Kingfisher Airlines says no to low cost model

Kingfisher Airlines has said it will never enter the low cost-no frill segment as it defies all economics and makes no sense to run a service below cost. "We are in business to make profit and not losses and hence Kingfisher is totally against this model as it feared that a low cost budget carrier will not survive on a sustainable basis. "Low cost airlines are cutting into their own pockets and will not be able to survive. Their pricing strategy is faulty," Kingfisher Airlines general manager (sales) Manoj Chacko said. According to him low-cost airlines should not operate in peak routes, which costs an airline around Rs three lakh plus in a Mumbai-Delhi sector carrying a up to 180 passengers. This works out to around Rs 2,300 per seat, Chacko said adding any ticket priced below the cost will lead to losses. "Also, what happens in a low cost carrier is people do not buy tickets costing more as then they expect add on (on-board meals, beverages etc), which are offered by other airlines. He said Kingfisher's ticket pricing starts around Rs 4,000 for Delhi-Mumbai sector and it recovers operational costs and a percentage of profit.

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Air Canada to end daily flights to India

Citing insufficient demand for the Canada-India route, the Air Canada has announced plans to discontinue its daily flights to India starting in May. Canada's leading carrier currently offers one daily flight from Toronto to New Delhi, with a stopover in Zurich, but it has been unable to break even on the route, particularly during the summer. "Our financial goals were not met because of the seasonal nature of traffic to New Delhi, which did not enable us to maintain profitable occupancy levels throughout the entire year," Air Canada spokesman John Reber said. He added: "We have tried several times over the past 20 years to make service between Canada and India work, ... but unfortunately we haven't found the right formula yet."

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KLM to increase flights to India

KLM will add one more flight to Hyderabad taking the total number of return flights to 43 to India every week."For the summer 2007 season, KLM along with Air France and Northwest will add one extra flight to Hyderabad, going up to five flights per week," according to a KLM-Air France release. As part of their strategy to expand their presence in the emerging markets like India, China and South America, KLM and Air France would increase return flight from China to 34 and six flights from Lima to Amsterdam. "Both the airlines (KLM and Air France) will significantly grow capacity to long-haul destinations by 7 per cent in Asia, 11.4 per cent in Latin America and 10.1 per cent in North America," it said. KLM will also increase flight frequency to European destinations like Barcelona, Moscow, Stavanger and Tallinn, the release added.

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Kingfisher Airlines to fly new routes

Kingfisher Airlines plans to launch more flights on new routes in its summer schedule, beginning March besides introducing services connecting Tier-II cities in the western and southern regions. "We will increase the number of flights on our trunk routes like Mumbai-Delhi, Mumbai-Bangalore, and Mumbai-Kolkata from March this year in our new summer schedules," Kingfisher Airlines general manager (sales) Manoj Chacko said. The airline, which has a fleet of 25 aircraft, will also fly two daily flights connecting Delhi-Chennai, he added.

Currently, Kingfisher has seven Mumbai-Delhi flights daily, to which a couple of more would be added, while the Mumbai-Bangalore sector, which currently has five services daily, will be increased to six, he said. The airline was also looking to start services from Mumbai to Baroda, Jamnagar, Bhuj, Indore and Nagpur. It will also start services on the Bangalore-Lakshwadeep, Chennai-Madurai, Chennai-Trichy and Chennai-Coimbatore routes, thereby connecting all important cities around Chennai, said Chacko. The summer schedule begins on March 26 and will continue till October. The airline had already filed this new schedule with the Slot Committee for approval and expects to get it very soon, Chacko said.

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Jet Airways to start flights to Brussels

India's largest private airline company Jet Airways will make a stopover in Brussels for its flights between Mumbai and New York in the US. The service that is due to start this August will provide the first direct air link between Belgium and India. At present travellers to India from Belgium have to take connecting flights from other cities including Paris, Frankfurt and Amsterdam. Next to the link Mumbai-Brussels-New York, Jet Airways also intends to start a connection between New Delhi and Toronto before 2007-end. This connection will also have a stop over in Brussels.

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HAL jet goes off runway at Bangalore air show

The Aero India show at bangalore was marred on Thursday when a jet trainer of Hindustan Aeronautics Limited (HAL) veered off the runway while taking off for a flight display but the pilot was not hurt. The prototype version of the intermediate jet trainer (IJT) piloted by Wing Commander Baldev Singh went into a grassy patch of land near the runway at Yelahanka airbase, the venue for the air show, throwing up clouds of dust this afternoon. Indian Air Force and HAL sources said preliminary information indicated that one of the IJT's tyres burst while it was taking off. Fire tenders had reached the spot and Singh, a HAL test pilot, was safe, the sources said.

The runway was closed for some time after the accident, the second mishap here involving a HAL-built aircraft in less than a week. On February 2, a Dhruv advanced light helicopter of the IAF's Sarang aerobatic team plummeted to the ground while participating in practice ahead of the air show, killing co-pilot Squadron Leader Priye Sharma and seriously injuring pilot Wing Commander V Jetley. The IJT flew yesterday at the inaugural ceremony of Aero India, a major aerospace and defence exposition in which some 500 companies from India and abroad are participating. The IJT, which is designed to be used by the IAF for initial training of its fighter pilots, was developed by HAL and National Aerospace Laboratories. It is yet to enter full production.

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Singapore Airlines to increase flights to India

Singapore Airlines is contemplating to double its daily flights to Delhi and Chennai in the next two years and plans to add another flight to Kolkata. "By 2009, our daily flights to Delhi and Chennai is expected to double," said Singapore Airlines General Manager (India) Foo Chai Woo, attributing it to the 'rise in load factor'. With the introduction of another flight to Kolkata, Singapore Airlines would have five-flight a week by the end of this year, he added. He said plans were also afoot to increase the flights to Bangalore and added "We plan to open a new route to Coimbatore by the end of this year". Singapore Airlines has been operating 48 flights a week to India. Woo said that the world's premier airline had already announced availability of e-ticketing services across all its flights in India, except Mumbai which would be e-ticket enabled by February 16.

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McDonald's to open at New Delhi railway station

Passengers at New Delhi and Old Delhi railway stations may soon begin their journey with a sumptuous meal of nans and chicken butter masala from canteens run by city's famed Nirulas' chain of restaurants; and if time is short, they can just bite into McDonald's burgers before boarding the train. The appetising revelations were made by Attorney General Milon Banerjee before a Delhi High Court bench of Justice Mukundakam Sharma and Justice Sanjeev Khanna adjudicating on popular complaints against unavailability of hygienic food on trains. Banerjee told the court that the government has roped in Nirula's and American multi-national food chain McDonald's to maintain canteens at New Delhi and Old Delhi ralway stations.

