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It appears that Mr. Brunner and members of his team have listened to the pleas of Bangalore.

They have been on-site, getting things fixed, apologising and comforting passengers, putting pressure on their ground handling agents, and other sub-concessionaires to get in to shape.

Ever so slowly things are falling in to place. Airlines are reporting smoother operations by and large. Today, there was a major IT systems glitch that forced everything to go to manual, from boarding pass to the actual boarding. But, from all reports, despite this one step backwards, two steps have been taken forward. There is light at the end of the tunnel that these initial teething problems will be resolved.

Thank you to all the workers at BIAL.

One issue that cannot be addressed by BIAL, is the tentativeness, of the AAI run, Air Traffic Control. Despite Bangalore being the third busiest airport in India, AAI has not deployed experienced controllers from the Tier 1 cities, but instead it has chosen to, from Tier 2, and smaller cities. These new controllers, till now, probably controlled less flights in a day, than they do at Bangalore, in an hour.

The ATC at HAL, had even suggested to AAI, that the new controllers spend time at the HAL ATC to become familiar with the traffic conditions and patterns at Bangalore, and build up their confidence. Call it ego, call it apathy, AAI chose not to.

Now all the passengers, airlines, BIAL are suffering due to this tentativeness. AAI should deploy at least 10 controllers from its top tier 1 ATC (Mumbai, Delhi, Chennai) on a war footing at Bangalore, if the situation is to be salvaged.

A situation that is within BIAL's control, and I beg, to be addressed on priority, is the whole Cargo area. I have posted pictures in an earlier article, and its is shameful. Bangalore needs a fully functional airport, and I know BIAL can deliver; if only they put their mind to it.

A picture is worth a thousand words. So I will let the images do the talking of my visit to BIAL on May 28, 2008.

While much is said about the passenger terminal building and the passenger experience, the support facilities are in a sorry shape, and partly explain the problems, plaguing the passenger terminal.

The cargo terminal building of Air India - Singapore Airport Terminal Services (AI-SATS) is an unmitigated disaster. How Customs authorities permitted a warehouse, that is at least 2 months away from even basic inhabitation, to function as a high security bonded warehouse, is a mystery.

What is even more sad, is that fact that SATS is renowned for it good service, and is a subsidiary of the world famous Singapore Airlines, of whom, I am still a very loyal customer. It appears they were pressed in to commencing operations before they were ready. This is an answer the BIAL management, and the Indian Customs Authorities in Bangalore should answer.

AI-SATS Cargo terminal serves the following airlines :

• Air India
• Indian Airlines
• Singapore Airlines
• Jet Airways
• Malaysian Airlines
• Emirates
• Etihad
• Dragon Air (subsidiary of Cathay Pacific)

The incomplete cargo village meant to house cargo and customs agents. Right now they are working by the roadside.

The building meant to house the airlines' staff. Right now they are having to "make do" in the BIAL administrative building (in white to the left).

Traffic congestion just to enter the passenger terminal building. Given the lack of self control of Bangalore driver, note the lack of any police or security guards to control the traffic, and signs to guide visitors to the correct lane. (The left lanes are meant for the 10 minute pick-up /drop-off).

Police, Army, and other government vehicles "hogging" the parking space in the pick-up / drop-off lanes, adding to the congestion. Of course, the 10 minute rule does not apply to them, only us poor souls who actually pay for using the airport.

A temporary shed, serving as the airport staff canteen, opposite the BIAL office, about 500 meters west of the Passenger Terminal Building. I have said before, if we do not ensure the comfort, of those who ensure our comfort and safety, we are heading for a systemic failure.

The narrow service road leading from the passenger terminal building to all the service and auxiliary buildings (BIAL administrative offices, airline offices, flight kitchens, cargo terminal buildings (CTBs), fuel farm). It was completely choked. It took me 30 minutes to travel the 2 km.

In the absence of any public toilet facilities in the auxiliary buildings, employees and workers at the airport, have to "make do", with an Indian touch to the International airport.

The narrow service road is completely jammed. It took me about 30 minutes to travel 2 km from the PTB to the CTB. There is no alternate road. I saw works of ground handling agents AI-SATS, getting off their shuttle bus, and running the 1 km to the terminal, in order to report to work on time. This narrow service road cannot handle the all vehicles. It is having unintended consequences on passenger operations since the flight kitchens, airport and airline offices are all on this service road.

Due to overloading of the cargo warehouse parking, and the lack of any policing or security control, vehicles are parked haphazardly, encroaching upon the already narrow service road.

Absolutely mayhem on the road with no policing or security to control the chaos.

Export cargo dumped outside the AI-SATS Cargo Terminal Building (CTB) in the rain.

More cargo just lying already soaked in the rain. Notice all the civil construction in progress, and the cargo and customs agents having to use boxes and cartons as tables for work.

Zinc sheets and flapping plastic making up a temporary wall, of what is supposed to be the AI-SATS Customs bonded "high security" warehouse. Customs is required to grant permission, only after a thorough inspection.

Workers on the roof of the AI-SATS warehouse. Welding was being done directly overhead the cargo. The roof is incomplete and this is the rainy season.

A temporary and naked heavy electrical outlet, with valuable cargo just dumped all around it. A major fire and safety risk.

Valuable export cargo, damaged by poor handling and storage before it is has even left our city.

Over 70% of the floor space of the AI-SATS warehouse is being used to store building construction materials. Welding is being done, right next to cargo. Due to sheer un-preparedness, over 100 tons of cargo is lying outside the warehouse on the tarmac waiting to be brought in. What cargo was brought in, is just haphazardly dumped all around, and is not traceable. Both the Menzies and AI-SATS warehouses are badly understaffed. Cargo agents, and even airlines' managers were seen trying to help AI-SATS locate cargo to pacify irate importers and agents.

An high view of the choked service road. BIAL has blocked the entrance to the service road on the fuel farm side, without notice or explanation to any of the operators, adding to everyone's misery. Over 50 tons of export cargo in still on trucks, LCVs and lorries, waiting for the last 24 hours to enter the warehouse to unload cargo.

Another view of the choked service road. Observe the incomplete civil construction of the AI-SATS terminal.

Sandhya Ravishankar / CNN-IBN

Tue, May 27, 2008 at 13:13 in Nation section

MISSING IN ACTION: Minutes before departure, the crew of Indian said the plane couldn't be located.

Bangalore: You have heard of planes going missing in flight, but have you heard of a jet going missing at the airport? That's exactly what happened at the new Bangalore International Airport on Monday.

Passengers at the newly opened Bangalore International Airport were in for a rude shock when the plane they were supposed to be flying in went missing!

They were waiting to board Indian flight IC915 to Hyderabad, but just fifteen minutes before departure, airline staff could not locate the plane. Indian's crew then went hunting for the craft for 45 minutes.

One of the waiting passengers, Dr Ramesh said, "Just opening new airports is not enough. One needs people and systems in place. They made us wait for a good two hours for the ticket and then in the queue and then suddenly the signboard said the flight had departed."

As angry passengers demaded to know if the flight had actually left, the hapless Indian staff had no answers.

Adding to the confusion, Air Traffic Control did not respond for over an hour, despite frantic calls by the ground staff. It took over an hour to finally locate the flight, which had apparently been waiting on the tarmac for the passengers to board.

