After steadily loosing market-share, low cost carriers (LCCs) like IndiGo, SpiceJet, and Kingfisher Red (former Air Deccan), have clawed back from 41% during the July-September 2008 quarter, to 46.4% in October.

Indian domestic passenger numbers and passenger numbers growth
January 2007 to October 2008

Source: Centre for Asia Pacific Aviation and Ministry of Civil Aviation

While passenger number rose in October, in the slowing economy, passengers are tightening their belts and looking for lower cost travel options. Full service carriers like Air India, Kingfisher, and Jet, are reluctant to pass on savings like the reduction in fuel prices and reduction in congestion over busy airports, over the last few months. LCCs have removed the congestion surcharge, and have introduced lower fares on advance bookings.

The full service carriers have indirectly increased their incomes by withdrawing commissions paid to travel agents, and have further penalised paasengers by imposing a "transaction fee" of Rs. 350 to 500 to cover for the travel agents' commission.

While full service carriers like Jet typically charge Rs. 7,400 for a one-way ticket between Mumbai and Delhi, LCCs like SpiceJet typically charges Rs. 5,125. The gap between LCCs and full service carriers has grown back to Rs. 1,500 - Rs. 2,000 from a paltry Rs. 400 earlier, which had caused massive passenger defections from the LCCs to the full service carriers.

LCCs have also taken the battle up a notch further, now allowing corporate customers to reschedule and cancel tickets with little or no fees, in a bid to increase their penetration of the lucrative corporate traveller business.

IndiGo and SpiceJet led the LCC charge carrying about 1.2 million passengers each, while Kingfisher Red carried 0.74 million.

According to a Centre for Asia Pacific Aviation (CAPA) report, Air India has almost doubled its bailout request from the Indian Government, in the form of an equity injection and a soft loan (30:70 split), to USD 813 million from USD 467 million requested just two months ago. The amount is roughly equivalent to the revised expected losses for the carrier this financial year.

The request puts the Indian Government into a difficult position, as support for the national carrier would distort the competitive environment for India's troubled private carriers. Jet Airways and Kingfisher have resorted to an operational merger in an attempt to stem losses and both are seeking to raise fresh debt and equity from domestic and offshore sources.

Air India's losses have been caused by its slow integration with the former Indian Airlines, weak demand and excess industry capacity. The carrier, which was reported to be making losses on 200 of its 207 routes, has recently cut back its network and is seeking to raise cash from the sale-and-lease-back of aircraft.

Interference by virtually all the politicians and bureaucrats, who treat the airline as their personal fiefdom, ties down the hands of the management in finding solutions to address the challenges.

Domestic travel demand has been on a downward spiral since May this year (3.9 million passengers) until September 2008 (2.7 million passengers), as a result of slowdown in demand caused by high fuel prices and a slowing economy. Total passenger numbers fell a significant 13 per cent year-on-year compared to last year's 3.6 million. The October numbers have shown recovery, but it is too early to say if this is a case of traffic bottoming out, or not.

Indian domestic passenger numbers and passenger numbers growth: January 2007 to October 2008

Source: Centre for Asia Pacific Aviation and Ministry of Civil Aviation

Air India's domestic passenger numbers fell 10.6 per cent year-on-year to 565,000 in October 2008, giving it a market share of 18.2 per cent, up from 17.6 per cent in October 2007. The carrier's load factor was also an anemic 59 per cent in October 2008.

The United States' space shuttle Endeavour roared into the clear moonlit sky from the Kennedy Space Centre with a seven-member crew, carrying bedrooms and a bathroom, on a house keeping mission to repair and upgrade the International Space Station.
Photo courtesy NASA
Space shuttle Endeavour's STS-126 flight will feature important repair work and prepare the International Space Station to house six crew members for long-duration missions.

The 15-day flight with its four planned spacewalks will primarily focus on servicing the station's two Solar Alpha Rotary Joints, which allow its solar arrays to track the sun. (The starboard SARJ has had limited use since September 2007.)

Endeavour will carry about 32,000 pounds, which will include supplies and equipment necessary to double the crew size from three to six members in spring 2009.

The new station cargo includes additional sleeping quarters, a second toilet and a resistance exercise device. The shuttle also will deliver a new crew member and bring back another after more than five months aboard the station.

The shuttle twin booster rockets were fired at 1955 last night (0630 IST today) which lifted the 2.04 million kg shuttle into the sky with blinding light and defending roar.

The NASA shuttle carries some 32,000 pounds of supplies and equipment necessary for two new sleeping compartments needed for crew whose size is planned to be doubled from there to six by spring next year. It includes a second toilet, a water reclamation system and a resistance exercise device.

Shortly before launch, Commander Chris Ferguson said, "It's our turn to take home improvement to a new level after 10 years of International Space Station construction." Joining Ferguson on Endeavour's 15-day flight are Pilot Eric Boe and Mission Specialists Donald Pettit, Steve Bowen, Heidemarie Stefanyshyn-Piper, Shane Kimbrough and Sandra Magnus. Magnus will replace current station crew member Greg Chamitoff, who has lived on the outpost since June.

Endeavour will return to Earth on Discovery's mission, targeted for February 2009. It was United Space Agency's first mission in six month, 24th shuttle flight, the 22nd for Endeavour and the 27th shuttle mission to the station.

NASA is constructing the USD 100 billion space station with 16 other countries for about a decade. The water recycling plant is meant to purify urine and other waste water into drinkable water and the second toilet is needed for the expanded crew.

E!Online reports, crowds of photographers and fans went crazy for a glimpse of Victoria Beckham, aka Posh Spice, the former Spice Girl, after she landed at Los Angeles International Airport.

When Posh arrived from Europe in her trench coat, sunglasses, hat and boots, all signs of civility vanished. The crowd of photographers and fans waiting for Posh became unmanageable. "The photographers were going crazy," an eyewitness tells E!

Posh, though, kept walking, calm and cool.



Read the full story here.

The Boeing Company [NYSE: BA] just reached a tentative agreement with its engineering union, the Society of Professional Engineers in Aerospace (SPEEA). Hopefully, this will put to rest the labor woes that have been casting a shadow over the company since September. On November 1, Boeing settled a 54 day strike with its machinists union, that has had its impact on the company (read related story). And today, Boeing looks like it will avert a strike with SPEEA if the parties sign a contract by December 1.