Appearing for the railway ministry and Indian Railway Catering and Tourism Corporation Ltd (IRCTC), he said the authorities have also initiated steps to improve the infrastructure, service and quality of food items supplied to the railway passengers. Nirula's and McDonald's had been appointed to run canteens at New Delhi and Old Delhi Railway stations, he said. After taking into account the government's initiatives on supply of fresh and hygienic foods to railway passengers, the bench adjourned the matter till April 18, granting six weeks to the government to expedite their proposals aimed at improving the food quality at railiway stations and running trains. Before adjourning the matter till April 18, the Bench also directed the court-appointed committee to inspect the six railways' kitchens in the capital as well as the pantry vans in running trains.

The court appointed committee, which included advocates Kirit Uppal and Varun Goswami, were asked to summit its report on its last inspection to the court in the intervening period. The condition in the pantry cars of the running trains was unhygienic and bad, the IRCTC should take steps immediately to improve the situation, said Uppal. Despite charging exorbitant prices for food, the private contractors or licencees appointed by the IRCTC did not improve the quality of food and hygiene condition of the pantry cars in about 235 express trains. The court's direction followed in course of adjudication of a petition by Delhi resident Goswami, who had approached it April 28 seeking directions to the authorities to modernise and sanitize their base kitchens all over the country and pantry cars.

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Boeing forecasts an aviation boom in India

India will need 856 aircraft worth $72.6 billion in the next 20 years, the Seattle-based Boeing said, even as it committed an investment of $2 billion in the country in various areas of civil aviation. "Our investment will include $185 million towards pilot training, engineering services and maintenance, repair and overhaul facility," said Dinesh A. Keskar, senior vice president for sales for Boeing Commercial Airplanes. "We have also committed an investment of $1.7 billion in offsets, including the sourcing of engineering services from Hindustan Aeronautics and software from firms such as Infosys, Wipro and Tata Consultancy," Keskar said. "In fact our simulator for pilot training has already arrived in Mumbai and will be in operation by the end of this month," he added on the margins of the Aero India show at the Yelahanka air force base in Bangalore.

The $100 million maintenance, repair and overhaul unit is coming up at Nagpur and will mainly cater to the needs of Air India, while the pilot training unit will be located in Mumbai and operated by a subsidiary - Alteon. Boeing officials said thanks to the impressive orders worth $19.7 billion placed by Indian aviation companies in 2005 and 2006, the country was among the top five markets for the group. "India was a small blip in the global aviation map. Now it is driving the civilian airplane market," Keskar said. "The strong economic growth, emergence of low-cost carriers and major airport revamp plans are the factors driving growth." While Air India placed the largest orders for 68 aircraft, Jet Airways was next with 30, followed by SpiceJet with 20, Air Sahara with 10 and three from the Indian Air Force to ferry the president, prime minister and other important dignitaries.

Keskar said Boeing was also bullish on India emerging as a major market for cargo planes, but said there was no immediate forecast available for this segment of commercial aviation. So was the case with business jets, he said. Giving a break-up of the types of aircraft India will need, the Boeing official said 676 of these worth $44.29 billion would be for single-aisle products, followed by 120 twin-aisle types worth $25.41 billion. Further, the demand is forecast at 51 regional jets worth $1.45 million, the larger aircraft like 747s may only account for nine units worth $1.45 billion, Keskar, who has been in India for each of the six air shows, added. Boeing is also supporting pilot training in a $10 million initiative marked for schools run by the Indian government. "There is a tremendous shortage of pilot in India. We need a pipeline of cadets."

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Kingfisher Airlines signs software deal with Sabre

Kingfisher Airlines, one of India’s fastest-growing airlines, has engaged Sabre Airline Solutions, a global leader of software and services for the airline industry, to provide a full suite of more than 20 enterprise applications to enhance its guest processing functions, as the airline continues its rapid expansion of its operations. With the implementation of Sabre Airline Solutions’ passenger reservations and departure control systems, the SabreSonic Passenger Solutions, Kingfisher Airlines will be able to manage its reservations, pricing, ticketing and reporting more efficiently. Kingfisher Airlines is also among the first in India to offer the latest range of check-in options for its guests, including “Web check-in” facilities and “Roving agents” that use mobile devices to check in guests to help alleviate check-in queues at airports.

“Kingfisher Airlines entered into a strategic partnership with Sabre Airline Solutions as we wanted to ‘get it right, first time.’ We are a full-service, new world carrier, and we need the depth and width of application solutions that Sabre Airline Solutions can provide as quickly as possible. We are also tapping into Sabre Airline Solutions’ airline consulting expertise to ensure we are adopting airline management best practices,” said Dr. Vijay Mallya, Chairman & CEO, Kingfisher Airlines Limited. Kingfisher Airlines’ entire suite of Sabre Airline Solutions products is fully hosted through Sabre eMergo Web access, an application service provider environment that provides the technology without the cost of acquiring and maintaining costly hardware and infrastructure systems.

“This engagement with Kingfisher Airlines is a lead indicator of airline enterprise applications trends in general. Kingfisher Airlines engaged a single vendor (Sabre Airline Solutions) for more than 20 enterprise applications in a single consolidated project. By doing so, Kingfisher Airlines can now benefit from the integration, consistency of service and cross-department best practices,” added Mr. Tom Klein, executive vice president of Sabre Holdings and group president, Sabre Travel Network/Sabre Airline Solutions. Kingfisher Airlines is also leveraging other technology from Sabre Airline Solutions to help analyze the market and determine the best approaches to maximize revenue, including Sabre AirMax Revenue Manager, the Quasar passenger revenue accounting system and the Sabre Loyalty Suite.

To optimize operations, Kingfisher Airlines is also leveraging the Sabre AirOps Flight Operations Suite and the Sabre Rocade Crew Management System. Mr. Vish Viswanathan, vice president, Indian sub continent for Sabre Airline Solutions, said, “The Indian market is poised for significant growth over the coming years and Sabre Airline Solutions is extremely pleased to be working with Kingfisher Airlines to provide this growing domestic carrier with a full suite of integrated, leading-edge solutions that will enable their continued business success.” Through a separate deal, Kingfisher Airlines has also become the first new-entrant carrier in India to distribute its inventory through the Sabre global distribution system (GDS). It signed a Direct Connect Availability (DCA) agreement — the highest level of participation in the Sabre system. With this, Kingfisher Airlines can now market and sell its products through all Sabre Connected travel agents globally.

