As my final post for the month of July, I reproduce a touching example of the revolutionary change occurring within the aviation sector in India. Indian Airlines is 100% government owned, and has mended its ways thanks to the competition from private sector airlines. A similar revolution has already occurred at the state owned BSNL, who is competing head on with the private telecom providers, and all the state owned banks, who are competing with their private counterparts.

It is time the mandarins at Rajiv Gandhi Bhavan free NACIL (Air India and Indian Airlines) and the Airport Authority of India from their clutches. They will compete and effectively.

Devesh
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A quiet revolution in service delivery ?
31 Jul, 2008,
Arvind Panagariya,

The events preceding the recent trust vote in the Parliament — the chanting, the shouting, the waving of wads of cash, and the display of total contempt for the country’s highest office expressed in the hissing and heckling that forced the prime minister to table rather than deliver his speech — point to virtual chaos in governance. Daily reports of rapidly deteriorating law and order situation in our major cities reinforce this picture.

Yet, within the complex democracy that is India, this image masks some dramatic improvements under way. The entry of multiple private-sector players into areas that were previously monopolised or dominated by the government is bringing a quiet revolution in service delivery.

Traditionally, Indians seeking service have approached the man behind the desk with great apprehension: Should they plead with him? Should they consider bribing him? Perhaps an aggressive approach involving a physical threat would do the trick? Or may be they should find a “connection” to bring pressure from the top?

But thanks to freer private-sector entry, this tyranny of the man behind the desk is beginning to give way to a culture of service with smile. This realisation came to me during a recent visit to India that involved a lecture tour in four cities in as many days.

My first two stops — Hyderabad and Bangalore — brought me to dazzling new airports built to international standards. I had read much about the woes of the journey between each of these airports and the city they served. But less than one hour between Rajiv Gandhi International Airport and the heart of Hyderabad and approximately one hour and fifteen minutes between Bengaluru International Airport and the city centre of Bangalore seemed no worse to me than the time taken going from the JFK Airport to Manhattan or from Narita Airport to Tokyo.

My third stop was Chennai, which too was smooth. But my luck seemed to turn for the worse as I began my journey to Jaipur via Mumbai. Upon arrival at Chennai airport, I learned that my Jet Air flight to Mumbai had been discontinued a week earlier. With no contact number at hand, the airline had been unable to inform me of the change.

So I suddenly found myself at the mercy of the “man behind the (Jet Air) desk.” But much to my surprise and comfort, he booked me on an Indian Airlines flight that would bring me to Mumbai well in time to make the connection to my Jet Air flight to Jaipur. He got me the Indian Airlines boarding pass and also issued the boarding pass for Jet Air flight from Mumbai to Jaipur. All I had to do was wait.

As luck would have it, the Indian Airlines flight also got delayed. By the time I arrived in Mumbai, I was left with only 35 minutes to catch the flight to Jaipur. It looked hopeless: my checked bag was yet to come and I also needed to transfer from Terminal 1A to Terminal 1B. In desperation, I caught hold of the first ground staff I could spot. He turned out to be from Kingfisher.

The young man nevertheless walked me to the nearest Indian Airlines office. That office was meant to deal with lost baggage and not flight connections. Yet, the woman in charge immediately called Jet Air to alert them that I was on my way. Sadly, Jet Air responded in the negative: I was too late to make the connection.

But the woman urged me to pick up my luggage and rush to Terminal 1B anyway since flights can experience last minute delay. Thanks to the efficiency of luggage handlers at the airport, by the time I walked back to the luggage area, my bag had arrived. I loaded it on a cart and rushed to Terminal 1B. With multiple counters open, I could walk straight to one of them and display the boarding pass issued in Chennai. “The woman behind the desk” immediately called the staff at the gate and successfully persuaded it to let me in. Alongside, she had me run and get the luggage scanned, checked it in and asked an employee to rush me through the security and thence to the gate. To my sheer pleasure, I (and my luggage) arrived in Jaipur as planned.

It is unlikely that this episode could have occurred in the pre-liberalisation era. The happy outcome required swift movement of luggage from the plane to the arrival area and assistance of employees of an airline and a department that had no direct responsibility to me.

Sceptics would undoubtedly say that this episode relates to an industry in which only the well off benefit, with the common man continuing to suffer the same old fate. There are three responses to this argument. First, the process of improved service delivery must begin somewhere. We should not let the best be the enemy of good.

Second, ordinary folks are not as untouched from the pleasures of superior delivery as sceptics would have us believe. In Jaipur, my brother-in-law, a middle-class Indian, could scarcely stop talking about the excellent service he was experiencing at a new private-sector bank. In turn, his wife had stories of great service combined with low prices of fruits and vegetables at a recently opened supermarket. To these, I may add the dramatic benefits of improved and expanded telecommunications service benefiting virtually all.

Finally, it is only through demonstration in some sectors that we will bring pressure on service providers in other sectors (including public sector) to mend their ways. Already, public sector providers in banking, telecommunications and airlines have had to adjust their attitudes under competition from their private sector rivals. Under the able leadership of Lalu Prasad Yadav, even railways, a public monopoly, has become customer friendly. And the day may not be far when providers of electricity, water, education, health and even law and order will feel the heat.

(The author is a professor at Columbia and Non-resident Senior Fellow at the Brookings Institution.)

Source : The Economic Times

Leave three hours to get there…

By Saritha Rai
Wednesday 30 July 2008

There were high hopes for Bangalore's multimillion dollar air hub, which opened in May. But locating it in a near wilderness without a decent road was not a great start, says Saritha Rai.

Raghu Shenoy, chief executive of a small Bangalore IT services firm, thinks nothing of jumping on a plane to see a client. If a customer wants a face-to-face meeting, Shenoy will be in Europe in less than 24 hours.

But he quails at the prospect of using Bangalore's new international airport. Even the businesses that lobbied for its creation are hardly breaking out the champagne.

For a start, despite a decade of planning, no one appears to have thought about how to reach the glass-and-steel structure. The $620m airport opened at the end of May, apparently in the middle of nowhere and without a new road link.

Shenoy's company has its headquarters in the gigantic Electronics City, a pristine suburban technology park, where neighbours include India's leading outsourcing companies such as Infosys Technologies and Wipro.

From Electronics City, the 65km trip to the airport can take three hours, outstripping the charge on most laptop batteries.

While top executives can use the expensive helicopter ferry service launching soon, others are obliged to factor in a five-hour lead time before boarding even 30- to 50-minute short-haul flights to neighbouring tech cities such as Chennai and Hyderabad.

Shenoy gets all the way to London from Bangalore in about twice the time his colleagues take to travel to the airport to catch a domestic flight.

The new airport was first conceived 17 years ago, when Bangalore was not even a blip on the globalisation map. In the past decade, as the government dithered monumentally, the city has turned into a verb - being "Bangalored" means your job is being offshored - and air traffic to and from the city had grown some 300 per cent, far above initial projections.

Dozens of multinationals such as Google, HSBC, IBM, Microsoft and Tesco have large operations in the city.

This year, some 11 million passengers will fly in and out of the airport and the technology outsourcing industry will account for a chunk of that.

Yet if air traffic growth has been fuelled by the business traveller, why is the new airport located in near wilderness, far from these businesses?

But then nothing has come easily for the technology industry in Bangalore. For want of a public transport system in the city, companies such as Wipro and Infosys run a fleet of hundreds of private buses to ferry employees to the workplace and back.

Faced with Bangalore's notorious power shutdowns, many run their own power-generating plants.

When hotel rooms in the city got scarce and exorbitant, some IT companies set up hotels on campus for their visitors. To spare thousands of their employees from getting stuck in the never-ending traffic jams that choke the arterial road taking them to Electronics City, companies are chipping in to fund the government's project to build an elevated expressway.

And yet, for businesses that pushed for the new airport, the frustrations are endless. For the best part of the ride to the airport, commuters have to jostle with fume-spewing three-wheelers, bikes, buses, cyclists and, as in most Indian cities, the odd stray animal.