The tentative agreement reached today between Boeing and the Society of Professional Engineering Employees in Aerospace (SPEEA) offers market-competitive wages and improved benefits over the four-year duration of the proposed contracts.

SPEEA is recommending that nearly 21,000 employees in Washington, Oregon, California and Utah vote to ratify the agreement.

"Our goal was to negotiate contracts that reward our employees for their hard work and the success they helped create," said Doug Kight, Boeing vice president of Human Resources. "This agreement provides market-competitive pay and benefits that enable us to attract and retain the best talent, remain on the leading edge of technology and continue to win business in uncertain times."

The proposed contracts reward engineering and technical employees for their role in the company's success with

• Five percent annual salary adjustment funds in each year of the contract.
• Continued participation in the Employee Incentive Plan (EIP), which paid individual employees 41 days of extra pay over the past three years.
• Health care benefit improvements, including enhanced wellness and preventive care coverage at slight cost increases.

In addition, Boeing addressed SPEEA concerns about the use of non-Boeing labor and subcontracting, while providing the company flexibility to make business decisions.

If ratified, the new contracts will go into effect Dec. 2, 2008, and will expire Oct. 6, 2012.

More information on the negotiations is available here. A detailed summary of the contract proposals is available in PDF format here.

Boeing should be happy if the SPEEA signs, it has been distracted for far too long, with its employee negotiations, while it's competitors ploughed ahead.

Boeing logo is copyright of The Boeing Company.

India marked its presence on Moon tonight to be only the fourth nation to scale this historic milestone after a Moon Impact Probe with the national tri-colour painted successfully landed on the lunar surface after being detached from unmanned spacecraft Chandrayaan-1.

Joining the US, the erstwhile Soviet Union and the European Union, the 35-kg Moon Impact Probe (MIP) hit the moon exactly at 8.31 PM, about 25 minutes after the probe instrument descended from the satellite in what ISRO described as a "perfect operation".

Miniature Indian flags painted on four sides of the MIP signalled the country's symbolic entry into moon to coincide with the birth anniversary of the country's first prime minister Jawaharlal Nehru, observed as Children's Day.

"It will signify the entry of India on Moon," an Indian Space Research Organisation (ISRO) official said.

The MIP is one of the 11 scientific instruments (payloads) onboard Chandrayaan-1, India's first unmanned spacecraft mission to Moon launched on October 22 from Sriharikota spaceport.

Developed by ISRO's Vikram Sarabhai Space Centre of Thiruvananthapuram, the primary objective of MIP is to demonstrate the technologies required for landing a probe at the desired location on the moon.

The probe will help qualify some of the technologies related to future soft landing missions. This apart, scientific exploration of the moon at close distance is also intended using MIP. PTI

Congratulations to ISRO

Images courtesy Wikipedia

This is way too cool to pass up.

The New York Times reports Google researchers have added sophisticated voice recognition technology to the company’s search software for the Apple iPhone.

Users of the free application, which Apple is expected to make available as soon as Friday through its iTunes store, can place the phone to their ear and ask virtually any question, like “Where’s the nearest Starbucks?” or “How tall is Mount Everest?” The sound is converted to a digital file and sent to Google’s servers, which try to determine the words spoken and pass them along to the Google search engine.

Read the complete story here.

Pity it is only available on iPhone. When will they make it available for the Blackberry or the Treo ?

Deliveries delayed 9 months; deliveries of 747-8 Freighter to begin third quarter of 2010; deliveries of 747-8 Intercontinental passenger model to begin second quarter of 2011. Company working with customers to minimize disruption.

Boeing [NYSE: BA] today announced an adjusted schedule for production and delivery of the 747-8 Freighter and Intercontinental airplanes.

Source Boeing via Bloomberg
The delays have been caused by delays in the supply chain due to design changes, and the recent Machinists' strike which halted production at the company's factories.

Boeing had planned to ship its 787 Dreamliners to customers starting in May and then divert those engineers to the 747-8 program, its biggest plane and a competitor to the Airbus A380 superjumbo.

That plan has gone up in smoke since the Dreamliner, is already more than 15 months behind schedule, and the 57-day machinists strike, has only added to Boeing's woes.

As if that were not enough, engineers are in contract talks this week and are also threatening a walkout.

At best, deliveries have been pushed back 9 months. Delivery of the first 747-8 Freighter will move from late 2009 to the third quarter of 2010. The first 747-8 Intercontinental passenger jet delivery moves from late 2010 to the second quarter of 2011.

"Our entire team has worked hard to mitigate growing schedule risk on this program but have been unable to overcome the collective impact of work statement increases to the original design, a tight supply of engineering resources, and the recent Machinists' strike," said Boeing Commercial Airplanes President and CEO Scott Carson.

"The remaining work on the 747-8 program is well defined," said Ross R. Bogue, vice president and general manager -- 747 Program and Everett site. "This schedule adjustment provides the time we need to finish that work and bring both airplanes to market successfully for our customers."

This announcement has clearly impacted Boeing's stock prices, which are down 4.5% at the time of this story.

I have added a new star ratings widget from Outbrain that allows you to rate blog posts and provide instant feedback.

This widget is available to bloggers on Blogger, WordPress or TypePad.

I am very impressed by the widget. It's light, requires no registration and very intuitive, automatically blending in to the current blog design. I also like the fact that outbrain does not put its logo and marketing stuff on the widget.

Blog visitors can hover the mouse over the five stars at the bottom of each post and click any of them to rate the current blog post.

Outbrain even offers a widget that can be installed in the FeedFlare of FeedBurner.

With the hectic pace today, many users are too rushed, to type in extensive comments. This star rating system enables bloggers like me to get quick feedback from you readers which indicates your reaction to the blog post.

For my readers, I hope you find the ratings system to your liking and use it.

For my fellow bloggers you can get the outbrain Ratings Widget here.

My sincere thanks to all the visitors of Bangalore Aviation.

Over the last two weeks you will observe that I have implemented changes in the site. I seek your feedback and comments on these changes. Good, great, bad or ugly.

Snap Shots

I installed a tool on this site called Snap Shots that enhances links with visual previews of the destination site, interactive excerpts of Wikipedia articles, MySpace profiles, IMDb profiles and Amazon products, display inline videos, RSS, MP3s, photos, stock charts and more.

Sometimes Snap Shots bring you the information you need, without your having to leave the site, while other times it lets you "look ahead," before deciding if you want to follow a link or not.

