2008 was the year reality struck home in the Indian airline industry. One whiff of the downturn exposed the lack of robust business planning, and abundance of financial vulnerability of Indian carriers, leaving all of them battered and bruised, some more than others.

We saw mass-scale defaulting on payments by carriers in India to everyone from airports to aircraft manufacturers.

Touted as THE growth sector of the future by both Boeing and Airbus in 2007, in the last nine months, domestic airlines have slashed capacity and with very shallow pockets, pulled back at least one-third of their aircraft orders due for delivery this year.

India’s domestic airline capacity shrank by more than 8%, compared with 3.5% in Japan and growth of 18% in China.

As late as mid 2008 Boeing, Airbus SAS and Empresa Brasileira de Aeronautica SA (Embraer) were projecting delivery of 91 aircraft during 2009. They will now thank the stars if they can deliver the reduced quantity of 57 aircraft expected this year.

Both Boeing and Airbus are claiming that no airline has "cancelled orders", but this statement does not account for the deferrals in delivery and the diversion sales of aircraft by Indian carriers to foreign airlines.

In this highly competitive market, it appears that Boeing has the upper hand. It is facing deferral of only two of its 22 expected deliveries down 10%, while Airbus is down 53% expecting to deliver only 32 out of the expected 68 aircraft in large part due to Kingfisher. Embraer increased its delivery tally to five aircraft up 500% from the projected one thanks to the phenomenal growth of Paramount Airways their main customer

Boeing Customers

Jet Airways with fleet of 111 aircraft accounts for the two deferrals of Boeing. One 777-300ER and one 737. Jet has leased out a significant portion of its wide-body fleet. A total of seven of its eleven uber-luxurious Boeing 777-300ERs to Turkish Airlines THY and Gulf Air, and two each of its Airbus A330-200s to Oman Air and Gulf Air. Jet has called for a further ten per cent cut in seat capacity and is now trying to leasing out its narrow body Boeing 737s.

Image courtesy and copyright A.J. Best. Used with his permission. Please do not re-use without permission.

SpiceJet with 12.5 per cent growth will take delivery of 12 Boeing 737-800s/900s, one each quarter for the next three years adding to its fleet of 14 Boeing 737-800s and 900s.

Air India backed by the Government of India, will take delivery of its new Boeing 737-800s, four 777-300ERs and and three 777-200LRs by September, as scheduled. Air India (domestic and international combined) has a fleet of 150 aircraft. The combined order to Boeing and Airbus was for 111 aircraft.

Airbus Customers

The largest domestic carrier and most aggressive Airbus customer Kingfisher Airlines is in terrible financial shape. It led all Asian carriers with a 17.1 per cent capacity cut and has held its expansion to its existing 76 aircraft not withstanding the fracas with GECAS on four of its aircraft. It has diverted its three of its five A340-500s to Arik Air of Nigeria, the balance two have become "white tails" at Toulouse. Of the five A330-200s delivered, two are lying idle. Kingfisher is now in talks with Arik Air in an effort to lease them. The deliveries of the A380 have been deferred yet again. Even pending deliveries of ATR42s and 72s from the Air Deccan days are languishing at Toulouse. Kingfisher has been forced to defer delivery of 32 of 48 Airbus A320 planes that were due for delivery in late 2008 and in 2009 and is also diverting its narrow body A320 family orders to foreign airlines like Turkish THY. So while Airbus may deliver planes to an Indian airline, the aircraft may never come to India.

IndiGo along with fellow value carrier SpiceJet has been registered increasing market share, and has recently taken delivery of its 19th Airbus A320. It is maintaining a more conservative but steady delivery rate.

Air India domestic (formerly Indian Airlines) will maintain its delivery with Airbus for the narrow body A320 family having recently taken delivery of three each A321-200s and A319-100s. Airbus has also commenced discussions with Air India on the A380 superjumbo and hopes to convince the airline to buy a few.

While both Boeing and Airbus do not expect any new orders from the Indian market in the near to medium term, they continue to be bullish on India and maintain their market forecasts which estimates that the country’s airlines would buy up to 1,100 planes over the next 20 years.

Call it post 26/11 jitters, but an quick reacting flight attendant and under-cover commandos caused a security flap and high drama at New Delhi's Indira Gandhi International Airport.

An Air India Airbus A320-200, IC-401 from New Delhi to Kolkata with 104 people on board, was lined up awaiting clearance for take-off when a woman passenger, an off duty flight attendant for another airline, alerted cabin crew of the suspicious behaviour of three fellow passengers travelling together, after she observed one of them reading a book about Air Disasters.

When she questioned them they were dismissive claiming the book had nothing to do with her. Her suspicions raised the off-duty flight attendant passenger alerted the Air India cabin crew. The three suspect passengers refused to answer questions about the book to the on-duty crew and also did not identify themselves.

The quick reacting Air India flight attendant informed the captain, who, following procedure decided to return to the gate.

The alert created high drama. As the airplane returned to the gate, security forces cordoned off the airplane and interrogated the three suspect passengers, who turned out to be three commandos of the elite Special Protection Group,which is entrusted with protecting amongst others, the Prime Minister of India.

The book they were reading was a training manual. For obvious reasons SPG commandos are expected not to reveal their identity, so no action could be taken against the commando for failing to clear the air at the outset. The airplane was finally able to depart after a delay of two hours.

Talk about the ultimate anti-climax.

What is your view of this incident? Post a comment.

Hat tip to Simon Hradecky for the tip.

A JetLite flight to Bangalore was delayed by 45 minutes and boarding on several flights had to be suspended for 10 minutes on Sunday evening after a passenger Saptarishi Basu, complained that his laptop had gone missing from the security hold.

Around 5 pm, Basu, who was to board the JetLite flight to Bangalore, went in for security check. On completion of his check, he found his laptop missing on the delivery side of the X-ray machine. He immediately lodged a complaint with the nearby CISF official.

5 pm is a peak travel hour, and there were over 400 passengers departing to Chennai and Delhi undergoing security checks. The CISF suspended all boardings, and started checking the CCTV footage to find the missing laptop. S.B. Hari, a Chennai bound SpiceJet passenger had mistakenly picked up Basu's laptop, thinking it as his own, since both passengers carried the same model.

