation, Mr Praful Patel, with the Secretary, Mr Ajay Prasad, the Chairman of Kingfisher Airlines, Mr Vijay Mallya, and the Chairman of Jet Airways, Mr Naresh Goyal, during a meeting with Chief Executive Officers of various domestic airlines, in the Capital on Thursday. — Ramesh Sharma

(Significant words. Cutting losses!!! Whose? Mallya's and Goel's?

Should also have been rewritten as:

CUTTING LOSSES: Praful Patel and best friends Mr. Vijay Mallya and Mr. Naresh Goyal during a meeting to discuss how to finish off India's low cost carriers.

(Copyright The Hindu)http://www.hindu.com/2006/09/29/stories/2006092902492000.htm
CAPTAINS GATHER: From left: Minister for Civil Aviation, Praful Patel, with Secretary, Ajay Prasad, Chairman of Kingfisher Airlines, Vijay Mallya, and Chairman, Jet Airways, Naresh Goyal, at a meeting with Chief Executive Officers of domestic airlines in New Delhi on Thursday. — PHOTO: Ramesh Sharma

                                             ***

The photographs and TV clips of this event had many significant and interesting shots of the people in attendance.

Doubt that some photographers are smart to pick this up, but most of the pictures had PP going overborad greeting Mallaya and Goel. Anyone would know that Goel was the first to tell Gopi once that he, Gopi, knew nothing about the airline business and that his intention was to finish off everyone. This was just after Gopi went around saying that he wanted all one billion Indians to fly.

Mallya also everyone knows exited the LCC model  to embrace super luxury. At a recent meet in Bangalore, he hit out at the LCC model, saying it was rubbish ."These people don;t realise that they have to make money."

Any surprises then that PP wants to regulate the whole thing now?      

http://economictimes.indiatimes.com/articleshow/2035786.cms

Boeing to expand its management team in India

Larry Coughlin will now be the managing director of India Operations, Boeing Commercial Airplanes, while Mike Devers has been appointed vice president, India Operations, Integrated Defense Systems.

Said Boeing chairman and chief executive officer Jim McNerney while announcing the new appointments on Wednesday, "India is a priority market for Boeing. There is a tremendous opportunity for Boeing and India to work together on a multitude of projects and business initiatives."

"We have a solid business plan and a long-term view of the market. With this approach we are going to create even greater value for Boeing and our customers and partners in India."

"In the new position, Coughlin will be responsible for coordinating and integrating in-country operations to strengthen the growing partnership between Boeing and India's civil aviation industry," a company statement said.

Prior to this appointment, Coughlin was a director of strategic projects

http://www.dnaindia.com/report.asp?NewsID=1056157
Air Deccan changes course from market share to revenues

Praveena Sharma
Sunday, October 01, 2006  20:38 IST

MUMBAI: After clocking losses of Rs 340 crore for the 15 months ended June, 2006, budget carrier Air Deccan is changing course — from focussing on market share to revenues. As a corollary, route rationalisation and yield management become the buzzwords.

“We are planning to protect our revenues through innovative marketing campaigns, route rationalisation and a sound revenue management system. We have recently hired two executives from Ireland’s state-owned carrier Aer Lingus to manage our revenues. With this, things are expected to look up on the revenue side,” said Air Deccan CEO Warwick Brady on the sideline of Centre for Asia Pacific Aviation (CAPA) symposium here on Saturday.

It has already kicked off the process by cutting frequency and flights on some sectors to make them commercially viable. The no-frills airline, which has usurped a substantial chunk of the aviation market pie (21.2% in June, 2006) over the last one year, wants to improve its yields by 5-6% over the next couple of months.

“December onwards our yields would be up by 5-6%, which would give us better margins. Playing the revenue game is hard because the range of margin (between $1-3 -Rs 46-138 per passenger) in the airline business is very small,” said Brady.

Air Deccan’s current average yield is around Rs 2,700 per passenger. Today the airline was missing the break-even yield by $7-8 (Rs 322-368) in a bad month and by $4-5 (Rs 184-230) in a good month. On a fare of Rs 3,000, we need to achieve a load factor of 80% to break even,” Brady said.

At present, the airline’s average load factor is 78%. However, on Airbus routes, it manages to register a higher load of over 85%. The airline, which will be operating 60,000 flights from now to March, 2007 (on existing and new aircraft), is looking at a market share of 25% by the middle of 2007.

And as the airline pursues higher revenues, it does not mind if it slips a little on market share. “We don’t want to jeopardise our revenue flow for 1-2% market share,” quips Brady.

Analysts said the budget carrier’s move was a step in the right direction. “This mindset is a good change. There is no point in filling up your aircraft 100% if you are not making profits. Indian airlines need to concentrate on keeping their costs low and ensure steady stream of healthy revenue to offer competitive fares. A focused approach to bottomline is very critical in ensuring survival of airlines,” said Kalpesh Parekh, assistant vice-president at ASK Raymond James.