Should you decide this is not for you, just click the Options icon in the upper right corner of the Snap Shot and opt-out.

DISQUS Comments

The commenting system has been vastly improved with the addition of DISQUS. Hierarchical commenting now available, as well as a re-blog facility. If you would like to do a "You Tube", there is even a facility for recording your comments via video.

A multi-tab widget with recent comments, prolific people, and most popular articles has been added.

RSS Feeds and E-Mail subscriptions.

As previous, you can subscribe to the RSS feeds or subscribe via e-mail using the icons at the top of the page.

Thanks in advance for your time.

Devesh

The Deccan Chronicle reports that the ministry of civil aviation (MoCA) is ready to roll out the User Development Fee (UDF) for Bengaluru International Airport Limited which is likely to cheer air passengers but leave the promoters red faced. While the UDF for domestic passengers will be Rs 375, international travellers will have to fork out Rs 1,000 every time they fly out of BIA. The decision comes as a blow to the private operator as they have said that non-approval of the proposed UDF has caused huge losses to it.

Highly placed sources in MoCA say the long pending decision was taken after scrutinising the capital cost of the airport which was put at Rs 2,470 crore by BIA. “The Hyderabad international airport was considered as the benchmark as it is bigger and better than BIA in many ways and was also being built simultaneously. While GMR Group, the lead consortium for Hyderabad airport pegged their expenditure at Rs 2,370 crore, BIA was on little higher side. So after deliberations we have decided to fix the UDF on par with Hyderabad airport,” sources said.

“The procedure for arriving at the UDF was based on the cost incurred on the project. In this connection, the private operator had earlier sent the internal audit report but we sought an independent engineer’s report and it was carried out by international firm Scot Wilson as the evaluation of expenditure should be done from an arm’s distance. The same firm which gave the completion certificate for BIA,” sources said.

BIAL had sought approval for Rs 675 as UDF for domestic passengers and Rs 1,075 from international travellers. The proposal was pending before the MoCA for the last five months as it was considered high. “After carefully assessing the costs and public sentiments, the officials and representatives of AAI, felt that the charges should be on par with Hyderabad airport,” he said.

“It was felt that it was unfair to further burden passengers who already feel that BIA is inferior to Hyderabad airport. The BIAL hasn’t collected UDF for the last five months and we have to factor in this to make up for the losses incurred. A final decision will be taken after we work out all these modalities,” the officials said. The decision comes at a crucial time when BIAL is rethinking about its expansion plans due to the global meltdown.

Photo courtesy Wikipedia
Air New Zealand and Boeing [NYSE: BA] announced Dec. 3 as the date for the airline's sustainable biofuels flight from Auckland using a 747-400 jetliner. Conducted in partnership with Rolls-Royce and UOP, a Honeywell company, one of the airplane's four Rolls-Royce RB211 engines will be powered in part using advanced generation biofuels derived from jatropha. Air New Zealand now becomes the first airline to use a commercially viable biofuel sourced using sustainability best practices.

Boeing, Air New Zealand and UOP have worked diligently with growers and project developer Terasol Energy to identify sustainable jatropha in adequate quantities to conduct thorough preflight testing. Using proprietary UOP fuel processing technology, the jatropha crude oil was successfully converted to biojet fuel, marking the world's first large-scale production run of a commercially viable and sustainable biofuel for aviation use.

"This flight strongly supports our efforts to be the world's most environmentally responsible airline," said Air New Zealand Chief Executive Officer Rob Fyfe. "We recently demonstrated the fuel and environmental gains that can be achieved through advanced operational procedures using Boeing 777s. We're also modernizing our fleet as we await our Trent 1000-powered 787-9 Dreamliners, which will burn 20 percent less fuel than the planes they replace. Introducing a new generation of sustainable fuels is the next logical step in our efforts to further save fuel and reduce aircraft emissions."

As part of the fuel verification process, UK-based engine maker Rolls-Royce's technical team conducted extensive laboratory testing to ensure compatibility with today's jet engine components and to validate the fuel meets stringent performance criteria for aviation fuel.

"In preparation for Air New Zealand's test flight we achieved our near-term goal - identifying and sourcing the first large-scale run of sustainable biofuel for commercial aviation," said Boeing Commercial Airplane's Managing Director of Environmental Strategy Billy Glover. "The processing technology exists today, and based on results we've seen, it's highly encouraging that this fuel not only met but exceeded three key criteria for the next generation of jet fuel: higher than expected jet fuel yields, very low freeze point and good energy density," Glover explained. "That tells us we're on the right path to certification and commercial availability."

Because of the unique environment in which aviation operates, stringent criteria are in place to ensure that any alternative fuel meets or exceeds current jet fuel requirements. Advance testing for the Air New Zealand flight showed that the jatropha-based biofuel met all critical specifications, including a freeze point at -53 degrees Fahrenheit (-47 degrees Celsius) and a flash point at 100 degrees Fahrenheit (38 degrees Celsius).

"Laboratory testing showed the final blend had excellent properties, meeting and in many cases exceeding the stringent technical requirements for fuels used in civil and defense aircraft," said Chris Lewis, Rolls-Royce company specialist for fuels. "The blended fuel therefore meets the essential requirement of being a 'drop-in' fuel, meaning its properties will be virtually indistinguishable from conventional fuel, Jet A1, which is used in commercial aviation today."

To process the jatropha crude, the team relied on UOP's green jet fuel processing technology based on hydroprocessing methodologies that are commonly used to produce transportation fuels. During processing, hydrogen is added to remove oxygen from the biomass, resulting in a bio-derived jet fuel that can be used as a petroleum replacement for commercial aviation. Boeing is working with airlines and engine manufacturers to gather biofuel performance data as part of the industry's efforts to revise the current American Society for Testing and Materials (ASTM) standards to include fuels from sustainable plant sources. Jatropha, which can be grown in a broad range of conditions, produces seeds that contain inedible lipid oil that is extracted and used to produce fuel. Each seed produces 30 to 40 percent of its mass in oil. Plant oil used to create the fuel for the Air New Zealand flight was sourced from nonarable lands in India and Southeastern Africa (Malawi, Mozambique and Tanzania).

