Air India, Jet Airways fight for market share, announce up to 40 per cent discount for festival season

Budget carriers Indigo and SpiceJet have been gaining market share at the expense of Jet Airways.

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NEW DELHI: Full service carriers Air India and Jet Airways seem to have thrown in the gauntlet on budget airlines to garner more market share this festival seasonby announcing up to 40 per cent discounts on tickets booked a month in advance.

Budget carriers Indigo and SpiceJetBSE -1.99 %have been gaining market share at the expense of Jet Airways. Air India's aggressive first mover stance to introduce special fares is significant as it comes in the backdrop of civil aviation minister instructing Air India to garner more loads (aircraft occupancy) few days ago.

The national carrier announced the "Jaldi Jaldi" scheme under which the fare for tickets booked at least 30 days in advance will be 40-50 per cent cheaper compared to the existing instant purchase fare, the airline said.

A day later, Jet Airways announced similar discounts saying, "The new apex fares will go on sale effective September 22 and will offer guests attractive savings on several domestic routes. Travel validity for 21-day apex fares is till October 18, 2012, while the 30-day apex fares have no expiry date."

Travel experts say the idea behind such discounts is to be assured of filling up a certain number of seats and generating a fixed amount of revenue well in advance so that the carriers can sell the remaining seats at a premium. Going by the data given by sector regulator Directorate General of Civil Aviation (DGCA), airlines had an average occupancy of only about 70 per cent in August. This indicates that 30 per cent capacity is going unsold.

"The idea with discounts is that after around 20 per cent seats are filled, the remaining can be sold at a premium going forward. This is a great opportunity for Indian carriers to manage yields better," Travelocity MD Himanshu Singh said.

As budget carriers IndiGo and SpiceJet flew past Jet Airways and Air India, respectively, in August, becoming the largest and the third largest domestic airlines by market share in spite of smaller aircraft fleets, the discounts are aimed at wrestling back some of that lost market share. However, it will result in very expensive fares for those who don't book well in time, say experts.

"AT present, even 7-14 days before a flight, 60-70 per cent of airline's inventory is spare. But after the discount scheme, fares may shoot up by 40 per cent in the last seven days as substantial inventory would be sold off already at discounted price. This would allow airlines to sell more seats and make more money at the same time by having a mix of very high fares and low advanced price," said Keyur Joshi, chief opearating officer of MakeMyTrip.com.

Travel experts also think that following this move, even budget carriers will not remain far behind and are bound to introduce discounts, without saying it out loudly.

http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/air-india-jet-airways-fight-for-market-share-announce-up-to-40-per-cent-discount-for-festival-season/articleshow/16520896.cms

Air Asia CEO to visit India

Govt?s FDI in aviation seems to have rekindled interest among foreign carriers in the country?s aviation sector

The government’s decision to allow 49 per cent foreign direct investment (FDI) in civil aviation seems to have rekindled interest among foreign carriers in the country’s aviation sector. A few days after the government made the crucial policy announcement, Tony Fernandes, chief executive officer of Air Asia, the largest low-cost carrier in Southeast Asia, said he would visit India this month.

“Will be in India at the end of the month and will try to meet all of the press,” Fernandes said in his response to an email query.

Shortly after the Union Cabinet approved FDI in civil aviation and multi-brand retail on September 14, he had tweeted: “Fantastic news that India has opened up investment to foreign airlines. With Malaysia opening up this is fantastic news for airlines like Air Asia. Great that Indian government has put people first.”

However, according to news agency Reuters, Fernandes, while addressing the Singapore press, said he had no immediate plans to enter the market because he thought the aviation fuel tax and airport charges were still too high.

This time, Fernandes seems to be taking cautious moves after fizzing out of all excitement shown by Air Asia when it entered the Indian market in 2010. Seldom had any airline expanded at such a speed then.

Air Asia was flying to nine destinations across the country and has over 120 flights a week (to and from) in operation. Later, the airline withdrew flights from New Delhi and Mumbai, attributing it to high operating costs that include high airport and fuel charges.