Once out of the city and on to the speedier highway, drivers have to watch for pedestrians - workers from factories, inhabitants of the villages dotting the fringes of the expressway - darting across the high-speed stretch.

Traffic police work the route, not directing traffic but stopping pedestrians from hurtling into the path of vehicles speeding towards the airport.

The airport's swanky façade is attracting oglers from nearby villages, all trying to peer through the glass. Inside, commuters are less impressed.

When Shenoy arrived at the airport last month to board a night flight to London, he found the business class lounge overflowing even at midnight. Passengers have plenty of complaints: the aerobridges don't work, the wi-fi goes on and off, and the lavatories smell.

Certainly, the new facility is an improvement on the embarrassment that was Bangalore's old airport. In the words of a frequent traveller, it resembled a Greyhound bus station in a US town rather than an airport.

The airport was so cramped that the wait to clear immigration and customs and to retrieve baggage was interminable. Travellers eventually found their way out, only to be hounded by private taxi operators who fell on them like a pack of wolves.

The new airport with its 53 check-in counters and 2,500-vehicle car park is an improvement. But commuting three hours for a 40-minute flight is no one's idea of good connectivity. Harried techies are clamouring for the old airport to be reopened at least for domestic flights.

Bangalore's airport was conceived so it could give this otherwise gung-ho tech city an infrastructure edge and signal a change in its dodgy traffic and transport systems.

Now, the local talk is that it's only a matter of time before even obscure Chinese cities, wannabe Bangalores, plan and pull off better airports.

Source : Silicon.com
Story URL: http://management.silicon.com/itdirector/0,39024673,39265482,00.htm

India set to sign liberal aviation pact with EU

NEW DELHI: Indian airlines are set to get an improved access to European destinations. A liberal aviation pact between India and the European Union (EU) is on the cards, which will enable this as well as give EU carriers better access to India. In a way, the pact will work like an ‘open skies’ agreement between India and the EU.

According to civil aviation ministry sources, Indian carriers will get to operate a virtually unrestricted number of flights to European destinations like London, Paris and Frankfurt.

They can also enter into code-share pacts with European carriers without seeking government approval. On a reciprocal basis, European carriers will also get similar market access to India and be able to ink pacts with Indian counterparts without going through elaborate government clearances.

The proposed horizontal aviation agreement between the two sides provides far more flexibility than the air service arrangements being pursued by India with individual EU members. The liberal aviation pact between two of the world’s largest trading partners is expected to be signed in September when prime minister Manmohan Singh visits France to participate in the India-EU summit.

“Germany and the UK have already agreed to the terms of the proposed agreement. We are expected to negotiate with other member states as well shortly. The agreement is expected to be signed during the PM’s visit to France in September this year,” a civil aviation ministry official said.

The EU has similar agreements with China and the US. Currently, 26 bilateral air services agreements exist between EU members and India. The horizontal agreement between India and the 26-member EU would also allow people from either side to book an integrated ticket for travelling by different modes of transport.

It will also ensure technical co-operation between the two sides in areas like aviation safety, security and traffic management.

The proposed pact between the sides would remove nationality restrictions (from the EU side) in the bilateral air services agreements between EU members and India. This will allow any designated airline from the member states and India to operate flights to each other’s territory where a bilateral agreement with India exists and traffic rights are available.

The agreement will also pave the way for routing flexibility to European carriers, which means designated carriers of different countries may use each other’s traffic rights. For example, if a designated French carrier exhausts all its bilateral traffic rights with India, it can still operate additional services using traffic rights of the Netherlands.

But this comes with a rider—the French airline would have to operate from the country whose rights are being used.

It’s estimated that US and EU traffic constitutes about 30% of India’s total international air traffic.

Source : The Economic Times

By TBM Staff | Chennai

The development plans of Chennai Airport got the clearance of the Public Investment Board (PIB) today. It will now have to be approved by the Government (CCEA approval). The work is expected to begin by September 2008. Last year in April, the Government decided that the Chennai Airport would be developed by following international standards by the Airports Authority of India (AAI). The AAI has developed a master plan and design of terminals through Global Architectural Design Competition. An Inter-Ministerial Group (IMG) has approved the development plans. The plans focus on the enhancement of runway capacity, apron capacity and terminal building capacity.

The Tamil Nadu government has handed over about 130 acres of land to the AAI for the development of the secondary runway. Land has also been made available by the defence authorities. In a meeting chaired by the Defence Minister, held on July 24, 2008, it was decided to hand over 21 acres of defence land to the AAI for the expansion of the airport. The Expert Committee on Infrastructural Development is expected to give the environmental clearance to the expansion project shortly.

The existing international terminal at the Chennai Airport has a capacity of three million passengers and existing domestic terminal has a capacity of six million passengers. Additional capacity of four million is being added to the international terminal to enhance its capacity to seven million passengers. A new domestic terminal is being built with capacity of ten million in addition to the existing domestic terminal, to augment the capacity of the domestic terminal to 16 million. The construction and development work is expected to be complete by October 2010. The total cost of the project is estimated to be Rs 1808.10 crore of which approximately Rs 1077.16 crores will be required for the new domestic terminal building and for the modernisation/extension of the international terminal and the face lifting of the existing international and domestic terminals. 80 per cent of the project will be funded through internal resources of the AAI and 20 per cent through commercial borrowings. No User Development Fee (UDF) or budgetary support is envisaged for this project.

The upgraded international terminal building, which will be able cater to seven million passengers a year, will have a peak hour capacity of about 4450 passengers, 109 check in counters, 35 immigration counters for departure and 39 for arrival, eight customs counters for departure and 26 for arrival, eight conveyor belts and eight aerobridges. This terminal is expected to be saturated in 2017-2018. The domestic passenger terminals which will be able to cater to 16 million passengers annually will have a peak hour capacity of about 5360 passengers, 99 check in counters, ten conveyor belts, nine aerobridges and is expected to be saturated by 2012-2013.

The pre-engineering and pre-qualification of the project have been completed. As per present estimates, work is expected to commence in September, 2008. Construction of runway, taxiway, parking bays is expected to be complete in 20 months and the terminal buildings in September 2010. Thus, the runway, taxiway, parking bays scheduled to be completed by April, 2010 and the terminal buildings by October, 2010.

Source : TravelBizMonitor.com

Sindhu Bhattacharya

NEW DELHI: The Bangalore International Airport (BIAL) just keeps courting controversies.

First, the issue of keeping the old HAL airport open resurfaced with the Karnataka chief minister raising the issue recently. And now, the ministry of civil aviation has expressed its displeasure over the new airport’s passenger handling capacity.

In fact, the ministry has already asked the Airports Authority of India (AAI) to determine whether BIAL management’s claim — that the airport is yet to reach its peak passenger capacity — is valid, by calculating its peak passenger handling capacity and the capacity in terms of million passengers per year.

According to industry estimates, BIAL is capable of handling only about 9 million passengers against the current traffic of 10.5 million.

The ministry has suggested that BIAL either construct a temporary terminal to handle extra passenger traffic till the proposed extension is completed or reduce commercial space inside the integrated terminal building to make more space for domestic passengers.

Civil aviation secretary Ashok Chawla was disappointed at the way BIAL has dealt with the issues. “It is true that Bangalore airport was initially planned for lesser traffic and passenger traffic grew at a faster-than-anticipated rate. But unlike the Hyderabad airport (which is also a greenfield airport) management, the managers of BIAL have been unable to adequately respond to the changed market scenario.”

Does this inability to respond to market dynamics stem from the way the airport management is structured? While GMR is the principal investor in the Hyderabad airport (which also faced a similar unprecedented growth in passenger traffic but managed to create adequate capacity mid-way), BIAL is a consortium comprising L&T, Siemens Project Ventures and Zurich Airport and perhaps needs a longer consultation process to approve changes.

Besides, if the BIAL management now agrees to the ministry’s assessment that traffic has already outgrown terminal capacity, demands for keeping the HAL airport open will gain ground further.