Air New Zealand is one of several air carriers working to diversify and secure its energy future through participation in the Sustainable Aviation Fuel Users Group. That effort includes a commitment to sustainability criteria for fuel sourcing and commercializing plant-based fuels that perform as well as, or better than, kerosene-based fuel but with a smaller carbon lifecycle. The goal is to create a portfolio of next-generation biofuels that can be blended with traditional kerosene fuel (Jet A) to improve environmental performance.

Additional flight specifics will be announced closer to the actual flight date.

Book with SpiceJet on the 13th and 14th November and fly your kids under 12 for free.

SpiceJet, announced a special promotion to commemorate Children’s Day, November 14th. Children fly free on all bookings done on November 13 and 14, 2008, only the statutory PSF of Rs. 225 will be charged. All children booked should be under 12 years on date of travel and be accompanied by an adult. Detailed terms and conditions of travel are available on www.spicejet.com.

Open for travel till 28th March 2009, this offer can be availed of through the SpiceJet website and SpiceJet call centre at 1800 180 3333 / 0987 180 3333. This offer cannot be availed with any other ongoing promotions and is valid on all its flights covering 17 destinations.

Special goody bags also await all Children who fly on November 14, 2008 on any flight on the SpiceJet network.

Bengaluru International Airport announced the completion of six months of airport operations. The new greenfield airport opened on 24-May-08.

80% of the aircrafts departed on time with 15 mins tolerance, as per the internationally accepted norms. Average wait time for delivery of the first baggage on the arrival belt being 9 minutes for domestic and 13 minutes for international arrivals. Average queue time at check-in is 10 minutes, at security check it is 7 minutes, at arrival immigration it is 15 minutes and at departure immigration it is just 7 minutes.

Albert Brunner, CEO of BIAL shared data, facts and figures with the media. He said, “The passenger today is evolved with his travel to other international airports. The performance at an airport is measured in terms of the time taken for each process and his quick entry and exit from the airport. We are glad to have established the success of this six month young airport with data supporting its operational efficiency.”

Bengaluru International Airport Traffic

The airport began operations with 170 flights per day in May-08, it ended the summer ‘08 season with 162 flights per day. For the winter ’08, flights increased to 165 per day resulting in a growth of 1.5%. Although the domestic air traffic reflects a decline of 1.5%, this overall positive growth is due to the increased international flight operations from Bangalore further establishing the many promises that the city holds. Compared to the summer season, the airport will see a 23% growth in international movements.

The last six months have seen the introduction of six new international air carriers into Bangalore, making more global destinations directly accessible to air travelers. These include Dragon Air, Tiger Airways, Oman Air, Air Mauritius and most recently Indian carriers - Kingfisher Airlines and Jet Airways. This increase is largely due to the city’s attractive air traffic passenger profile and the increased capacity of the new airport.

The total increase in international flights during the winter schedule is over 160% as compared to last year’s winter schedule. New flights and sectors from our Bengaluru International Airport also includes Indian Airlines to Abu Dhabi which commenced operations from 27-Oct-08. Additionally, Transmile (freighter ) will begin operations to Malaysia (Kuala Lumpur - Subang).

New additions at the terminal

Bengaluru International Airport recently opened its Reserved Lounge that caters to high profile and important travelers such as MLAs, MPs, Chief Secretaries, visiting dignitaries and high profile executives. The lounge also houses an office for the State Intelligence and is operational 24/7. The other lounges in the terminal building include the Oberoi, Kingfisher and BIAL operated lounge - Cafe Net at the domestic departures. In addition, the VVIP terminal on the airside also has a lounge. The airport is readying to add the Indian (IC) lounge, soon to open, to its list of lounges, built on par with international standards.

My personal observations

• Congratulations to the BIAL team for completing 6 months. The airport is coming along nicely on the passenger front. The cargo terminal operators are doing a good to decent job, and operations are stabilising at AI-SATS and good at Menzies.

But....................

• The whole focus of BIAL is still only on passengers. Its time for their focus to include "Non passenger" business visitors', whose needs are still ignored. The air cargo operations contributes about 30% of airport revenue to BIAL, and is critical for most industries.
• There is no parking, no proper security or traffic control in the service roads near the service areas like flight kitchens, cargo terminals, airline offices, etc.
  
• There are almost 5,000 employees at the airport, and an additional 1,000+ of business providers like cargo agents and customs agents. Many of these staff, want to use the Vayu Vajra and Suvarna bus services, to reduce transport cost and travel in greater comfort. BMTC has an excellent monthly pass, but they are unable to use it, as these buses only can stop at the main parking.
  
• There is no shuttle bus service INSIDE the airport which can link long term parking with the passenger terminal building, or the main. Inside the airport premises is BIAL responsibility and they have to fulfil it.
• The cargo village is still not delivered. The airlines' offices building is still not delivered.
• There is no official, active involvement with industry, the primary customer of the airport.
  

I can only exhort BIAL to improve in these areas of shortcoming. Time to make BIA from good to great.

The turmoil in the Indian airline industry during the month of October has produced results that can be, only mildly described as, significant. In just four weeks, castles built over the last four or more years, have come crashing down.

By the end of 2008, the Indian airline industry which accounts for less than 2% of the global airline market, will contribute about $2 billion, or over 33%, of the total global losses. This dire, lop-sided situation, which can be attributed to only primary factor – gross imbalance. It is ironic, that the demand – supply imbalance in the Indian airline industry, is resulting in this imbalance between market share and losses share.

How did the situation become so dire?

Over the last 4 years, the Indian airline industry has created this imbalance thanks to rampant and blind expansion. It was all on auto-pilot, thanks to low fuel prices and a robust economy.

In 2008, along came the “perfect storm” and the reality struck home. Skyrocketing fuel prices since late 2007, married to a populist fuel pricing policy by the central and state governments in India which grossly overtaxed aviation turbine fuel (ATF), and sent the already high fuel prices in to the stratosphere, followed by a slowing economy thanks to the global financial credit crises and subsequent meltdown of demand, and uncontrolled costs.

Capt. G.R. Gopinath’s Air Deccan believed in bring airlines to the masses. To expand customer base Air Deccan expanded in to the smallest of cities, and given that, India is an extremely price sensitive country, offered fares that were at par with, or just marginally above, that of the Indian Railways, known to be one of the most economical railways in the world.

Along with with Air Deccan (now Kingfisher Red), low cost carriers (LCCs) Air Sahara (now JetLite), SpiceJet, IndiGo, and GoAir commenced. India seemed destined for low cost paradise, as even full service carriers, Indian Airlines (now Air India), Jet Airways, and Kingfisher Airlines, scrambled to develop low cost fare models of their own.

