1. Air Astana, the rising star in EuroAsia
New aircraft on order, product enhancements and route expansion – with a major focus on Asia – are pushing Kazakhstan’s Air Astana towards its target of 63 aircraft and a strong network supported by hubs in key destinations Air Astana achieved record growth during 2007.Passengers carried increased by 46 percent over 2006 to 2.13 million. “Air Astana is a great story,” said the airline’s president Peter Foster. “We’ve been profitable every year since inception. We’re a great commercial and operational success story.” We are the fourth fastest growing full service airline in the world. Foster has had a distinguished career in aviation. He served in a variety of management and senior management positions yes with Cathay Pacific, both in and overseas, and was a chief advisor to Philippine Airlines during its restructuring .Foster was appointed CEO of Royal Brunei Airlines in July 2002, a position he held until October 2005 when he was appointed president of Air Astana .Air Astana recently confirmed a firm contract for the purchase of six A320s, as part of its expansion programme on domestic and medium-haul routes. First deliveries of the aircraft will start in 2012. “This order is consistent with our strategic business plan aimed at expanding our fleet, and continuously improving the service to our passengers,” Foster said .Currently Astana flies to three destinations in Asia – Beijing, "Bangkok and Seoul. New destinations have yet to be confirmed but Foster admits, “We are looking at Hong Kong - which would be extremely good for launching services into Singapore. “Air Astana is entering into an exciting new era of development to match strong traffic growth demands from the dynamic Kazakh economy,” he added. Air Astana, a joint venture between a state holding company and BAE Systems, currently operates a network that serves 25 domestic and 21 international destinations. Achievements during 2007 included the launch of the Nomad Club frequent flyer programme, online seat booking and full e-ticketing availability on most .
Source: Business Standard;17.6.2008

2. Virgin Blue launches Airpass
Virgin Blue has launched an Airpass exclusively for international visitors to Australia. From September international travelers can purchase Virgin Blue Airpass packages of three flight sectors starting from $A207. “Our new Airpass is designed to be very affordable, easy to buy and easy to use,” said Stefan Pichler, chief commercial officer, Virgin Blue Airlines. Airpass holders can fly on their choice of 53 routes across allowing travelers to explore capital cities, regional towns and tourism centers across our Australasian network .The Virgin Blue Airpass is valid for 12 months, and the cost of flights is based on air mileage flown. The web-based product will be available for sale globally via the www.virginblueairpass.com web site or via travel agents. Air passes can be purchased in conjunction with any international air ticket or any airline to .Travel agents are able to earn commission on sale provided that they have pre-registered with Virgin Blue at
Source: Business Standard;17.6.2008

3. New online US visa scheme being introduced
Travelers to the US from the UK exempt from certain US visa requirements will have to use a new online travel authorization process from January 12.Under the new Electronic System for Travel Authorization (ESTA), all travelers, including children, from 27 countries under the US visa waiver programme will have to fill out an electronic travel authorization form online (https://esta.cbp.dhs.gov/) prior to boarding a US-bound aircraft or ship. Initially, there will be no fee to submit an application. It will require answering questions about criminal records, communicable diseases, past history of visa revocation or deportation, and basic biographical data such as name, birth date and passport information. Changes in address and itinerary can be made online after the ESTA form has been first submitted, according to the US State Department.ESTA is not a substitute for a visa, as visas will still be required for certain travel from visa waiver countries. “It is principally for those individuals planning to travel to the United States for temporary business or pleasure,” a statement said. “Individuals from those and other countries traveling under valid visas will not be required to apply through ESTA. And just like with visas, those traveling with an ESTA approval will still be required to go through pre-clearance facilities at US ports of entry.” The new process is intended to determine whether a traveler to the US is a law enforcement or security risk. US Customs and Border Protection will begin to accept voluntary ESTA applications through the ESTA  Web site: https://esta.cbp.dhs.gov/ from August 1.US officials warn that after ESTA becomes mandatory, travelers who have not received prior approval may be denied boarding, experience delays or be denied admission at a US port of entry. If an applicant is not approved for travel through ESTA, he or she would have to apply for travel through the normal visa process. And if a traveler previously had been refused admission or a visa to the US, he or she would not be eligible for ESTA.US homeland security secretary Michael Chertoff said: "Getting this information in advance enables our front-line personnel to determine whether a visa-free traveler presents a threat before boarding an aircraft or arriving on our shores. “It is a relatively simple and effective way to strengthen our security, and that of international travelers, while helping to preserve an important program for key allies. “Currently, travelers must fill out a paper form detailing their passport information, travel plans and intended length of stay when arriving on a carrier to the US.
Source: Financial Times;London;16.6.2008