Another passenger, Gangadhar said, "What's the use of a grand opening of the new airport when everything is going haywire? Civil Aviation Minister, Praful Patel should be ashamed of himself for letting things go wrong like this."

The incident has added to travellers' unhappiness with Bangalore's pride, the new International Airport.

Dr Ramesh said. "This is not an international airport. This is more like a bus terminus, I'm sorry to say."

Savie Karnel and Sanchita Sen
27 May 2008

Two MiD DAY reporters set out simultaneously from Bangalore for Chennai, one by plane and the other by bus, to check out the relative merits of air and road travel. Savie Karnel, who flew from the Devanahalli airport, took 7 hours to reach central Chennai, while Sanchita Sen, who boarded a bus, took just 40 minutes more. Lesson: The long ride to the new airport takes the joy out of short haul flights. Passengers spend a lot of additional money, and save little or no time

If you suspected the long drive to the new airport would make your short haul flights way too expensive and time consuming, you were right.

MiD DAY did a reality check yesterday and found that a flight to Chennai would save you about 40 minutes, but cost you about Rs 4,300 more than if you took a bus.

We set out from Koramangala, which we thought was a good representative location to start from. It wasn't as far flung on the southern periphery as Electronic City, or as close to the airport expressway as Hebbal.

THE JOURNEY

Our destination was central Chennai. We booked two tickets, one on a private bus, and another on a Kingfisher flight. We began our journey simultaneously at 1.30 pm.

As we file our report from a hotel in Chennai, we bring you some lessons:

The distance to the airport is too much of a bother if you are in central or southern Bangalore, and are planning a trip to places such as Chennai. You have to worry about too many things: get on to cabs and buses, load and unload your baggage several times, and subject yourself to security checks and several other formalities. The new airport has other glitches. Its public address system is an abysmal failure, and the ground staff are still finding their feet.

Here is a detailed account of how our parallel journeys went.

The race begins

1.30 pm: Savie and Sanchita meet at Koramangala
1.45 pm: They wave goodbye to each other at Madivala, Hosur Road.

Sanchita’s journey

2.00 pm: Sanchita's bus leaves for Chennai. Savie gets into a cab and heads for Devanahalli.
2.55 pm: Bus crosses Tamil Nadu border and enters Hosur
3.45 pm: 15-minute break at a Krishnagiri food joint
6.30 pm: 10-minute halt for tea at Vellore
8.30 pm: Bus reaches terminus at Koyambeedu in Chennai.
8.34 pm: Auto drivers try to fleece her, but a Tamil helps her fix the fare to Egmore at Rs 120
9.10 pm: Sanchita arrives at Hotel Marina Towers, Egmore

Savie’s journey

2.00 pm: Cab leaves for Devanahalli
3.56 pm: Arrives at airport. Cab ride has taken nearly two hours
4.10 pm: Goes to the airline counter for baggage check-in and boarding pass
4.16 pm: Proceeds for security check, and waits for flight announcement. Scheduled take-off: 5.20 pm.

Reporting time is 4.20 pm and boarding 4.50 pm

4.52 pm: Asks Kingfisher ground staff about departure and is told “Wait for the announcement!”
5.00 pm: Starts getting anxious and asks airline executive at gate to the tarmac. He replies, “Wait for the announcement. Boarding will be from Gate 7”
5.10 pm: Sits down near Gate 7. Announcements are faint, and not clear.
5.12 pm: Walks up to announcement desk. No help again.
5.16 pm: Notices a passenger walking towards Gate 7. Asks ground staff about flight status and is told, “We just began boarding.” Other passengers follow, but no announcement is made
5.20 pm: Boards the BMTC Volvo bus to the aircraft, and is kept waiting for 15 minutes
5.40 pm: Enters the aircraft
6.00 pm: Pilot says he is ready, but ATC clearance is delayed because of air traffic congestion
6.15 pm: The flight finally takes off. It is late by 55 minutes
7.20 pm: Lands at Chennai airport
7.32 pm: Takes a pre-paid taxi to Egmore
8.30 pm: Reaches Hotel Marina Towers and checks in
9.10 pm: Sanchita walks in, meets Savie


Cost of bus travel

Auto fare from Koramangala to Madivala: Rs 15
ABT Travels ticket to Chennai: Rs 390
Auto fare from Koyambeedu bus terminus to Marina Towers, Egmore: Rs 120

Cost of air travel

Cab fare from Madivala to Devanahalli: Rs 700
Kingfisher ticket for Chennai: Rs 3,888
Taxi fare from Chennai airport to Egmore: Rs 250

Conclusion
Difference in price: Rs 4,328
Difference in time between air travel and bus travel: 40 minutes

Source : The Mid-Day

I am an angry Bangalorean today.

For two months, we have been hearing stories as to how the new Bengaluru International Airport was FULLY ready, and that the Government was denying the BIAL permission to commence operations of its new airport, thus causing untold losses to the consortium.

Looking to prevent a repeat of the fiasco following the launch of the Rajiv Gandhi International Airport in Hyderabad, many people and bodies connected with the aviation industry, had advised a planned and incremental approach to commencing full blown operations at the new airport. Commence with international passengers, then move international cargo, and finally domestic passenger and cargo, 6 months later.

BIAL refused. They fought and got permission to commence full blown operations; and immediately ran in to, what it described as, "teething problems".

Quoting from a story in The Hindu "As the drama unfolded in the morning, some airline operators called the new airport a “complete mess”, and struggled to deal with the passengers’ ire."

The Times of India story describes other horrors with airport operations.

In an earlier article I have posted pictures, taken just 24 hours before start of its operations, of a totally incomplete cargo warehouse. A "high security", customs bonded, warehouse that was assured to be ready before the original airport opening date of March 30, 2008, two months earlier.

The CNN-IBN video shows the total collapse of ground services at BIAL. In the video some guy in a green T-Shirt is manhandling an airline employee.

Unlike RGIA, at BIAL, the entire ground handling is TOTALLY CONTROLLED by the BIAL appointed agents. The airlines have ZERO role in ground handling. Yet, airlines are having to bear the brunt of passengers' ire, since the management of BIAL and its agents' are nowhere to be found.

The ill effects of the BIAL's agent's ineptness are having impact well beyond Bangalore. The NavHind Times from Goa has this story of a flight from Bangalore to Goa that landed without the baggage.

The airlines have no offices. There are reports, that employees at the airport, have totally inadequate food canteens, the bathrooms meant for them are so badly maintained, that, in desperation, they are having to fight security staff to use passenger bathrooms, and proper drinking water is a distant dream

Yet, they are the ones, out there in the front, without sleep, and without proper food, fire-fighting for their passengers' basic comforts, on a fiasco, not of their making. Is it any wonder why there are staffing problems already ?

BIAL, and their supporters, have been claiming that the airport was FULLY READY since March 30. That was two months ago.

Obviously BIAL has not used the two month delay constructively, since crucially required infrastructure, is still 3~6 months away. Imagine our plight, if the airport had opened two months earlier.

A simple thing like no water, are not teething problems. Not maintaining bathrooms, are not teething problems. Having an incomplete "high security", customs bonded, cargo warehouse, when it was guaranteed to be ready 2 months ago, are not teething problems. Not having offices or basic food canteens for airlines' employees, are not teething problems. These are failures due to sheer un-preparedness.

I have said this before. If we do not ensure the proper working condition and comfort, of those who ensure our comfort and safety, the system will collapse.