Thanks to the unbridled expansion, HR costs went in to orbit. From expatriate flight crews to the ground handlers, people were at a premium, and airlines paid, and paid way to well.

Another problem is, India does not have adequate full service airports, let alone, separate low cost airports like Europe and North America.

At all major airports across the country the skies became heavily congested, and it was not uncommon to hear an announcement from the Captain “Ladies and Gentlemen, welcome to Delhi. We are 25th in line for landing, and should land 2 hours from now”. This on a 1.5 hour flight.

The higher costs of full service airports, these delays, and systemic inefficiencies eroded the advantage LCCs in Europe and North America enjoy, i.e., making 9+ flights per day per aircraft, compared to 6 or less in India, and only added to the operating cost burden on all airlines, particularly the LCCs.

As global fuel prices rose, thanks to the fuel taxation policy in India, which makes ATF about 70% costlier than global standards, the impact on airlines was even more severe.

The airlines began to bleed profusely. Unable to sustain, airlines have been raising their prices over the last year, in some non-metro routes, by over 100%. The price sensitive Indian market, particularly in Tier II cities began to slow down.

In parallel, along came the economic slowdown. Demand slowed, and passengers across the board began tightening their belts. The bottom fell out of the market, as passengers shifted from the skies back to rail and bus. At the same time, new airports at Hyderabad and Bangalore were commissioned in the first half of 2008, these airports are far away from the city, and the long and costly commute, along with the rising air fares, totally erased demand in the regional routes, the demand-strength on which LCCs had based their massive expansion plans.

Domestic traffic has contracted over the last four months, declining by as much as 19% in Sep-08. Growth has fallen from 33%+ to over -20% within the span of just six months.

Indian domestic passenger numbers and passenger numbers growth: Jan-07 to Sep-08

Source: Centre for Asia Pacific Aviation & Ministry of Civil Aviation

In desperation, airlines have been resorting to steps, hitherto unthinkable, to stop their bleeding and cash burn.

To bolster yields per flight, airlines have cut capacity by 17% in the six months Apr to Sep 2008, and the further increase in prices have had even more impact on demand. Jet and Kingfisher entered in to an alliance, which left the jaws of most Indians agape on the floor, given the severe competition between them. Staff, including precious flight crew, started getting the axe. CEOs of three airlines are no longer there. Despite a 20%+ reduction in fuel prices (thanks to taxation cuts and falling crude prices), no fare reductions are being passed on to the passenger. The massive fleet expansions have been put on hold. Aircraft deliveries are being delayed. Aircraft already produced are being sold off to other global airlines. Aircraft in the fleet are being returned back. Disagreements and litigations will ensue, but the airlines have no choice. Their backs are against the wall.

The reduction in fuel prices will provide short term relief, but the outstanding fuel bills of the airlines are gigantic. Capacity reduction will have its impact only if properly rationalised with demand.

While, domestic demand crashed through the floor, the one bright spot was international traffic growth, which has remained consistently robust at 10% year-on-year for the first half of FY 2008-09. However, as the global economic slowdown has started taking its toll on international travel, many carriers, such as Singapore Airlines, Finnair, Austrian, British Airways, and KLM have announced capacity cuts and withdrawal of service. At the same time, with the Middle East being a robust market, Gulf carriers continue to grow. Emirates has become the largest foreign carrier in India and will aggressively expand from 132 to 163 weekly services over the next six months.

I am reminded of the Chinese saying “may you live in interesting times”. The rest of 2008 and whole of 2009 is going to be very interesting indeed. The medium term growth for the Indian airline industry is bright, but only for those who survive.

Kapil Kaul, CEO, Indian Subcontinent & Middle East, The Centre for Asia Pacific Aviation, gives us a look behind the scenes…

Jet-Kingfisher alliance - the unthinkable happens

The Jet Airways-Kingfisher alliance, which although unthinkable just a few weeks ago, is a reflection of the current fragile state of the market. The primary objective of this arrangement is to bring together the two largest players in the market, with overlapping networks, to reduce capacity and align it with demand, whilst at the same time being in a position to influence fares. At this stage, it would appear that this alliance will lead to extensive engagement and integration between the two carriers.

Key elements of the alliance will include code-sharing; interline and special prorate agreements; network rationalisation; joint fuel management; common ground handling; GDS integration; frequent flyer reciprocity and human resource sharing.

The alliance is yet to take-off in any meaningful way, to date there have been some initial meetings, but it is too soon to expect any concrete steps. The initial focus will be on network, commercial and revenue management issues. Both carriers are hoping that a reduction in capacity, optimisation of their respective networks, higher yields and lower fuel prices, together with the generally strong demand in the third quarter, should reduce losses. The future of the alliance depends on both carriers seeing equal and measurable improvements in performance.

Jet Airways restructuring

Jet Airways is similarly restructuring its domestic and international operations. Jet has reduced its capacity in H1 2008/09 by 13%. The combined seat production of Jet and JetLite has declined from around 56,000 daily seats in April 2008 to 50,000 in Sep-08.

Jet is actively pursuing a cost reduction strategy - staff rightsizing is a key element of this and has been implemented actively at JetLite. The recent attempt to do so at Jet Airways was poorly timed and managed, resulting in a significant media and political uproar. However, other measures include a zero commission structure, a focus on direct distribution and e-commerce, renegotiating GDS fees and other measures. Maintenance and operational issues are currently under intensive review.

On the other hand, investment is being made in strengthening areas considered weak, such as the overseas sales network which has not been making a sufficient contribution to the international routes. Targeted sales and marketing initiatives are being pursued to enhance revenue and yield.

The integration of Jet Airways and JetLite continues and although the process has been longer and more challenging than anticipated, positive results are expected to be seen shortly.

As a result of focusing on core operational and commercial issues over the last six months, the Jet Airways/JetLite combine has increased its market share lead over Kingfisher/Kingfisher Red and has posted much healthier load factors in the last quarter.

Seven B737s are being returned prior to the end of this year, while five B777s are being leased to Turkish Airlines, allowing for capacity on North American routes to be better aligned with demand. These routes have been under significant pressure. Deliveries due in the next 12-18 months are being deferred and no new international routes are expected during this period.
JetLite is expected to operate with a full strength of 24 aircraft shortly with the return of two CRJs from maintenance.