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Airbus predicts strong growth In India

Airbus expects demand for aircraft to grow quickly in India, led by travel as well as freight traffic, and the European company said it will look to source more materials, design and engineering services from the country. The plane maker, part of EADS, expects Indian firms to place orders for 1,100 passenger and freighter aircraft valued at about USD$105 billion over 20 years. "India will be the fastest-growing country for air travel for the next 10 years," Sanjay Sharma, senior marketing analyst at Airbus, said. Strong economic growth, greater liberalization and a "large, frustrated pent-up demand" would help the Indian air travel market grow faster than the global average, he said.

Airbus estimates the Indian air travel market will grow at an average 7.7 percent per year over the next 20 years, compared to the worldwide average of 4.7 percent. India's passenger aircraft fleet will grow five-fold in the same period, Sharma said. "While the bulk of the demand will be for single-aisle aircraft, there is a market for long-range and large aircraft, as well," Sharma said, ahead of Airbus's participation at the Aero Show in Bangalore this week. Air freight traffic would also gain as more domestic airlines entered and better infrastructure boosted profitability, he said. India's Flyington Freighters recently ordered six Airbus freighters valued at USD$1 billion, and Airbus estimates there will be demand for 165 freighter aircraft over the next 20 years.

Airbus, which made its first delivery in the country for state-owned Indian Airlines in 1976, has seven clients including Jet Airways, Deccan Aviation, Indigo, and Kingfisher Airlines, which has ordered five A380 aircraft. EADS has said it would invest would invest up to EUR2 billion euros (USD$2.58 billion) over the next 15 years in India in production and research and development facilities. An engineering centre, a fully-owned subsidiary, would be operational in the second half of this year. It was also looking at more cooperation with Indian firms in engineering, design and manufacturing, and may identify modern materials suppliers, Sharma said. State-owned Hindustan Aeronautics makes doors for the A320 planes, and EADS said last year it would extend its cooperation with HAL to other areas.

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Air India planning budget flights to US

With Malaysia-based Air Asia proposing to start a low-cost global airline, Air-India may look at long-haul budget carriers following the success of its subsidiary, Air India Express. “We are open to the idea of flying a low-cost airline to Europe and the US ... Who knows, it might catch on in future and we would like to gear up to meet such a demand,” Air-India chairman V. Thulasidas said. Air Asia, which offers fares equivalent to Rs 700 between two South Asian destinations, proposes to offer flights to Europe from Asia for as low a price as $100, revolutionising long-haul travel. Taking a cue from this, Air-India is now mulling a budget airline to Europe and the US, Thulasidas said, adding that the national carrier now has low-cost flights to several destinations in West Asia from a number of cities in India and between Chennai and Singapore. Barring Dubai, where Air-India operates both budget flights and regular ones with business and first-class categories, the airline does not operate regular flights to other destinations in West Asia.

Thulasidas, however, said that “as of now, there are no concrete plans”. If Air-India decides to go ahead with its plans for a low-cost long-haul international budget airline, this will be a first-of-its-kind venture by an Indian air-carrier. So far, low-cost or no-frills airlines have been operating solely in the domestic sector. The financial performance of these airlines have not been rosy so far with most of them struggling to break even. It was only in the third quarter of this fiscal that Air Deccan posted a net profit. Others, such as SpiceJet, GoAir and Paramount will take at least another year to enter the black. Against this backdrop, the business model would assume prime importance and it remains to be seen what business model the country’s international flag-carrier comes up with. Air-India, will, however have the advantage of learning from the experience of Air Asia should it decide to carry forward its plan for an international budget airline. Air Asia is pushing for launching its Malaysia-Britain service in July. Another Hong Kong-based airline, Oasis has big plans in this segment.

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MDLR Airlines leases two Avro RJ70's

BAE Systems Regional Aircraft has continued its penetration of the fast-growing air transport market in the Indian sub-continent with the lease of two Avro RJ70s to new Indian carrier MDLR Airlines. Based in Delhi, the new airline has been formed by Mr Gopal Goyal, who is Chairman and Managing Director, in association with Dr Harsh Vadhan who is a veteran of the Indian air transport industry, having been in senior management with Air India, Chief Operating Officer of Vayudoot, and now for several years, a leading aviation consultant. The first RJ70 (msn E1229) was delivered in late January and the second aircraft (msn E1230) will follow a month later. Both aircraft are configured in a two-class layout with eight business and 68 economy seats. Scheduled operations are due to start on February 1st and will link Delhi with provincial capitals in the north and north east of India.

Notable destinations to be served include Ranchi, Jaipur, Nagpur, Kulu, Jammu, Simla, Chandigar and the holy city of Varanasi. MDLR Airlines selected the RJ70 because of its combination of performance and economics and the fact that many of the airports to be served have short runways in mountainous regions with poor infrastructure. The airline has also contracted with Regional Aircraft for its Jet Spares 'spares by the hour' customised support programme. Mr Paul Stirling, Senior Vice President Asset Management of Regional Aircraft added: 'We are delighted to have secured another customer for our lease portfolio in the Indian sub-content, following on from our successes with First Flight Couriers and Yeti Airlines in Nepal. We are very active in this market and are in discussions with a number of carriers across the region. 'We wish MDLR Airlines every success in their operations for the future.'

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Air Deccan may separate ATR opeartions

Budget carrier Air Deccan, which has the largest network in India covering 60 airports and operating more than 300 flights a day, may hive off its highly profitable ATR Turboprop aircraft operations into a separate company. The airline operates 23 ATR Turboprop aircraft (40 to 70 seater jets) and 18 bigger Airbus A320 jets. While the helicopter business is already operating as a separate division (the company has a fleet of 10 helicopters and three fixed-wing aircraft), the regional business (with ATR aircraft) is likely to be spun off into a separate company. "This is aimed at better operational efficiency and gaining better valuation. The routes operated by ATRs are more profitable as these fly to airports where Air Deccan enjoys monopoly. With an independent company, the ATR division can come out with a separate balance sheet," sources say. Warwick Brady, chief operations officer, said this was one of the options being looked into.

