6000 Pilots Needed, Apply Today

Its interesting that even though the aviation boom is over 5 years old, we are still short of 1000 pilots. This will only get worse, per the civil aviation ministry, in the next five years the industry will be short by 6,000 pilots. Of course you cannot get experienced pilots overnight, but the shortage is also acute because of the lack of quality aviation academies in the country. The recent bankruptcies of US airlines (EOS being the latest victim) will help in getting a few experienced pilots, but frankly that's going to be a drop in the bucket.

Air India Express Launches Flights to Kuwait, Dubai and Dhaka

Air India Express has announced the launch of new services to Kuwait, Dubai and Dhaka as part of its plan to serve international destinations from second tier cities. Plans call for the launch in the next six months of flights to Kuwait from Kerala, Mangalore and Ahmedabad; to Dubai from Goa, Pune, Hyderabad and Ahmedabad, and to Dhaka from Kolkata.

The strategy to primarily avoid international flights from metros and serve from second-tier cities is a smart move for the airline, which avoids some of the vicious price competition out there, and is, of course, great news for travelers who get nonstop service that would have otherwise required a change of planes.

Will India's Airlines Stop Paying Commissions to Travel Agents?

Echoing the practice of airlines in other regions of the world, airlines in India are considering eliminating base commissions for travel agents, a move that will likely force agents to charge a service fee to their customers. This does not mean that airlines won't pay anything -- the likely scenario is that they will reward high volume agencies while reducing payouts to smaller agents. Commissions have moved from 9% to 5% in India in recent years.

Travel agents in the US complained bitterly when airlines eliminated base commissions a few years back, but they learned to live with the new environment, instead charging customers upwards of US$50 (Rs 2000) to issue a ticket. That will likely be the new reality in India as well.

This is good news for online travel agents, who saw their market share spike in the US, as their service fees were typically only US$6 to issue a ticket (some agencies continue to charge nothing). Look for online agents to tout their small or non-existent service fees as a way to drive sales online.

Are SpiceJet and IndiGo in Merger Talks?

The Business Standard is reporting that SpiceJet and IndiGo have held merger talks, speculation that caused a nearly 10% jump in SpiceJet's stock. We are normally not a fan of mergers, but the Indian aviation is not like other markets (one major difference is that the underlying infrastructure simply cannot handle the growth that has been thrown at it by the new carriers). A merger by these two carriers should help to rationalize capacity and get fares a bit closer to where they need to be. Both sides deny the talks, but really -- what else are they going to say?

The Top 5 Airports in India Account for 70% of Passenger Traffic

As per a recent study by the ASSOCHAM, (The Associated Chambers of Commerce and Industry of India) the top 2 airports Mumbai and New Delhi account for 40% of the passenger traffic in India, and the top 5 account for 70% of the traffic. As per the report the reason passenger traffic has not increased in other parts of the country is due to a lack of infrastructure. There are around 400 airports in the country but only a 100 are used for civil aviation. An interesting data point to me was the comparison of total passengers on premium rail services vs. air passengers. There are about 52 million passengers that take premium rail services (the low hanging fruit for LCCs) compared to 15 million air passengers. That's where the challenge lies. Certainly building good infrastructure will help in increasing passenger levels, but the big challenge is competing with the Indian Railways. Airlines see the opportunities in connecting tier II cities, but with the Railways fast improving and hoping to provide more higher speed train services this challenge will only get tougher.

SpiceJet and GoAir to Pull Out of Kochi

SpiceJet and GoAir announced that they will pull out of Kochi, citing skyrocketing costs. SpiceJet ended operations on 14 April, while GoAir will have its last flight in May. Landing fees at the airport are Rs 35,000 compared with just Rs 2,500 in Mumbai. Ground handling costs and upcoming repairs were also noted as reasons for the departure. The airport was the first in India to be run by a private operation.