Chawla said both the options — creating temporary capacity in the form of an additional terminal or reducing space allocated commercially for eating joints, etc — are being discussed and a final decision would be taken in the next two weeks.

Since reduction in commercial space will have direct repercussions on BIAL’s revenue generation, the idea of creating an additional, albeit temporary, terminal capacity looks to be the most feasible option.

b_sindhu@dnaindia.net

Source : DNA

Global growth rate of flights continues to slowdown: OAG
By TBM Staff | Mumbai

The world’s airlines are scheduled to operate just one per cent more flights for July 2008 compared with the same month last year. According to the latest statistics from OAG (Official Airline Guide), the world’s authority on flight information, this represents an additional 34,800 flights. Capacity for July is up by three per cent year on year.

The total number of flights scheduled to operate worldwide this month is 2.64 million, offering 318.3 million seats to travellers around the globe. Within this global figure of all scheduled passenger flight operations, the low cost sector accounts for 459,000 flights (17 per cent) and 68.3 million seats (21 per cent). Frequencies and capacity in the low cost sector are both showing 13 per cent growth for July 2008 v/s July 2007.

Within the United States, domestic activity has dropped 2 per cent overall or 21,500 fewer flights this month, resulting in 818,000 fewer seats. This is despite increases in low cost frequencies and capacity within the US of four per cent and three per cent respectively.

Figures for Europe and Asia Pacific indicate these regions are faring better at present, with intra-Europe and intra-Asia Pacific figures both showing a three per cent increase in the number of flights (up by 18,268 and 15,975 respectively) and a four per cent rise in capacity of 3.03 million and 3.07 million more seats year on year.

Steve Casley, Chief Operating Officer, OAG commented, “The OAG figures for July reveal signs of an impending downturn in the aviation industry. While some regions continue to show steady growth, the impact from the current climate in the United States is already contributing to an overall slowdown in the global figures and on the key long-haul routes between North America and hubs in Europe, Asia Pacific and Latin America. The full impact will be clearer when we publish our forecast for Quarter Four.”

The figures were revealed in the latest OAG Aviation Statistics, a regular snapshot of airline activity around the world. Flight information and data solutions company OAG collates data from more than 900 scheduled airlines, on a daily basis, which gives an accurate overview of anticipated travel demand.

The transatlantic route, traditionally one of strong growth, is showing just one per cent increase in flights and two per cent in capacity for July. Similarly, there is just one per cent rise in the number of transpacific flights and seats. Flights between Western Europe and the Middle East, however, are up by 11 per cent, and there is a rise of six per cent for flights between Western Europe and Asia Pacific.

India continues to show year-on-year growth far exceeding the average. For this month, there is a 34 per cent increase in flights to and from India (4,545 extra flights representing 870,000 more seats) and a 12 per cent rise in domestic operations (5,341 flights, 576,000 seats). The Middle East is showing a 20 per cent growth in international operations (7,248 flights and 1.4 million seats), but a drop of -four per cent on routes within the region.

Other territories showing a notably significant increase in year-on-year capacity are the Russian Federation (621,000 more domestic seats, 558,000 more international seats); France, with 428,000 more international seats, of which 84 per cent is in the low cost sector; UAE with 694,000 more international seats, largely driven by continued growth of Emirates and Etihad; Canada, with 321,000 more domestic seats, largely attributable to WestJet and Porter; and Poland, with 492,000 more international seats, of which around half are in the low cost sector.

Aircraft fleet data from OAG reveals there are 40,197 planes operating worldwide this month compared to 38,886 the same time last year, an increase of 3.4 per cent. North America accounts for 36 per cent of the global market, followed by Europe with 27 per cent. Globally, there are more than 8,100 aircraft on order this month, a rise of just under 20 per cent compared to this time last year. North America is the only region showing a decline year on year, with 0.6 per cent fewer aircraft on order compared with July 2007. Asia Pacific accounts for the largest share of new orders (33 per cent) and the Middle East is showing the largest year on year percentage increase at 74.3 per cent (347 more aircraft on order than a year ago).

Source : TravelBizMonitor.com

Qantas jumbo makes emergency landing after mid-air drama

Image from BBC News

MANILA (AFP) — A Qantas Boeing 747 flying to Melbourne made an emergency landing in Manila on Friday after a dramatic mid-air rupture that left a "gaping hole" in its fuselage, officials and passengers said.

Stunned passengers reported how the jumbo, which originated in London and made a stop in Hong Kong, plunged 20,000 feet (6,000) metres in an "absolutely terrifying" ordeal.

A Qantas spokeswoman said the plane, carrying 346 passengers and 19 crew, diverted to Manila where it was now undergoing inspection on the ground.

"There was a terrific boom, and bits of wood and debris just flew forward into first (class) and the oxygen masks dropped down," June Kane, a passenger from Melbourne, told the Australian Broadcasting Corporation.

"We were told that one of the rear doors, a hole had blown into it, but I've since looked at the plane and there's a gigantic gaping hole in the plane. "It was absolutely terrifying, but I have to say everyone was very calm," she added, speaking from the Philippine capital.

Qantas chief executive officer Geoff Dixon said initial inspections showed the aircraft had sustained a hole in its fuselage, and it was currently being inspected by engineers. He said the flight crew performed emergency procedures after oxygen masks were deployed and there were no reports of any injuries. Dixon said the Australian Transportation Safety Bureau and Civil Aviation Safety Authority had been notified.

Manila airport operations officer Ding Lima said the aircraft lost cabin pressure shortly after leaving Hong Kong bound for Melbourne. "The captain of the aircraft immediately called the (Manila) control tower for an immediate landing," Lima told local radio. "There is a big hole in the belly of the aircraft near the right wing about three metres in diameter," he added.

Flight QF30, which took off from Hong Kong at 9:00am (0100 GMT), had been due to arrive in Melbourne at 1145 GMT, according to the Qantas website. Lorena Dimaya, a Qantas assistant supervisor in Manila, said the aircraft had landed safely just after 11:00am local time and the incident had not been "life threatening." She said the plane had taken off from Hong Kong when it "encountered some technical problems and requested to be diverted to Manila, where it made an emergency landing."

Passenger June Kane said the problem seemed to centre on the baggage compartment of the plane. "I'm looking at the plane now and on the left-hand side, just forward of the wing, there's a gaping hole from the wing to the underbody," she said. "It's about two metres by four metres and there's baggage hanging out so you assume that there's a few bags that may have gone missing.

Passengers praised the crew for landing the plane safely. "We heard a very large bang, the oxygen masks came out. But the crew was very calm and everything was fine," said Phil Rescall, a 40-year-old man from England travelling to Australia for work. "I think we were all very lucky."

"The crew were terrific, they did a great job," another passenger, Brendan McClements, said. "Everyone gave them a round of applause as we landed."

Source : AFP

Keep HAL airport open: AAI
24 Jul 2008, TNN

Anshul Dhamija and Sujit John

Bangalore: The new Bengaluru International Airport (BIA) has landed in a turbulent whirlwind with the Airports Authority of India (AAI).

The AAI has prepared a report that says that BIA’s capacity is less than what its promoters have stated, that the airport is already saturated, and that the promoters have violated a key clause in the concession agreement signed with the government. It has gone on to recommend that the old HAL airport be kept open till BIA builds an additional terminal.

The AAI report, a copy of which is with The Times of India, follows a directive by the civil aviation minister to study the capacity issues at BIA. The AAI had designated a 4-member team to conduct the study in June.

The report says that the Bangalore International Airport Ltd (BIAL) must take “immediate action...to create an additional capacity of 10 million passengers per annum to avoid further congestion and to handle the projected growth.” The report goes on to say, “In view of the saturation of the passenger terminal, import cargo, apron and runway, it is recommended that, in the meantime, the existing HAL Airport may be permitted to operate until the time of commissioning of proposed additional capacity at the new Bengaluru International Airport.”