FDI is expected to boost investor sentiment in the long term. According to the Centre for Asia Pacific Aviation (Capa), a Singapore-based consultancy: “The floodgates of investment are unlikely to open in the short term but from the perspective of improving sentiment and demonstrating that the government is committed to supporting the development of a viable airline industry, this is a positive milestone.”

“If the Government is serious about granting new licences to well-funded, professional start-ups, we could in due course see the launch of greenfield joint ventures by carriers such as Air Asia, Jetstar and Tiger Airways,” the Capa analysis said.

With Civil Aviation Minister Ajit Singh repeating his ministry is committed to address the concerns of the aviation industry, airlines are hoping to make gains in the long run.

Addressing the fifth Assocham International Conference on Indian Civil Aviation on Saturday, Singh said: “Among my top priorities will be getting aviation turbine fuel (ATF) declared as ‘notified product’, to bring transparency in its pricing and reduction of VAT (value-added tax) on ATF by the states.”

Singh also said innovative solutions like development of low-cost airports would be put in place to help create affordable air connectivity in remote areas of the country.

Both these moves will be a big boost to the ailing Indian aviation sector as well as to the interest of foreign airlines, say experts . The approximate losses of airlines in the last financial year stood at Rs. 10,000 crore.

http://business-standard.com/india/news/air-asia-ceo-to-visit-india/487433/

Air India flight cancelled, passengers stranded

Passengers who arrived at the Thiruvananthapuram airport in Kerala for an 8.45 am Air India Express flight to Sharjah early Saturday morning received a rude shock. They were told the flight had been cancelled on the instructions of the civil aviation ministry.

One passenger, Biju, said Air India officials washed their hands off the affair, saying the civil aviation ministry was responsible for the cancellation.

“They asked us to take up the issue with the ministry when we confronted them,” added the passenger.

Although Air India officers later promised to accommodate 40 passengers on the evening flight to Sharjah scheduled for 7.30 pm, they failed to do so, leading to more confusion.

Association of Travel Agents’ president, K.V. Muraleedharan alleged the aircraft had been diverted to Uttar Pradesh to ferry Haj pilgrims from the Union civil aviation minister’s constituency.

But Member of Parliament, Dr. Shashi Tharoor, who called civil aviation minister, Ajit Singh to inform him about the cancellation of the AI flight, said he had promised to look into it immediately and make other arrangements to fly the stranded passengers to Sharjah.

Union minister of overseas Indian affairs, Vayalar Ravi too promised to bring the sudden cancellation of the AI flight to the notice of Prime Minister Manmohan Singh

Minister K.C. Joseph said Air India’s shabby treatment of passengers from the state would
be brought to the Centre’s notice.

Air India lands NRKs in soup

Dealing a deadly blow to air passengers from Kerala, the Air India and Air India Express are continuing with the cancellation of their flights from the state and diverting them to Uttar Pradesh on the orders of Union Civil Aviation Minister Ajith Singh, to carry Haj pilgrims from there.

Since September 17, the national airliner and its arm have cancelled two dozen schedules to the Gulf alone.

In March when the pilots started their strike, the two airliners had to cancel over 160 schedules almost every month.

“From the time of the pilots’ strike, the two airliners had to cancel almost 168 schedules per month. The passengers from the state are its major source of revenue. Yet it has let down the people of Kerala,” said Paulose K. Mathew, chairman, Kerala Region of Travel Agents Federation of India.

The schedules cancelled since September 17 are the Trivandrum-Sharjah weekly twice, Trivandrum-Dubai weekly thrice, Kozhikode-Kochi-Kuwait weekly once, Kozhikode-Dammam weekly thrice flights of Air India Express and the Air India’s jumbo Kochi-Riyadh weekly twice flight that can carry 433 passengers. Air India officials are at a loss to explain the situation to the affected passengers.

Meanwhile, minister for Non Resident Keralites Affairs Department (NORKA), K.C. Joseph said that Air India had been ignoring Kerala and alleged that Ajit Singh had regional considerations in diverting the flights.

KPCC president Ramesh Chennithala sent a letter to the Prime Minister asking him to urgently intervene in the issue.

Non-Resident Indian Affairs Minister Vayalar Ravi, protesting the cancellations, said that the Haj services should be conducted without causing hardships to Keralites.