Fly Overseas for Less this Summer

The airfare reductions that we are currently witnessing in the domestic sector seem to be touching the overseas sector as well. With competition heating up and supply increasing, airlines, that are loath to fly empty seats, are cutting fares. With Kingfisher/Deccan all set to fly to international destinations the supply will only increase. The airfares for this upcoming summer season are already seeing a downward trend with some airlines throwing in some extra freebies like a free hotel night.

The general belief that international operations would be the savior for some of India's airlines seems to be sinking...just like that airfare.

You can still catch some of these crazy deals while they last at Tripmela.

Can Mergers Save India's Airlines?

The Wharton School published an article looking at consolidation in the Indian Airline industry and found that, like in the United States, mergers will not solve the underlying problems associated with air travel. The piece focuses specifically on the Air India - Indian tie-up, which will likely show increasing losses in the year following the merger. The authors suggest that labor unrest and corporate culture could doom mergers in the industry.

The culture issue is one facing Kingfisher and Deccan head on, as execs try to figure out how to bring together a culture of providing premium service with one focused on lower costs. At the same time, they are trying to keep two separate brands - a feat that is at least as big a challenge as higher fuel costs and downward pricing pressure.

The authors offer no suggestions but hint that success may lie in growing the airline routemaps to include overseas destinations, an area where Air India has had some success and Kingfisher is scratching to go.

Airlines look to cut expansion Plans

With high fuel prices, downward ticket pricing, resulting in lower yields most airlines are looking to reduce the pace of expansion in the coming months. Jet plans to increase capacity at a faster pace in its Internation market than the domestic market, its doing so sustain its lead in the overseas market. Jet will be adding 6 ATRs in the domestic sector next year, these will most likely be deployed in the Non-metro (tier 2-3) cities.

LCCs Gain Share

Low cost carriers, per latest data from the DGCA, now have a majority share of total domestic passengers. Full service carriers including Jet and kingfisher have lost share mainly to Spice Jet and Indigo Airlines. The price promotions by Spice probably helped it to gain share this past quarter. Of course while the entire game of market share is being played, the airline industry is expected to lose Rs 4,000 Crores collectively.

Air India Feels the Pain in its Middle East Sectors

Air India has been going heavy up with its LCC brand Air India Express to the Middle East destinations. But its been facing declining passenger load factors in this sector. Per this article 'The passenger load factor of the flag carrier's low-cost subsidiary for West Asia has fallen a steep 11 percentage points over the last six months as a result of competition from new low-cost entrants and fare wars by incumbents.' This is partly due to increased number of planes, but largely driven by increased competition. This pressure is only going to increase with Deccan (or whatever Kingfisher Airline decides to call) all set to fly overseas in August, and the big dog Emirates Airlines throwing its hat in the LCC ring.

Airlines in India to Collectively Lose Rs 4,000 Crores

Given the current oil prices the Indian airlines could collectively lose up to $1 Billion this fiscal (2007/08) year. This is being exasperated by the re-introduction of irrational pricing (great for the traveler) by some of the airlines to sustain their load factors. This downward pricing in the domestic sectors coupled with increasing costs is creating record losses for the industry. This is another reason why Kingfisher Airlines is waiting with bated breath for August, as that's when they can fly overseas and hope to reduce their losses to a certain extent.

Even Jet Airways Is Feeling the Pain

Jet Airways, an airline that historically shown strong profits, announced that it will post a loss for its fiscal year. While an airline losing money generally isn't particularly remarkable, it is for Jet Airways, which has been a model carrier in India. However, faced with rising fuel costs (like everyone else) , startup costs associated with growing their international business, and increased pricing pressure at home, they couldn't make the financials work.

The downward pressure on fares in the domestic market will be a big story this year and could lead to additional consolidation in the industry.

India's Airlines to Reduce Short-Haul Flying

SpiceJet has announced that it will withdraw 12 short-haul flights due to increased fuel costs. We've typically seen fuel cited as the reason for airlines dropping longer flights, but the issue is really two-fold: yes, fuel costs are an issue. But the larger issue is that SpiceJet only flies mid-sized 737s, while the routes would be better served with ATRs (which are popular with Deccan and JetLite) or Embraer 190s (which I don't think any Indian airlines fly). Hyderabad to Chennai and Bangalore to Kochi will be affected by the changes. Check with SpiceJet to make sure your upcoming flights have not been elminated.