"The ATR division can take care of various regional operations, while Airbus can focus on low fare operations. We are exploring other ways of consolidation too. However, no final decision has been taken in this regard." Another Air Deccan executive said it was too premature to comment on the issue as the airline was weighing several possibilities of restructuring. Company sources said the airline was working out various modalities of tackling the human resources allocation angle also. "Besides complex human resources and management issues, inventory management and allocation of engineers and pilots are posing a problem in creating a regional business entity," the source said. While it takes approximately 10 to 12 months for every new route to mature, Air Deccan's ATR routes have turned profitable in three months. The regional airports, that are connected by Air Deccan, also give concession on navigational and landing charges.

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Himachal Pradesh goes without snow

Peaks and valleys that wear a thick blanket of snow at this time of the year in Himachal Pradesh - which literally means land of snow - are mostly snow-less and rainless this winter. Weathermen say the state went without snow and rain in January for the first time in almost four decades - or more precisely 37 years. January is considered the coldest and wettest month of the winter season. The chill, snow and rain are crucial for the countryside where some 90 percent of the hill folk live on farming. The dry spell could hit apple orchards the most. The apple economy at Rs.15 billion is the hill state's main cash crop and has farmers worried.

'The drought this year isn't a good sign at all for the crop which will be harvested in summer (in August),' said Lekh Raj Chauhan, president of the state fruit and vegetable growers' association. 'The continuous drought has begun to dry up trees which could be backbreaking for farmers in the long run,' Chauhan said. 'But we're still hoping for some late winter snow and rain in February,' he said. 'It is really unusual to see the mountains in Himachal without snow at this time of the year. The western disturbance is taking place but the current is so weak it is not resulting in snow or rain. That is why January has gone snow-less after 37 years,' said Manmohan Singh, the head of the Shimla meteorological office.

'The temperatures in the past two weeks have been some eight degrees above normal and touched 18 degrees Celsius in Shimla. The normal temperature at this time of the year usually varies between two degrees Celsius to nine degrees Celsius in Shimla,' Singh said. The mercury rise is breaking new records at many places across the state this winter. Usually hotels in the popular resorts of Shimla, Kullu Manali, Dharamsala, Dalhousie, Chail, Kufri, Narkanda and Kasauli draw tourists in large numbers. 'But due to lack of snow most of these hill stations are wearing a deserted look this winter,' said a travel agent.

Even more surprising is the lack of snow in the high mountains of Lahaul, Spiti, Bharmaur, Kinnuar and Dodra Kwar. The snow has been scanty in these high mountains of the tribal belt, which experiences some of the harshest winters in the entire country. The 13,050 ft high Rohtang pass, also called the gateway to the Lahaul valley, is usually some 20 feet under deep snow by now. But this season the snow is barely a few feet deep and if snow doesn't fall this month the pass could open in a record time in spring.

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Air India to strengthen cargo business

With India's surging two-way trade now estimated at $250 billion, Air India has identified air cargo business as a major revenue-stream for the future and will foray into it in a big way with a fleet of 15 aircrafts. Air India's Chairman V Thulasidas said that India's flag-carrier is already in the process of converting two of its Airbus 310 aircrafts into cargo carriers. With the company acquiring 68 new Boeing aircrafts, it will convert two 747-300s into cargo carriers. It has six more A-310s, which it proposes to convert in a phased manner. Thulasidas said that after the proposed merger of Air India and Indian, five Boeing 737-200 aircrafts, now with Alliance Air, a subsidiary of Indian, will also be converted into cargo carriers.

Once these plans fructify, the merged airline will have a reasonably large cargo fleet to cater to varying distances and destinations. "We have identified air cargo business as a major revenue stream for us going forward," he said. Air India is currently in the process of implementing its $9 billion fleet expansion programme, for which it has tied-up a $7-billion Line of Credit with ABN Amro. The 68-aircraft acquisition has already begun with four 737-800s already acquired for its budget airline, Air India Express. Thulasidas said, the carrier is expected to get one new aircraft every month from now till 2011. He said that apart from 18 737-800s for Air India Express, the airline will acquire 23 777s for long-range operations besides 27 state-of-the-art 787s.

The first of the 777s will be acquired in April 2007. Of the 23, eight will be 777-200 LR (long range) and 15 will be 777-300 ER (extended range), he said, adding that the 787 aircraft delivery will begin in 2008, after its launch by Boeing. Thulasidas said the six Boeing 747-400s that Air India has will continue to be in operation for the next seven-eight years, adding that the two old 747-200s will be phased out with the acquisition of the new aircraft. He said, it was a conscious decision not to go for bigger 747 or Airbus 380 aircrafts, as the company wanted to have more aircrafts in its fleet to cover more destinations. The airline will, however, review after 2011 whether to go in for new 747s or A380's but as of now "there are no plans to acquire them", Thulasidas said.

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GoAir to offload 26% stake

Aviation seems to be the next big frontier for India Inc with even the low cost carriers talking big business. There's been lots of talk around Jet Airways eyeing a stake in the Wadia owned Go Air. However, it's now time for some real action because Go Air is talking to private equity players for off loading about 26 per cent stake. Sources said that Go Air is ready to strike a deal with Chicago-based Gatx Corporation and Boston-based Wellington Management offloading 26 per cent equity stake in the company. The valuation of Go Air is pegged at around Rs 400 crore. "We are in talks with strategic investor who will bring on to the table value, not just money," said Jeh Wadia, MD, Go Air.

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CAE to establish training centre in Bangalore

CAE announced it will establish its first Indian aviation training centre in Bangalore, India. It will be located close to the Bangalore International Airport at Devanahalli. The centre will open by the end of calendar 2007 and will train up to 1,000 pilots annually when fully operational. The initial plan involves an investment of approximately US $20 million and would likely include the participation of a partner. CAE is evaluating partnership possibilities. CAE's India training centre will serve India-based airlines and the surrounding region. The centre will be part of the CAE-Airbus cooperation and will initially offer pilot, cabin crew and maintenance training as well as flight operations support on the Airbus A320 and the Boeing 737. The training centre will also serve the needs of the CAE Global Academy, a new training alliance intended to address the global shortage of pilots. Currently, Indian carriers have approximately 200 aircraft in operation and have ordered an estimated additional 400 aircraft to be delivered over the next five years, which will generate the need for more than 1,000 new pilots per year.