The JetLite flight took off 45 minutes behind schedule. All other flights, for which boarding had been suspended, took off on time. Basu though, was not on the JetLite flight, since he had to complete formalities. He was accommodated on an Air India flight leaving at 7.55 pm.

This does raise some interesting questions to which I request comments.

• How do you protect and identify your laptop either during your travels on in public areas ?
• JetLite is a low cost carrier, and Air India a full service one. Who paid for the difference in fare ? If Basu or any of the airlines did, is it not unfair ? After all, it is Hari who picked up the wrong laptop. Should he not pay for the delays ?
  

A host of new and updated services to and from India announced this week.

Saudi Arabian Airlines (Saudia) will launch new flights to Bangalore, Lucknow, and Kozhikode (Calicut) over the next few days. The airline has commenced operating three flights a week to Lucknow; two flights a week to Bangalore from today, March 30, 2009 and four flights a week to Kozhikode, starting tomorrow March 31, 2009.

Israel's national air-carrier El Al Israel Airlines is planning to enhance connectivity between India and Israel by launching twice a week Tel Aviv-New Delhi service from summer. At present El Al Airlines operates three flights a week from Mumbai to Tel Aviv and has a commercial tie-up with national air-carrier Air India and private airline Jet Airways for onward connections to other Indian cities. A spokesman for the airline indicated that El Al was considering Bangalore as a destination, but at a later stage.

Air India has introduced a daily Delhi-Chicago flight via Frankfurt using the new 342 seat Boeing 777-300ER in a three class configuration. The Delhi-Chicago flight will actually originate from Hyderabad (the GMR-UPA connection at work?), while passengers from Kolkata and Amritsar will complete through check-in, immigration and customs formalities at their respective airports.

Turkish Airlines, has increased its seat capacity (measured in ASKs) by 24 per cent and frequencies by 12 per cent from its new summer schedule which went in to effect yesterday. New Delhi, Bombay and Chicago flights are now upgraded to a daily operation. For more details of the changes click here.

Two Air India employees have been arrested after the vigilance department of the airline found they were allegedly involved in human trafficking and transported two women to the US showing them as their wives.

Deepak Salvi, a office superintendent, and Hemant Morade, an operator, were arrested for allegedly illegally transporting two women posing as their wives to the US and returning alone, police said.

Another accused Ejaz Ansari, a resident of Nagpada in south Mumbai, was arrested today for allegedly assisting in transporting the women.

The two airline employees had used free tickets entitled to employees' relatives to transport the women, police said.

Salvi had travelled to the US in September 2007 and Morade in April 2008 with women who posed as their wives but returned alone, prompting the vigilance department of the Air India to make inquiries, they said.

Air India officials, after confirming that the women were not the employees real wives, informed the US Consulate and sought additional information in December 2008.

US authorities confirmed the women were impostors and had travelled on fake passports to New York.

The entry of Air India in to the Star Alliance is delayed by at least one year to the first quarter of 2010.

Star Alliance founder, Lufthansa was a sponsor for Air India joining the Star Alliance. Since 2004, Air India has operated code-sharing flights with Lufthansa between Germany and India.

18 months ago, the Government of India decided to merge Air India and the erstwhile Indian (formerly Indian Airlines). The process of merger, which was to have been completed in 2008, has been severely delayed due to "integration" issues. Apparently there is major confusion at even the most basic levels between the staff of the two airlines, with no clarity on who is responsible for what. Where have we heard of this before?


While Star Alliance and Air India signed a non-disclosure agreement last year, the compliance is yet to be done. The IT systems are no where close to integration and Air India has not yet, even informed the Star Alliance, on which of the two systems it will finally be using. This is proving to the major sticking point for Air India's entry in to the global alliance.

Adding complexity to this issue are reports that mandarins at the Ministry of Civil Aviation of Air India owner, Government of India, are "upset" at reported talks between Jet Airways and the Star Alliance, whom they perceive as a threat to Air India.


Previously Jet Airways had an announced policy of remaining alliance neutral preferring to sign one-on-one bi-laterals instead. Delays by the US Federal Aviation Administration on Jet's code share deal with Star Alliance founder United Airlines have launched a diplomatic protest by the Indian government.

However, the extreme operating environment due to the on-going economic slowdown, the sheer size of India, and the desire of the Star Alliance to grow to 50 members especially regional airlines, may be tilting the scales in favour of Jet Airways joining the Star Alliance.

and I see not reason why can India not have two airlines participating in the alliance.

In a bid to strengthen the financial position of Air India, the Indian government yesterday substantially increased the allocation for its holding company, National Aviation Company of India Ltd. (NACIL), by about Rs 4,029 crore (approx $806 million) in the interim Budget 2009-2010. Almost the entire increase in allocation for the Ministry of Civil Aviation (MoCA) was cornered by NACIL, with the airline being earmarked Rs 8,165.64 crore ($1.633 billion), up against the revised estimate of Rs 4,136.89 crore for 2008-2009.

MoCA received a total allocation of Rs 12,164.76 crore, compared with the revised 2008-2009 estimate of Rs 7,490.06 crore, a hike of almost Rs 4,675 crore. The move came in the backdrop of Air India seeking enhancement of its equity and a soft loan to meet the growing expenditure on its ongoing aircraft acquisition programme of buying 111 planes.

A provision of Rs four crore was also made, for salaries and other administrative infrastructure was also made in the non-plan budgetary allocation of the Ministry for the newly-created Airport Economic Regulatory Authority (AERA), whose Chairman and two members are yet to be appointed.

The Indian Government yesterday gave post-facto approval to the formation of following Joint Venture Companies (JVC) between the National Aviation Company of India Limited (NACIL) which is the combined Air India and Indian Airlines entity, but branded Air India now, and Singapore Airport Terminal Services (SATS). The joint venture companies are more commonly referred to AI-SATS or Air India-SATS:

For Cargo Handling at Bangalore International Airport Limited (BIAL), Bangalore with 50:50 shareholding.