Kingfisher rationalising its capacity

The first steps of rationalisation can already be seen: Kingfisher Airlines has sold five A340-500s, which would suggest that plans to launch non-stop services to the US have been shelved for the time being. The current fleet of five A330s has two aircraft being used for the Bangalore-London route, with the remaining three aircraft yet to be deployed: routes under consideration are Mumbai-London; Mumbai-Singapore and Mumbai-Hong Kong.

On the domestic front, seven A320s are being returned in Nov/Dec and further reduction is still expected. Some A320s may be redeployed on short-haul international routes, primarily to the Middle East, where they can be used for back-of-the-clock operations. The ATR fleet is also under review, Kingfisher is reportedly not happy with the performance of the regional aircraft.

No expansion in the fleet is expected for the next 12-18 months.

The focus is on achieving commercial stability, stemming cash losses and addressing issues related to the integration of Kingfisher Red. The next 12-18 months will be a time of consolidation in terms of people, systems, operations and commercial issues and to restructure the cost base to compete more effectively.

SpiceJet and IndiGo consider their futures

The two largest independent LCCs are taking a cautious approach with respect to capacity expansion, SpiceJet has leased five of its aircraft to other airlines and is operating with a fleet of 15 aircraft. Its second quarter results were significantly below expectations and continued performance at this level will set the stage for further realignment.

IndiGo has also leased two A320s to Turkish Airlines and is evaluating fleet induction plans for the next 12-18 months.

Both carriers will benefit from lower oil prices and are launching some fare initiatives to stimulate the market. SpiceJet is currently the more vulnerable of the two carriers, despite its recent cash injection by a US-based private equity firm.

Air India ill-equipped to handle current environment

Air India is expected to show continued weakness in its domestic operations. The Jet-Kingfisher alliance will further accelerate this.

Air India is possibly the only domestic airline in India which does not have a modern yield management system - most fare decisions are taken manually.

Internal issues related to the merger between Air India and Indian, staff morale and a public sector mindset, continue to play havoc with its operations.

A massive cost-cutting exercise is under way which includes:

• Fuel conservation measures, for which IATA is assisting with an efficiency gap analysis;
• Older, less fuel-efficient B747s and A300s are being retired and leases on B747s and A310s are not being renewed. Of the 111 aircraft on order, 38 have been delivered, which has reduced the average age of the fleet from 14 years to ten years;
• International operations are being reviewed and the network is being restructured, including the suspension of certain loss-making routes;
• Reduction in weight and category of inflight catering.

However, Air India lacks the management strength to navigate the significant issues which it faces to be able to effectively challenge other players. Furthermore, with political impediments to rightsizing its workforce of 35,000, achieving a viable business model will remain tough.

The Business Standard reports that Indian carrier Jet Airways is believed to have struck a deal last week with west Asian investment agency Mubadala Development Company for a funding of Rs 1,000 crore (approx $ 200 million). The instrument of funding, however, has yet to be formalised.

Mubadala is wholly owned by the government of Emirates of Abu Dhabi.

The tenure of the loan, the interest rate and other details were not immediately available.

Mubadala owns Abu Dhabi Aircraft Technologies, which provides aviation technical services to carriers (Kingfisher Airlines is a client). The agency has also bought 35 per cent in aircraft manufacturer Piaggio Aero Industries. Mubadala also came into the limelight for buying 5 per cent in Ferrari.

The deal comes at a time when the aviation industry is facing its worst crises and accessing funds is becoming a major challenge. Aviation experts said the money Jet has raised is sufficient for the airline to continue to fly for at least another year.

Jet Airways had announced a loss of Rs 384 crore for the second quarter of this fiscal. The airline is also struggling with overdues to the state-owned oil marketers, airport authorities and operators. Jet’s outstanding to the oil firms is Rs 1,057 crore. It has also ordered 10 Boeing 777-300ERs, for which it needs Rs 4,000 crore, say experts.

With a market share of around 30 per cent, Jet recently tied up with its main rival Kingfisher Airlines, under which it will cut costs by sharing ground-handling facilities, and pilots, and rationalise routes.

The airline has been looking at ways to raise funds, including an aborted rights issue, private placement and by approaching banks in India. Negotiations with a south Indian bank came close to a culmination.

The Economic Time is reporting that Jet Airways is in advanced stages of discussions with Temasek Holdings of Singapore to divest 10% of its stake for Rs 250 Crore ($ 50 million).

The next six months are considered vital for the survival of the airline industry in India. Raising working capital is the highest priority during the economic downturn caused by the worldwide credit crisis and financial meltdown.

It is estimated that just the two major private airlines, Jet and Kingfisher, will require about Rs. 1,000 Crore each to survive the next two quarters.

The funding from Mubadala appears to be a long term dedicated investment, when compared to a hot and speculative investor.

The Chief of Air Staff, Air Chief Marshal Fali Homi Major confirmed that the Indian Air Force (IAF) has cleared the construction of the second runway at Bengaluru International Airport (BIA).

As per the BIAL master plan, the second runway (27L-09R), will come up to the south of the airport.

The promoters of the airport, BIAL, have been pushing for approval to cope with future demand.

BIAL had projected that passenger traffic at the airport, that is already running at capacity, will be around 11 to 12 million by 2011. Bangalore air traffic peaked at 10.1 million in March 2008, even before the new airport opened. BIAL’s proposal to put up a second runway to cope with the traffic ran into rough weather after the IAF stated that civilian aircraft could stray into the operational airspace at its Yelahanka air base that is just 1.4 nautical miles (4 km) from BIA.

BIAL CEO Albert Brunner, informed reporters, he was pleasantly surprised to learn of the development. “I was not aware of it. This is great news. I must say here that this has come as a big relief for us. We thank the Indian Air Force for its support. We need to work in close coordination with the IAF henceforth and we are hopeful that we can do that,” he said.

Asked how long BIAL will take to put up the second runway, Mr Brunner said: “The runway should be in place three to four years after starting construction. The second runway will be A-380 compliant.” A single air traffic control (ATC) is likely to handle both civilian and military aircraft, government sources said.

The approval of the second runway puts the ball back in BIAL's court. The pressure will be on the consortium to commence construction without delay.

Air traffic control is one of, if not, the most stressful job in the world. Air traffic control officers (ATCOs) have to be constantly on the alert, even when pilots make a mistake. We as passengers never hear of their deeds, only of their mis-deeds. In a tribute to ATCOs around the world, I present a collection of videos and audios.