"We have been serving the Indian market for the last 35 years, with carriers such as Air India, Indian Airlines and more recently Jet Airways, Air Deccan, SpiceJet, Indigo, Air Sahara and Kingfisher Airlines", said Jeff Roberts, CAE's Group President, Innovation and Civil Training and Services. "Listening to our customers, we realized the strategic importance of opening a training centre in India. The Indian aviation industry is growing rapidly and faces significant pilot shortages. Establishing this training centre further strengthens our relationship with our Indian customers; it also demonstrates our continued commitment to providing training solutions worldwide, close to our customers' base of operations. As both a training service and equipment provider, CAE can offer the complete spectrum of aviation training services and products to address the needs of this market, including pilot provisioning services and the sale of full-flight simulators and training devices."

CAE is a world leader in providing simulation and modelling technologies, and integrated training services to the civil aviation industry and defence forces around the globe. We design, manufacture and supply simulation equipment and offer training and services. This includes integrated modelling, simulation and training solutions for commercial airlines, business aircraft operators, aircraft manufacturers and military organizations and a global network of training centres for pilots, and in some instances, cabin crew and maintenance workers. With annual revenues of over C$1 billion, CAE operates in 19 countries around the world. CAE has sold nearly 700 simulators and training devices to airlines, aircraft manufacturers, training centres and defence forces for air and ground purposes in more than 40 countries. We have over 110 full-flight simulators in more than 20 aviation training centres, serving approximately 3,500 airlines, aircraft operators and manufacturers across the globe. CAE licenses its simulation software to various market segments and has a professional services division assisting customers with a wide range of simulation-based needs.

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Government planning to tax aircraft rentals

The domestic airline industry may be in for a heavy blow of Rs 650 crore next fiscal if early indications on tax proposals are anything to go by. The finance ministry is toying with the idea of withdrawing the exemption on withholding tax for lease rentals of aircraft. This would translate into higher airline tariffs for fliers as aviation companies are likely to pass on the tax burden to passengers. The levy was kept in abeyance to allow Indian and Air India to expand their fleets through leased aircraft. The finance ministry has now indicated the exemption may be scrapped. It is likely to be withdrawn from April 1 on aircraft as well as engine lease. Over two-thirds of the domestic carriers’ current fleet of 240 aircraft are on short and long-term lease while the remaining one-third are owned by the airlines. “The non-availability of the exemption will significantly increase domestic carriers’ fleet-acquisition costs,” according to Federation of Indian Airlines (FIA) chairman and Air India CMD V Thulasidas.

However, the finance ministry, which is looking at axing exemptions to expand the tax base, is not in favour of extending the benefits available to airlines, an official said. In 2006, the Central Board of Direct Taxes had put out a list of tax exemptions on its Website to get public views on which ones should be withdrawn. It is likely that the government would first touch the exemptions available to corporate sector rather than those available to individuals. Withholding tax rates vary between 10% and 48%, depending on the country the lessor is registered with. The domestic carriers have various expansion plans lined up with airline companies likely to add over 450 aircraft to their existing fleets. The plans may become more costly after the exemption on withholding tax — under Section 10(15A) of the Income-Tax Act is withdrawn. The exemption is valid to lease deals signed till March 31, 2007.

To hedge themselves against this, some of the airliners are looking at finalising their lease agreement before March 31, 2007. While the tax levy may not lead to a cut in expansion plans of the airlines companies, they may pass some of the additional cost on to passengers. “If the exemption is withdrawn, it would lead to increase in costs by at least Rs 60 per seat, assuming an average withholding tax of 10%,” explained the director of a leading low-cost carrier. Explaining the tax calculations, CEO of a low-cost carrier said, “The average monthly lease rent of an Airbus A320-type aircraft is about 1% of the price value, which turns out to be $400,000 per month per plane. Assuming an average 20% withholding tax, it would result in yearly tax of $960,000 per plane.” A ballpark estimate for 150 aircraft leased by domestic carriers, at 20% tax, would result in total tax of over Rs 650 crore in a year. This is expected to significantly affect costs and profits of the aviation industry, which is likely to incur losses of Rs 2,000 crore this fiscal.

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LCC's planning facilities for aircraft maintenance

Low-cost carriers (LCC's), including Air Deccan and GoAir are in the process of forming joint ventures with foreign firms to set up maintenance, repair and overhaul (MRO) facilities in India. Currently, these carriers have to either fly their aircraft to places like Abu Dhabi, Singapore or Belgium for secondary services. With many of them planning fleet expansion, the need to reduce operating costs has become imperative. Air Deccan officials confirmed that they have been in talks with global firms like Germany’s Lufthansa Technik and Singapore-based SIA Engineering, for the past one year for an MRO. “We are in the advanced stages of finalising the venture,” Mohan Kumar, director (finance) Air Deccan, said.

Go Air, which formed a joint venture with SIA Engineering, is now working out the details of the agreement. Kingfisher Airlines is likely to announce an alliance with either SIA Engineering or a prominent US-based engineering firm next week. The initial cost of setting up a hangar and other tools, along with the basic workshop, would be over Rs 100 crore. Sending aircraft abroad for MRO costs the company Rs 25 lakh per aircraft, he said. Currently, only Boeing has an MRO facility in Nagpur that offers services to Air-India, Jet Airways and Air Sahara, as per its aircraft purchase agreement with these carriers. Airbus is close to setting up a facility in Nashik and ATR is finalising a location for the facility in Bangalore.

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Air Deccan in expansion mode

Air Deccan, India’s second-largest domestic airline by marketshare, has approached some of the country’s leading conglomerates to raise $75-100 million for its expansion plans. The low-cost airline has sounded out the Reliance Anil Dhirubhai Ambani group, which operates the country’s second-largest private telecom company, and a leading Delhi-based conglomerate about the investment, said a source familiar with the development. The carrier has given investment bank Edelweiss Capital the mandate to help it raise funds from an Indian conglomerate or a clutch of private equity players to create a war chest for the year ahead.

Private equity funds who are being targeted for this round of fund raising include Texas Pacific Group, Carlyle Group, Standard Chartered Private Equity, Macquirie Capital, Chrys Capital, Lehman Brothers, General Atlantic Partners and GIC of Singapore. Air Deccan, which clawed its way back into profitability last quarter, is also looking to raise money by securitising its future receivables or issuing bonds. Industry sources said it is talking to global players like International Lease and Finance Corporation (ILFC) and General Commercial Aviation Services (GECAS). “We are talking to a variety of people. But no decision has been made yet,” said Air Deccan promoter Captain GR Gopinath.