As per AAI’s calculations, the terminal capacity at BIA can only handle 9.78 million passengers annually as against the city’s passenger traffic of 10.12 million passengers in 2007-08. This means that since the day BIA opened on May 24, the airport has been under capacity. BIAL, on the contrary, has claimed that the airport’s capacity is 11.4 million passengers, which could even go up to handle 14 million passengers annually.

As per recommendations of the International Air Transport Association (IATA), an airport which has to handle passenger traffic of 10 million passengers should have a terminal size of 1,50,000 sqm in area. BIA, according to the AAI report, has a terminal size of barely half that at 71,310 sqm.

The report goes on to state: “BIAL revised its forecast to 11.4 million in November, 2006, for the year 2015 which deviates from the actual traffic drastically. In fact the traffic was growing as high as 43.9% when the revised forecast was made in November 2006.

As per the concession agreement para 14.2 (page-61) BIAL was supposed to provide facilities as per IATA/ICAO standards and was to provide 27.3 sqm of space per peak hour passenger (PHP), whereas the actual area provided is 19.8 sqm per PHP, which is in deviation with the concession agreement.”

As per norms followed by IATA, the capacity of an airport terminal is calculated on the ratio between the total area of an airport terminal to the number of peak hour passengers, which for any airport should be a minimum of 25 sqm/PHP.

In fact the figure of 19.8 sqm/PHP at BIA is way below that of older airports in Chennai and Kolkata which have figures of 23.15 sqm/PHP and 24.15 sqm/PHP respectively. In the new Hyderabad airport terminal, it is estimated to be 35.21 sqm/PHP.

Further, taking the terminal building in its totality, the report states that the “basement area of 18,665 sqm is not used for passenger facilitation, it is used for storage, services and utilities. Therefore, basement area should be excluded from the total terminal area which will reduce area/PHP to 14.6 sqm.”

What AAI report also said

• BIA’s peak hour runway capacity is 32 movements as against current peak hour demand of 25. With anticipated annual growth rate of 25%, runway is likely to saturate during 2010-11. Immediate action should be taken for construction of second runway
• Existing number of parking bays are 42 as against peak hour demand of 41 bays (26 passenger aircraft, 5 freighter, 10 buffer for contingency). Addition of 30 more bays recommended
• There is imbalance between import and export cargo area which needs adjustment, that is import cargo is saturated whereas export cargo and domestic cargo have adequate capacity. It is therefore recommended that an additional import cargo capacity may be created immediately.

Source : The Times of India

From October 1, 2008, airlines in India are going to stop paying commissions on their tickets sales by travel agents.

Travel agents are understandably incensed. Until about a year ago they used to earn 9% commission, which was dropped to 5%, and in another 2 months, will drop to 0.

Industry experts say most small agents will shut shop, while the bigger ones will earn special bonuses, instead of commission, from airlines, which will get increased, even further, thanks to the smaller agents closing down.

The various travel agents' associations, whose members account for 85% of tickets sold, have threatened to stop selling air tickets, which will impact the Rs. 33,000 Crore airline industry in India.

For many smart customers, travel agents were already operating in the Zero Commission regime, since we would take back the commission, in the form of discounts.

Painful as it is, it is time for travel agents in India, to start walking the extra mile to earn their commissions. As a customer I do not need to pay 5% to a travel agent to just do an online booking that I can do myself. In most mature markets, travel agents receive no commission from the airline, and charge service fees, which demands the provision of value addded services.

For many years, I have been telling my travel agent friends that they need to provide services commensurate with their commissions. Start providing holistic travel related services. Hotels, car rentals, visa and passport services, travel insurance, travel advice, and tours, are just some of the areas they must look at.

Online travel agents, such as Ezeego1.com, Cleartrip.com, Yatra.com and Makemytrip.com have already started finding alternative sources of revenue. Some these agents have less than 30% of their total revenues coming from airline bookings.

Agents who develop skills and offer services that help the customer find better deals, and an easier travel experience, will survive, others will just disappear in to history.

Kingfisher Airlines firms up Heathrow plans
By Brendan Sobie

India’s Kingfisher Airlines is preparing to launch its first two international routes, connecting Bangalore and Mumbai with London Heathrow, at the end of August or beginning of September.

The carrier also is aiming to begin its first US route, connecting Bangalore with San Francisco, in September or October.

Kingfisher chairman Vijay Mallya confirms the carrier has secured two slot pairs at Heathrow and London will be its first international destination, with daily service from both Bangalore and Mumbai.

“We will start between 31 August and 3 September,” Mallya told a group of reporters during an unveiling yesterday of Kingfisher’s new Airbus A330-200 at the Farnborough airshow.

The aircraft at Farnborough is Kingfisher’s second A330-200 and was delivered last week. Its first A330-200 is now in Bangalore, where it is being used for pilot training.

Kingfisher over the next two months will take another three A330-200s plus five A340-500s. Mallya says the five A330s will be used to operate the new London services plus services from Mumbai to Hong Kong and Singapore.

He says Kingfisher as a new entrant at Heathrow has inherited the slot pair previously used by Brazil’s VRG, which earlier this year dropped all of its long-haul services. He adds Kingfisher has leased a second slot pair for an undisclosed sum from an undisclosed carrier which could become a codeshare partner.

Kingfisher will compete against British Airways, Virgin Atlantic Airways, Jet Airways and Air India on the Mumbai-London route but Mallya says there is enough demand to support all five carriers.

“London is a must-go destination for an Indian,” he says.

Kingfisher will only compete against BA between Bangalore and London. Mallya says the booming southern India market can easily sustain a second service.

Mallya says the carrier’s first batch of A340-500s will be used on a Bangalore-San Francisco service. “We will start in September or October,” he adds.

Kingfisher has been touting Bangalore-San Francisco since it ordered the A340-500 in 2006. Mallya says connecting the two IT hubs is attractive even in today’s environment because IT is one sector not impacted by the oil prices or slowing economy.

“For the Bangalore-San Francisco sector there’s a lot of demand. It’s a unique product because no one else offers it non-stop,” Mallya says.

Kingfisher was also planning to serve New York from Mumbai using the A340-500 but Mallya says this may be scrapped because there is already too much capacity in this market given current demand. “The New York flight we’re looking at very closely,” he says.

Kingfisher hopes to begin selling tickets on its initial batch of international services next month.

All of Kingfisher’s A330s and A340s will be in two-class configuration consisting of economy and “Kingfisher First”. Mallya calls the latter a “super business product” which will be priced “slightly higher than business class prices”.

Kingfisher First is basically a first class product without the divider between seats, which Mallya says is “unnecessary” in today’ environment.

There is also a “social area” in Kingfisher First, with a staffed bar, two sofas and bar stools. He says in the carrier’s A340-500s there will be two bars in Kingfisher First and a smaller one in economy.

Mallya says he got the idea of the bar from the Boeing 747, which used to have bars in the upstairs.

“We don’t see them anymore. They’ve all been replaced by seats,” he says.

Kingfisher’s widebody fleet will also feature a custom-designed first class seat from B/E Aerospace and an IFE system with large individual screens from Thales.

“It will be the best in the sky and the best in the sky won’t come cheap,” Mallya says.

Source : FlightGlobal

India, the world's largest democracy, has a sorry record in sound and bold economic administration. Populist measures abound, and nothing is sacred or immoral in the perpetual quest to obtain and then secure the "gaddi".

Fuel pricing in India is a prime example.

Officially, the "Administered Price Mechanism" was abolished in 2002, but today, the Indian government has a greater control on the fuel market and prices than ever before. Private operators have been driven out of the market, and only the Government owned companies survive.