We begin with a happy ATCO at JFK airport in New York.

Humour is always a good stress buster, and mothers-in-law appear to be a globally common source of pain, as this conversation between a JFK ATCO and a Virgin Atlantic flight demonstrates.

About a year ago, there was extreme commotion in the Indian skies with ATCOs bitterly complaining about the expatriate pilots, and their lack of English language skills, the universally accepted language of the skies. This audio exchange between Air China 981 and JFK ATC demonstrates the language problem.

Sometimes it is the accent or idioms of the ATCO that pilots do not understand. Given the busy conditions at most airports, it leads to confusion, then irritation, and anger, as we hear in this conversation between Etihad 503 (UAE), Asiana 222 (Korea) and a JFK ATCO.

And then there are times, where pilots really screw up and need to be rescued, as this re-creation of a scary incident at Providence, Rhode Island.

And as a closing, I am sure you too will feel sorry for this JFK ATCO, who is having a really bad day in the office.

So please take some time, and send a thank you letter to the ATCOs at your local airport.

India can boast of having the second largest airport terminal in the world when the third terminal building at the Indira Gandhi International airport (IGIA) here comes up in 2010.

The terminal building alone will come up on 20 acres of land, with the entire seven-storey structure providing a total space of about 5,20,000 square metres and having a capacity of handling 34 million passengers a year.

The Terminal-3 or T3 of IGIA would be the second largest after the new terminal T3 at the Beijing Capital International airport (BCIA), constructed before the recent Olympics, which has a total floor area of 9,86,000 square metres.

Giving details of the mega project underway at the Delhi airport, CEO (Airport Development) of Delhi International Airport Limited (DIAL) Prabhakar Rao said: "Our focus is on three Ms -- men, material and machinery. That is helping us giving shape to this major project."

In an interview to PTI, he said several factories were functioning at the project site, producing materials ranging from concrete and steel pipes to air-conditioning ducts. "Almost a thousand trucks bring in bulk materials like steel, stones and bricks every night to the site, without disturbing traffic anywhere on the near by national highway."

Deadline challenges

Maintaining that it was a "challenge" for DIAL to complete the mega project in the stipulated time of 37 months, Rao said major airports like Changi in Singapore took 76 months for completion, while Heathrow's T5 and Beijing's new terminal took 60 months. IGIA's T3, which would be able to handle the largest aircraft Airbus A-380, is expected to be completed by March 2010, ahead of the Commonwealth Games. About 24,000 workers belonging to 44 contractors are working day and night to build the integrated terminal which will cater to 34 million domestic and international passengers every year. Also, on the 24x7 job are about 100 foreign experts, who are racing against time to meet the deadline.

Maintaining that Delhi fell in the high damage risk or Zone IV of quake-prone area, the DIAL airport CEO said "Keeping in mind the occurrence of earthquakes here, we are constructing the building to meet the requirements of a higher risk level, that of Zone V or very high damage risk." He said the new steel and glass terminal would be an environment-friendly "green building", which would have complete natural lighting, an intelligent air conditioning system and efficient waste-water treatment facility.

The building needs a massive 2,50,000 square metres of air-conditioning ducts, which when kept in a straight line would cover a distance of 500 kilometres, Rao said.

As various aspects of the construction process were going on parallel in order to save on time, "we have asked the selected bidder, ETA of Dubai, to set up a plant in the country." And "now India's largest air-conditioning duct manufacturing plant is functional at the site," Rao said, adding that the chillers were being imported from the US.

78 aerobridges, 168 check in counters

The four piers of the terminal building would have 78 aerobridges, six exclusively for big planes such as Airbus A-380, for boarding and disembarking. Each pier would be about 1.2 kilometres long but the passengers would not need to walk as they can reach their boarding gate by any of the 98 travelators, Rao said.

Also for the convenience of the passengers, there would be 168 check-in counters, 49 immigration counters, 48 emigration counters and a 61-room hotel, apart from various lounges.

The terminal would also have an intelligent car parking facility for 15,000 cars -- 6,000 at Multi-level car parking (MLCP) and 9,000 at surface level.

The MLCP would be a fully automated one, from generation of parking slip to allotment of slot, no person would be required but still people could park their vehicle without a hassle, the DIAL CEO said.

Ambitious growth plans


Video from wdp4 on YouTube.

The promoters DIAL have chalked out very ambitious growth plans for the airport, calling for new terminals T4, T5, and T6 over the next 20 years. As per the IGIA website the time-table for the airport is :

New Terminal Building (T3)

T3 Project (New Runway and Associated Taxiways Completion by 15th August, 2008)

1.Construction of new code F(A380 Compatible) Runway (11R/29L) of length 4430 mt with CAT IIIB Airfield lighting
2.A Parallel taxiway two cross field taxiways
3. 10 No. Additional remote stands for T2

Phase 1B
T3 Project (New Integrated Passenger Terminal Building and associated works Completion by 31-Mar-2010)

1.Construction of New Terminal building of capacity 27 MPPA, area of 4.4 Million Sq.Ft ,55 Contact stands,16 remote stands, piers, fixed links and aerobridges.
2.Aircraft parking stands for contact and remote stands.
3.Cargo expansion
4.Additional maintenance hangars
5.New GSE areas
6.Fuel farm expansion
7.Expansion of the existing Sewerage treatment plan
8.Providing a Multi level & surface car park
9.Metro Connectivity
10.New landside roads & up gradation of existing road system
11.Expansion of the existing Catering facilities
12.Provision for GA facilities

Phase 2 (2012)
1.Additional remote stands near T3
2.Cargo expansion
3.New flight forwarders area near cargo
4.Additional parking stands for cargo
5.New central transportation corridor
6.Catering facility expansion
7.Additional MRO

Phase 3 (2016)
1.New terminal T4
2.Expansion of T3 including piers
3.Contact stands for T4
4.New runway (11L/29R)
5.Parking facilities in front of T4
6.New ATC tower and complex
7.Cargo expansion
8.Fuel farm expansion
9.GSE area expansion
10.MRO expansion
11.Catering facilities expansion

Phase 4 (2021)
1.New Terminal T5 (Low cost)
2.Expansion of T3 and T4 piers and concourses
3.Remote stands for T5
4.New straightened runway 09/27
5.Cargo facilities at north (relocated)
6.Additional GA facilities·
7.Additional MRO·
8.New fire station·
9.Catering facility expansion·
10.Landside developments in front of T4 & T5 including parking
11.New metro station
12.Fuel farm expansion
13.GSE expansion

Saturation phase (2026)
1.New Terminal T6·
2.New pier for T5 & contact stands
3.Additional MRO
4.Catering facilities expansion
5.GSE expansion
6.Cargo expansion

Entry into Lakshadweep islands is restricted to non-islanders, and governed under the Lakshadweep rules 1967 which state "No person who is not a native of the island shall enter or reside in the island except and in accordance with permit issued by the competent authority."