The entry of a strong corporate name on the company’s board can change the dynamics of the marketplace,” said COO Warwick Brady. “We would prefer those who stay invested in the company on a relatively long-term basis,” added finance director Mohan Kumar. Reliance ADAG fits the bill, sure. But a Reliance ADAG group spokesman, when contacted, declined comment. When asked, Mr Kumar said the only investment that Reliance ADAG group currently has in the company is the 3.5% equity Reliance Capital held through its mutual fund arm. Air Deccan had earlier said that it was open to divesting around 15% equity to raise $75 million from the market. The process is expected to be completed over the next three months.

The development is significant as the success of the negotiations could mean the entry of more big-ticket corporates in the fast-growing and high-profile aviation industry. Their deep pockets and strong fund-raising abilities would be of invaluable use to firms like Air Deccan who have to battle stiff competition and rising fuel costs. Air Deccan is growing fast and can look at consolidation through various means, including the acquisition of a smaller domestic carrier if it has a stronger balance sheet. The airline raised $118 million in two rounds of fund-raising, including an IPO, in the past two years. Air Deccan has just opened the booking of three lakh seats at Rs 7 per ticket.

SpiceJet has countered by offering 99,999 seats at 99 paise. Full-service carriers like Jet Airways and Kingfisher, that are in a stronger position financially with better margins, are expected to enter the fray with discounts soon. This could further erode margins for everyone, sources said. ILFC, a subsidiary of the AIG group, is among the world’s largest lessors of widebody aircraft. It also boasts of owning the world’s most valuable fleet, about 750 planes worth about $40 billion. Gecas, a division of GE, is another large US company with similar interests.

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SpiceJet to start Online check-in service

Low-cost carrier SpiceJet said that it will start offering web check-in service from Delhi to 14 destinations across the country. Passengers travelling from Delhi to select destinations would be able to check-in, choose preferred seats and print boarding passes through SpiceJet website, SpiceJet said in a release. The service once availed on a ticket would restrict cancellations or any modifications on that ticket, the release said, adding the service would not be available for passengers travelling with infants, unaccompanied minors and persons using wheelchairs. "SpiceJet's web check-in service provides hassle free air travel experience. The new service would also help in making check-in counters at airports less crowded," SpiceJet CEO Siddhanta Sharma said in a statement.

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Jet Airways introduces Kosher Meals on its flights

Jet Airways, India’s premier airline, announced the introduction of Kosher Meals for its international passengers. Special Kosher meals prepared and served according to Jewish Dietary Regulations will be available on board Jet Airways flights to London and Singapore. To start with, Kosher Meals (KSML) would be served on the Mumbai-London-Mumbai and Mumbai-Singapore-Mumbai sectors. Passengers will need to inform the airline about their meal preference at least 48 hours prior to the date of travel. Commenting on the introduction of Kosher Meals on board its international flights, Mr. Wolfgang Prock-Schauer, Chief Executive Officer, Jet Airways stated “The addition of the Kosher meals to our in-flight menus is a reiteration of our commitment to the requirements of international passengers. These Kosher Meals have been created especially for Jet Airways by expert Chefs from our in-flight Caterers in consultation with our own Food & Beverage Managers”. Passengers are requested to state their preference for a Kosher Meal (KSML) option while booking their tickets either online or through their travel agents.

In conformity with IATA regulations, the other special dietary options available on Jet Airways’ international flights include Asian Vegetarian; Diabetic; Low-Cholesterol; Low Salt and Jain meals. Jet Airways currently operates a fleet of 60 aircraft with 47 classic and next generation Boeing 737-400/700/800/900 aircraft, 3 Airbus A340-300E aircraft, 2 Airbus A330-200 aircraft and 8 modern ATR 72-500 turboprop aircraft. With an average fleet age of 5.3 years, the airline has one of the youngest aircraft fleets in the world. Jet Airways operates over 330 daily flights to 50 destinations that span the length and breadth of India and beyond, including London Heathrow in U.K., Singapore, Kuala Lumpur in Malaysia, Colombo in Sri Lanka, Bangkok in Thailand and Kathmandu in Nepal. The airline plans to extend its international operations to North America, Europe, Africa and Asia in the coming years with the induction of wide-body aircraft into its fleet in 2007. Since inception in May 1993 until end-December 2006, Jet Airways has flown close to 69 million passengers.

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Old locos to add 'steam' to India's tourism blitz

Adding a bit of 'steam' to India's tourism blitz, rather literally, the railways plan to deploy at least 15 locomotive engines of the era bygone to promote heritage tourism in and around the national capital. 'We will be collaborating with Delhi Tourism to deploy some 15 steam locomotive engines which will ferry tourists in and around Delhi under specially designed packages,' said V.N. Mathur, general Manager of Northern Railways. 'We intend to call it 'steam tourism' and the packages will fulfil the needs of tourists visiting Delhi who want to capture a slice of India's rich heritage in their memories by travelling in these iron-horse beauties,' Mathur said. The senior railway official said India has as some 58 locomotive engines - also called 'chhuk chhuk' trains - across the country that use the same invention of Thomas Alva Edison and will be used in a phased manner for tourism purposes.

Even though most of India's tracks have already been converted into broad gauge, there are still some left in places like the national capital and the northeast where these locomotives can run on narrow gauge and meter gauge, officials said. In fact some engines like WP-7200 named Shenshah and WL-15005 named Sher-e-Punjab run on broad gauge. These were retired in 1995, but 'Shenshah' has since been redeployed as heritage special in Delhi, ferrying tourists on weekends. Another train 'Fairy Queen' that was built in 1855 holds the Guinness World Record for being the world's oldest locomotive in working condition and is running between Delhi and Alwar, close to the famous Sariska tiger reserve in Rajasthan. Fairy Queen had even hauled troops during the 1857 war of independence 150 years ago, which the government is commemorating this year with series of events, officials explained.

Another pride of Indian Railways is the XE-3634, also called 'Pawan Doot' built in 1930 and commissioned a year later to marked the second stage of evolution of the rail network in the country. All these locomotives, and more, were also showcased at the grand parade steam engines in Delhi on Friday, which was inaugurated by Railways Minister Lalu Prasad. A special photo exhibition was also put up at the Rail Museum here, showcasing the journey of the Northern Indian Railways, right from the Fairy Queen Steam Loco and WL-15005 of yesteryears to the Jan Shatabdi and the Rajdhani Express of today.

