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India's airline sector set for 20
pc jump: Praful
Patel
New
Delhi: India's Civil Aviation Minister Praful
Patel has said that he expects the country's newly
regulated airline sector to boom 20 percent annually
over the next five years on the back of surging investment
and traffic. Domestic and international passenger
traffic would grow 20 percent a year as the government
and private sector invest 20 billion dollars over
the five years, including more than doubling the number
of civilian passenger planes to 400, he said in an
interview. After years of crippling red tape, poor
infrastructure and high costs, India is throwing open
the sector to new carriers at home and abroad, deregulating
routes, increasing traffic, developing its airports
and modernising its fleets. "Well India's aviation
sector has far too long been restricted and now that
we have opened up, liberalized in a big way and international
traffic also has been liberalized to the extent that
with the United States we have a near open skies policy,
very liberal agreements with the United Kingdom, many
other countries. And that is spurring demand internationally
and within the domestic sector we have allowed many
new low cost carriers and regular carriers also to
start operations," Patel said.
New
Delhi last month signed breakthrough deals with the
lucrative United States and United Kingdom markets,
doubling capacity to and from the UK and opening skies
with the United States. India has also agreed to liberalise
traffic with China. The two nations account for almost
40 percent of the world's people. Patel also said
India was pushing ahead with more bilateral agreements
to increase international routes, including with Singapore,
Hong Kong, the Netherlands and Belgium. India's average
annual air travel is 0.1 trip per person, a fraction
of the global average of 2.0, industry figures show.
The latest entrant into the Indian market, Kingfisher
Airlines, backed by the world's second largest spirits
maker, India's UB Group, is due to take off this week.
India's leading domestic carrier, Jet Airways Ltd,
which has begun flying overseas, recently raised 435
million dollars in an initial public offering, that
was heavily oversubscribed and the stock listed at
a premium to the offer price.
Patel said the communist-backed government would push
ahead with plans to sell up to 25 percent of Air-India
and Indian Airlines in 2005/06 (April-March) to help
fund expansion in the face of growing competition,
but would not privatise them. "Well there's no number
fixed because the financial advisors to both the Air
India and Indian Airlines board will advise them what
would be right percentage but initially the thought
process was in the vicinity of 20-25 percent. That
number could be flexible as per the advice given,"
Patel said. "Well, I guess it should be completed
in this fiscal 2005-06 and that is the only way we
will be able to fund and raise resources for our ambitious
acquisition plans," he added. Patel -- 48-year-old
founder and head of a business empire spanning home-made
cigarettes, edible oils and health care -- is confident
the coalition's allies who support it from outside
can be swayed for the part sale of the struggling
state carriers. His comments came a week after Air-India
approved the long- awaited purchaseof up to 50 long-range
planes from Boeing Co worth about seven billion dollars
in a deal that has drawn public protest from European
rival Airbus. Patel would not be drawn, saying it's
business rivalry.
He,
however, said that there were no geo-political considerations
involved when the government gave the go ahead to
the Air India (AI) board to buy aircraft from Seattle-based
Boeing. Stating that the civil aviation ministry never
gave any directions in this regard, Patel said that
the deal with Boeing was purely based on techno-economic
parameters. Boeing's bitter rival Airbus Industries
has demanded an inquiry by the Central Vigilance Commission
(CVC) into the deal alleging foul play. "The process
of acquiring planes for state carriers is based on
government's existing system. ''On my request, Prime
Minister Manmohan Singh had consitituted an oversight
committee which vetted the whole selection process
for purchase of 43 Airbus A320 aircraft by Indian
Airlines (IA). The same procedure will be followed
for Air India deal also,'' said Patel. These specific
comments of Patel comments came even as the American
aircraft major claimed today said that its deal with
Air India "could stand any scrutiny' and was above
board.
"This
deal can stand any scrutiny. As a foreign company
we cannot comment on any decision India might take
towards conducting a CVC into the deal entered into
by Boeing with Air India. The matter is sovereign
to India and not our prerogative," said Dinesh A Keskar,
Senior Vice President, Boeing Commercial Airplanes.