4. Continental and United forge 'comprehensive' partnership
Continental Airlines and United Airlines are to link their global networks in a "comprehensive co-operation plan". Although falling short of a merger, Continental plans to leave the Delta-led SkyTeam group and join the United-led Star Alliance, although this process may take at least a year. The two carriers are to work together on code-share flights, frequent flyer programmes, lounges, IT and procurement. "This work was assisted by the efficiency opportunities identified during the parties' earlier merger discussions," a joint statement said.  A range of joint ventures are to be established to allow co-operation between the two airlines and other Star Alliance members, which include Lufthansa and Air Canada. Continental, the fourth largest US carrier by traffic, will seek US Department of Transportation approval to join in an anti-trust immuzed alliance. This will enable the Houston-based airline to work closely together with United - the second largest US carrier - Lufthansa, Air Canada and other alliance members to work closely together and establish a transatlantic joint venture. The North Atlantic plan aims to allow Continental, United, Lufthansa and Air Canada to poll revenues to allow them to compete more effectively with rival SkyTeam carriers led by Delta and Air France. "The transatlantic joint venture will combine the strength of the carriers to create a more efficient and comprehensive transatlantic network for the carriers' customers," the statement said. Other joint ventures are planned for the Latin America and Asia-Pacific regions. Within the US, the two airlines plan to begin broad code-sharing and frequent flyer reciprocity. Continental chairman and CEO Larry Kellner said: "As we experience some of the most challenging conditions airlines have ever faced, we look forward to the benefits of a new relationship with United and the other Star Alliance members." He said "substantial new opportunities" for passengers would be created through the partnership, while admitting that cost cuts were part of the plan. United's chairman, president and CEO Glenn Tilton said: "Continental will bring significant new assets to our global alliance, and our two companies will work together effectively with our partners to provide the best overall network in America and the world."
Source: Financial Times;London;16.6.2008

5. ‘Domestic aviation may face over-capacity’
Indian aviation industry, which is facing tough times due to falling revenue and high fuel costs, will have to seriously deal with overcapacity on certain routes, former Air India Chairman and Managing Director, V Thulasidas, said. Overcapacity on certain routes coupled with intense competition has resulted in falling revenue for the domestic airlines. At the same time, their costs have gone up, mainly due to the unusually high fuel prices. The two together are pressing the airlines from both sides,” Thulasidas said. “The ATF cost in India is much higher...therefore, the problem in India is much more serious than any where else in the world,” he said.
Source: Business Standard;16.6.2008
 

6. Airlines hunt credit tools to avoid crash
Back in 1997, the first indication of the private airline boom going bust was when they started defaulting on their payments. Circa 2008, the cash crunch in the sector is causing airlines to come up with new ways to keep the money rolling in the system to avoid defaults. If airlines are to be believed, these instruments include those where shares of the company are put forward as a guarantee for debt. SpiceJet’s head of projects and planning, Kiran Koteshwar, said, “We are looking at various instruments which are available in the market. These include short term instruments, including simple overdrafts where shares are used as the guarantee. These are products which are available all over the world.” He added the Delhi-based firm was exploring the possibility of getting insurance for its debt. An analyst with a foreign brokerage, who did not want to be named due to compliance issues, said, “Credit on forward sales has been an accepted practice in the industry. But putting the promoter’s shares on the line is risky and would be slightly strange. People would give debt only when they feel value, which is not really there in the airline industry now.” Says a senior Jet executive: “While Jet is not in need of such instruments currently, it is natural that players who are finding it tough would try and find additional structures and instruments to keep money rolling. “Small players have reached a stage where they have no assets such as aircraft because of sale and leasebacks deals,” the official said, referring to the practice among airlines to keep their balance sheet light by buying an aircraft, selling it to a third party and leasing it back, which is very cost-beneficial. With oil constituting the largest chunk of operating costs, most of the credit facilities are used to service fuel needs. Airlines seem to have successfully negotiated with oil companies for longer payment periods. Jet claims that they now have a 60-day credit period, up from 45 days some few weeks ago. SpiceJet sources say their credit period varies between 15 and 45 days. An analyst said, “Almost every oil marketer has been offering two weeks or 15 days of credit on fuel. But anything longer, especially without any interest, is certainly good for the aviation industry.”
Source: Daily News & Analysis;16.6.2008