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Queensland tourism targets Indian honeymooners

Indian newlyweds are the latest tourists targeted by Queensland, as the sunshine state ramps up its push to boost its share of Australia's lucrative travel market. Queensland Tourism Minister Margaret Keech, who is currently in Delhi for the Queensland on Tour - India trade mission, said the state has been popular in past years with other Asian newlyweds, and that similar steps could be taken to attract Indian honeymooners. "I have raised the potential of the honeymoon market during discussions with agents here, building on work we have already done to grow the market," Ms Keech said. Tourism Queensland has already attempted to give people in the industry a taste of what is on offer by recently playing host to a large group of Indian travel agents who specialise in honeymoon holidays. "The agents returned to India with a good understanding of what Queensland can offer their customers," Ms Keech said.

"They know from their own experiences that Queensland has everything a couple in love could seek - from wedding facilities, to honeymoon luxury, stunning natural assets, adventure and an experience that will be with them for life." India has been identified as one of Australia's fastest growing tourism markets. Almost 80,000 Indians visited Australia in 2005-06, a 33 per cent increase from the previous financial year. Almost one-third of those made a trip to Queensland while in the country. As part of her trip to Delhi, Ms Keech has also urged airlines to include Queensland in their flight schedules in order to cater for the growing demand. "One of the key issues is that while we are seeing significant increases in visitor and expenditure growth, there are currently no direct flights to and from Queensland and India," she said. "The protection of Queensland's traditional $3.2 billion international holiday market and the development of new emerging holiday markets is extremely important. "Increasing direct flights to key international markets is a big part of the development process."

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Air-India, Indian merger only by mid-2007

The proposed merger of Air-India and Indian, formerly Indian Airlines, to face domestic and international competition in the skies, will overshoot the April deadline and is likely to be completed by mid-2007. A committee of secretaries appointed by the Group of Ministers (GoM) to go into the proposal has favoured the merger of the two Government-owned airlines. "Although the GoM has also cleared the merger, the Union Government is yet to give the green signal," Chairman and Managing Director of Air-India V. Thulasidas said. He said even if the mandatory clearance for the merger from the Cabinet came in the first week of February, it would need a minimum 16 weeks to complete the formalities. Accenture, the consultant that prepared the road map for the merger, had fixed that many weeks for completing the legal merger process after obtaining the Cabinet nod. Mr. Thulasidas said there were no hitches for the merger.

The employees and the unions of Air-India were in favour of the merger with Indian and had a "positive attitude." The Union Civil Aviation Ministry authorities had informed him that employees of Indian were also in favour of the merger. Better career opportunities for the personnel of the two airlines, cut in costs and being better equipped to face the competition are cited as the major benefits of the merger. The industry profits were declining. It was estimated that the proposed merger would add around Rs. 1,200 crore to the bottom line of the new entity through synergies between the two airlines. The service of the consultant would be available for one year after the formal merger to ensure the integration of manpower, marketing and sales wings of the two airlines. The merged entity would be the largest airline in Asia. Asked about the name of the airline after the proposed merger, Mr. Thulasidas said "we have been told not to worry about the name and logo now" and ponder it only after the formal merger.

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Government to promote small regional carriers

After low-cost carriers, it is now the turn of regional airlines to spread their wings. In a bid to improve air connectivity to the hinterland, the government is finalising a policy to promote airlines that operate only in a particular region. Under the policy, a regional airline, flying aircraft with not more than 80 seats, will be exempted from navigation and airport charges. This concession will be available only for airlines that restrict their operations to one region rather than establishing a nation-wide network. Civil aviation ministry has carved out four regions — north, east, west and south — for marking geographical limits, sticking to which will be mandatory for availing the exemption from airport charges. The government is also planning to extend concessional sales tax rate of 4% for all regional aircraft. Currently, the benefit is available only to turboprop aircraft and others have to bear high sales tax of up to 26% in some states.

Airlines keen on availing the ‘regional’ benefit have to operate on a distinct licence. If an existing airline wants to start a regional carrier, it will have to obtain a new licence. The policy on regional airlines will be put in place in a few months, civil aviation ministry sources said. The move will help projects meant to connect small sectors that now do not have air connectivity. MDLR airlines, floated by a Haryana-based real estate developer Gopal Kumar Goyal, plans to focus exclusively on religious places of north India. Initially, the benefits under the policy will be given to carriers with fleet size of less than 80-seater aircraft. As the policy on regional airline evolves, all eligible carriers will be given these incentives, the official said. The Directorate General of Civil Aviation will be notifying fleet strength and infrastructure requirements for regional airlines. Civil aviation ministry will also be talking to state governments to provide incentives to fuel the growth of such airlines, the source added.

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Istithmar to increase stake in SpiceJet

Dubai World investment firm Istithmar is set to increase its stake in Indian low-cost airline SpiceJet. Istithmar chief executive officer David Jackson said a decision on the matter will be taken in a couple of days. "We are in the process of making an additional investment," he said, but declined to disclose the amount. A board meeting tomorrow is expected to approve the new investment. Istithmar has invested $50 million in SpiceJet, which was launched in May 2005. Spicejet had informed the Bombay Stock Exchange recently that it would offer equity shares on preferential basis to various foreign and domestic investors. Istithmar is banking on the huge growth potential of SpiceJet as the Indian government is opening up the aviation sector to low-cost carriers and air travel is growing amid a strong economic growth.

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FedEx acquires Indian air freight company

FedEx Corp. announced Wednesday it has completed its $30 million acquisition of an Indian air freight company. FedEx Express has bought Prakash Air Freight Pvt. Ltd., which is one of the largest domestic express companies operating in India. PAFEX has been the FedEx service provider in India since 2002. "The continued growth and improvement of express services in India will serve to strengthen the country's infrastructure, enhancing the competitiveness of Indian businesses and their access to global markets," said Robert W. Elliott, FedEx Express president, Europe, Middle East, Indian Subcontinent and Africa. Present in India since the mid-1980s, Memphis-based FedEx (NYSE: FDX) introduced an all-cargo flight to India in 1997; began the first overnight express service between India and China in 2005; and is the first cargo airline to serve two gateways in India, Mumbai and Delhi, with 16 round-trip flights a week.