Government have become addicted to their windfall fuel tax income. In the last 6 years, fuel tax collections have increased almost 250% to a staggering Rs. 170,000 Crores (Rs. 1.7 trillion or US$ 41 Billion).
Indian bureaucrats have learnt well from the Europeans and their "tax and spend" Keynesian economic models. Fuel taxes are greater than the cost of the fuel. In Bangalore, when we pay Rs. 57 for a litre of Petrol, Rs. 32 is taxes, only Rs. 25 is the cost of the actual fuel. Internationally, the cost High Speed Diesel ex-refinery (excluding taxes, duties, levies, etc), is marginally higher than Petrol. Yet, in India, Diesel costs 35% less than Petrol, thanks to lopsided tariffs and populist driven subsidies.

The one fuel that is truly free in pricing is Aviation Turbine Fuel (ATF). Thanks to the government induced haemorrhaging, and the traditional, but wrong view, of air travel being a luxury, oil companies are using deregulation on their favourite whipping boy -- ATF. In India, ATF costs double than prevailing international prices.

The results are plain to see. Despite being leaders in the global airline growth story, airlines in India, today, are bleeding, and bleeding bad. Losses in 2008-9 fiscal, are expected to cross $2 billion. Unable to sustain, in sheer desperation, airlines are hiking air fares, cutting back schedules, deferring aircraft deliveries, laying off staff, even considering importing their own fuel.......... in short, anything, to cut down losses.

This has resulted in air traffic crashing all across India. In Bangalore, the shining example of India's air traffic growth, from an annual growth rate of 33% year on year, for the first time since 2001, air traffic is actually falling to levels below that of the previous year.

Additionally, due to the remoteness of BIAL airport, regional air traffic is decimated, with air passengers switching to trains and buses instead. We might be tempted to say "so what". But we overlook the productivity aspects in the slower transit time of trains and buses. And in today's globally competitive economy, productivity matters.....a lot.

The operators of the Bengaluru International Airport, BIAL, now face an additional quandary. The airport terminal is reportedly, under capacity, and needs immediate expansion. Till now, their primary source of revenue, has been landing charges levied on flights. Thanks to a reduction in flight operations by the airlines, their income stream and cash flows have been reduced. So BIAL is increasingly forced to rely on passenger based User Development Fee (UDF), which has both the Government and passengers united in their opposition.

An imposition of UDF by BIAL on domestic passengers will only aggravate the already bad situation, and result in a further compression of air traffic. A downward spiral into a bottomless pit.

A possible solution requires bold decisions. Something both the political and administrative establishment in India are not known for.

• Government has to pledge at least 10% of its fuel taxes towards public transportation infrastructure. My friends in the auto industry will hate me for this suggestion, but our cities are choking in their own growth.
  
• ATF pricing should be reduced to international price parity. Ex-refinery, and taxes, union and state. Everyone should share the burden, including the airports and airlines. They must pass on the savings and re-invigorate the market, not use it to butress their bottom lines. The downstream impact of the aviation industry is far greater than the losses sustained by price reduction. We must not forget, every aircraft purchased by India, results in huge "offsets" i.e. mandatory exports of other goods and services.
  
• A moratorium on UDF for at least 12 months by all airports in India. Keep costs low. It will pinch, but the increase in flight operations will butress some of the revenue loss.
  
• Allow HAL airport to handle regional air traffic. By sticking to its hardline, BIAL will only continue to drive passengers away from the air, to trains and buses. A negative for all stake holders, including the citizens of Bangalore.
  
• Diverting part of the regional traffic to HAL will also give BIAL breathing room, and delay the need for investment in a costly second terminal, till global economic conditions improve.
• Forget a "temporary terminal". Passengers will not accept travelling 50km, paying a UDF, and then using a "tent".

This is just one view point. Other constructive suggestions are welcome via the comments section.

Plane truth: Trains fare better
By Nandini Chandrashekar, DH News Service, Bangalore:

Frequent short haul air travellers from Bangalore seem to be preferring the train, discouraged by the distance and time taken to travel to the new Bengaluru International Airport (BIA).

South-Western Railway officials here have noticed a great increase in passengers notably on the Shatabdi trains running between Chennai and Bangalore. Booking on these trains have been steady at 100 per cent beginning from the month of May.

Five trains ply daily between Bangalore and Chennai at present, excluding a weekend train. While most of these trains do experience heavy traffic, the Shatabdi has been facing unprecedented rush for the past two months and the trend appears set to continue.

Bangalore Divisional Railway Manager Akhil Agarwal told Deccan Herald that booking had increased significantly on Chennai, Hyderabad and Kochi-Trivandrum routes.

“We are going to observe this for a couple of more months and if the trend continues, then we will either add coaches to the existing trains or add a new train on the route.”

Shatabdi trains at present are running with seven coaches and these are likely to be augmented to 10 coaches.

Officials are still keenly watching the other sectors like Hyderabad and Kochi. There has been a definite increase in bookings on the Hyderabad route as well, but a senior railway official pointed out that it could also be due to the introduction of the Garib Rath train in the month of February.

The route towards Kochi and Trivandrum is a busy sector any time of the year and it has been difficult to establish the reason.

Travel agents have no doubts whatsoever, about the decline and the reasons for it. Rakesh P of Jagadish Air Travels admitted that they had a staggering 65-70 per cent drop in air ticket bookings to Chennai after the opening of the new airport. His clients clearly expressed their unwillingness to travel the long distance to the airport for a 30-minute flight.

He also said a considerable number of his clients who flew to Chennai to visit the consulates now prefers Shatabdi or a bus. In fact, so popular has been the demand for buses, that the agency started bus bookings as well to keep in tune with the customer requirements.

Another travels, Classic Air Travels, has also experienced a 50 per cent drop in their bookings to Chennai.

Interestingly enough, the passenger traffic to Hubli and Mangalore has fluctuated slightly, but nothing to indicate decreased air travel.

The reason, says Rakesh, could be because the number of travellers on this route have always been less, due to high costs and the ones that did travel could well afford it and would continue doing so.

Buses to Chennai seem to be faring pretty well considering that this is considered to be a slump season.

Phanindra Sama, CEO of redbus.in, the online portal offering reservations for 300 bus companies, said that sale of tickets to Chennai had jumped by about 35 per cent.

The increase was across all kinds of buses as the travel time is only five hours.

This time advantage seems to have encouraged software companies, who send their employees to obtain visas, to take the bus.

“There is a definite cost and time advantage to taking the bus to Chennai these days,” he added.

Source : The Deccan Herald

Air passenger traffic takes a hit on high fares
Anirban Chowdhury / New Delhi July 11, 2008

Dips 4 per cent in July first week for the first time in 3 years.

For the first time in the past three years, the first week of July has seen the domestic air passenger traffic declining by 4 per cent over the year-ago period. After slowing down to a single digit in the past few years, the passenger traffic slipped into the negative zone this month.

"There has been a decrease of 5-6 per cent in the first eight days of July for full-service carriers compared with that in the same period of 2007," said Ankur Bhatia, executive director, Bird Group, which controls Amadeus India, one of the leading technology providers to the Indian travel industry.

Amadeus provides one of the largest ticket reservation platforms for the airline industry in the country.

Apart from full-service carriers, executives of low-cost carriers like JetLite and Simplifly Deccan confirmed that their numbers had gone down. Experts said taking a marginal growth of SpiceJet and IndiGo into account, the overall passenger traffic would go down by close to 4 per cent for the industry in the July.

According to figures released by the civil aviation ministry, the domestic passenger traffic in the country had seen a double-digit growth in the first quarter of 2008.

The growth in the first quarter of this calendar year was 11.12 per cent over the same period last year. The growth fell to a single digit in April compared with 8.65 per cent growth in the same month last year.

The growth in May came down to 2.9 per cent over the previous year's.

The ministry figures for June have not been compiled yet, experts and airline executives said, adding that the negative growth would have started in the last week of June.

The decrease has happened primarily because of two reasons — increase in prices leading to lower load factors and a cut in capacity in the last couple of months.

The average price across airlines and sectors has increased by more than 100 per cent this year over that of 2007. This has led to a significant dip in the average passenger load factor (PLF) to close to 60 per cent for most carriers(compared to an average PLF of 70-75 per cent last year).

