05. January 2007


Date: 05. Jan. 2007
Airline passengers braving the fog over the last few days may be spared of a fare hike with most Indian carriers opting to wait and watch despite the hike in aviation turbine fuel (ATF) prices by over 4% this month. The only exception, however, could be Air Deccan which is planning a hike in fuel surcharge by about Rs 50 to Rs 150.
Public sector oil firms — IOC, Bharat Petroleum and Hindustan Petroleum — raised ATF price by over 4% effective from January 1. ATF or jet fuel prices have increased this month after a consecutive fall in the previous three months, which was in line with the trend in international oil prices.
Jet fuel prices for domestic airlines in Delhi increased by 4.4% to Rs 37,746.92 per kilolitre, while in Mumbai the price was hiked by Rs 1649.43 per kl to Rs 39,013.31 per kl, according to Indian Oil, country’s largest fuel retailer. For international airlines, who unlike domestic airlines do not pay local sales tax, the price in Delhi was raised from $620.62 to $648.22 per kl effective from January 1. In Mumbai, the hike was $27.38 per kl to $642.73 dollars per kl.
While most low cost carriers such as IndiGo, SpiceJet and GoAir said they will not increase the fares, Air Deccan is contemplating a raise in the fuel surcharge. “There will be no knee-jerk reaction by the industry to the current hike in fuel price. At least, for the next 15 days there will be no increase in air fares,” said GoAir COO, Raj Halve.
According to SpiceJet VP (marketing & planning) Sanjay Kumar: “We are not raising fares with the increase in ATF prices this month.
But we will hike the fuel surcharge if the jet fuel prices continued to increase from next month.”
Added IndiGo president & CEO Bruce Ashby: “We are not looking at any overall fare increases now.”
However, Air Deccan may increase its fuel surcharge by Rs 50 to Rs 150 over the next week. “We are evaluating a raise in the fuel surcharge. The hike, which will be finalised in next 10 days, will be between the range of Rs 50-150,” said Air Deccan COO Warwick Brady.
Most full-service carriers — such as Jet Airways, Air Sahara and Air India — are also adopting a wait-and-watch policy before going in for any upward revision in fares.
“We will wait for sometime before considering any raise in air fares,” said Air Sahara president, Alok Sharma.
Source: http://economictimes.indiatimes.com


Date: 05. Jan. 2007
Cleartrip, the travel portal with a mission to make travel simple, is proud to announce the integration of Air Deccan on its travel booking platform, and will be extending the ability to search and book Air Deccan flights to its consumers from the 21st of December, 2006.
Cleartrip and Air Deccan have entered this relationship, with an aim to leverage the Cleartrip.com technology platform to offer a superior value proposition to consumers, in terms of price and convenience of user interface. A marriage of these brands will allow the consumers increased options of travel while already providing options for stay. The endeavour is to make Cleartrip one stop shop for travelers across all price points.
Speaking about the tie-up, Ram Shriram, Sherpalo Ventures, one of Cleartrip’s investors said, “With Cleartrip’s focus on providing a superior user interface and Air Deccan’s invaluable price benefit we are confident that this partnership will result in more consumers finding the right travel provider for their needs in the simplest manner possible.”
Captain G.R. Gopinath echoed Ram Sriram’s enthusiasm adding, “Air Deccan aims at providing low cost travel to the common man with enhanced accessibility and affordability. We are constantly exploring avenues that would make our tickets more accessible to the passenger. Internet distribution is an important part of our overall strategy and we are thrilled to be working with a service like Cleartrip that makes booking travel so simple.”
Commenting on the partnership Sandeep Murthy, CEO Cleartrip stated, “Air Deccan is India’s leading no-frills airline, and has been responsible for growing the market. It operates across a wide network, which includes 11 centres which were unconnected before Air Deccan started flying. We are positive that Air Deccan’s product will find the best platform on Cleartrip.com.
Cleartrip, which has been functional for over 5 months since its launch in July, also offers flights on Jet Airways, Air Sahara, Air India, Indian, Kingfisher Airlines, SpiceJet and Indigo. It has run various promotional offers, which include exclusive schemes with Air Sahara, Indian, Kingfisher Airlines, Jet Airways and Indigo. Its television commercial was launched recently, to support its offline marketing campaign.
Source: http://deccan-airways-news.newslib.com