Delay in Baggage Delivery Costs United Airlines Rs 60K

Delhi consumer commission ordered United Airlines to pay Rs 50,000 to an exporter whose baggage was delayed by the airline, plus an additional Rs 10,000 for litigation costs. The passenger was on his way to Mexico City to participate in a trade fair when one of his bags was delayed and delivered three days after the fair was over. Although this incident happened in 1998, a decade ago, Mr Sharma was given only Rs 60,000 against the original amount of $40,000 USD that he claimed for loss of business, mental agony and inconvenience.

Offline Presence for Online Travel Agencies

In their quest to sell more of the higher margin vacation packages Yatra.com has decided to have a consumer facing offline presence. They will be opening holiday lounges, aptly called “Yatra.Com Holiday Lounge”. Currently these lounges are operational in cities like Gurgaon, Chandigarh, Ahmedabad, Bangalore and Chennai. Lounges in Mumbai and Connaught Place in New Delhi are slated to open in the next 10-15 days. They want to open these additional lounges in well-known streets, malls, and premium places (in other words expensive real estate). This is a fairly expensive proposition given the booming real estate costs in India. It will be interesting to see how long they can sustain this money sapping strategy.

India's Airlines Bring Back Rs 0 and Rs 99 Fares

About 12-18 months ago we would frequently see India's lowfare carriers offering Rs 99 and Rs 0 fares on some of their routes as a way to drive market share. After quickly realizing that these fares were killing them, they swiftly disappeared.

Well, they're back. Tripmela has published a bunch of great airfare deals from GoAir (Rs 0), Air Deccan (Rs 99) and IndiGo (Rs 99). While these are crazy airfares that won't benefit the airlines at all, they are great for travellers. Hurry and pick these up before the airlines decide that losing money isn't a great business strategy.

Kashmir: Come Up and Play 18 Holes of Golf

The New York Times features an article about how Kashmir's tourism officials are trying to sell the destination as a great location to play golf. Although many western governments tell their citizens not to visit the region, this has not deterred the government from spending more than US$6 million (about INR 24 crore) building a new golf course in Jammu to attract visitors. Even with that huge outlay, nobody is expecting Kashmir to become the next Scotland.

For great deals on flights to Jammu and Srinagar, visit Tripmela.com for great airfares to many cities in India.

A Desi GDS?

Jet Airways plans to launch a Global Distribution System (GDS) with other (unspecified) carriers and an IT company (probably Wipro). Per this article, Jet Airways paid close to $40 Million in GDS fees last year, a major motivation for them to develop a new GDS. Per their chief commercial officer "there is no reason why the airline should have to payout so much to the GDS companies. There is so much IT talent in India which can be used to develop a new system that can be used by Jet as well as other carriers". True, but the biggest hurdle is not technology rather it is getting a critical mass of airlines to adopt this system and getting travel agents to use this (an expensive proposition). Case in point G2 Switchworks, an alternative to the established GDS brands such as Sabre, worldspan, etc. G2 which completed its 4 year anniversary this month has had limited success in dethroning the established GDS'. Whether the Desi GDS becomes a reality or not only time will tell. Even if Jet (and other airlines) does not move all its inventory to this new system, but is able to use this as leverage to reduce their overall GDS fees it will be a win for them.

Another "offloaded" passenger story

We all know how this story goes, the passenger is late in boarding the aircraft for a million reasons, gets offloaded. He threatens, yells, cries...but to no avail. Only this time it was a MP of the Rajya Sabha that was offloaded from an Air India flight. According to Mr. Wahab, the Rajya Sabha MP "he had reached well on time to catch the flight, that was running 20 minutes late from Bahrain, but got a little late while being taken from the VIP lounge at the airport to the aircraft". Uh, he got late while waiting at the VIP lounge, unless he is physically/mentally challenged, couldn't he have walked to the gate or did he need directions ?