Besides, in the last two months, the airline industry has cumulatively cut around 10 per cent of the total domestic capacity deployed in the country by cancelling 160 of a total of around 1,600 daily flights operating in the country.

Taking an average of 100 seats per aircraft, this would mean that around 16,000 daily seats had been taken out of the market. This two-month cut would have offset most of the capacity increase that happened last year.

Source : The Business Standard

HAL airport: Centre may seek more time to get back to HC

The issue of keeping HAL airport open even after the new airport becomes operational has become contentious as the agreement signed with the promoters states that the existing airport will close when Devanahalli starts functioning

Ashwini Phadnis

New Delhi, July 8

A decision on whether the HAL airport in Bangalore should be reopened is likely to get delayed with the Centre planning to approach the Karnataka High Court seeking more time to reply on the matter.

The court had sought the reply of the Centre by July 18, but the thinking is that it would be better to seek some more time from the court rather than give a hurried representation.

“The Centre is seeking the official view of the State on its stand on the issue. Besides, the report of the Airports Authority of India (AAI) on whether there was a capacity constraint at the new airport, which could be sorted out by reopening HAL airport, is also being examined.

All this will take some time and therefore, the view of the Centre is to seek more time from the court to make a representation,” a senior Government official said.

The Centre has been asked to report to the court after examining the capacity of the new airport, seeking the views of the State Government on having two airports in Bangalore and considering issues relating to connectivity to the new airport.

The HAL airport closed on May 24 when the new airport at Bangalore became operational.

The issue of keeping HAL airport open even after the new airport becomes operational has become contentious as the agreement signed with the promoters states that the existing airport will close when Devanahalli starts functioning.

The demand for keeping both the airports open has come from several quarters, including citizen groups and Parliamentarians.

In March this year, the report of the Parliamentary Standing Committee on Transport, Tourism and Culture on the closure of Bangalore and Hyderabad airports had strongly suggested that the existing airports in the two cities be kept open for commercial operations.

Source : The Hindu Business Line

Mr Albert Brunner, CEO, Bangalore International Airport Project
Jul 08, 2008

Bangalore International Airport Limited (BIAL), the owner and operator of the new Bengaluru International Airport, is a public limited company, registered under the Indian Companies Act. A private-public venture, the project realized so far and the upcoming phases are being built and will be operated by the company for the next 30 years with an option to continue for another 30 years. BIAL is committed to establishing the new Bengaluru International Airport as India’s leading airport in terms of quality and efficiency and set a benchmark for the future commercial development of Indian airports. The new airport is located about 35 kilometers north of the city. This will allow both the city as well as the airport to develop. It is spread over an area of approximately 4000 acres and besides the regular airport services it will offer a hotel, shopping mall, food courts and other convenience amenities in the upcoming project phases.

Albert Brunner, Chief Executive Officer (CEO), Bangalore International Airport Project, is a Civil Engineer by profession and is from Zurich, Switzerland. He has also had postgraduate trainings in business administration. Albert Brunner was appointed as CEO of Bangalore International Airport Limited in 2002. Under his leadership, the Company reached Financial Closure in June 2005 and the construction of the airport began in July 2005. Mr. Albert Brunner has been in the airport business for the last 17 years and has served as a member of the Executive Board of Zurich Airport Authority from 1995.

Replying to Anil Mascarenhas of India Infoline, Albert Brunner, CEO, Bangalore International Airport Project, says, “Operation-wise, we have reached a high level of performance.”

It’s been a month since you started operations. What are some of the recent developments?
The airport is just about a month old or should we say young and encouraging announcements such as the launch of the Deccan Aviation Skylimo (helicopter service to and from the city) on July 01 are taking shape. It is the first of its kind in India.

Four new international airlines have started operations from Bengaluru International Airport since it began operations, due to increased capacity. They are Air Mauritius that began operations on May 27, Tiger Airways on June 01, Oman Air on June 16 and Dragon Air (Subsidiary of Cathay Pacific) on July 02.

Where connectivity is concerned, some of the aspects that have delighted airport users at Bengaluru International Airport include the promptness and efficiency of BMTC Volvo bus services and so far connectivity has not been a block for most passengers. We do realize that the connectivity for the companies situated in the south is still an issue and will work together with the Government of Karnataka to improve the same.

Operation-wise, we have reached a high level of performance. Most of the flights leave on time as long as they arrive on time. This is confirmed by all international airlines and most of the domestic ones as well.

The airport’s design and planning have a lot in store for future expansion. Could you give us an idea about the same?
The Master Plan of the Bengaluru International Airport has been developed to fulfill the need for an operationally efficient and passenger friendly airport for Bangalore. It ensures that the size and capacity of the airport facilities can be gradually expanded based on the passenger and cargo growth.

The Master Plan not only includes provision of premium land for commercial real estate developments such as office parks, retail, entertainment and hospitality but also land reserve for a rail link to the city. The intention of BIAL to develop an Airport City is in line with the increasing attention being paid to ‘Aerotropolises’ globally.

Please elaborate on Aerotropolises.
An Aerotropolis is a city in which the layout, infrastructure and economy are centered around a major airport. Experts in the field are of the opinion that Airports will shape business location and urban development in this century as much as seaports did in the 18th century, railroads did in the 19th century and highways in the 20th century.

We envision the airport city to be a flourishing destination in itself; people will not only come here to take flights but also to relax, do business and shop. It will provide growth giving a strong impact on economy and creation of jobs.

What is the annual passenger-handling capacity? What are your expansion plans?
Infrastructure at an airport is not designed to an annual capacity, but to a peak hour demand. Under the present traffic scenario, Bengaluru International Airport can easily handle the traffic for the next 2-3 years. During this time, we want to realize the next expansion.

The Master Plan of Bengaluru International Airport has been developed to fulfill the need for an operationally efficient and passenger friendly airport for Bangalore. It ensures that the size and capacity of the airport facilities can be gradually expanded based on the passenger and cargo growth. The land at our disposal allows us to develop the airport up to a capacity of approximately 40 million passengers a year.

We are working towards the next expansion phase of the new airport. However, kindly note that we are currently at a planning stage. The work on expansion is in line with our commitment to expand the size and capacity of the airport infrastructure in line with the projected passenger and cargo growth. We will keep you informed as soon as we have some concrete plans to announce.

Given the sharp spike in ATF, have you witnessed a drop in passengers? Many flights, which otherwise used to be full are seeing vacant seats, especially in the business classes. What is your take on the situation?
As of last week, the total number of flights was 1120 (per week). This figure includes both international and domestic flights. In comparison to the first week of operations, there is a 2% reduction in the total number of flights. This is due to a 3% reduction in domestic flights* per week. International flights however have shown a 4% increase (from 134 flights to 140 flights) per week. *Due to operational reasons, Go Airways has suspended operations till Sept 15, 2008 and Paramount Airways has reduced frequency.

Walk us through the revenue streams from the airport. Landing and parking charges may be a large part of the income?
The revenue from the airport is divided into aeronautical and non-aeronautical revenues. Since the airport is only a month old, it is a bit early to comment on the aeronautical and non-aeronautical revenue split. However, approximately 15% of revenues are expected to come from the non-aeronautical avenues.

Aeronautical revenue: A very important revenue stream for the airport is the User Development Fee (UDF). The Concession Agreement specifies that BIAL will be allowed to levy UDF from embarking domestic and international passengers for the provision of passenger amenities, services and facilities. The UDF is used for the development, management, maintenance and operation of the airport. While international passengers flying out of Bengaluru International Airport pay UDF, domestic passengers are not being charged this fee for the first three months of airport operations.

Landing charges at BIAL to be paid by airlines as per the current AAI charges levied at other international airports in India. Landing charges at BIAL are in fact lower than what was charged by HAL for all carriers. According to the concession agreement, BIAL could adjust the landing charges to the inflation rate since 2001, this will lead to an increase of 38% but BIAL has totally waived of any such increase.