Sashi Tharoor, MP, said that he would ask Air India to urgently resolve the impasse.

‘PM should intervene’

Chief minister Oommen Chandy has asked Prime Minister Manmohan Singh to intervene to stop the frequent cancellation of the Air India flights from Kerala to Gulf.

He said in a statement here on Saturday that the decision to increase the ticket rates to Gulf countries has also increased the travel woes of those from the State.

The PM should intervene to put in place an alternative arrangement for ensuring better travel facilities to the state, the CM said.

The latest in the series of cancellation was that of the Sharjah flight scheduled for 8.45 am on Saturday.

http://www.deccanchronicle.com/channels/nation/south/air-india-flight-cancelled-passengers-stranded-709

Sliding seat design claims to cut passenger boarding time in half and double space in the aisle

It is one of the stresses that can turn you off air travel.

You board the plane, stow your luggage away and try to squeeze past passengers doing the same - all in a very tight space.

But one design firm claims to have come up with a novel way of bypassing the hassle while also saving the airline money by cutting turnaround times and fuel costs.

US company Molon Labe Designs claims that its 'Sider Seat' will save airlines two hours of extra flying time each day and result in 'happy, loyal customers'.

The system works by enabling the outer seat to slide over the middle seat, increasing aisle width from 19 inches to 43 inches and allowing passengers to move about more.

Travellers then just slide the seat back, locking it into place

The aircraft interior design firm says the plan would not only improve emergency exit time due to a 'shorter pathway to overwing exits' but help settle that other battle air passengers endure - competition for the shared armrests.

The company's website says: 'Increasing the aisle will reduce airline on-ground turnaround times.By allowing aircraft to turn in half the time we can give airlines 120 minutes of extra flight time per day per aircraft.

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'Passengers would be able to take their seats quicker as they would be better able to manoeuvre around people and crew who are stowing their belongings and assisting others.'

The one downside to the design could be comfort, as the seats appear to have little in the way of cushioning and don't recline - so are perhaps best suited to short haul trips.

In response, company founder Hank Scott told TravelMail: 'It is as comfortable as any seat out there, and with the money the airlines save they could actually ask to make it more comfortable and provide even more legroom!'

A prototype is reportedly in development and expected in November.

http://www.dailymail.co.uk/travel/article-2206619/Sliding-seat-design-claims-cut-passenger-boarding-time.html

Planes of the future could fly on sawdust or straw

Passenger jets could be chomping on straw or flying on fuel extracted from sawdust in coming years as the search widens for cleaner alternatives to kerosene, French scientists say.

The "ProBio3" project, started in early July and co-financed by a French government economic stimulus program, aims to use traditional horse-bedding materials to develop a new kind of biofuel that can be used in a 50/50 blend alongside kerosene.

"Tomorrow, planes will fly using agricultural and forest waste," said Carole Molina-Jouve, a professor at Toulouse's National Institute of Applied Sciences (Insa), who is coordinating the ProBio3 project.

"We already know how to set up a basic production line but we must move towards an industrial line," she said. "We need to translate what is done in laboratories to the real environment while improving its profitability and efficiency."

The move to use straw-based materials or wood shavings as a source of fuel is the latest in a series of biofuel ventures aimed at cutting fuel bills and pollution.

So far most attempts have been based on crop-based products, raising concerns over food shortages following recent drought.

But European planemaker Airbus, one of the program's backers, believes woodchips and agricultural waste could be alternative fuel sources of the future.

With a budget of 24.6 million euros ($32.1 million) over eight years, ProBio3 aims to set up a profitable production chain for hydroprocessed oils, a type of biofuel which has been certified by international standards organization ASTM as useable for aviation in combination with kerosene.

Fuel made from wood and straw may seem at odds with some of the most extreme man-made conditions inside a modern jet engine, where temperatures can reach 1,600 degrees Celsius. But scientists say they already know the basics of the process.

Industrial or farm waste is broken down into sugars through enzymes, then mixed with microorganisms such as yeast, and transformed into lipids through the chemical process of fermentation.

The fats obtained are then treated with hydrogen to make a type of hydrocarbon with similar properties to fossil fuels.