The project cost is estimated to be Rs.99.10 crores. (Rs. 5 Crore ~ $1 million). The debt-equity ratio will be 50:50 and each partner's equity contribution would be Rs.30 crores in the total share capital of Rs.60 crores. The balance would be borrowed from Banks and Financial Institutions. The JVC is estimated to be profitable during its operation and expected to yield an IRR of 17% over a 15 year period.

To undertake the Ground Handling activities at Bangalore International Airport Limited (BIAL), Bangalore with 50:50 shareholding.

The 50-50 joint venture company would involve investment of around Rs.72.78 crores, out of which Rs.50 crores would be share capital and the balance raised from banks as commercial borrowings. As per estimates, it is expected to yield an IRR of 35% over a period of 10 years.

To undertake the Ground Handling activities at GMR Hyderabad International Airport (GHIAL), Hyderabad with 50:50 shareholding.

The JVC for ground handling services at GHIAL would involve investment of approximately Rs.80 crores, out of which Rs.60 crores would be share capital and the balance capital would be raised from banks as commercial borrowings. The equity share holding of AI and SATS would be in the ratio of 50:50. As per estimates, it is expected to yield an IRR of approximately 41% per annum over a period of 7 years.

(iv) To undertake Ground Handling at Mumbai, Delhi and other Indian Airports excluding Bangalore, Hyderabad and Cochin with 50:50 shareholding.

NACIL as a National Carrier had the option of either undertaking the ground handling services at all metro airports under its subsidiary company or through a Joint Venture partnership company in terms new ground handling policy. It selected SATS as its JV partner for providing comprehensive ground handling services at Indian Airports. This agreement is for all airports other than Bangalore, Hyderabad and Cochin. In the proposed JVC, both AI and SATS shall subscribe 50% of the shares each. The terms and conditions will be firmed-up after negotiations with SATS and accordingly the Memorandum Of Understanding for a particular station would be signed by the partners.

As I had indicated in my article "An air battle ..... on the ground", Government owned Air India, holds majority market share of the ground handling business at Indian Airports, since the existing agreements were signed when the airports were operated by Airport Authority of India, a government department, creating a monopoly situation.

Almost all these contracts were to cease by December 31, 2008, with the introduction of the new policy on ground handling but will now cease by January 1, 2010, due to the protests of airline companies, airline employees, and employee unions of existing ground handling companies.

SATS is considered one of the première ground and terminal handling companies in the world, and Air India would like to meet the increasingly competitive, price sensitive and demanding needs of its customers in a free market scenario. It is looking to SATS to provide the modern equipment, processes, technology and resource management tools needed to upgrade its capabilities.

February 9, 2009, 10:00 IST (04:30 GMT)

TV channels are reporting that an Air India Airbus A321 performing flight IC866 was involved in a rejected take-off/near miss at Mumbai Chhatrapati Shivaji International Airport earlier this morning.

The flight had commenced its take-off run, when a helicopter which was given permission to land, strayed across the runway to land on the helipad. On sighting the helicopter the flight crew of IC866, rejected the take-off, applying emergency braking.

All passengers on board, estimated at 148 are safe. The tires of the aircraft require changing which is being done right now.

Initially it appears a fault of the air traffic control, which appears to have given permission to the helicopter to land, while at the same time, giving permission to the Air India flight to take-off.

Update 1 - 10:55 IST (05:25 GMT)

The shocker. The army helicopter was part a three helicopter convoy of Indian President Pratibha Patil.

The presidential convoy was conveying the President from the Governor's mansion, The Raj Bhavan, along with the top most leadership of the state of Maharashtra, to the airport. Due to security procedures, it is unknown whether the President was on board the chopper which strayed on to the runway.

Clearly a major mishap has been avoided, and there is bound to be a major investigation.

Information from aviation experts indicate the plane was at V-1 speed (around 100 knots). This is why the plane was able to perform a "rejected take-off", with the autobrake system kicking in. In another few seconds, the plane would have crossed the V-2 threshold, at which point the aircraft is travelling just to fast for it to stop on the runway. That would have surely resulted in a disaster of epic proportions.

The wheels of the Airbus A321 aircraft jammed after the rejected take-off, and the aircraft tyres burst due to the excess heat caused by the emergency braking. It has been taken back to the terminal. The passengers have been dis-embarked and are in the terminal. Arrangements for an alternate aircraft are being made.

Update 2 - 13:25 IST (07:55 GMT)

A Mumbai Airport official told news agencies.

"At around 09.00 hrs today, an Air Force chopper landed on the same runway from which Air India flight IC 866 (with 150 passengers on board) was taking off for Delhi, forcing the pilot of the plane to abort take off at the last minute,"

However there is some confusion. News reports claim

the Air India aircraft was taxiing to reach the main runway for the take off when the Air Traffic Control talked to the pilot regarding the helicopter. The pilot applied the brake to bring the aircraft to a halt

Whereas, all reports indicate a high speed take-off reject, resulting in the nose wheel tyre blowing out, indicating the pilot had commenced the take-off run and was not taxiing.

Credit is being given to the alertness of Captain SS Kohli, pilot of IC 866, who aborted the take off. Captain Kohli said,

"The the chopper and our aircraft got the clearence from the ATC at the same time. The ATC had lost contact with the chopper."

"The chopper just landed without taking a landing clearance. I cannot say much more,"

Meanwhile, an official spokesperson of the President told news agencies that "Everything is perfectly fine. The President was attending her normal functions."

As per Timesnow TV.

A fleet of three helicopters including the one carrying Patil, along with Maharashtra Governor SC Jamir and some other dignitaries, had taken off from Mumbai's Naval base 'INS Kunjali' and were on their way to the airport since the President was to fly to Gondia by her special Indian Air Force Plane (IAF) plane to attend a function.

A probe into the incident has been ordered by the Directorate General of Civil Aviation, the sources said. A senior DGCA official is coming from New Delhi to Mumbai to join the investigation, they said.

An IAF spokesman said, "the pilots of the chopper had followed the instructions from Bombay approach meliculously. The Presidential entourage was cleared to take off from INS Kunjali and land at Santa Cruz between two taxiways". An inquiry has been ordered by the IAF into the incident, he said.

While full information is not yet available, this appears to be the most likely situation based on past knowledge, historic traffic patterns, and information.