Tell us about your cargo facility. What is the utilization now?
In line with international standards, BIAL selected the consortiums of Air India & SATS and Menzies Aviation with Bobba Group to handle cargo at the new airport. With an allocated area of fifteen acres and an initial capacity to handle approximately 350,000 tons of cargo annually, space constraints will no longer exist at the new airport.

Following are some of the salient features:

• The cargo facility has domestic and international cargo in the same premises.
• The concessionaires have designed the cargo facility which is under Full CCTV Surveillance all areas 24/7.
• The concessionaires offer cargo facility to airlines and shippers at the best international standards and competitive prices
• The warehouse management is backed up with tried and tested IT systems which has features like RF wireless Hand-held Mobile Terminals, Barcode System Management, Management on Cargo, Storage Locations, ULDs, Doors etc, Inventory Check, Breakdown Management, Build-up Management, Dangerous Goods Management, Damaged ULD Management, Damaged Cargo Management, ULD Inventory Management, truck Queue Control
• The cargo concessionaire provide facilities like pallet storage systems, separate storage space for small and loose cargo, track and trace inside their facility.
• Out of many, the cargo warehouses have the following facilities for the users: Banks, conference rooms, training rooms, business centre, help desk, staff canteen, truck parking.

The new cargo facility handles all types of cargo - general cargo, perishable cargo, courier, mail and specialized cargo (dangerous goods, live stock, etc). Adequate holding areas and cold storages have been provided for by both consortia, catering not only to floriculture and horticulture but also industries like pharmaceuticals and other perishables. Cargo Village: The new airport will provide infrastructure for cargo agents and freight forwarders at a cargo village that is being built in the airport premises. This area will house 200 offices and 120 warehouses.

By when do you expect to start expansion here?
BIAL forecasts cargo volumes of approximately 220,000 tons in the first year of operation as opposed to a capacity of 350,000 tons. Both the cargo terminals at the new airport can be expanded when the need arises.

Furthermore, BIAL has the land reserve to allow more cargo handles to operate at the new airport in order to boost the import/export cargo volume. The new airport will see both a quantitative increase in terms of export facility area and qualitative improvement, in terms of storage and handling capabilities, to promote the outflow of goods globally.

The new airport will see both a quantitative increase in terms of export facility area and qualitative improvement, in terms of storage and handling capabilities, to promote the outflow of goods globally which mainly consist of garments, pharmaceuticals, machinery spares and perishables.

What revenues do you expect from commercial activities? We hear your advertising concessionaire JC Decaux has already sold out 70 per cent of its advertising space.
Yes, BIAL has chosen JC Decaux as the airport’s advertising concessionaire for a period of seven years. A world leader in outdoor media, JC Decaux builds and manages all media space throughout the airport. The company brings in a wide range of international expertise and experience, thereby positioning the airport as an exclusive property offering state of the art media options.

At Bengaluru International Airport, we have aimed to create world-class advertising opportunities which are on par with other international airports. Due to the superior opportunity at our airport we have received a very encouraging response from the market. We, currently, have foreign as well as local brands present at the airport. It is our constant endeavor to create unique and innovative advertising solutions at the airport.

Could you give us an idea about the revenues you see from here and for how long are the rates negotiated typically?
We have a rate card for promotions and JCDecaux will be better positioned to give you the relevant details.

What kind of incentives or government help would you seek?
Building an Airport within the PPP model has its set of challenges given the magnitude of the project. Our main challenge was to deliver this project on time. All other aspects have been of learning for us and we could not have done this without the tremendous support received by the government authorities as well as the Private Promoters. At this point, the focus needs to remain on further developing the connectivity form the city to the airport.

What is the customer feedback so far?
It’s been almost one month, since BIA started its commercial operations and we have received overwhelming responses from travelers to and from the Airport. Passenger feedback has been key to improving the airport facilities. While many have congratulated BIAL on the first class facilities and access road to the airport, many passengers have also given objective feedback on the service and amenities.

Most passengers have been empathetic to the fact that a project of this magnitude has initial interruptions and have expressed their support. All the feedback received has been compiled systematically and action has been initiated for each of them.

Brief us on the latest ownership pattern of the airport. Any stake sale etc in the near future? Reports mentioned about BIAL seeking a valuation of up to $2.5 billion to raise about $200 million in equity to fund the second phase of the airport’s development. Could you give us more details.
Bangalore International Airport Limited (BIAL) is Public limited company under Indian Companies Act formed to design, build, own and operate the greenfield private sectorowned and operated airport in India. Private promoters hold a 74% stake in BIAL while the state holds the remaining 26%.

The shareholding is as follows:
Karnataka State Investment & Industrial Development Corporation – 13%, Airport Authority of India – 13%. Siemens Projects Ventures – 40%, Larsen and Toubro – 17% and Unique Zurich Airport – 17%.

Of the total cost of Rs24.70bn, 16% is equity investment, 14% is state support from GOK, 65% is debt and the remaining 5% is internal accruals or security deposits.
It is important to understand here that the state had set aside a certain amount for this project. Hence, the equity contribution by the private players had to accordingly be in the shareholding ratio, keeping the state investment amount in mind.

Regarding reports mentioned about BIAL seeking a valuation of up to $2.5 billion to raise about $200 million in equity to fund the second phase of the airport’s development, I would like to reiterate that this is not true. There have not been any talks in this regard between the shareholders.

The Karnataka chief minister spoke about negotiating with BIAL to keep HAL airport open. What is your view?
As you are aware, HAL was shut the day BIAL was operational, ie on Friday, May 24, 2008. We have always maintained that Bangalore needs a single aviation platform for both domestic and international traffic, to allow seamless transfer between domestic and international flights for passengers, cargo and efficient airline operations. All successful aviation hubs in Asia (Singapore, Kuala Lumpur, Hong Kong, Seoul) have developed out of such a single platform. Examples cited where a city has several airports (New York, London) have above 100 Mio. passengers, compared to the 10 mio of Bangalore. Since Bangalore has a strong business market and ideal location, the new airport will serve as a regional hub for South India attracting investments and businesses that will lead to significant growth and job creation. In the current scenario, Bangalore stands the chance to become a hub for south India as against Hyderabad and Chennai.

Last but not least it has to be mentioned that the concession agreement, which clearly stipulates the closure of the then-existing airport, has always anticipated a growth of the new airport. The concession agreement even indicates future expansion steps. Therefore it was always clear: When the new airport opens, the old will be closed. Thereafter the new airport has to be expanded in order to always meet the demand.

What is your expectation regarding the high-speed rail link between the city and the Bengaluru International Airport (BIA) at Devanahally. By when do you see it happening?
From a passenger and environment point of view a rail link to the airport is absolutely essential and BIAL has always maintained that. The high-speed rail link would enhance the convenience and comfort of the traveler. For exact timelines of the project, the state authorities would be better positioned to answer you.

Give us details about the low cost terminal. What kind of activity and business do you expect?
There has been a lot of speculation on this topic. While we are working on the next expansion of the airport, kindly note that nothing has been finalized yet. The work on expansion is in line with our commitment to expand the size and capacity of the airport infrastructure in line with the projected passenger and cargo growth. We will keep you informed as soon as we have some concrete plans to announce.

What is the total cost so far incurred. In the next two to three years, what is the amount set aside for the airport. How would it be funded?
The project cost of phase I currently stands at Rs24.70bn. This cost does not include the added investment of approx. Rs10bn made by the selected concessionaires. Phase II of the airport expansion which will include another runway and terminal building is expected to cost more than phase I. An intermediate expansion of the existing terminal building will cost approximately $20mn.

Source : India Infoline

Venkatesha Babu

Bangalore: Seventeen years after it was conceived, the Bengaluru International Airport became operational on the night of 24-25 May after several delays. From the day of its launch, the airport has been in the news mainly for the wrong reasons, from complaints over poor connectivity to inadequate toilet facilities. This, however, doesn’t seem to faze Albert Brunner, the soft-spoken chief executive officer of airport operator Bangalore International Airport Ltd (Bial), who has been leading the project since 2002. In an interview with Mint, Brunner responds to the criticism and controversy surrounding Bial. Edited excerpts:

Can you give us an overview of where things stand today?