NO COMPETITION WITH FOOD INDUSTRIES

At Insa's biological systems and processes engineering lab (LISBP) in Toulouse, France, where Airbus is based, Molina-Jouve removes a test tube holding a yellowish paste from a refrigerator.

"Those are large and fatty yeasts, full of synthesized lipids," she explains, meters away from a small reactor where sugars and yeasts are combined for the fermentation process.

As part of the ProBio3 project, partner Tereos Syral, a specialist in producing starch from cereals, will attempt to replicate the process on an industrial scale using a reactor with 100 times the capacity of the one in the lab.

Molina-Jouve dismissed any concern that biofuel production would divert food crops at a time when commodity prices have been soaring. "The project will focus on non-food biomass," she said.

The European Union plans to limit the use of crop-based biofuels in a major shift in the region's much-criticized biofuel policy, according to draft legislation seen by Reuters.

Last week France said it would push for a pause in the global development of biofuels and the creation of strategic food stocks in response to the third global food price spike in four years.

The "ProBio3" project is part of an EU drive to reach annual output of 2 million tonnes of biofuels for aviation by 2020 in Europe.

Biofuels should help cut down the aerospace industry's carbon footprint while using renewable energy sources, said Jean Botti, chief technical officer of Airbus parent EADS.

"We want to achieve a balance in terms of carbon dioxide where everything that comes out will be balanced with what goes in," Botti said.

Europe consumes around 50 million tonnes of kerosene per year.

Airbus, Boeing and Brazilian manufacturer Embraer agreed earlier this year to co-operate on developing alternative fuels.

Dutch airline KLM operated the world's first scheduled biokerosene-powered flight in July 2011 when one of its Boeing 737-800 jets flew 171 passengers between Amsterdam and Paris using a mix of cooking oil and Jet-A fuel.

http://in.reuters.com/article/2012/09/19/us-biofuels-planes-idINBRE88I0W220120919

Mass cancellation of Air India flights to Gulf angers Chandy

Urgent intervention of PM sought

Thiruvananthapuram, Sept. 23:  

Chief Minister Oommen Chandy has strongly protested the repeated instances of cancellation of fights operating in the West Asian sector.

Coming on top of the steep hike in fares, cancellation of flights have brought untold misery to thousand of passengers from various destinations in the State.

WRITES TO PM

The Chief Minister conveyed his protest to the Prime Minister, sought his urgent intervention in the matter through alternative arrangements.

He also cited the demand for an exclusive airline that the State government proposed to launch as a permanent solution to West Asian travellers’ woes.

The State government is ready to launch the service provided the Centre granted the clearances. Chandy requested the Prime Minister to clear the proposal at the earliest.

The Chief Minister’s communication was prompted by the latest incident involving Saturday’s cancellation of an Air India Express flight from here bound for Sharjah. Passengers, including women and children, streaming into the airport for the early morning flight were greeted with the news about the cancellation.

TOUGH TIME

They had a tough time what with the airline not being able to come up with any alternative arrangements for their evacuation. The Chief Minister said that, on an average, 11 flights were being cancelled from the three international airports in the State for one reason or another.

Cancellations were reported the most from Thiruvananthapuram (six); Karipur (Kozhikode international airport) had reported three and Cochin International airport, two.

Chandy recalled that he had on several occasions in the past brought to the Centre’s attention the plight of passengers flying in the West Asian sector.

He had mentioned this in the memorandum he had submitted to the Prime Minister when the latter visited Kochi to inaugurate the Emerging Kerala Global Connect event earlier this month.

AJIT singh COMING

Meanwhile, sources said that Ajit Singh, Union Minister for Civil Aviation, has agreed to visit Kerala to look into repeated cancellation of flights from the State.

Shashi Tharoor, Member of Parliament representing Thiruvananthapuram, had met with the Union Minister in this regard.

Sources quoted Tharoor as saying that the Union Minister had promised that he would ensure that such abrupt cancellations do not recur.

On an average, 11 flights are being cancelled from the three international airports in the State for one reason or another.