Update 3 - 17:00 IST (11:30 GMT)

The Indian Directorate General of Civil Aviation (DGCA) released a statement at 16:10IST ((10:40 GMT)

Mumbai Airport, the busiest airport in India was witnessing heavy air traffic and operations today morning. The ATC Mumbai was aware of the Presidential visit and were watching the approach movement of the Presidential convoy of helicopters. At that time an aircraft of Air India was on the active runway-27. The ATC, noticing movement of the aircraft on the runway, asked the aircraft to immediately apply brakes and exit through the taxiway. The aircraft exited immediately and the helicopters landed safely.

Director General Civil Aviation has ordered an investigation of the incident under rule 77 and appointed Jt. DGCA as the Inquiry Officer for the purpose of carrying out the investigation. Jt. DGCA has reached Mumabi and started investigation proceedings.

Considering this incident involved the President of India, the poor controller on duty is in for a very rough time.

Update 4 - 20:00 IST (14:30 GMT)

The Air India aircraft is registration VT-PPF. An Airbus A321-211 construction number 3340, it did it first test flight on December 5, 2007, and was delivered by Airbus on December 14, 2007. It is powered by the CFM56-5B3/3 engines.

Image copyright Flickr user Pallav105

The last few days may have brought bad news to both Boeing and Airbus in the form of order cancellations, which have put both manufacturers in an unenviable situation of being negative on their net order book for 2009.

They can take heart in the procurement actions of India's national carrier Air India, which will be taking delivery of ordered aircraft.. By September end, Air India, would add 13 aircraft to its existing 154.

On Friday the low cost subsidiary Air India Express inducted another Boeing 737-800 aircraft increasing its fleet size to 21 aircraft. The new aircraft inducted has ‘shikara on the Dal Lake in Kashmir’ on one side of the tail and an ‘image of a large expanse of the Rajasthan Desert’ on the other side. The tail designs are an innovative and novel feature of the Air India Express fleet. Each of the aircraft showcases the picturesque landscapes, monuments, birds, animals, handicraft and dances of India on both sides of the tail.

The airline will launch it’s once a week flight Srinagar to Dubai from February 14, 2009. The airline is expected to increase frequency on the Chennai-Trichy-Dubai route from three flights a week to seven flights a week, on the Chennai-Hyderabad-Dubai route from three to four flights a week, and on the Trichy-Kuala Lumpur sector from three to six flights a week.

On Monday, Air India will take delivery of three Airbus A321-200s which will be deployed on domestic routes in India.

This will be followed by three Airbus A319-100s in March.


The national carrier will also add three B777-200LRs and four B777-300ERs to its fleet between June and September, to be used for international operations.


Air India has the largest number of fixed assets in the Indian aviation industry. It has placed orders for 111 new aircraft, estimated at Rs 40,000 crore ($8.3 billion), and these will be delivered in three years. The airline is expected to post losses of Rs 3,000 crore ($625 million) in the current fiscal, but expects an equity infusion of Rs. 2,000 crore ($417 million) by the Government of India, by March.

The recent "hijack" incident involving Indigo airlines flight 6E344 from Goa to New Delhi, has created the furore all over India, and even on to the international stage.

I am glad, Jitendra Kumar Mohala, a 42-year-old chartered accountant, and son of a retired air commodore of the Indian Air Force, has been booked under sections 336 (endangering life and personal safety of others) and 506 (criminal intimidation) of the Indian Penal Code, as well as Suppression of Unlawful Act Against Safety Of Civil Aviation Act, 1982, which is non-bailable. Now let us hope the authorities throw the book at him.

In the last 15 days alone, there have been three other reported instances of passengers creating trouble on board an aircraft.

• January 14th. An Air India passenger, Valli Panikker (42) got so drunk on the flight that he started abusing and misbehaving with fellow passengers, and hit two cabin crew members on board a New York-Mumbai flight. He was handed over to Mumbai police after the plane landed. Penalty ? Rs. 1,200 fine. News report here.


• January 30th. A 72-year-old man, on a Chennai-Delhi flight, was completely drunk and started groping some women and tried to 'feel up' some of the stewardesses. Penalty ? He was de-planed. As per a police official at Chennai "As he was an aged man, the crew decided to not file a complaint against the man. We warned him not to repeat such activities and let him leave after some time." News report here.


• January 30th. A passenger, Prashant Imene, on board a Jet Airways London-Mumbai flight, molested a woman co-passenger, assaulted the cabin crew and hurled cuss words at them, threatened to throw his passport out of the window (I wonder how, at 30,000ft), tore his boarding pass, threw water on a flight attendant's face and hit an elderly passenger with a spoon. He was not drunk. Penalty ? The police booked him for outraging the modesty of a woman, threatening and assaulting. He was produced in court on January 31st. Sentence unknown. News report here.


• February 1st. Jitendra Kumar Mohala, 42, passenger on board Indigo 6E 344 misbehaved with an stewardess over some issue and threatened her, saying that he was armed. He said he had two accomplices on the board and they would hijack the plane. He also said that he was official of the Director General of Civil Aviation (DGCA) and will inspect the plane. Penalty ? Let us see what develops.
  

Outside this 15 day window,

• July 12, 2008, a drunk Kuwaiti national, Bilal Ahmed, 40, forced a Doha to Bangkok Qatar Airways flight. to make an emergency landing in Mumbai. Sources said his hands and feet had to be tied together to bring him under control. The Mumbai police meekly returned Bilal Ahmed to Doha on the very next Qatar Airways flight, instead of meting out any punishment.

Airlines, including those in India, hire attractive young ladies as customer service and cabin crew to inject glamour in to an otherwise tiresome travel experience. The Singapore Airlines' "Singapore Girl" is renowned globally. Virgin Airlines is considered "Still Red Hot" with its glamorous red uniformed female cabin crew, a theme followed by Kingfisher airlines in India. The crews of Jet, Indigo, SpiceJet, and some in Air India, are no less, in the glamour quotient.

Indian air crews, particularly, females, have to put up with troublesome passengers some who are over-aggressive, often hostile, many times drunk and lecherous, believing that the stewardess is their personal property to abuse, grope, and fondle.

In the land when 'Devi', the female goddess, is worshipped, this lack of respect for women in the air, is utterly disgusting.