Did BIAL lie to Bangalore when it claimed to be ready for take-off on March 30th ? May be not, but for sure, they did not tell the whole truth.

In fact, one service that performed flawlessly, was the Government owned, BMTC's, Vayu Vajra airport Volvo bus service.

We have to stop being BIAL apologists. The BIAL consortium are supposed to be "specialists" with years of experience in airport operations. They are not amateurs, and should be held to higher standards.

BIAL management and those of IT'S agents should on scene, taking personal charge, helping and sorting out the problems. Mr. Brunner's presence at the airport will send the much needed signals to everyone, to shape up.

After all this is sorted out, we should BIAL's hold feet to the fire. They have up till now, shown complete inflexibility, and waved their contract in face of this nation. Now it is time to show them the same treatment.

Put together an independent body, comprised of equal representation from BIAL, Government, Airlines, Cargo and Customs Agents, Industry and Passengers. This body will ensure committed delivery dates of infrastructure, and monitor service levels for the first six months. Any slip, and cough up cash, M/s BIAL. This same body can then continue to act like a permanent, independent service monitoring body, armed with penal powers.

Obviously BIAL read the pulse of Bangaloreans correctly. We were shown a good looking passenger terminal, and we, as expected, we fell for the "Hawa Mahal". We just gushed in awe, and did not look beyond the façade.

HAL was not comfortable airport by any means, but at least it was functioning one; and in ALL aspects -- passengers, cargo and employees. Bangalore has been forced to close this functioning airport, and move to a facility that is far from ready, and obviously not fully functional.

All these days, BIAL has been harping on the sanctity of their contract with India.

It time we hold BIAL to the sanctity of the unwritten contract, to provide public infrastructure on a FAIR basis, while providing the residents of Bangalore, the TRUE and COMPLETE picture.

Right now, this does not appear to be the case.

"I am the happiest man in the world" said Albert Brunner, CEO of the BIAL consortium.

He has good reason. His seven years of perseverance, along with his dedicated team, has concluded with the smooth opening of the Bengaluru International Airport (BIA) on May 24, 2008.

Barring a few glitches here and there, the experience was "awe-inspiring" for many Bangaloreans, who, up till now, had to put up with the small AAI owned terminal at HAL airport. Reactions were rightfully positive, and the praise is well deserved.

Air India IC 609, an Airbus A320, from Mumbai was the first flight to touch down at BIA, which was turned around as IC 957 to Singapore, and became the first flight out.

In parallel, the era of HAL, and its decades of faithful service to Bangalore was coming to a close. Jet Airways 9W 2512, an ATR-72-500, to Mumbai and Singapore Airlines SQ503, a Boeing 777-200, to Singapore, were the last commercial domestic and international flights respectively.

Many aircraft that landed at HAL for their final flights, were then ferried across to BIAL to commence operations this morning. There were emotional thanks from the flight crews to the Air Traffic Controllers at HAL for their years of dedicated service, again the praise is rightfully deserved. The ATCOs at HAL will continue to operate the skies of Bangalore, controlling all the traffic to the south.

These many ferry flights created a small traffic jam in the skies over BIAL, causing minor delays, in inbound flights, who were forced to orbit, till landing slots opened up. Air France AF 192 from Paris, became the first international flight to land at BIAL.

But these are minuscule and teams at both airports, BIAL and HAL should take a well deserve bow to all the cheers that are due to them

Welcome to Bangalore, BIAL.

Travel trade associations skeptical of airlines implementing the directive
By Krupa Vora | Mumbai

The much-debated issue of refund of airline tickets has been now brought to the forefront by the Directorate General of Civil Aviation (DGCA) by issuing a Civil Aviation Requirement (CAR) letter to the airlines. As per this CAR dated May 22, 2008 all scheduled and non-scheduled carriers will now be subject to refund of airline tickets with immediate effect. The CAR letter has been issued in public interest as per Rule 133A of the Aircraft Rules and Ministry of Civil Aviation Order no. AV 13030/105/2007- DT dated May 12, 2008.

Commenting on the same, Kanu Gohain, Director General of Civil Aviation, said, “The issue of refund of tickets by airlines has become a major source of grievance amongst airline passengers. A large number of complaints are regularly received which revolve around delay in refund of unused tickets, the amount which is refunded by the airlines against cancelled tickets and the policy of not to refund the ticket amount but to adjust against tickets to be purchased by the passenger for the future travel in the same airline that too valid for a limited period of time.”

However, the travel trade associations who have been pushing for the resolution of this issue over a long period of time, have been skeptical with regards to the airlines implementing the CAR issued. Speaking to TravelBiz Monitor, P Sampat Kumar, National Managing Committee Member and Chairman Legal and Industry Affairs, TAFI, said that, “The association welcomes the initiative taken by Ministry of Civil Aviation (MoCA) via DGCA to issue a directive to domestic airlines to forthwith look into the reasonable cancellation charges levied by them and the process of refund within the given time frame. TAFI also has taken note of DGCA directive informing airlines not to reflect charges, surcharges, fees as taxes giving the traveller an impression that it is government imposed. This also vindicates TAFI’s stand all along that all operational cost must be reflected in the fare.”

C V Prasad, President, TAAI stated that, “This move from DGCA was long pending, however the concern is whether the airlines will implement and follow the CAR issued by the DGCA.” To make it more clear, the letter mandates that passengers are entitled to full refund of all charges which are denoted as tax or surcharge. By implication the cancellation charges can only be levied on the fare component of the ticket. To make this clearer, if we have a ticket with a basic fare of Rs 100 and other charges of Rs 2,750, the entire Rs 2,750 will have to be refunded to the passenger in case of a cancellation.

Source : TravelBizMonitor.com

For more details please see this article

The BIAL management has sent out this e-mail earlier today, confirming the launch of operations of the new Bengaluru International Airport, later tonight.

Congratulations to the entire BIAL team, and welcome to Bangalore.
----------------------------------------------------
Friday, May 23, 2008 1:21 PM

Subject: New Date: Commencement of Commercial Operations at new Bangalore International Airport

Dear All,

This is to inform that Bengaluru International Airport Limited (BIAL) has received a notification from the Ministry of Civil Aviation (MoCA) on the above subject. According to the notification, “the Central Government hereby notifies that the Bangalore International Airport at Devanahalli would be commissioned w.e.f. 00.01 hours local time of 24th May, 2008, instead of w.e.f. 00.01 hours of 23rd May 2008 as notified earlier”.

We herewith officially confirm to all partners operating from New Bangalore International Airport (BIAL), Bangalore India:

1. New Bangalore International Airport will be operational from May 24, 2008
2. All flights scheduled to depart after 00:01 hours (local time) of May 24, 2008 will operate from the new Bangalore International Airport.
3. All flights that have a departure after 00:01 hours (local time) of May 24, 2008 from BIAL are accepted for landing at the new Bangalore International Airport on May 23, 2008
4. All flights that have a departure until 23:59 hours (local time) of May 23, 2008 will be operated from HAL airport (Current airport)

We thank you for your understanding and support and look forward to a mutually beneficial cooperation in future.

With best regards,

Marcel Hungerbuehler
____________________________
Chief Operation Officer

----------------------------------------------------
An update for international passengers.

All flights departing Bangalore before 23:59 23/May will depart from HAL airport. These are EK517, TG328, and SQ503. Passengers are advised to check with their airlines.

In fact SQ503 will be the last international departure from HAL airport.