We opened on the 24th of May. Whereas the first flight was perfectly fine, the first day was a disaster. We had teething problems in two areas, operation-related and infrastructure-related.

People waited for 20 minutes for the staircase to attach to the aircraft. I would be fuming if it had happened to me. They had to wait for 40 minutes for baggage, another reason to get angry. Then you had to wait for one hour to get a taxi. The reason (was that) the service provider did not get the licence for taxis. When we opened we had 89 taxis, now we have 800 taxis.

You see, the cumulation of all these things gave us a bad name. I do not want to look for excuses, we have to solve it, but most of it was not under our control. Still, we were the one to take responsibility. Infrastructure-wise, we don’t have enough toilets, we had underestimated—the layouts were bad. We have now increased the number of toilets, added area wise 45%.

When people had to get out, we needed staircases and bridge or bags to be brought out, it was the responsiblity of the ground handler who is the service provider. Unfortunately, many of the airlines wanted to do the ground handling themselves. And for a long period, they had not signed the contract with the ground handlers. At a very late stage, they said to the ground handlers: “you do it”. But neither they had trained personnel nor equipment.

Why bad blood between you and Kingfisher Airlines?

Kingfisher has always said that they want to make Bangalore their operational base. And (Kingfisher owner Vijay) Mallya has requested for additional facilities. When they complained about the problems in the first two days, they complained in a very professional way, whatever they said was very justified. And we really solved it in a professional way. In view of this, I can’t understand the bad remarks from Mallya about us. Because he has the least reasons to speak like that. He asked for a lounge, we have given him that, he has a Kingfisher bar there. Whatever he requested, we have given him. He wanted space for office, we have given it. But they are yet to begin work on it. I personally do not understand why he made such remarks.

We have offered him whatever he wanted—office space, MRO (maintenance, repair and overhaul facility). The first time he came to the airport, he may have expected a much bigger airport, which is grand. But we have always said we do not want to build a status symbol, we want a functional airport; whenever the need arises, we can increase the size. Maybe he was disappointed...

Comparison with GMR Hyderabad International Airport Ltd, which built a bigger facility relatively more smoothly?

We wanted construction of the airport (to take off) in 2002. We could begin construction around mid-2005, the time we wanted to open the airport! During the same time we had unprecedented gowth in aviation, because we had a proactive civil aviation minister who opened the skies. They allowed new airlines.

Our promoters were disappointed with the slow progress... It would have been impossible for us to go to the board to tell them that we will be building a bigger airport and we need to redesign. Nobody would invest one additional rupee for that—they never knew whether we would succeed or not. I made a new traffic study and went to the board for additional money. We had two choices—either we stop and redesign, which will result in further delay or begin construction and during construction, try as much as possible to expand the airport without delaying the opening. We increased the scope of our contractors by 70% without delaying the opening date. We went from Rs1,412 crore to Rs1,930 crore and finally we had to increase (the cost) to Rs2,470 crore because of delays.

Hyderabad, which was two or three years behind us, were carefully watching. They even copied our concession agreement and it is not a joke.

It is said within a year Bial will get full in terms of handling capacity...

(Interrupts)... It makes me angry. Even the ministry speaks about annual capacity. There is nothing called annual capacity. Peak-hour capacity (is what matters). We don’t have peak hour for 24 hours.

If airlines want to operate, when the slots are full between 6 and 8, we ask them to come the next hour and we have space. You spread the peaks over the day, if you could do that over 24 hours, then our capacity would be 24 million.

What are the indications on the past one month in terms of traffic?

Presently, we get a feeling that there is a slowdown. It may be a seasonal slowdown, it is a slow season now. But we should see how it grows. Let us assume that we have an increase of 15%, then next year we may have around 11.5-12 million, this we can handle, another 10% we can handle, then it will be a bit tight.

But for two-three years down the line, infrastructure building has to start now. Right ?

We started our planning process around nine months ago. We know, we need the second runway by 2012-13, if we continue to grow as we grow now. We need a second terminal at the same time, four years from now. Next week we’ll go to the board and give the preliminary information and three months from now, we’ll give a concrete proposal.

Is the additional investment linked to valuation and divestment of stake as there has been talk of Bial being valued at $2.5 billion (Rs10,775 crore) or more?

Fact is that we do not have revenues from domestic passengers. User development fee (UDF) is the backbone of our revenue and 80% of traffic is domestic and we don’t have revenue (from domestic traffic) for the first three months. Therefore, there is a certain reluctance (on the part of our investors for additional investment).

None of them have, however, said I am not interested in infusing additional money. None of them have ever said we (have to) go public for funding. I give you my word it has never been discussed. It could be a solution because it is cheaper than borrowing from banks but (it is only one of the solutions being considered).

What is the investment for an intermediate terminal?

We are thinking whether we need to build a functional terminal or a slightly bigger shell that can accommodate more people. It is being considered. Building should be below Rs100 crore and the apron expansion should be more... that would mean an investment of another Rs200-300 crore at least.

There is apprehension that the project is goldplated and you have not opened the books completely.

We are completely transparent. There are two representatives of Karnataka and government of India and the books are open to them.

Feeling among investors?

Initially we projected break-even in seven-and-a-half years. However, since then we had to make more investment but we also have more passengers. If we could charge the UDF, we will break even in five years. As I told you before, we need to invest further. Really, it is the (capital) appreciation of the airport, not the revenue, that makes (this project) more interesting for the investor.

Airlines are bleeding. Your outlook? Seen any cancellation of short-haul flights ?

Airlines are our customers. They are in a tight position, GoAir and Paramount have suspended one flight each. We have no indication of a slowdown for the winter schedule. In September, we will get a clear indication.

Arguments in favour of keeping the short-haul flights from the old airport and indemnifying Bial for those losses. Comments.

I feel sorry that they still come up with those arguments. You can indemnify our loss but in the long run, it is the loss of the city. The city will lose out having a strong airport and an opportunity to attract lot of international airlines and make it stronger. Airlines are already losing money. They will also lose money by (spending on) additional resources in two airports.

K. Raghu contributed to this interview.

Source : The Mint

HAL can’t handle charter flights
Monday July 7 2008

Monica Jha

BANGALORE: Despite receiving a green signal from the Ministry of Civil Aviation to operate charter flights, the HAL Airport is in no position to handle charter flights.

The reason being that the security mechanism at the HAL Airport is inadequate for the handling of take-offs and landings of charter flights. The Central Industrial Security Force (CISF) personnel, who are in charge of the security for civil airports in India, are no longer stationed there.

The CISF men, who were deployed at the HAL Airport, were shifted to the Bengaluru International Airport (BIA), Devanahalli, when it began commercial flight operations on May 24. Presently, the HAL Airport’s security is handled by the local police, who do not have the expertise required for the airport’s internal security checks, including customs and immigration/emigration. The local police are deployed just to guard the infrastructure and handle the law and order situation.

A senior CISF official told the this website’s newspaper: “The Airports Authority of India (AAI) has written to the CISF Headquarters in New Delhi, asking them to deploy CISF personal at the HAL Airport. The Bureau of Civil Aviation Security (BCAS) had recommended a joint survey by AAI and CISF to identify the security needs and the number of personal required. However, the CISF Headquarters has not yet responded.’’

“The HAL Airport will need at least 100 CISF personnel to handle charter flights. The local police is not good enough for airport security,’’ the officer said. A licence from BCAS is mandatory for anyone to be deployed for security checks at an airport and the CISF is the authorised agency for the job.

Once the HAL Airport starts charter flight operations, it will handle five to six charter flights per day.

Flight diverted

Recently, an international charter flight that was supposed to land at HAL Airport was forced to land at BIA, as the former did not have CISF personnel or the necessary security checks and immigration in place.

Source : The New Indian Express