It is not just passengers, just yesterday (February 3rd), in a most shocking incident, an Andhra Pradesh Home Guard attached to the Rajiv Gandhi International Airport, B Vinod Reddy, was arrested for eve-teasing some girl students and then beating up their male classmate when he attempted to intervene and get Reddy to stop. Reddy was finally arrested and charged under sections 323 (Voluntarily causing hurt) and 509 (Insult the modesty of a woman) of the Indian Penal Code, after the students went on a protest at the airport.

Despite India having the laws under the Indian Penal Code, and being a signatory to all United Nations' conventions and treaties covering civil aviation, recent incident indicate a pattern of not levying punishment.

Compare the minor penalties in India, to the penalties in the United Kingdom which mandates a penalty of £5,000 or 2 years’ imprisonment. In the United States, criminal penalties are a fine of up to US$ 11,000 or 20 years imprisonment, civil penalties aside.

India has to enforce its laws, and severely punish offenders, only then, will passengers learn to control their mouths, their hands, and their behaviour.

What also surprises me is the lack of complaints from the airlines or the crews. I refuse to accept that a stewardess is not disgusted to the point of making a complaint, after being groped, abused, or 'felt-up'. An airline looses a lot of money by making emergency landings, and looses passengers who have to put up with a horrible experience.

It is time for all of us to stand firm with a "zero tolerance" policy against these maniac passengers, and also empower the crew by supporting their complaints. Otherwise, we risk the typical knee-jerk reaction, one can expect from the government -- to ban serving of alcohol on board any flight, which will only inconvenience 99.9% of passengers instead of punishing the offending 0.1%, and still leave cases like Prashant Imene (who was not drunk) and Jitendra Kumar Mohala (who drank before the flight) un-addressed.

Kingfisher is the largest defaulting private airline in India, and this has finally caught up with it. State owned oil marketing companies (OMCs), who claim they are owed about Rs. 1,000 Crore ($200 million), have enforced 'cash and carry' payment terms on the airline, since it has not cleared its dues, even after the extended 90 day payment terms.

Kingfisher Airlines will now have to pay upfront to buy aviation turbine fuel from oil companies to operate its regular scheduled flights. It goes without saying, this will put a major kink in the operations of the airline.

Airline officials are trying to keep its operations unaffected and claim that Kingfisher is sticking to all its schedules.

Hectic negotiations are on behind the scene. Industry sources in the oil industry indicate that with Kingfisher Airlines agreeing to the cash upfront terms, OMCs may not carry out any immediate action against the airline, though they will continue to seek ways to get the dues from the airline, and are also demanding interest on the outstanding dues, and bank guarantees.

Kingfisher Alliance partner, Jet Airways, has paid about Rs. 98 Crore, when pressed by the OMCs on January 28th. However, no action is contemplated against, the state owned National Aviation Company of India Ltd. (NACIL) which operates Air India.

NACIL is estimated to owe the OMCs about Rs. 2,500 Crore ($500 million), but no official, including the CEOs of the OMCs, would even dream of taking any step, for fear of their job. One hand of government has to scratch the back of the other.

The Mint is reporting that GoAir recently started offering uniform fares, inclusive of surcharges and other taxes, for purchases made 21 days in advance.

For short sectors, defined as less than 750 kms travel distance, the airline will charge Rs 1,700 a ticket and Rs 2,700 for distances greater than 750 kms. According to the company statement, in effect a Mumbai-Delhi ticket bought 21 days in advance will be for Rs 2,700 instead of the base fare of at least Rs 1,000 plus Rs 2,925 of surcharges and airport fees.

GoAir’s new offer is in reaction to the introduction of Rs one fare by IndiGo on certain routes and SpiceJet Ltd.’s Rs 99 base fare for tickets booked at least 21 days before travel.

The quarter ended December 31, 2008 witnessed an 18 per cent decline in domestic passenger growth, and has prompted all major airline groups in India to resort to price cuts in order to stimulate passenger demand.

Jet Airways, and its low cost subsidiary JetLite, were one of the early adopters of the 21 day advance fares also called APEX fares. Jet Airways also recently offered Rs 250 base ticket fares, while JetLite started Rs nine base fare for travel during this month. It has similar schemes for its Business-Class too. Jet Airways is expecting a 15 per cent increase in passenger traffic.

Jet's alliance partner Kingfisher Airlines also slashed fares between 21 per cent and 65 per cent on various routes earlier this month while the state-owned and operated National Aviation Company of India Ltd. (NACIL), which runs Air India, also announced an average reduction of 52 per cent in basic fares for domestic travel on 20 major routes.

2008 was a torrid year for domestic airlines in India, as recently released figures by the Ministry of Civil Aviation (MoCA) show.

Domestic passenger traffic for the year 2008 fell 5% from 42.58 million to 40.77 million (Fig. 1), driven by the increase in fuel costs, and the massive hikes in air fares, which are yet to fully retreat, and capacity reductions by the airlines.


The Low Cost Carriers (LCCs) Indigo, SpiceJet, and JetLite, improved their market shares at the expense of Full Service Carriers (FCCs) Air India, Jet Airways, and Kingfisher Airlines. IndiGo is the big winner this year with a four per cent market share gain. Air India (the former Indian Airlines), gave up a big three per cent share. (Fig. 2)

The notable exception is Go Air (now called No Go Air due to its numerous flight cancellations), and the former Air Deccan, now christened Kingfisher Red after their acquisition. Kingfisher Red lost five per cent market share, while Kingfisher Airlines gained only three per cent, resulting in an overall loss of two per cent market share to competitors. Clearly the strategy at Kingfisher is not working.


While most airlines and airline groups lost in actual passenger numbers, LCCs IndiGo, SpiceJet, JetLite (the former Air Sahara now a subsidiary of Jet Airways), and Paramount, gained passengers. (Fig. 3).

The capacity swapping at Kingfisher group is clearly visible, and when performance of both Kingfisher Airlines and Kingfisher Red is combined, actual passenger numbers went down 10.5 per cent, from 12.56 million to 11.25 million.