Keskar said that the Boeing as an aircraft manufacturer
had presented its products before Air India and it
was only after a through study that Boeing was considered
for the deal over its European rival Airbus. "Air
India has a strict evaluation procedure. And we were
selected after Air India had decided on all the factors
and taken all the parameters into consideration. The
package we offered was comprehensive and competitive,
and needless to say, pricing is an important part
of the package. But the bottom line is that our product
is better than the competition," he said. He said
that the three new planes, namely the Boeing 777-300ER,
777-200LR and 787-8 (Dreamliner), was better than
the products offered by its rival Airbus. The new
innovations it was offering included, crown area for
crew seat, state of the art computer systems in the
787-8s attached to the back seat of each aircraft,
more seating space and composite parts which do not
corrode and can withstand great pressure. "Our newest
airplanes for the medium, long and ultra-long haul
markets are the right choice for Air India because
they are clearly positioned to provide the national
carrier with higher revenue potential. Financial benefits
by conducting objective calculations reveal that all
Boeing airplanes, 777- 300ER, 777-200LR and 787-8
have operating profits that far exceed those of competitors,"
he said.
He
said that operating Boeing aircrafts will not only
help Air India earn more revenue, as the fuselage
of these planes were larger than their Airbus rivals,
but would also help it save more money, by lowering
its operational costs. "The fuselage in the 777-300ER
is 78 cm wider than that of the A340-600. It can carry
333 passengers as against 305 that can be carried
by A340-600. Also it has 12 percent more cargo space.
Apart from all this 777-300ER is 20 tonnes lighter
than its competitor and burns one million gallon less
fuel, thereby lowering its operational costs. The
777-200LR and 787-8 burn two million gallons less
fuel than its Airbus rivals, the A340-500s and the
A330-200s respectively. Maintenance costs are also
lower," he added. "Based on the projected route pattern
and aircraft utilization for Air India, the operating
profit per year of 27 787-8s is 81 million higher
that that of the A330-200s, the eight 777- 200LRs
have an advantage over A340-500s by 44 million US
dollars, and the 15 777-300 ERs generate 60 million
dollar greater annual profit than the A340-600s. Thus
that cumulative operating profit per year for Air
India with a fleet of these 50 airplanes is 185 million
dollars greater than that of an Airbus fleet," he
said. He further said that the 787-8 will be coming
in 2008, adding that Boeing was proud of the fact
that India which has been among the first to have
the 707s and the 747s in its fleet will also be among
the first to have the 787-8 Dreamliner. Patel said
the Boeing purchase would not be derailed by the row.
Underlining India's potential, Patel said the country
had about 180 civilian passenger planes, compared
with 750 in China and more than 6,000 in the United
States. Less than one percent of India's more than
one billion people fly each year, with tens of millions
relying on cheaper, but outdated trains and road networks.
But competition, a flurry of new cut-price airlines
and tax cuts in the sector have brought fares down
dramatically -- in some cases rivalling trains --
and brought flying within reach of millions more people.
Spending power is also surging in Asia's fourth largest
economy. Limited advance purchase tickets between
major cities now sell for as little as just over 10
dollars each way. Patel said he was confident the
government would further reduce taxes on aviation
fuel over the next year or so to help bring down prices
and make the sector more competitive.
- May 5, 2995
Boeing-Air
India 'deal can stand any scrutiny': Boeing (Go
To Top)
by Sutirtha Sanyal
New
Delhi: Aircraft major Boeing today said that the
company's deal with Air India "could stand any scrutiny".
"This deal can stand any scrutiny. As a foreign company
we cannot comment on any decision India might take
towards getting the Boeing-Air India deal examined
by the Central vigilance commission. The matter is
sovereign to India and not our prerogative," said
Dinesh A Keskar, Senior Vice President, Boeing Commercial
Airplanes. He said that the Boeing as an aircraft
manufacturer had presented its products before Air
India and it was only after a through study that Boeing
was considered for the deal over its European rival
Airbus. "Air India has a strict evaluation procedure.
And we were selected after Air India had decided on
all the factors and taken all the parameters into
consideration. The package we offered was comprehensive
and competitive, and needless to say, pricing is an
important part of the package. But the bottom line
is that our product is better than Airbus," he said.
He said that the three new planes, namely the Boeing
777-300ER, 777-200LR and 787-8 (Dreamliner), was better
than the products offered by its rival Airbus. The
new innovations it was offering included, crown area
for crew seat, state of the art computer systems in
the 787-8s attached to the back seat of each aircraft,
more seating space and composite parts which do not
corrode and can withstand great pressure. "Our newest
airplanes for the medium, long and ultra-long haul
markets are the right choice for Air India because
they are clearly positioned to provide the national
carrier with higher revenue potential. Financial benefits
by conducting objective calculations reveal that all
Boeing airplanes, 777-300ER, 777- 200LR and 787-8
have operating profits that far exceed those of competitors,"
he said. He said that operating Boeing aircrafts will
not only help Air India earn more revenue, as the
fuselage of these planes were larger than their Airbus
rivals, but would also help it save more money, by
lowering its operational costs. "The fuselage in the
777-300ER is 78 cm wider than that of the A340-600.