7. New airlines edge out older players via clever marketing
NEW entrants Kingfisher Airlines, SpiceJet and IndiGo have outsmarted the established players Jet Airways and Air India (formerly Indian Airlines) in terms of marketshare. Aggressive marketing seems to have helped start-up carriers to take away market share of full service carriers in May 2008. While Jet Airways’ market share in the domestic market came down to 20.5% in the month (from 21.6% in April 2008), share of Air India reduced to 14.8% in May (from 15.1% in the previous month). Market share of Kingfisher Airlines and Air Deccan increased to 14.4% and 14% in May 2008 as against 14.3% and 13.6% in the previous month of the same year. JetLite has seen its share moving upward to 8.6% for the period (from 8% in the previous month). “Jet Airways has been hit hard by Kingfisher at its top-end of the business. Simultaneously, budget carriers have snatched its the bottom-end customers,” said Ankur Bhatia MD, Amadeus India. He added that the airline has lost marketshare by going slow on its route expansion plans. Aviation analysts attribute Air India’s poor performance to management disorientation postmerger of Indian Airlines and Air India. They say that the national carrier has failed to utilise the available capacity. The government in August last year merged the two national carriers to form country’s largest aviation company — National Aviation Company of India (NACIL). The merged entity flies under the brand name of Air India both in the domestic market and internationally. According to the data released by the directorate general of civil aviation (DGCA), domestic airlines carried 19.24 million passengers during January-May, registering a growth of 9% over 17.65 million passengers in the corresponding period last year. It may be noted here that the air traffic which was growing at brisker pace of about 25% till last year is now moving in single-digit. “Even this 9% growth is not real. The passengers who have led this growth are those who are being offered discounted fares by airlines. If you include the entire air traffic including international, the growth rate would be in the range of 2% to 3%,” an industry watcher said. On account of soaring jet fuel price, airlines have been consistently increasing airfare (through hiking fuel surcharge). This has pushed airfare beyond the reach of many. As against Rs 900 in May last year, airlines now levy a fuel surcharge of as much as Rs 2,900.
Source: Economic Times;16.6.2008


8. Panel seeks aviation fuel pricing details
A final decision on providing sales tax relief on aviation turbine fuel (ATF) to domestic airlines is likely to emerge only after the June 21-23 meeting of the Empowered Committee of the State Finance Ministers on VAT in Srinagar. The committee Chairman, Dr Asim Dasgupta, said that the Ministry of Civil Aviation has been asked to provide more details on how ATF price is fixed around the country and what options are available for the committee to consider on the matter.
Source:Hindu,Business Line;17.6.2008


9. Jet ties up with Shell-MRPL for supply of ATF
With the airline industry facing the brunt of high jet fuel prices, premier carrier Jet Airways on Monday announced a two-year tie-up with Shell-MRPL JV for its supply at the new airports in Bangalore and Hyderabad. The 50:50 joint venture company, which would supply aviation turbine fuel to Jet Airways at these two airports, said it would look forward to partner with other airlines in the country. "This marks the beginning of our commercial partnership with airlines in India. We look forward to partnering with other airlines in the country in the coming months," Shell-MRPL (Mangalore Refinery and Petrochemicals Limited) Aviation Fuels & Services Pvt Ltd CEO Sanjay Varkey said
Source: The Free Press Journal;17.6.2008

10. Jet looks to expand in China, mulls Dubai link
Jet Airways is working on plans to ambit in China by entering into code sharing deals with local airlines to connect Mumbai with more cities, including Beijing. It is in talks with three major Chinese airlines on deals for exchanging seats and connectivity to different cities in India and China. “We can offer the whole of India to Chinese carriers. Similarly, we expect them to offer us access to different cities in China,’’ Jet Airways chief commercial officer Sudheer Raghavan said after a function marking the launch of Mumbai-Shanghai-San Francisco service, making Jet the first Indian carrier to connect the three commercial hubs across the world. Talks with Chinese carriers—Air China, China Eastern and Shanghai Airlines—are in different stages of progress and a final decision is awaited, he said. “We hope to excite their interest in code sharing activities,’’ he said. The flight service launched by Jet on June 14 is expected to draw passengers in equal numbers from Mumbai, Shanghai and San Francisco. “That is the kind of balance we are looking at it,’’ he said. Jet Airways is working to open up the Mumbai-Dubai sector once it gets the necessary landing rights, Raghavan said. “Apart from that, we are going to consolidate our international operations after we get a fresh batch of wide bodies aircraft in late 2009. Then, we will resume further growth of international operations.’’ Jet Airways has connected India with 19 international destinations. They include nine destinations added in the short span of the past seven months, Raghavan pointed out. The latest service is it fourth long-haul connection with North America. Speaking at the launch function, consul general of India in Shanghai, Vishun Prakash described the new flight service as an important move to further develop people to people relationship between India and China.
Source: The Times of India;17.6.2008

Prepared by
Jennifer Kumar, BBA (NAU) Alumni
Skyline Business School
Hauz Khas Enclave, New Delhi 110 016
Tel: 2686 4848, 2652 4399
http://www.skylinecollege.com