The first two quarters of 2008, provided no clue to the excess capacity in the Indian airline industry. The "perfect storm" of increased fuel prices and reduced economic activity started rearing its ugly head towards the end of Q2 (April, May, June), and kicked the industry in it's teeth in Q3, with a mind numbing 25 per cent drop in traffic. (Fig. 4). Q4 has provided some seasonal relief, but Q1 of 2009 will see numbers dropping back again.


With the exception of Paramount, which has a small niche regional market, all the airlines saw massive drops in passengers in Q3. (Fig. 5). Most airlines staged a recovery in Q4, but the surprise is Jet Airways. It's passenger numbers tanked almost 20 per cent in Q3 and continued the downfall by another 15 per cent in Q4.


The market share of LCCs followed the increase in air fares, as passengers shifted from the FSCs. SpiceJet share in Q3 reflected its financial problems, prior to the Ross bailout. (Fig. 6)

It is an ignominious performance that the pioneer in the air travel bubble, Air Deccan (now Kingfisher Red) has lost over six per cent market share over the year. Clearly many of the "first time flier" passengers have chosen not to repeat, either returning back to trains and buses, or moving to other carriers like IndiGo and SpiceJet.


The data highlights the price sensitive nature of the Indian traveller. IndiGo appears to have a winning formula with its low prices and efficient service. Fancy gimmicks do not work. At a time of economic slowdown, the FSCs have to get their act together quickly. By holding fuel surcharges to unjustifiably high levels, they are surrendering ground to the LCCs and surface transport.

Both the European EASA and US FAA have issued emergency Airworthiness Directives ADs for operators of CFM56-5B engines, typically operated on the Airbus A320 family of aircraft, which include the A318, A319, A320 and A321.

Snecma Image
EASA Emergency Airworthiness Directive 2008-228 and the FAA Airworthiness Directive AD 2009-01-01, requests operators of CFM56-5B engines, to monitor Exhaust Gas Temperatures (EGT) for deterioration. If both engines show deteriorations of 80 or more degrees, at least one engine must be replaced according to the new directive. EGT monitoring is a crucial aspect of flight operations.

The emergency directives come after an incident, in which an Airbus A321-200 experienced compressor stalls on both engines during initial climb out on December 15th 2008. While not disclosed, it is suspected, this is the incident involving Air France Airbus A321-200, F-GTAJ, flight AF 2585 from Tunis to Paris CDG, where the flight had to return to Tunis 14 minutes after take-off due to "unspecified engine problems".

The CFM56-5B is a very popular engine with over 60% of Airbus A320 family operators, selecting them.

In India, Indian (now Air India) operates the CFM engine on the new series of Airbus aircraft, part of the 43 ordered by them in 2006. Indian had ordered 20 Airbus A321s, 19 Airbus A319s and four A320s. The older series of Indian's A320 fleet use engines from IAE, as do most of India's private operators, Kingfisher Airlines, Kingfisher Red, and IndiGo, which are not impacted by these ADs.

I must stress that there is no need for passengers to treat these ADs as negative, and Air India has an excellent maintenance record.

National airline, Air India, followed lead of its two private sector competitors Jet Airways and Kingfisher, and today, slashed its basic air fares in the domestic sectors ranging from 35 per cent to 82 per cent as per PTI.

The fare cut was effective from 1500 hours today, an Air India spokesperson said.

The maximum reduction in fares was 82 per cent on the Chennai-Bangalore route, while on Mumbai-Kolkata route, the reduction would be 35 per cent, Air India said. The basic fare for travel between Mumbai and Delhi now stands reduced by 49 per cent.

While Jet Airways and Air India have revealed their cards in terms of reductions, Kingfisher is yet to take a decision on the quantum of the cut, having only announced a reduction.

In other related developments, civil aviation minister Mr. Praful Patel has just released a bombshell. Apparently the government has decided not to bail out Air India. As per an article in Travel Biz Monitor,

The Central government yesterday ruled out any bailout package for National Aviation Company of India Ltd (NACIL), which runs the country's flagship carrier Air India, but said it could be given the benefit of duty cuts, said an IANS report. “The government will not provide any bailout package for NACIL. There will not be any direct financial assistance, but help in other forms like reducing duties is being done,” said Minister of Civil Aviation Praful Patel, on the sidelines of the foundation stone-laying ceremony of the Kolkata Airport upgrade in the city. NACIL recently projected a loss of Rs.21.56 billion for the current fiscal.

The Company had sought a bailout package of Rs 23.5 billion to help it tide over the shortfall. The airline is also in a financial squeeze due its ambitious plans to upgrade its fleet with an investment of Rs 440-billion with a limited equity base of Rs 1.45 billion. Faced with the acute funds crunch, NACIL approached the Ministry of Civil Aviation with a proposal for equity infusion of Rs 13.5 billion and Rs ten billion as soft loan

I find this hard to accept. Air India owes money by the bucket load to airport operators and oil companies, and to other vendors. By the minister's own admissions on the floor of the Parliament, Air India is by far the biggest defaulter to airport operators. Without the bailout package, there is no way on God's green Earth that Air India can pay back its creditors.

It appears this is going to become another case of passing on Air India's burden to the state owned Airports Authority of India, and to the oil companies ?

The government cannot have it both ways. Either it should stop interfering in Air India operations and sell off the airline, or then play the role of sugar-daddy.

In the aviation world, one hears of competition and disagreements in the skies, but in India, over the past year, an air-related battle has been steadily brewing -- on the ground.

Ground-handling is all the work on the ground relating passengers, cargo and aircraft. It involves passenger check-in, aircraft cleaning, aircraft handling, fuelling, baggage handling, cargo handling, boarding and disembarking passengers i.e. attaching the aero-bridge or ladder, etc. It does not include engineering functions, and catering.

Most passengers remain blissfully unaware of ground handling, since much of it happens out of sight, and is transparently to us, till there is a hiccup.

In India, most domestic airlines do the ground handling themselves also called "self handling", as they find it cheaper. Some foreign airlines with extensive operations to a given city, also do self-handling. Other airlines outsource the ground handling to either Air India or private companies like Cambata Aviation.

This has produced what I can best describe as an "organised zoo" at most Indian airports, especially the larger ones. As per the government, currently, more than 50 ground handling agencies, employing over 70,000 people, operate in India, which in many ways leads to chaos and congestion, especially at Mumbai and Delhi airports.