It can carry 333 passengers as against 305 that can
be carried by A340-600. Also it has 12 percent more
cargo space. Apart from all this 777-300ER is 20 tonnes
lighter than its competitor and burns one million
gallon less fuel, thereby lowering its operational
costs. The 777-200LR and 787-8 burn two million gallons
less fuel than its Airbus rivals, the A340-500s and
the A330-200s respectively Maintenance costs are also
lower," he added. He said: " Based on the projected
route pattern and aircraft utilization for Air India,
the operating profit per year of 27 787-8s is 81 million
higher that that of the A330-200s, the eight 777-200LRs
have an advantage over A340-500s by 44 million US
dollars, and the 15 777-300 ERs generate 60 million
dollar greater annual profit than the A340-600s. Thus
that cumulative operating profit per year for Air
India with a fleet of these 50 airplanes is 185 million
dollars greater than that of an Airbus fleet". He
further said that the 787-8 will be coming in 2008,
adding that Boeing was proud of the fact that India
which has been among the first to have the 707s and
the 747s in its fleet will also be among the first
to have the 787-8 Dreamliner.
- May 4, 20005
Fly
to Gulf on Kerala owned budget airline (Go
To Top)
Thiruvananthapuram:
Kerala may soon become the first state of the country
to boast of a state-run airline. The state government
is set to approach the Centre to seek permission to
operate a state-owned low cost international airline,
which will be aimed to cater for the Keralites working
in the Gulf countries. Huge number of Malayali workers
in the Gulf find it quite tough to pay a visit to
their home state, Kerala, because of the unaffordable
rates of the international airlines. The new airline,
which has been planned by the state Chief Minister
Oommen Chandy, will be at least 30 per cent cheaper
than other international airlines and would facilitate
the Keralites residing in Gulf. After a feasibility
study, which said that the venture is viable, the
state government officials say that it will not be
tough for the Chief Minister to get a central nod.
What gives Chandy the upper hand is the fact that
Kerala is already equipped with three fully functional
international airports, with a fourth one in the pipeline.
The three international airports are at Thiruvananthapuram,
Cochin and Calicut. The fourth one is to come up at
Kannur. There are daily flights operating from Singapore,
Colombo, Male, Muscat, Bahrain, Kuwait, Abu Dhabi
and Dubai besides other places. According to the Kerala
government sources, the state proposes to start out
with three big aircrafts and two turbo jets. Although
the new airline would be meant basically for the Keralites
in Gulf, it would also have flights to Chennai, Bangalore
and Hyderabad. Earlier, on Friday, the Union Civil
Aviation Minister, Praful Patel said that Air India,
the national carrier, will increase the number of
budget flights to various destinations in the Gulf.
These flights, he said, would go to Dubai, Abu Dhabi
and Al Ain in the United Arab Emirates and Muscat
and Salalah in Oman. In the beginning there would
be two flights from Kerala. The basic fare of the
Air-India Express from Trivandrum to Abu Dhabi is
Rs.3,250(74 dollars) and from Mumbai to Dubai, it
is Rs.2,750 (62 dollars) per ticket. With about 25
percent lower fares than other international carriers,
Air India Express aims to boost its share of the key
Gulf and South East Asian markets. In Kochi, the first
Air India Express flight was inaugurated by K.M.Mani,
Kerala's Minister for Revenue and Law. Air India Express
flight IX 421 took off for Abu Dhabi with 132 passengers
on Friday. In all, there will be 12 flights from Kochi,
daily to Dubai, one exclusive flight to Abu Dhabi
and four flights to both Abu Dhabi and Muscat. The
new flights are likely to be of immense benefit to
Keralites, a huge section of whom are settled and
working in the Middle East. The low-cost subsidiary
has fares that are 20 percent to 40 percent cheaper
than existing offers on other airlines. Friday's inaugural
flights fulfill a long-pending demand of Keralites
working in the Gulf countries. A fully-owned subsidiary
of Air India, Air India Express plans to operate 31
flights from three airports in Kerala, Thiruvananthapuram,
Kochi (Nedumbassery) and Kozhikode.
- May 1, 2005
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