Date: 05. Jan. 2007
The potential for India's airline sector to take off is sky-high as investment and the demand for new pilots soars.
Last month, European aircraft maker Airbus, said it intends to invest US$1 billion in India over the next decade to meet high demand in one of the fastest-growing air-travel markets in the world.
The Airbus investment is part of a $500 million assurance to the
Indian government, which recently ordered 43 Airbus aircraft for Indian, the state-owned domestic carrier, in a $2.25 billion deal.
Airbus has said it will spend $300 million in setting up a pilot-training school and $250 million on an engineering unit, both likely to be in the Indian technology hub, Bangalore.
"This is just the beginning - there will be much more," said Kiran Rao, president of Airbus India.
India's 2,300 pilots fly more than 230 aircraft, most of them brand-new, with half a dozen added every month. Almost a quarter of pilots in India are expatriates, as the sector needs 400 pilots a year but produces only about 100. New training schools are being set up, but the interim will see more expatriates being hired.
In another move, the Tata Group, whose diverse interests range from steel to retail and software, is making an indirect entry into the domestic airline business as a financial investor, by picking up a 7.5% stake in the Delhi-based low-cost airline SpiceJet. The investment, to be made through the group's financial arm, Ewart Investments, is reported to be worth about $17.2 million.
SpiceJet has moved to raise money because of the need for network expansion in the face of mounting losses. Among other investment proposals SpiceJet has accepted are Texas Pacific Group's $30 million, Istithmar PJSC's $25 million and Goldman Sachs' $5 million, the company said in a statement this week.
SpiceJet is acquiring its 10th aircraft this month and plans to expand its fleet to 18. It has a market share of more than 7.5% and has registered the highest load factor in the past 12 months.
The Tata Group has been looking to re-enter the aviation sector for more than a decade. The most publicized attempt was through a proposed $700 million joint venture with Singapore Airlines (SIA) to launch a domestic airline in 1997, which the government did not clear even after the group agreed to drop SIA.
Low-cost airlines seem much in demand this season for large corporate groups looking for financial investment. Soon after Tata-SpiceJet, Anil Ambani's Reliance Vision, a mutual-fund scheme under the Reliance Mutual Fund umbrella, revealed that it has been slowly acquiring Deccan Aviation shares in the past few months and has now acquired a 3.5% stake in Air Deccan.
Airline stocks have been beaten low in the past year because of poor financial performance. However, the prospects are good because of a growing economy and increasing travel. This month, Airbus rival Boeing delivered 18 of the 68 jetliners ordered by Air India under an $11 billion contract, the biggest commercial-aircraft deal in India's civil-aviation history.
In one of the largest-ever transactions that have followed, Air India has also secured a $6.2 billion loan from the Export-Import bank of the United States for its fleet expansion.
India's biggest domestic airline, Jet Airways, said this week that it had purchased 10 Boeing 787-8 aircraft to support its international operations.
Industry observers see corporate interest (Reliance, Tata) as a positive development for the sector. "The fact that institutional investors are beginning to see the potential in the business is a healthy sign,'' said Vijay Mallya, chairman of Kingfisher Airlines.
Air Deccan chief executive officer G R Gopinath said: "Large-scale investment by big groups, which we did not have earlier, is beginning to come in now. Growth of aviation is integral to the country's economic growth."
Indeed, India's aviation market is flying high, at least in terms of traffic and volumes. It is estimated that by 2010, there will be 70 million air passengers in India (up from the current 25 million). In the next decade, India needs $50 billion in investment in planes and infrastructure.
Indian carriers are expected to buy at least 280 new planes by 2010, worth $15 billion, and spend another $15 billion in the following decade. In the longer run, India needs 1,100 new aircraft, of which 935 would be passenger planes and the rest for freight, according to Airbus's market predictions.
Boeing has said it expects India will need 856 new jet aircraft worth more than $72 billion over the next 20 years.
India's domestic aviation market, in which 12 airlines compete, is expected to grow at 20% annually over the next five years. A slew of new carriers including Air Deccan, SpiceJet, Kingfisher, IndiGo and Go Air have resulted in airfares hitting rock bottom, challenging rail fares.
It has been a while since the Indian aviation sector was opened up to private players in 1991. Until then, Indian (then known as Indian Airlines) and Air India handled domestic and international air travel respectively.
With doubts about government intentions, only a few airlines began operations. Among the early entrants, only Jet Airways, which launched in May 1993, and Air Sahara, which launched in December 1993, have survived. However, sustained economic growth over the past few years has seen the Indian aviation sector explode.
But right now, the Indian airline industry is going through a difficult phase financially, and domestic carriers are thought to have lost about $300 million in 2006.
Air Deccan and Kingfisher have yet to break even on their operations. Jet Airways reported losses during the quarter April-June 2006 amounting to Rs449.8 million ($9.6 million) compared with a net income of Rs953 million in the previous year's corresponding quarter.
According to estimates, Indian private airlines lost $250 million in 2005, and are losing a whopping Rs2 billion ($45 million) in cash every month just to stay afloat. Having committed huge funds to acquire aircraft, most airlines are not in a position to pull back.
Low-cost airlines have emphasized that only about 2% of the Indian population travel by air and there is huge potential, once the air-ticket prices are brought down at par with rail travel. However, losses have kept away most retail investors from such companies as Jet Airways, SpiceJet and Air Deccan.
''Most [Indian] players will continue to show losses over the next 12-18 months, generating profitless volume growth. Efficient and well-funded operators will survive,'' said Kapil Kaul of the Center for Asia Pacific Aviation.
But there is hope for the future. With the stock markets booming, most airlines will be looking to tap the equity markets. Ultimately, most will bet on rising volumes for higher revenues.
For this to happen, infrastructure, including airports and accommodation, have to be substantially ramped up to make traveling for both the domestic and the international customer a comfortable experience.
Keeping airline schedules from falling behind because of winter fog can be achieved by installing new technology in aircraft.
As per the government's open-sky policy, private domestic carriers have been allowed to fly international routes, while the ceiling for foreign institutional investment in Indian airlines has been hiked from 40% to 49%. Delhi and Mumbai airports have been handed over to private players for major revamping, while there are plans in place for others.
According to recent reports, the eligibility norms for airlines seeking to fly abroad are likely to be reduced to a minimum of three years of domestic operations from five years at present. This will considerably benefit Air Deccan, which is looking to launch flights to the Middle East and Southeast Asia.
Source: http://mangalorean.com