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http://www.thehindubusinessline.com/todays-paper/tp-others/tp-states/article3929890.ece

Airports log in to social media to help passengers

The world’s airports are turning to mobile apps, social media and intelligent technologies, including geo-location services to improve the passenger experience. A new survey has pointed out that several airports also plan to invest in social media.

Though improving passenger experience is the number one driver of IT investment by a majority (59 per cent) of the world’s airports, according to the Sita Airport IT trends survey, reducing passenger congestion, with real-time staff location and monitoring the movements of aircraft and passengers at airports, are all set to come under its purview.

Passengers are set to see several changes, the survey has noted, given the rapid increase in mobile and social media apps delivering a more personalised user experience.

Keeping passengers informed about their flight status and expected waiting time are some of the top reasons why airports are providing mobile apps, with 88 per cent of those surveyed saying they are planning to invest in them by the end of 2015. During this period, 78 per cent of airports also plan to invest in social media with two thirds of these currently focused on evaluations or trials.

http://www.thehindubusinessline.com/todays-paper/tp-logistics/article3929862.ece

FDI in aviation: Foreign airlines on ‘wait-and-watch’ mode

Major foreign airlines seem to have adopted a wait-and-watch approach over the Government’s decision to allow them to pick up 49 per cent stake in Indian carriers, even though the Government says the mood in the industry was upbeat.

Air India has been kept out of the ambit of this major policy announcement, but there have been reports about a couple of Indian carriers holding preliminary discussions with foreign airlines to attract investment.

A day after notifying the foreign direct investment (FDI) rules, Civil Aviation Minister Ajit Singh said the sector was passing through a difficult phase due to the economic slowdown, but “the mood is upbeat after the Government has allowed 49 per cent FDI in domestic airlines.”

However, barring Abu Dhabi-based Etihad Airways, many of the major foreign airlines have said they currently do not have plans to invest in Indian carriers.

Aviation think-tank Centre for Asia Pacific Aviation also said, “The floodgates of investment are unlikely to open in the short term but from the perspective of improving sentiment and demonstrating that the Government is committed to supporting the development of a viable airline industry, this is a positive milestone.”

http://www.thehindubusinessline.com/todays-paper/tp-logistics/article3929860.ece

Will FDI clear the dark clouds hanging over Indian skies

The Government’s recent decision to allow 49 per cent foreign direct investment (FDI) in the aviation sector has given rise to two sets of questions. The first has to do with what this will mean for airlines like Kingfisher.

Will Kingfisher be able to get the much talked about monies to keep its operations afloat? Analysts are not very optimistic as they feel that the Government’s decision has probably come too late to help the airline.

The other, more significant questions, include, will this decision to allow foreign airlines to invest in India benefit existing airlines? Will it see the birth of new airlines promoted by foreign capital? How will the flying experience for passengers change?

There is near unanimity among analysts that SpiceJet and GoAir are likely to be the two most preferred airlines for FDI. The reasoning — both are promoted by those who are not hard-core airline professionals but entrepreneurs who invested in the business to exit at the correct time and with a profit, which they are likely to get from a foreign airline buying a stake in their businesses.

Positive move

While most international airlines have declined to comment on whether they will look at investing in an Indian carrier post the Government changing the policy, analysts say airlines from the Gulf, South East Asia and some European carriers are likely to take maximum advantage of the change in policy.

Already, Etihad Airways is in the news, with media reports stating that Jet Airways is in talks with the Gulf carrier.

Many in the industry feel that the policy change is also likely to see some new airlines take wings. This could be the route that Tony Fernandes, the promoter of the low-cost airline, Air Asia is likely to adopt.

Terming the decision as “excellent” Dhiraj Mathur, Executive Director and Head of National Aerospace and Defense Practice, PricewaterhouseCoopers (PwC), said that with the coming in of international airlines things can only get better for the sector and lead to a better flying experience for passengers. “Service will only improve,” he added.

Dhiraj pointed out that the other important aspects of allowing foreign airlines into the Indian aviation sector is the benefit of alliances that these international carriers can bring for an Indian carrier. International airlines that are said to be keen to invest in India carriers include Singapore Airline, which is a key member of Star Alliance.

Sushi Shyamal, Partner (Infrastructure Practice), Ernst & Young, feels that this is a step in the right direction.