Airports in the 21st century, are like the ports and railway junctions of the 19th and 20th century -- critical drivers of economic growth. As individuals, we look to the glamour and prestige associated with passenger air travel, while tending to overlook the air cargo requirements of commerce and industry which is drives the economic engine of Bangalore.

Thanks to years of power deficiency, Bangalore's economy is technology oriented. The IT industry is an addition to the long list of "high tech" industries calling Bangalore home. Telephony, electronics, machine tools, aeronautics, precision engineering, auto parts, garments, and floriculture industries, all of which produce goods, high in value, low in weight, and in many cases, perishable. All goods which are ideally suited to transport by air.

Globally, over 40% of goods by value are sent by air instead of surface transport. At Bangalore, which lacks a sea-port, it is more than 50%. Everyday, about Rs. 150 Crore (US$ 37 million) worth of goods transit Bangalore's airport, and this is set to double as soon as additional capacity is made available.

We are entering the final countdown to the operational commencement of the much vaunted "dream airport", Bengaluru International Airport (BIA), being promoted by BIAL consortium.

However, the dream is turning sour for much of Bangalore's industry.

BIAL has appointed two companies to provide Air Cargo terminals at the new airport. One in Menzies-Bobba and the other is Air-India - Singapore Air Terminal Services (AI-SATS).

More than a month ago, representatives of BIAL, Menzies-Bobba, and AI-SATS, assured industry that air cargo operations were ready to go, and painted a rosy picture of comfort and state of the art handling.

These are pictures taken at the AI-SATS warehouse on the evening of May 22, 2008, just 2 days before the launch of the new airport. Clearly, there is a huge gap between claims and reality.

Gaps between the roof and the walls

Unfinished construction with no security visible

Inadequate infrastructure. Generator in shambles.

What is absolutely mind boggling, is that the Customs Authorities have given the "all clear" to this warehouse, and have issued the necessary permits and bonding permissions to commence operations!!!!!!

The warehouse is clearly not ready for operations, and you will observe, the complete lack of basic facilities, even safety and security, an absolute must for any bonded facility.

By all appearances, this warehouse will require about 1 month to complete. In that month, this warehouse has the potential to handle cargo of value greater than the total investment in the airport.

Losses or damages to precious cargo will result in magnified damages of over Rs. 5,000 Crore to Bangalore's industry, and by extension it is Bangalore's economy and residents who will suffer the losses, due the un-preparedness on the part of BIAL and its concessionaire(s), and the hasty, ill-advised, and wrongly motivated actions by the Customs Authorities.

Economic reality is reshaping India's airline industry. Just a few years into a third wave of private operators, the high cost of fuel has led to a number of mergers, including a high-profile agreement to combine Indian Airlines with Air India. Other issues, including infrastructure constraints, increased competition, and wage inflation, have left low-cost carriers, such as Sahara and Air Deccan, with no alternative but to merge with larger airlines.

But the turbulence is likely to continue, as new carriers enter the fray to fill the gaps left by consolidation. And for the newly merged entities, the struggle has only begun, as the usual issues that accompany post-merger integration -- along with some that are particular to the airline industry -- come into play.

The industry has had a storied past in India, beginning in the early 20^th century when a host of private airlines tried their luck. Chaos reigned in the absence of workable regulations, and in 1953, a few years after independence, the airlines were nationalized and merged to set up two flag carriers -- Air India for international operations, and Indian Airlines for the domestic sector.

The private sector wasn't allowed to re-enter the arena until the early 1990s during the first flush of economic liberalization. Several promoters, including ambitious chicken farmers and individuals with underworld connections, took to the air. Most crash-landed, and a government in reform mode refused to bail them out. While the chicken farmers went back to their birds, others met a sorrier end: Takiyuddin Wahid, managing director of East West Airlines, was shot and killed in his Mumbai office. The airline collapsed.

A new crop of airlines has sprung up in the last few years. Deccan Aviation, India's first low-cost carrier (LCC), began operations in 2003. SpiceJet, also an economy carrier, took wing in 2005. Kingfisher Airlines, headed by the flamboyant liquor baron Vijay Mallya, started the same year. Other newcomers include GoAir and Paramount, while East West and another old-timer, ModiLuft, have returned.

It didn't take long for the shake-out to begin. In April 2007, Jet Airways took over Air Sahara for Rs. 1,450 crore. (Both of these second-wave companies started operations in 1993.) Kingfisher acquired an initial 26% stake in Air Deccan for Rs. 550 crore. (Mallya has subsequently paid more to increase his holdings.) And in the mother of all mergers, the government-owned Air India and Indian Airlines have joined to form the National Aviation Corporation of India Ltd. (NACIL).

More deals may be in the works. "We are open to buying out smaller domestic carriers," Naresh Goyal, Jet Airways' chairman, said at a recent news conference. Kapil Kaul, Indian subcontinent head of the Centre for Asia Pacific Aviation, noted the effect of significant internal and external changes in the last four years. "Mergers were the only options left for many airlines," he said.

The main reason for the consolidation is economic. Both Deccan and Sahara were low cost carriers, and with the rising cost of fuel there was no way they could make a profit. Mergers with full-service carriers such as Kingfisher and Jet Airways were the alternative to closing shop.

A 'Relentless Focus on Reducing Costs'

"Deccan was founded on the simple but grand vision that every Indian must fly," CEO G.R. Gopinath said. "To achieve this, it was imperative to have a ruthless and relentless focus on reducing costs through eliminating everything that was not essential but without compromising on the fundamentals like safety and schedule integrity."

Reality didn't support Gopinath's vision. "Price inclusivity alone is not enough," he said. "It is also very important to be inclusive from a geographical point of view. The infrastructure constraints in different cities mean having different aircraft for different geographies, which goes against the very fundamentals of the LCC (low cost carrier) business model. So, geographical inclusivity also meant increasing complexities by way of inventory management, logistics and maintenance."

When airlines add aircraft and routes, Gopinath added, "it affects the cash flow and the profitability in the short run because any new route takes six months to one year to become profitable. It is also a socio-economic reality that for any new service or product, it takes some time for a consumer shift to happen.

"These were all challenges that we were aware of from the very beginning, but they did impose a huge strain on our resources," Gopinath said. "In addition, there were issues of infrastructure constraints, increasing fuel prices, wage inflation and excess capacity because of a whole lot of new players who came on the scene after Deccan."

The merger gives Kingfisher obvious economies of scale. It also provides an advantage peculiar to the Indian environment. Airlines must complete five years in the domestic market before they can fly the more lucrative overseas routes. Through the Deccan merger, Mallya hopes to get permission for international flights earlier than he would for a standalone Kingfisher. "That the merger would allow Kingfisher to use Deccan's license to start international operations was a major factor, but it was not the most important factor," Gopinath said.

Kingfisher says the merger -- which awaits formal court clearance even as operational integration has begun -- has helped in many ways. Synergies have helped cut costs. Greater passenger volume has allowed for the airline to renegotiate agreements. Schedule integrity has improved.

The story is the same at Jet Airways, which was India's largest domestic airline by far before the Kingfisher-Deccan combination. It still is, but by a slim margin. According to figures from the Directorate General of Civil Aviation, Jet and JetLite (the new avatar of Sahara) had a market share of 29.9% as of the end of December. Kingfisher-Deccan had 29.3%. Indian Airlines had just 19%. (As standalone entities, Jet, Deccan and Indian all lost market share.)