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Travelocity, Expedia set to enter India

The Indian online travel segment is one of the fastest growing sector in the e-commerce story. The Internet and Mobile Association of India has estimated that the average number of online travel transactions has increased nearly fourfold from 207,000 a month in 2003-04 to 795,000 in 2005-06. The entry of two global online giants — Travelocity and Expedia.com — couldn’t have been more perfect as they attempt to expand their reach in the country. While Travelocity will be entering India with its Singapore-based online company Zuji, Expedia is yet to announce its detailed plans. Expedia.com is one of the leading online travel providers, with $4,261 million as gross booking for the third quarter ended September 30, 2006, and revenue for the same period was $613.9 million.

The company claimed to have attended to about 25 million travellers per month. Similarly, Travelocity’s gross travel bookings were $7.4 billion for 2005, translating to a revenue of $830 million for the same period. According to the press release on Zuji’s site, it plans to establish a specialist online travel team in India with a view to launch a ‘Travelocity India’ site. The team will be based in Mumbai and will be supported by Zuji’s regional headquarters team in Singapore. The company has already identified Himanshu Singh to head the Indian Travelocity team. Indian online players such as Makemytrip, Yatra, Travelguru and Cleartrip are not too perturbed by the move. Makemytrip, the leader in this segment, has 2.5 lakh registered users (looking at the 5 lakh figure soon) and clocks 3,000-4,000 transactions on its site everyday.

Yatra, the second largest portal in this space, has about 40,000-50,000 unique visits a day. Deep Kalra, founder and CEO, Makemytrip, said the entry of the biggies was an obvious and expected move because of the market that India offered. “The domestic online travel industry is roughly about $800 million (around Rs 3,600 crore). This would include suppliers such as carriers, hotels and OTAs and IRCTC. But these international players still need to build on their brand,” he added. Dhruv Shringi, founder and executive director, Yatra, asserted that it was good to have competition. “We welcome it.” With internet usage growing at 50 per cent per year, and e-commerce projected to double by 2007, industry experts are pegging the market to touch the $2 billion mark by 2008.

The entry of these portals in India not only validates the opportunity that Indian online ticketing market has but it might also set in some best practices in place. However, Cleartrip CEO Sandeep Murthy had a few words of caution. “It’s fine for them to come to India but this market is very complicated and it takes time to build trust among the stakeholders like the airline, hotels and others.” Almost all the players feel that the entry of global players is positive and challenging. Ashwin Damera, CEO and founder, Cleartrip, says, “It shows that the consumer base is growing. But the advent of these global bigwigs is also challenging as they come with a ready-made experience and customer base.” With the advent of low-cost carriers, the Indian market is following in the footsteps of the European and the US markets. Though the tier-I cities show the maximum online transactions, industry experts feel that in the coming years this growth will come from tier II and III cities. The players are also looking to extend the offering to other services such as hotels and care reservations.

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SriLankan starts double-daily services to Mumbai

SriLankan Airlines, for many years the largest foreign carrier operating to India, is expanding operations with the launch of double-daily flights to Mumbai, the country’s commercial capital this February. The additional flight adding to the present daily frequency to Mumbai will also raise the number of flights throughout India to an unprecedented 94 per week to 10 cities - 15 to Chennai, 13 to Trivandrum, 11 to Kochi, 10 to Trichy, 8 to Calicut, daily to New Delhi, Hyderabad, and Bangalore, and 2 to Goa. Manoj Gunawardena, Head of Worldwide Passenger Sales at SriLankan said: “It will not be long before SriLankan realizes the dream of a hundred flights a week to India! It is our aim to serve as many Indian cities as frequently as possible. Travellers can take full advantage of our rapid connections in Colombo to Europe, Middle East, Far East and the Maldives with the double-daily service from Mumbai increasing the level of convenience.” Flying time from Mumbai to Colombo is a mere 2 hours and 25 minutes.

The new flights are conveniently scheduled to depart Mumbai daily at 2:55 p.m. and arrive in Colombo at 5:20 p.m. The return flights are scheduled to depart Colombo at 11:45 a.m. and arrive in Mumbai at 2:00 p.m. Senaka Fernando, Regional Manager Indian Subcontinent & Maldives, said: “The increase in flights to Mumbai is the result of a recent bilateral meeting between India and Sri Lanka that reinforces the excellent cooperation that exists between the two nations. India has so much to offer in terms of history and culture and we are spearheading massive campaigns to lure more tourists to this fabulous country”. The launch of additional flights to Mumbai is part of SriLankan’s strategic plan to strengthen its market presence in India which remains the foremost tourism generating market for Sri Lanka. The additional flights will also support the airline’s campaign to promote tourism to India from its worldwide network through the Colombo hub.

SriLankan Airlines works in close collaboration with Indian tourism authorities to effectively promote in-bound tourism to India and has a strong marketing partnership with the State Government of Kerala. Operating a fleet of modern Airbus A340’s A330’s and A320’s, SriLankan now serves 50 destinations in 28 countries, and has gained a reputation as an award-winning airline. These include “World’s Best Airline” in a survey of Economy Class passengers, “World’s Friendliest Cabin Staff”, first runner-up for “World’s Best Cabin Staff”, “Best Overall In-flight Entertainment (small fleet), and “World’s Most Efficient Operator of Airbus A330s (small fleet)” from Airbus Industrie. SriLankan has also dominated regional awards, winning the Skytrax award for “Best Airline in Central Asia” for four consecutive years, as well as the TTG Asia Award for “Best Airline in South Asia” three times, and the Galileo Indian Express Award for the “Best Eastbound International Airline from India”.

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IAF officer killed in helicopter crash

An Indian Air Force (IAF) officer died when his helicopter crashed while rehearsing for an air show in Bangalore on Friday. Squadron Leader Priye Sharma died when the Dhruv advanced light helicopter (ALH) of which he was the co-pilot crashed in the Yelahanka air force station, an IAF spokesman said. The pilot, Wing Commander V Jetley, was injured and has been admitted to the Air Force command hospital in Bangalore. “Sharma's body has been recovered from the crash site,” the spokesperson said. The two officers were members of the IAF's Sarang display team and were rehearsing for the Bangalore International Airshow, which begins on February 7. Three other helicopters were part of the sortie. "There was no (no) mid-air collision," said the spokesperson. "An inquiry has been ordered into the accident, which occurred between 10 and 11 am." The ALHs are built by Hindustan Aeronautics Limited in Bangalore.

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