“FDI in aviation was long overdue and it was only a question of ‘when’ and not ‘whether’ it will happen. It has probably got highlighted so much as currently the industry is going through a rough phase. We have allowed FDI in banking, telecom, insurance, information and broadcasting and these are sensitive sectors as well,” he pointed out.

Heading out

Apart from international passengers, it is also the faster growing domestic traffic which could be of interest to foreign airlines, he added.

Shyamal adds that this could also provide a good opportunity for domestic airlines to go international as this can become a good integration strategy for local players, who are eligible to leap frog into the international arena.

An international aviation analyst feels that with the policy change aviation will finally be treated at par with other sectors. “The sector is undergoing a monumental shift and finally this policy change will allow the Indian aviation sector to participate in a fast changing industry rather than be a silent bystander,” he said.

Taking the argument further, Amber Dubey, Partner and Head (Aviation). KPMG, added, “It will also pave the way for Indian carriers to buy stake in global carriers some day, though it sounds unimaginable today. Just like no one imagined that iconic brands like Arcelor, Novelis, Tetley, Blackburn Rovers or Jaguar-Land Rover could be owned by Indians some day.”

Who benefits?

Critics of the policy, however, feel that it lacks focus. “On the one hand the Government has put bilateral exchange with foreign countries on hold. On the other it has allowed airlines to invest in domestic carriers. What is the message being sent… come invest in our carriers, get them to collect passengers and bring them to one point from where the foreign airline, which has invested in an Indian carrier, will carry them to the four corners of the world? How will this help Indian carriers?” argued one analyst.

The other issue that some are critical about is the timing of the decision.

Analysts point out that with the industry awash in the red, domestic carriers will become cheap assets for foreign airline to invest in.

Of course, according to analysts, this will not stop Indian players from eyeing foreign partners.

“The inherently high-risk and volatile business makes it a very restrictive industry for a majority of the financial investors to even consider investing in the sector. In the current market there won’t be many financial investors evaluating this sector. Cash crunch is definitely there,” an analyst said.

However, whether international carriers will pay heed to the interests of Indian carriers is something that one will have to wait and see.

http://www.thehindubusinessline.com/todays-paper/tp-logistics/article3929859.ece

Aviation: Clubbing FDI, FII will dilute the policy, say analysts

New Delhi, Sept. 23:  

Liberalising foreign investment norms for scheduled domestic airlines have raised a question mark over existing foreign institutional investment (FII) in airlines.

Experts also feel that the new norms make the three listed companies – Jet Airways, SpiceJet and Kingfisher – less attractive.

The new norms, as mentioned in the press note number 6 dated September 20, say the 49 per cent limit will subsume the limits on both Foreign Direct Investment (FDI) and Foreign Institutional Investors (FII) investors. When asked whether the 49 per stake be either through FDI or FII route alone, the Commerce and Industry Ministry replied in the negative.

It said, “This implies that when foreign airlines are investing in the capital of Indian companies, operating scheduled and/or non-scheduled air transport services, they can do so up to the limit of 49 per cent of the paid-up capital of such companies.”

Generally speaking, foreign investment can be made either directly or indirectly. Direct investment is guided by the Government policy. Foreign investors buy shares directly from the company and here money will come into the account of the company.

Indirect investment is also termed as portfolio investment and guided by the Reserve Bank of India’s regulations. In this case foreign investors buy shares in the secondary market and here money does not come to the company’s account.

Pointing out that it was conceptually incorrect to club FII and FDI, Dhiraj Mathur, Executive Director and Head of National Aerospace and Defence Practice, PwC, felt that legally both are governed by different provisions.  

FII is short-term capital which will not go into the company, while FDI is a long-term strategic investment. He added that clubbing the two would dilute the policy.

Another senior analyst felt that the latest move goes against the Government’s objective of bringing in long-term strategic investors for airlines.

“If you club the two together, FIIs will pick up from the secondary market and then seek a premium when the company wants them to exit. How will this benefit the airline?” he added. According to experts, this shows the “confusion” that exists in the mind of the Government on this issue.

http://www.thehindubusinessline.com/todays-paper/tp-economy/article3929823.ece