An Inevitable Combination

While the Jet takeover of Sahara set the consolidation ball rolling, the Indian Airlines-Air India merger attracts the most attention. The combination was inevitable considering that domestic carrier Indian Airlines was losing market share year after year. The merger, originally blocked by the late Prime Minister Rajiv Gandhi more than 20 years ago, was a long time coming.

Raghu Menon took over as chairman and managing director of Air India on April 1. (Though the company is registered as NACIL, it will be known as Air India.) To Menon falls the job of seeing through the two national carriers' integration process. "There is a lot of work to be done," he said. "I have to take everybody on board."

His first challenge is to put the organization's financial house in order. In 2006-07, Air India lost Rs. 448 crore and Indian Airlines Rs. 240 crore. The results for 2007-08 are not yet ready, but Menon acknowledges that the losses could be higher. Analysts say the combined entity, in its first year reporting as such, could end up Rs. 1,400 crore in the red. A sale-and-leaseback deal for eight aircraft late in the financial year should stem the red ink a bit -- a common but only temporary fix.

The financial situation is likely to become worse before it gets better. The airline has placed orders for 111 aircraft from Boeing and Airbus; 31 have arrived. They have been financed through loans from the Export Import Bank of India and the market, and interest payments will take a toll.

The other big burden on Air India -- and all airlines operating outside country -- is the high price of air turbine fuel. "ATF accounts for 40% of our costs," Menon said. According to the Federation of Indian Airlines, a lobbying group, ATF prices are 70% to 95% higher in India than in other places for domestic operations. For international operations, prices are some 30% higher. "Fuel costs are an issue that can plague industry profitability," said Charles Dhanaraj, professor of management at the Kelley School of Business at Indiana University.

Plans to take Air India public have fallen through. "Our balance sheet won't allow it," Menon said. Instead, the company will turn to the government. Whether it will seek an equity infusion or debt has not been decided. Jet Airways, meanwhile, postponed a Rs. 1,600 crore rights issue last month for the third time and is looking for other funding options. "We will go to the market when conditions improve," Goyal told an early April news conference.

The Proof Is in Execution

The market may bounce back soon. But what about the airlines? In 2006-07, the domestic carriers had combined revenue of Rs. 15,000 crore and losses of Rs. 2,000 crore. With these numbers, consolidation has become an imperative.

Yet what looks good on the drawing board is not necessarily easy in execution. "The success of any merger depends entirely on the sensitivity and the maturity with which the management handles it," Deccan's Gopinath said. "Mergers will succeed when the managements know what to synergize and what to leave alone. It has to be done with sensitivity, intelligence and commitment."

Consider Air India's other challenges. A loss of Rs. 448 crore recorded by the international carrier in 2006-07 was mainly because of a Rs. 425 crore payment of salary arrears. At Air India's domestic counterpart, Indian Airlines, similar arrears are being negotiated. In the run-up to the merger, Indian Airlines ground staff went on strike over the issue last June.

The trade unions said they didn't stand in the way of the merger because they expected that their arrears (from January 1997) would be cleared. They weren't. That has caused some alienation, which is compounded by the fact that there are more than 15 unions in the organization, all with separate representatives.

While the salary structure is quantifiable, the problems of corporate culture are more difficult to get a handle on -- at Air India as well as the other alliances. As Deccan's Gopinath explains: "The merger does have a lot of inherent challenges because the business models of Deccan and Kingfisher are completely different and, therefore, have distinctly different cultures. Kingfisher has the mind-set of a premium service provider, whereas we have a low-cost culture. As the two brands cater to very different segments, it is essential to have very distinct, separate identities for both. At the same time, one needs to create a certain emotional bonding between the employees for them to feel part of one organization."

Kingfisher's Mallya wants to de-emphasize the "Simplify Deccan" brand and its low-cost aspirations, but Gopinath is still fighting to maintain his company's identity. The Economic Times recently ran this headline: "Branding snag likely to end Mallya-Gopinath honeymoon."

At Jet-Sahara, a first merger attempt was aborted with both sides threatening to sue. Acrimony reached such heights that observers felt there was no way to repair the deal. When the deal was finally signed, Sahara ended up as the "lite" version of Jet in more ways than one: Little of the old airline remains.

At Air India, Menon agrees that integration is a priority. But some things simply cannot be done. For instance, pilots and ground engineers of one airline cannot move freely to the other. They get licenses for specific aircraft and cannot jump to another without extensive training. "Indian Airlines' biggest aircraft is smaller than Air India's smallest aircraft," Air India executive director Jitendra Bhargava pointed out. Pilots and engineers existed in silos within Air India; they will live in a larger number of silos in the new organization.

Menon and Bhargava are banking on the infusion of new aircraft into the fleet. "We have suffered from an image problem because our planes were very old," Menon said. "Today, some of our flights --Mumbai-Delhi or the new nonstop flight to New York -- have only new aircraft. Ask anybody who has traveled by them. This is the real Maharaja service." (The Maharaja is Air India's popular mascot.) The image revamp is also being aided by the new, private airports coming up in India.

Menon expects the new organization to benefit from a hub-and-spoke system being put in place. Indian Airlines will carry passengers from various parts of India to Mumbai, where they will be transferred to Air India's international flights. Air India is also joining the Star Alliance, a network of international airlines.

Joint ventures are being set up for maintenance, repair and overhaul, and ground handling facilities. These will be offered to other airlines and bring in some revenue.

Another big issue is external to the company: the growing competition in the skies, which sparked the consolidation and shows no sign of abating. As Dhanaraj of the Kelley School of Business explains, "Indian commercial aviation is still in its infancy. Deregulation started only in the late 1980s and only over the past decade has it really taken off. Traffic demand in the primary corridors -- Mumbai-Delhi, for example -- tends to be very high and intense. In the secondary corridors -- Calcutta-Bhubaneswar, for example -- it is still erratic. Over the next decade, as new airports develop and airlines learn to manage the scheduling process, things should take off even more dramatically.

"The interesting competition in India is not only among the different airlines, but also between airlines and the railways," he added. "The railways are trying to increase their speed and efficiency and, if they can ramp up, they will give stiff competition to the airways, particularly for short-duration flights."

"I am not afraid of competition -- I welcome it," Menon said, adding that it will help Air India become more efficient. Meanwhile, new airlines are springing up in the domestic arena to compensate for the reduced number of players that consolidation has brought about. The older companies are foraying abroad, even to the West Asian routes (there are 5.5 million Indians in the Gulf) that have been so profitable for Air India. And foreign airlines are landing in the country in ever-increasing numbers.

Every industry faces competition. What's so different about civil aviation? "The airline industry still remains glamorous in spite of the high mortality rates," Dhanaraj said. Adds Gopinath: "The glamour quotient of the industry does attract entrepreneurs and investments. But that alone cannot create a successful business."

Source : Knowledge@Wharton

Customers from United Airlines and Jet Airways will benefit through an agreement signed by both carriers. The companies plan to offer codeshare service, significantly expanding the number of flights available to customers of both carriers to travel between the U.S. and India.

United's Mileage Plus® and Jet Airways’ JetPrivilege members would also have the opportunity to accrue and redeem frequent flyer miles on most flights.

Michael Whitaker, United's senior vice president – Alliances, International and Regulatory Affairs, said, "Whether our customers are traveling east or west, our new partnership with Jet Airways will provide 18 more flight options that will make international travel more convenient. Our business travelers will particularly enjoy service to one of the fastest growing regions and business markets in the world.”