Magazine: Air India Service Among Best in World

Air India has long suffered from a reputation of offering terrible service on its routes to Europe and the United States. But over the past several years it has worked tirelessly to change that image, upgrading both its aircraft and its service within. Finally, the carrier is getting some recognition: Travel Weekly, a US-based publication for travel agents, notes in its new issue that Air India's service "matches or beats" that offered by the world's top airlines. For anyone who flew Air India as recently as 4 or 5 years ago, that will come as a shock, but it is worth another try (assuming you can't get on Jet, of course).

For low fares wherever you go, visit Tripmela.com for great airfare deals every day.

Low Cost Airlines to Introduce a Surcharge for E-Bookings

The low cost carriers Indigo and Spicejet will be introducing a surcharge of Rs 50 (flight time of less than 1 hour) or Rs 100(flight time more than 1 hour) for booking on the airlines' website. Trust the LCCs to nickle and dime you, Spicejet claims that their web hosting facilities in the US has increased prices, hence they will have to pass that cost on to the consumer. You will continue to pay a higher surcharge for bookings made over the phone. It will be interesting to see how the OTAs counter this, recently the airlines were frowning of being undercut by the OTAs and were threatening to reduce the commissions in a bid to circumvent the undercutting by the online travel agencies.

Consolidation in the Airline Industry leads Route Rationalisation

In their bid to retain operational efficiencies Jet Airways and Kingfisher Airlines will be rationalising their routes across the country. As a result the North–East region will lose out on the full service Jet Airways to be replaced by JetLite, which with its low cost structure can operate in these markets. These are definitely some of the advantages of a consolidated aviation market (Healthy for the long run).

Abysmal Supply of Hotel Rooms in Mumbai and New Delhi

Ever wonder why the rates of hotel rooms in Mumbai and New Delhi are at par (if not more) with the top tier cities of the world, when neither of the cities is close to being in the top tier. It’s the supply of available room inventory. You have heard this plenty of times on this blog, but now there is some data to back that claim. Bangkok has more hotel rooms than Mumbai and New Delhi put together. Total Rooms available in Bangkok are 60,000 compared to Mumbai at 20,000 and New Delhi at 25,000. This again explains the over the top room rates in these two cities.

Jet Airways to Open Second European Hub In Milan

In it's bid to increase the share of revenue from International operations to 50%, Jet Airways is aggressively expanding overseas. They will now be opening their second European Hub in Milan, Italy in addition to the existing hub in Brussels, Belgium. This new hub will let them take advantage of the tourist influx to Italy especially from the U.S during the summer season.

Another Close Call for Kingfisher Airlines

It seems that this week Kingfisher Airlines seems to be in the spotlight for the wrong reasons. Kingfisher's flight from Hyderabad to Delhi was aborted after some "dangerous substance" (not identified) leaked in the cargo hold setting off the smoke alarm. The plane, which was airborne for about 12 minutes was promptly brought back to the airport. The airline is blaming GMR, the airport operative responsible for security at the new Hyderabad airport, for clearing the cargo on to the aircraft. If you recall the ground handling facilities including cargo security was one of the contentious issues that led to the delayed opening of the airport. Hope they get to the bottom of this leak.. thank god the week is ending.

Global Image of Airlines

As Jet and Kingfisher Airlines look to expand their International routes and Air India is in a modernization drive there is an interesting article that talks about the different branding strategies that three majors can adopt. It has a collection of opinions from some Advertising/Marketing/Brand strategy folks in India. I do like the idea of a differentiated brand, in this world of commoditized air travel (international or domestic) brand can play an important role in a consumers' decision-making process. Of course making of a good brand does not just involve a clever tag line, it involves fine-tuning a lot of hard operational processes before the soft branding issues can be tackled.