The duplication of equipment is enormous, as is the consumption of space used to store them when not in use, which is significant. The multitudes of companies and people involved, have also created a security nightmare in terms of administration.

To address these issues, in 2007, the Government of India laid down a new Ground Handling Policy (GHP). The Indian Directorate General of Civil Aviation (DGCA) issued a circular dated September 28, 2007, and the Airports Authority of India issued a notification dated October 18, 2007 — to be effective January 1, 2009 that essentially said, airlines cannot employ their own staff for ground handling, nor can they engage any outside agency at the six major airports (Mumbai, Delhi, Kolkata, Chennai, Hyderabad, Bangalore), other than from a basket of those pre-selected by the airport operator. Simultaneously, the new policy also clarified that only domestic airlines can handle the ground services at the other smaller airports.

The idea was noble, and does make sense. The six major airports were to have selected two ground handling agencies, each, to provide services, using “competitive bidding to ensure that the best-equipped ground handling agency is selected.", but, as with any government initiative, it got lost in translation to policy, and flawed in implementation.

A taste of the "competitiveness" was given earlier this year, when the government had to back down from implementing this policy, after airlines boycotted India's first private Greenfield airport, the Rajiv Gandhi International Airport at Hyderabad, citing the exorbitant prices demanded by the private ground handling agents. The back-down affected the revenue plans of all airports, especially the privately operated ones at Mumbai, Delhi, Bangalore, and Hyderabad.

A government affidavit in a recent court case also gives us clues to some of the motives behind the new GHP. The affidavit admits that “upkeep, development and upgradation of the airport infrastructure require financial resources, which are to be raised from airport-related services such as ground handling. This ensures generation of income not only for the airport operator to maintain the infrastructure, but to ensure orderly growth and development of the airports.”

Another fundamental flaw is the inclusion of passenger facing services such as check-in in the ground handling policy. Check-in is a core customer service and product differentiation function for airlines. To expect airlines to exclude themselves from this critical function, is outright naive, and has expectedly, invited protests and non-cooperation from the airlines and their staff.

Another factor, and for this, one has to blame decades of left-leaning, communist hugging, Indian labour laws, that allow an organisation to hire a person, but never to fire. Government being the champion of these laws, and by extension all government controlled entities, have thus created a culture which tolerates unheard levels of incompetence, indifference, and sloth, in some cases bordering on criminal.

The state owned carrier, Air India, is also, one of the biggest ground handlers, but has formed a separate joint venture company Air India-Singapore Airport Terminal Services (AI-SATS) for ground handling. In most countries, one would logically expect a smooth transfer of employees to the new company and minimal disruption, but not in this case. After all, SATS has operational control, and will demand maximum productivity from these employees.

Naturally, incidences of union led disruptions have erupted over the last month, as the implementation date draws closer. A union called CAJAF (Civil Aviation Joint Action Front) has been protesting, disrupting ground operations, and in one totally deplorable incident, Air India staff, part of CAJAF, beat up the COO of SATS, Mr. Karamjit Singh .

Thanks to the inclusion of passenger check-in in to the GHP, and exclusion of foreign carrier, employee unions of of foreign carriers, Gulf Air, British Airways and Saudi Arabian Airlines have challenged the notifications in court claiming this would lead to job losses for over 50,000 workers. Staff of other airlines are silently cheering them on.

I must congratulate the government on achieving the impossible. In one fell swoop, the policy has united domestic and international airlines, as well as trade unions in their wrath. While the employees fear the new policy will divest a staggering 15,000 people of their jobs, airlines fear that it will affect customer services.

A new approach to ground handling is critically required, but it needs to be done with cooperation and rational expectations from all sides. Everyone will have to compromise to reach an amicable solution, the question is will they ?

As usual your comments are requested.

I must tip my hat to the travel agents' associations in India. Their strategy of targeting one airline at a time, has paid handsome dividends.

From a paltry five per cent commission on the basic fare, they have successfully made all the airlines pay three per cent on the gross fare, which includes the fuel surcharges, on domestic fares. Passengers will recognise that very often, fuel surcharges are anywhere from 4 to 10 times greater than the basic fare.

Travel agents represent as much as 85 per cent of the full service airlines' business. By selectively boycotting one airline at a time, the agents focussed all the hurt on one airline, while still preserving relations by continuing to provide services to their customers, using other airlines. In these days of economic crises, and rabid competition, the "non-boycotted" airlines were happy to benefit from their competitor's misery.

Like dominoes, each airline folded its negotiation hand. It started with Jet, then Kingfisher, then Paramount, and finally Air India.

In the history of air travel, prior to this action, only agents in Japan have been able to force a roll back of the zero commission regime. I wonder if it is too late for agents in other countries to learn from the Indian strategy. For all of us, regardless of business vertical, we should take lessons. Prior to negotiation, recognise the weaknesses in the opposite party/parties, if possible target one at a time i.e. divide and rule, adopt a strategy that pressures them, but never, ever, compromise your business survival, by pressuring your customers.

After obtaining concessions from the domestic airlines, the travel agents have now focussed their attention on the international carriers. starting with Singapore Airlines.

Following a failure of negotiations (read re-instatement of agency commission), six associations of travel agents today decided not to sell tickets of Singapore Airlines from Monday, December 29, 2008. Later, they have also decided to boycott, Singapore Airlines' subsidiary, SilkAir from January 1, 2009.

In the case of foreign travel, since the commission is paid only on basic fare, and fuel surcharges do not constitute as significant a component as in the case of domestic travel, the agents are demanding a five per cent commission.

Singapore Airlines, like other foreign airlines, at present, allows travel agents to charge around Rs 1,200 on sale of its tickets as a transaction fee.

A Singapore Airlines spokesperson said travel agents comprised an important element of its business and that it was very much interested in working with them. "Travel agents are getting a transaction fee, around Rs 1,200 per ticket. We think this model is good for the business. The model is working well and we would like to persist with it," the spokesperson said.

However, having tasted success with their "selective boycott" strategy, the associations are firm in their stand, that they would not settle for anything less, than a five per cent commission.