© Centre for Asia Pacific Aviation.

May 22, 2008
Bangalore Journal
An Indian Airport Hurries to Make the First Flight
By SOMINI SENGUPTA

BANGALORE, India — For years, frequent fliers in this technology hub complained bitterly about having to suffer the indignities of a tattered and tiny airport scrunched in the middle of a busy city neighborhood.

Now, with a new one opening on Saturday, people are clamoring once more. This time, to keep the old airport open.

The reversal does not reflect a sudden bout of nostalgia, but rather the fear that the new airport, no matter how modern it was intended to be, seems destined to be the latest repository of India’s astonishing inability to plan for its future and fix its sagging infrastructure.

The way things stand now, the trip to the new airport, 21 miles outside town, will easily take 90 minutes from the city center, and even longer from the software companies that have turned Bangalore, also known as Bengaluru, into India’s own Silicon Valley.

India’s famously sluggish bureaucracy has meant that workers are only now scrambling to finish widening the main road to the new airport. The city water supply has yet to reach the area, making it impossible to begin construction on the shops and office towers that are supposed to sprout around the airport. Even though airport officials were ready to open on schedule, in March, air traffic controllers said they needed more time to train. Late Wednesday, airport officials said they had been told by the government to postpone the opening by one day, to Saturday.

Bangalore has company in its misery. Attempts to revamp roads and ports have run into chaos all over India, not least because the actual growth of this bustling nation of more than a billion people consistently outstrips even the most perspicacious planner’s vision for it.

Traffic was backed up the day a new highway toll plaza linking New Delhi to its new satellite boomtown, Gurgaon, opened this year because planners far underestimated growth in traffic.

A high-speed bus route in the heart of Delhi was lambasted recently for pinching into car lanes, and no one, including the cows, seemed quite sure of which lane to use anyway. Several other major projects are behind schedule and mired in graft, including a new national highway.

The hullabaloo over the new airport is only the latest parable of India’s growth. That tale begins with the government’s decision to sign a deal with a private consortium to build the airport, agreeing to close the old state-run one, and effectively giving the new one a monopoly.

Generous as it was to the developers, it apparently failed to account for the Indian zeal to fly. Air traffic in and out of Bangalore has more than doubled since construction began three years ago, compelling the developer to amend the design of the airport.

Built on 4,000 acres and modeled after the airport in Zurich, whose developers are working on this project, the new airport now promises to accommodate 11 million passengers in its first year.

Still, most road and rail links that the government had promised to build to the airport have been delayed or scrapped, in part because lawsuits over acquiring the land and in part because they involve 32 government agencies.

Adding to the confusion, the state has been in the grip of political squabbling for many months.

Today, with air traffic likely to keep growing, an influential civic lobby is pushing for both airports to operate. Bangalore City Connect, a private industry-financed group that advocates for better urban infrastructure, said failing to plan for future growth would only add to Bangalore’s woes.

Albert Brunner, chief executive of the new airport, declined to comment on the appeal to keep the old one open, except to point out that the new one has plenty of room to grow. “It is our goal to always provide an infrastructure which is sufficient for or even ahead of the demand,” he said in an e-mail message.

The government official responsible for transportation to the airport said “future-proofing” had been complicated by the city’s “unforeseen” growth.

“We have been developing infrastructure all along,” argued V. P. Baligar, principal secretary for commerce and industries for Karnataka state, of which Bangalore is the capital. “The growth of the population has been faster.”

One lawsuit holding up the expressway project concerns D. M. Dwarkanath, a retired executive of a state-owned company. He risks losing his small bungalow to make way for the route. A hospice for children with AIDS is also threatened.

Such cases have sown deep resentment among many people here, who wonder: Why do people have to make way for India’s frequent-flying classes, which are still relatively small?

“It is only for the rich people,” Mr. Dwarkanath said fuming. “They don’t have patience. They want to rush to the airplane. They want to sweep everyone out of the way. Why should we live? Sweep us into the sea!”

They further contend that the path of the proposed expressway has been amended to spare the properties of politically connected people, a charge Mr. Baligar denies. He says the national highway authority will decide who must make way for the highway.

While the lawsuits crawl through the courts and bureaucrats pass files from one agency to the next, patience wears thin on Victoria Road in Bangalore. On a recent weekday morning, laborers carried stones on their heads, repairing a storm drain and backing up the morning traffic along two narrow lanes.

M. N. Badrinath, a salesman who spends three to four hours a day on the road, was skeptical. By the time repairs on this road are finished, he surmised, there will be even more cars. “The promises are like castles in the air,” he said, as he tried to sneak through a police line and into the traffic. “Are they planning for the future or for the present?”

An auto-rickshaw driver, Chand Pasha, said as he waited for a green signal: “My life is in traffic. It cannot get more miserable than this.” The misery of Bangalore’s roads has brought an unexpected boon to G. R. Gopinath, whose low-cost airline, Deccan, expanded the ranks of India’s fliers.

Mr. Gopinath is in favor of keeping the old airport open. Even so, starting Saturday he will offer a helicopter shuttle for commuters. It will cost about $100 and take 10 minutes.

Source : The New York Times

22 May 2008, Saurabh Sinha, TNN

NEW DELHI: Domestic airlines will no longer be able to hold passengers who cancel their tickets to ransom by delaying refunds indefinitely or by asking them to fly again instead within a given time.

Acting on complaints, the government is set to issue new refund rules: airlines will have to issue refunds within a week and cannot swap refund for another flight.

Better still, the new rules make it mandatory for airlines to refund the entire amount of passenger service fee (Rs 225), congestion surcharge (Rs 150) and fuel surcharge (at present Rs 1,950 for short flights and Rs 2,350 for others) on ticket cancellation.

Because these three alone add up to Rs 2,325 for flights below an hour's duration and Rs 2,725 for others, many low-cost carriers have been advertising basic fares of Re 1, Rs 3, Rs 99 or even zero to give the impression that their fares are low and it is taxes and surcharge that have made flying expensive.

Once the new refund rules come into play, these carriers may be forced to come clean on their pricing strategy and offer basic fares that give them leverage to hold back some cancellation amount.

The proposed rules are part of the new civil aviation requirement (CAR) framed by the Directorate General of Civil Aviation and approved by the aviation ministry last week. DGCA is likely to notify these shortly.

The CAR takes note of passengers' long standing woes. "The issue of refund of tickets by airlines has become a major source of grievance among passengers. A large number of complaints are regularly received... (of) delay in refund of unused ticket, amount refunded and policy of not refunding ticket amount but to adjust that against tickets to be used for future travel in same airline within a limited period of time," it says.

The CAR severely indicts airlines, saying that though the government does not usually interfere in their commercial practices, "the volume of complaints necessitates some affirmative action to safeguard the interests of the travelling public."

It adds: "The matter has been discussed in several meetings with airlines (but) with no improvement in the system... It is now considered that the onus rests with the government to fix some minimum benchmarks."

Under these new benchmarks, airlines will have to make refunds for payments made by credit card within seven days of the cancellation. "In case of cash transactions, refunds shall be made immediately by the airline office from where the ticket was purchased," the CAR says.

Many airlines, especially low-cost ones, do not issue refunds for cancelled tickets. They deduct a cancellation charge and retain the balance which can be adjusted by the passenger for flying with the airline again within a certain time.