Anyhow, there were a few common themes across all of opinions:
Jet airways: Position as British Airways (I personally would want them to be benchmarked to Singapore Airlines) to play up its image of Business efficiency.
Kingfisher Airlines: Mimicking the Virgin experience.. the phrase that comes to my mind is "let the good times roll"
Air India: Leverage Indian culture and heritage (i like the Maharaja as it is very different, but would prefer a slimmer and sharper looking King.. depicting a young vibrant and efficient person rather than a podgy bureaucrat)

But the tag line that I found most amusing as suggested by one of the persons was for kingfisher airlines: “Fly the 36-24-36 skies!” “Hostess with the mostest”... is this guy serious?

Budget Carriers Hint at Lower Commissions to Online Agencies

India's budget airlines are beginning to discuss lowering the 2-3% commissions that they are paying online travel agencies for selling their tickets. In a situation not seen in the US or in Europe, airline websites have seen their percentage of tickets sold directly through their websites actually shrink as online travel agencies undercut the airline's prices by refunding some of the commissions back to users. I suspect we'll see that arrangement disappear this year.

For great deals while they still last, check out Tripmela's great airfares in India for the best travel deals on trips in India.

Teen held with Lakhs in Cash at the Airport

A teen boy enroute to Bangkok was held in the airport with over Rs 20 Lakhs in hard currency in his possession. The custom officials got suspicious by his behaviour and took him in for questioning where they found the cash in his pockets and handbag (next time try on Cargo Pants). Although the boy was later released after getting proof of Income the cash was seized as it exceeds the maximum permissible limit of $5,000. My question is, what is a teenager doing with $57,000 in cash, have his parents not heard of credit cards or travelers cheques?

India's Airlines Shrink Capacity Growth

Airlines in India have lowered their expectations of capacity growth in 2008 in the face of falling demand. 2007 saw 30% growth in air traffic in India, but this year may only see 1/3 of that growth, and airlines are starting to make changes, reducing capacity, returning aircraft and slowing the rate at which they take new planes.

On a plus note, airlines have seen an Rs 400 increase in average fares, which helps with profitability but lowers demand - especially since we've seen a sharp decrease in the number of wildly low fares that used to be advertised to stimulate demand.

Of course, low fares haven't disappeared completely -- check out Tripmela's great airfare deals to find out the lowest fares on your next trip.

Courtyard by Marriott to come to Mumbai

Marriott International plans to launch the "Courtyard by Marriott" brand in Mumbai, India by 2009. The 300 room property will be near the Andheri-Kurla road close to the airport. This is good for two reasons.

Mumbai's hotel room rates are through the roof, which is largely due to the deficit of quality room inventory. This, although a small trickle, is certainly a development in the right direction.

India needs more standardized 3 & 4 star quality business hotels, Ginger Hotels is another good example of this.

In the meantime if you are looking for deals on hotels in Mumbai check out Tripmela for great deals on hotels. You can also sign up for the best 10 travel deals weekly newsletter.

Airlines Want to Serve Liquor on Domestic Flights

As most of you know alcohol is not served on domestic flights in India but is allowed on International flights. The airlines want to change that, they along with the liquor lobby are lobbying the government to allow alcohol back on your Mumbai to Goa (or any domestic) flight. Interestingly 4 Rajya Sabha members (not named) have pushed the civil aviation authorities to push this case. Interestingly, Vijay Mallya the owner of Kingfisher Airlines and United Breweries is also a member of the Rajya Sabha hmmm....
ऐ गनपत चल दारू ला... (Eh Ganpat Chal Daru la ...in case you cannot read the Hindi Script)

Kingfisher Flight Hits Jackal at Bangalore Airport

A Kingfisher aircraft hit a jackal at Bangalore's airport on Thursday, injuring no passengers but causing damage to the plane's nose wheel. The ATR, on its way to Hyderabad, was pulled from service, and the airport was closed for 3 hours. The delay was due to the difficulty of moving the plane with the jackal caught up in the wheel (gross). This incident comes soon after a dog wandered onto a runway at Hyderabad's airport.

For cheap flights to Bangalore that do not involve hitting a jackal, check out Tripmela's great airfare deals to Bangalore.