The senior management of Singapore Airlines has rushed to Singapore for "consulatations" with senior airline management. Stay tuned. I am sure, an announcement from Singapore Airlines, capitulating to the agents, will follow, very shortly. After which it will be the turn of Lufthansa, British Airways, Emirates, and other major foreign carriers.

In the Rajya Sabha today, the Minister for Civil Aviation, Shri Praful Patel informed the Parliament today that airport developers both in public and private sectors are not getting their dues from the airlines on time which is causing them financial problems.

As per the minister's statement in the house

In respect of Airports Authority of India’s (AAI), the dues, in Rs. Crore (Rs. 5 Cr = $1 million) of defaulting airlines are :

NACIL-Air India - 739.50; Kingfisher Airlines / Kingfisher Red - 286.62; Jet Airways / Jetlite - 32.78; Spicejet - 15.76; Paramount Airways - 12.50; Interglobe Aviation - 6.00; Go Air - 8.81. Total dues are Rs. 1,101.87 Cr.

Mumbai International Airport’s dues are as follows: NACIL-Air India - 52.90; Kingfisher Airlines / Kingfisher Red - 14.11; Jet Airways / Jet Lite - 7.51; Go Airlines - 2.29; Air Indian Charters Ltd - 0.80; Lufthansa Airlines - 0.80; Malaysia Airlines - 0.63; Emirates - 0.61;
Indigo Airlines - 0.57; Spicejet Ltd - 0.55; Singapore Airlines - 0.42; British Airways - 0.30;
Kuwait Airways - 0.27; KLM Royal Dutch Airlines - 0.26; Airlines Allied Services - 0.25; Kenya Airways - 0.25; El-al Israel Airlines - 0.23; Qatar Airways - 0.21; Saudi Arabian Airlines - 0.20; Ethiopian Airlines - 0.20; Other airlines - 3.18. Total dues are Rs. 86.54 Cr.

The total dues of airlines as on date owed to Hyderabad International Airport Limited (HIAL) is Rs. 48.75 Cr.

The total dues of airlines as on 15.12.2008 on Delhi International Airport Limited (DIAL) is Rs. 84.50 Cr.

The total dues of airlines on Bangalore International Airport Limited (BIAL) is Rs.41 Cr.

Cochin International Airport Limited (CIAL) have also informed that there are some dues from airlines, but it appears no details are provided.

Government has given instructions to AAI to take all possible steps including legal action, if warranted against the defaulting airlines.

Just two airlines, Air India and Kingfisher owe 93% of total AAI dues, and 80.5% of MIAL dues. I suspect the trends at other airports will be similar.

Without political directive, it is career suicide for anybody at AAI, which is a government body, to even dream about, let alone execute, pursuing recovery operations against Air India, which is a government owned entity. In any case, Air India, just does not have the money. It is waiting for Sugar-Daddy a.k.a. Government of India to bail it out.

In case of Kingfisher, I am completely stupified. Dr. Mallya runs a global empire, he is astute and I am told, an extremely driven man. Aviation and Kingfisher, the airline, is his passion. What has gone wrong ? Have the liabilities of the Air Deccan merger finally caught up ?

Rs. 1,100+ Crores is not a trivial amount. This is money of the taxpayers of India, that should be put to better use, than left as overdues.

How seriously can we treat the minister's statement about instructing AAI to use all possible means to recover their dues ? It will be a simple step for AAI. All they have to do is stop the airlines from landing at their airfields, and seize the aircraft already parked. It will probably take, all of 2 seconds, before holy hell will break loose.

All the airport operators are suffering due to the economic crisis, and the subsequent reduction in overall aviation activity, be it flights, passengers or cargo.

AAI revenue has decreased by Rs. 228 Cr., April to September 2008, as compared to the corresponding period in 2007. MIAL's aeronautical revenue is down Rs. 79.83 Cr., April, 2008 to November, 2008. DIAL is down Rs. 50 Cr., and is already begging for financial assistance for its ambitious expansion plans, needed to meet the requirement of the Commonwealth Games 2010. HIAL has seen a total revenue decline by 15%. BIAL is down, but has not provided figures. The only other major airport operator, CIAL, has not been affected significantly, due to the constant middle east traffic, the one area of global aviation that is still escaping the global meltdown.

Overdues impose unneeded operational expenses on airport operators, and that ultimately comes back to passengers in the form of decreased services, delayed facilities, and higher fees. MIAL has been given permission for a 10% across the board rate hikes at Mumbai, Delhi can be expected to follow very soon.

Mr. Praful Patel is in difficult position of being the "boss" of both the defaulting airline and the airport operator owed the money. He has to make up his mind, and fast.

Air India (AI) passengers at the Chhatrapati Shivaji International Airport (CSIA), Mumbai and other airports across the country will witness delay in baggage clearance and other inconveniences in the coming months as AI employees’ union will conduct a series of demonstrations and strikes to protest against the new ground handling policy of the government. According to a report in today’s Daily News & Analysis (DNA), the union is agitating against ground handling contracts being awarded to foreign companies and National Aviation Company of India Limited (NACIL) being forced to form a Joint Venture if the former wants to continue with ground services.

AI passengers will have to face inconvenience today as the airline employees will walk out of the terminal to protest against the new Ground Handling Policy (GHP). The Civil Aviation Joint Action Front (CAJAF), formed by Air Corporation Employees’ Union (ACEU) and Aviation Industry Employees’ Guild (AIEG), staged a demonstration outside the CSIA in Santacruz, Mumbai from 12.30 to 1 pm today. “This will affect baggage, cargo handling and catering services,” said an ACEU member. The CAJAF, consisting of 8,000 employees from Mumbai and 12,000 across India, are protesting against NACIL being forced to form a JV with SATS (a subsidiary of Singapore Airlines) for ground-handling under the new GHP that comes into force from January 2009.

Till now, NACIL (merged company of AI and Indian) carried out ground handling for themselves and other international airlines. “NACIL earns Rs 1,000 crore from ground handling of other airlines and carries out ground handling worth Rs 1,500 crore for AI and Indian, which is free. If we form a Joint Venture with SATS, we will have to give them 50 per cent of these earnings,” informed George Abraham, General Secretary, AIEG.