"This is a patently consumer-unfriendly move that we want to correct," said a senior official. The government consulted refund rules of several countries before coming out with its own stringent draft of rules.

Source : The Times of India

Will target internet savvy leisure and corporate travellers
By Anita Jain | Mumbai

Thomas Cook (India) Ltd. launched www.thomascook.in, a complete travel portal offering end-to-end travel solutions for both B2B and B2C customers, in Mumbai today. The portal will offer hotel inventories from UK based hotels4u.com, which was acquired by Thomas Cook in February this year. The website aims at targeting the internet savvy leisure and corporate travellers, travel agents and partners who will be integrated with the offline business of Thomas Cook India. They will also offer travel and travel related financial services to its customers.

The website provides for online booking of travel insurance, 800 holiday packages including Thomas Cook’s own 100 per cent holiday packages and offers Rail Europe passes and tickets. Apart from this, the portal features over 750 domestic and international airlines, over 30,000 hotels and 30 cruises. With the introduction of a separate portal for the Indian market, the company is positive about its future growth.

Madhavan Menon, Managing Director, Thomas Cook (India) Ltd, said, “We are currently working on the plan and will soon be ready to offer the inventory of 30,000 hotel inventories from all over the globe through hotels4u.com. Also, after the introduction of the inventories in Indian market, clients will be able to book and pay online for their hotel bookings which is at present active only for flight booking.”

Giving an insight into the salient features of the website, Amitabh Pandey, President and Head, E-Business said, “This initiative will extend our reach enormously. Our portal offers a whole range of travel products and related financial services including domestic and international flight booking, foreign travel insurance, hotels, cruises and Rail Europe tickets and passes. This channel will significantly augment our extensive distribution network.”

He further added, “We are going to increase the volumes in the flights, hotels, travel insurance and packages section. For cruises, we will add more options through our parent company Thomas Cook, which offers the highest number of cruises in Europe. Along with increasing the inventory, we are also going to enhance our payment gateways on the portal.”

With a view of huge potential in internet banking in India, the company is putting in efforts to enhance the services online. “At present, only HDFC bank is online for internet banking, soon we are going to link up with more banks including ICICI bank. We also plan to introduce foreign exchange service online. We are facing certain government constraints on selling foreign exchange online in India, and hence are in talks with Reserve Bank of India (RBI) to look into the matter.”

Source : TravelBizMonitor.com

The BIAL consortium has launched a new website providing information on the new Bengaluru International Airport (BIA), at http://www.bengaluruairport.com.

The website has a lot of information and is worth checking out. Please do keep in mind, that it is a work in progress.

Hot breaking news.

BIA launch has been postponed by 24 hours. The new launch date is 00:01 24/May/2008.

Stay Tuned for more information.

I have received a clarification from BIAL that the User Development Fee (UDF) is to be collected from ALL OUTBOUND INTERNATIONAL passengers. The amount of INR 1070 is inclusive of all taxes. So please make sure, you carry the correct amount of money with you.

BIAL has also appealed that passengers paying UDF please remit exact change.

A User Development Fee of Rs. 1070 will be collected from all outbound international passengers using the Bengaluru International Airport. The User Development Fee is towards the cost for construction and operation of the airport and has been approved by the Ministry of Civil Aviation of India.

Departure before or on 30 June, 2008
International Passengers traveling out of Bengaluru International Airport before or on 30 June, 2008 will have to make payment of the User Development Fee at the counters provided in the check-in hall or on the first floor before emigration check counters. Passengers should produce the receipt of payment at the time of emigration check. Payment can be made by cash, debit card or credit card (Visa/Mastercard only). If you are paying by cash you are requested to provide exact change for quicker processing. Please allow 10 minutes for the transaction during peak hours between 2200 hrs and 0300 hrs. And about 3-5 minutes at all other times.

Departure on or after 01 July, 2008
For passengers travelling out of Bengaluru International Airport on or after 01 July, 2008, the User Development Fee will be included in your ticket.

Exemptions
Infants under the age of 2 years and Airline Crew on duty are exempted from User Development Fee.

Express News Service

BANGALORE: Shifting all commercial aviation operations at Bengaluru International Airport on May 23 will put its operator Bangalore International Airport Limited and the Ministry of Civil Aviation in rank contempt as the matter is sub-judice and the Contempt of Court Act mandates that interference in the course of judicial proceeding constitutes criminal contempt which is punishable with a jail sentence, retired judge of the High Court, Justice Michael F Saldanha, told this website's newspaper.

"The Karnataka High Court (KHC) has submitted a PIL for continuance of commercial operations at HAL Airport. KHC having been prima-facie satisfied that a case has been made out, has admitted the petitions by citizens. At the stage of interim relief, the High Court has passed a speaking order which has been endorsed and confirmed by the Supreme Court, indicating that the whole issue requires reconsideration. But BIAL's latest attempt to illegally shift all operations to BIA is to present the court with a fait-accompli and to render the court proceedings infructous," said Justice Saldanha.

The law requires that the parties before the court must report back to the court with regard to the outcome of all that has transpired relating to the interim direction and abide by the order the court passes. Before completing this procedure, shifting operations at BIA is an illegal method to force the issue and by-pass the court.

Source : The New Indian Express

Govt Studying Options, Wants Some Flights From Old Facility
Saurabh Sinha & Anshul Dhamija |TNN

Source : The Times of India

New Delhi/Bangalore: Less than 48 hours before HAL airport shuts down and the Bengaluru International Airport (BIA) takes off, the Centre has made a U-turn on its decision of having only one airport in Bangalore.

Civil aviation minister Praful Patel told TOI: “The ministry is not happy with having only one airport.” The government is exploring all legal options of keeping HAL airport open for some flights. But, for the time being, the existing facility will have to close for all commercial operations from May 23.

“Big cities need more than one airport today. It’s unfortunate that contractual obligations, based on a bidding process undertaken by the previous government, have forced old airports at Bangalore and Hyderabad to shut down. The modernization of Delhi and Mumbai airports, undertaken by us, does not have any such condition,” a concerned Patel said.

“Unfortunately, this kind of thinking was not reflected in Hyderabad and Bangalore by the past government. We are not happy with this situation and are exploring all angles to keep the existing airports open alongside the new ones,” the minister said.

Patel’s statement comes after his ministry had announced the closure of the HAL airport after a crucial meeting was held between the government and the BIAL stakeholders on May 12.

TOI had reported that the government was considering keeping the HAL airport open for 80-seater short-haul flights and cargo flights. DGCA sources had confirmed the government’s thinking.

It is learnt that the ministry is poring over the bid documents made for the new airport — which was awarded to a Siemens-Zurich Airport-L&T consortium — to find a way out. The Centre is also looking at the traffic projections that have been overtaken.

Says aviation expert Devesh Agarwal: “In the past three years, Bangalore’s passenger traffic has grown by over 250%.” Currently, HAL airport handles 11 million passengers. “The bidding process would have certainly been different had it been undertaken by this
government. I would have preferred to keep both airports open. We’re trying to find some way out,” said Patel.

Members of the Bangalore City Connect (BCC), a citizens’ group comprising industry leaders, experts and the public, had voiced a similar point of view.

BCC member V Ravichander had said: “When a global tender was floated for building a new airport in Bangalore, nowhere did it mention that HAL airport had to be closed down. Only after months of re-negotiation with the Centre did the no-airportwithin-150-km clause come into force.”