The government has recently strengthened the requirement call for airlines to check for the entry permit at Kochi Airport while boarding the flight.

The permit will be available at Islands Administrative office (Director of tourism) Union Territory (UT) of Lakshadweep and the Cochin office of the Administrative officer.

Cochin office:
Secretary to the Administrator,
UT of Lakshadweep,
Indira Gandhi Road,
Willington Island
Cochin, Kerala, India

Tel +91 (484) 266-8245
Fax +91 (484) 200-8155

Island office Address (Kavaratti):
Directorate of Tourism Development,
UT of Lakshadweep,
Kavaratti Island

Tel +91 (4896) 262-250

Hotels on the island also, normally provide assistance and guidance, to their guests about the entry permits.

Jet Airways, will forge a frequent flyer partnership with United Airlines, one of the largest international carriers based in the United States, effective November 15, 2008.

With this partnership, Jet Airways’ JetPrivilege members may now earn and redeem JPMiles on the entire global network of United Airlines, and, United Airlines’ Mileage Plus members may now earn and redeem their miles on Jet Airways' services to 64 destinations in India and beyond. More details are available on Jet Airways' website.

United Airlines operates more than 3,200 flights a day to more than 200 U.S. domestic and international destinations from its hubs in Chicago, Denver, Los Angeles, San Francisco and Washington D.C.

United, along with German carrier Lufthansa, had commenced the Star Alliance. Readers will recall that recently Lufthansa has committed itself to helping Air India become a partner of the Star Alliance. It will be interesting to see how this partnership evolves. Ideally, I would like to see Jet Airways become a full fledged Star Alliance member.

As a regular flier around the world, I would always experience the mental shock of coming down the levels as I transited from my Singapore Airlines flight, on to a domestic US carrier. It did not matter whether it was American, Continental, Delta, United, or US Airways, it did not matter if the transition was from economy to economy, or from Business class to domestic First class, it was a always a jarring, thud of a drop. Never mind that I was probably the only person in the domestic First class who had actually paid a First class fare, compared to my upgraded cabin mates.

In my life, with over a million flown miles on Singapore Airlines, and the highest level of frequent flier (Solitaire PPS) achieved after 5 continuous years of loyalty, I have been upgraded only once.

I am not complaining. It was this fanatical devotion to non-dilution of their premium classes, and slavish offering of the best customer service, that put the premium classes of foreign airlines like Cathay Pacific, Emirates, Etihad, Singapore Air, Virgin Atlantic, and others, way way above, their full service "cheap" US carriers, even on international routes.

The US "full service" carriers led the world in, to the glamorous world of air travel, and also in, to the decline of mediocrity, with their generally poor service, all the way from the reservation till baggage collection, or in many a case, attempted baggage collection. Distributing free class upgrades like candy, only lowered the quality of service in the premium classes, and with it, brand equity, even further.

Twice, I have faced drinking water rationing on an international flight, both with a US carrier, both in Business or First class. Once with United ex Heathrow to JFK, and once on Delta from LAX to Tokyo. 8 or 10 hours with one small bottle of water ?!?! Why ? The catering department forget to load enough water!!!! Compare this with Emirates which offers its First class passengers showers on-board its Airbus A380.

Global road warriors will agree that Emirates and Singapore Airlines are the two airlines which epitomise the highest levels of commercial aviation passenger comfort and customer focus, in all classes. If Emirates is the King of full service carriers, Singapore Airlines is surely the Queen.

Photo by : Lianhe Zaobao
I was shocked to read, the queen has decided to move its guests out from her full service 5 star palace. On November 4, Singapore Airlines announced it has decided to start charging passengers a US$50 surcharge for confirmed exit row seats in economy class. On the same date the same airline also announced it was lowering its fuel surcharges.

This follows most US airlines deciding to charge for "options" like check-in baggage, flight attendants are resisting US Airways' moves to charge for soft drinks, US Airways even charges for pillows and blankets. What aspect of these airlines' actions would even remotely, make us consider them "full service" ? "Full dis-service" may be.

Many of us have seen this spoof of an airline announcement by MAD TV. In 2007 we all laughed at the ludicrousness of this announcement. No more.

In India, in their quest to show low "airfares", airlines have taken "componentisation" of the total fare to extremes. Basic airfare, fuel surcharge, congestion surcharge, transaction fee, and the list goes on. Gentlemen, we know our basic math, and can total up all the charges. Treat us as adults.

Coming back to Singapore Airlines. Previously, the economy class exit rows were normally occupied by the Krisflyer members. At a time when company budgets are shrinking and executives are required to fly economy, the additional legroom of an exit seat is one of the soft perks the loyal, but harried traveller, can look forward to.

With only 2 to 8 seats per flight, even Singapore Airlines' spokesman Stephen Forshaw will agree, it is not a revenue raiser. My question to CEO Cheong Choong Kong, why risk the alienating your passengers by this move ?

There could be logic in this move, but customer perceptions do not follow logic. Either you are a "5 Star" airline or you are not.

With the aviation industry in a facing rough weather, private air-carrier Jet Airways has terminated services of up to 35 expatriate pilots who captain the airlines' Boeing 737-aircraft.

Confirming the development, a Jet Airways spokesperson said some 25-odd pilots have been sacked. But aviation industry sources claimed that services of up to 35 expatriate Boeing-737 captains have been terminated by the Naresh Goyal-led domestic airline.

The expatriate pilots get between USD 15,000-18,000 salary per month besides prerequisites such as five-star hotel accommodation and business-class conveyance to their home country, which is significantly more expensive to the airline when compared to the Indian flight crews.

Last month, Vijay Mallya-run, and Jet Airways alliance partner, Kingfisher Airlines, had announced a 90% cut in the salaries of its trainee pilots as part of its cost-cutting measures. PTI