In a scenario of rising demand and intense competition between Full Service Carriers and Low Cost Carriers in India, regional airlines are emerging to take the lead discovers Anita Jain

The Indian civil aviation sector is poised for a quantum growth with growing levels of domestic and international tourism traffic. With the upward surge, the Indian Low Cost Carrier (LCC) sector is driving this change by successfully tapping 45 per cent of the Indian aviation market share. To cope with increasing demand, the supply and competition between airlines is on the rise. From 2005, about ten companies have applied for scheduled airlines licenses, in order to enter the race. Full service carriers focused more on international routes while the LCC sector focused on the metro and mini metro routes. Indian regional aviation takes wing The government, in order to enhance connectivity to tier II and tier III cities in the country and reduce congestion at airports in the major metros, introduced the regional airlines policy in August last year. However, Indian Airlines took the lead way back in 1996 with the introduction of Alliance Air. Its objective was to serve the regional air travel market. The airline was plagued by the fact that its fleet (mainly Boeing 737s), was not only ill-equipped to operate in regional airports, but also not suited for short haul flights. In addition, its four ATR aircraft could not be pushed for service elsewhere, as they were positioned to serve the North East market. With the boom in the aviation sector after 2003, several players showed an interest in launching airlines with national operations. Approvals for nine of these were pending till August 2007, when the Ministry of Civil Aviation (MoCA) announced a separate category of airlines meant to serve India, beyond its big cities. Soon after the policy was announced, some airlines awaiting national licenses, reapplied for regional permits. These included Star Aviation, Trans India Aviation, Air Dravida and Emric Aviation, all of which are looking to start operations in South India. In this region, air traffic outpaced other regions, in 2007. Under the new regional aviation policy, which covers both aircraft and helicopter operators, airlines are supposed to operate primarily between airports of any of the four regions (North, South, West and East/North-East). Thus, a regional airline in a particular region operates from one metro to all non-metros in that region. However, airlines which have a license to operate in the Southern region can operate flights between the three metros in that region — Chennai, Bangalore and Hyderabad. Directorate General of Civil Aviation (DGCA), the governing body for aviation in India, introduced a separate category for the regional airlines permit. The category is governed by the following guidelines: Minimum initial startup capital will be required according to classification of the fleet operated (weight of the aircraft being 40,000 kg, at take off). A regional airline should operate with three aircraft in one year with five at the end of two years. For airlines with aircraft of a take-off mass of less than 40,000 kg, the paid-up capital should be Rs 12 crore for three aircraft. Two additional planes will ensure a required total paid-up capital of Rs 20 crore. To ensure that such airlines remain viable, they should have a paid-up capital of Rs 30 crore, along with three aircraft to begin with. Addition of each aircraft will require Rs 10 crore extra, subject to a maximum of Rs 50 crore of equity. Regional fixed wings continue to grow Since 2003, passenger traffic has grown at almost 25 per cent, annually. This growth is not restricted only to metros. According to Airports Authority of India (AAI) estimates, traffic in tier-II and tier-III cities (such as Ahmedabad, Pune, Goa, Amritsar, Coimbatore and Vishakhapatnam) is expected to grow by at least 20 per cent, per year, until 2012. “As the impact of the Indian growth engine reaches smaller towns, the travel demand in such cities will increase. Further, increasing congestion and real estate costs in the metros will make non-metro cities attractive destinations for business. About 18 Special Economic Zones (SEZs) are coming up in India, mostly in tier II and tier III cities,” says Olivier Kobisch, DC/EM – Market Analysis Manager, ATR. “According to recent research, the business segment constitutes up to 65 per cent of the Indian aviation sector, while the remaining 35 per cent is from leisure and VFR segments. Out of that 65 per cent of business travel segment, 78 per cent fly to metro cities, while of that 78 per cent, 87 per cent fly from metros to tier II and tier III cities,” says Koustav Dhar, President – Commercial & Special Projects, MDLR Airlines Ltd. According to Dhar, there are about 400 aircraft operating in India, of which only 68 are capable of regional operations. Currently, only 32 aircraft are operated by regional carriers. Thus, there is a huge requirement for regional airlines to increase fleet size, in order to absorb the growing demand. “The regional aviation sector has the capacity to add 300-350 aircraft, to its current fleet size,” adds Dhar. Waiting for approval: Some regional airlines that are waiting to begin operations include Air Dravida, Trans India Aviation Pvt. Ltd, Emric Aviation Pvt. Ltd. and King Air. Regional airlines operate with hub-and-spoke networks; they connect non-metro cities in a region, to the main metro city of that area. From this point, full-service airlines carry traffic to other metros and international routes. “The existing policy framework in aviation encourages regional airlines, as it waives landing and parking charges for smaller aircraft. Regional airlines can benefit from lower parking charges, when they use non-metro airports as hubs. The US has a mature regional airline model wherein one out of every four domestic passengers flies a regional airline,” says Jerome Cheung, Manager of Asia Pacific – Markets & Airline Analysis, Bombardier Aerospace. “By introducing a separate category for regional airlines, the government has unintentionally solved a coordination problem for the third-party MRO business. There have been some moves by the industry, to set-up third party MROs that can service all aircraft (including Boeing and Airbus). It creates a natural demand for smaller aircraft, 50-100 seater ATRs, Embrears and CRJs,” says Steve Horner, Director – Marketing India, ELF. To tap the regional market Indian Airlines re-branded Alliance Air, in September last year as Air India Regional. Currently, Paramount Airways, Jagson Aviation and Star Aviation have got a green signal from MoCA, to operate as regional carriers. Air Dravida, Trans India Aviation Pvt. Ltd., Emric Aviation Pvt. Ltd. and King Air are awaiting approval. New players like Bird Group will consider regional carrier operations, by 2009. Regional skies getting busier According to Praful Patel, Civil Aviation Minister, regional air connectivity is still very low. Patel comments, “Regional aviation is the future. There is plenty of opportunity in connecting tier II and tier III cities with smaller airlines. ATF is cheaper and landing and navigation charges for 80-seater and smaller planes are waived.” Tax on jet fuel for smaller planes (which the regional carriers will use), is set at a low four per cent, compared to 30-40 per cent that FSCs pay. M Thiagarajan, Managing Director, Paramount Airways says, “Regional airlines can work well as feeder airlines. These in the South link a number of less connected places; for example, Hubli, Belgaum, Bellary, Salem, Tirupati and Pondicherry. Any airline, which has a 20-50 seater aircraft can carry passengers and feed them to larger airlines in metropolitan cities.” On the infrastructure front, the government is developing 33 non-metro airports. “There is definitely huge potential in the regional business, but DGCA should also provide financial concessions for airlines. ‘Watchhour’ charges should be waived, as well,” concludes Dhar. Despite the infrastructure crunch, the regional airlines policy is grabbing attention. This seems to be the only way for airlines to graduate to having national operations. MoCA is not approving any new FSCs. Regional airlines, with a good track record, may acquire national status in the coming years. As air routes to metros become increasingly congested, airlines see an untapped market in smaller cities and with regional airlines these might become busy hubs. The start of regional airlines opens another interesting chapter in Indian aviation. The government has set the right tone by creating a competitive environment. It should now let the market work and step in only to remove policy constraints or anti-competitive behaviour. Source : TravelBizMonitor.com