1. Asian airlines go light-weight to offset heavy fuel bills
Lighter lunches, less alcohol and even streamlined cutlery are on the menu on Asian airlines as they shed excess weight in scores of little ways in a bid to cut down escalating fuel costs. With every gram carried on board equating to fuel, airlines are taking a closer look at what’s on board and making some inventive changes to cut their fuel costs — some which passengers may notice, others they won’t. These include using lighter cutlery with in-flight meals, cutting down on the amount of wine, beer and water carried on board and even ditching heavy-weight magazines in favor of more lightweight reading — literally.

JAPAN AIRLINES
Japan’s largest airliner Japan Airlines Corp (JAL) has shaved 2.5 kg per flight by introducing spoons and forks that are 2 gm lighter for its non-business class passengers. Its in-flight audio programs have also been made a few pages thinner by squashing Japanese and English text side-by-side. However, the most weight being lifted is in the cargo section where JAL has introduced glass fiber containers to cut some 26 kg per load.

ALL NIPPON AIRWAYS
All Nippon Airways Co (ANA), meanwhile, have decided to stock its alcohol section with quarter bottles of wine instead of full bottles, but has assured passengers that this will not lead them to run out midroute, insisting: “we had loaded too much before.” The company has also changed seats on domestic flight planes — introducing a lighter carbon fiber seat frame which reportedly will save the airline 40,000 liters per aircraft each year. For passengers it has brought welcomed widened leg-room, according to a spokesman, although the downside is reduced “cushion” in their seats. Other airlines are taking more short term measures. Singapore Airlines has already introduced lightweight carts and service-ware for meals on board its new A380, the world’s largest passenger jet - a move which will eventually be extended to other aircraft.

SINGAPORE AIRLINES
“We’re also eliminating heavy magazines and opting for lightweight reading instead,” said a spokesperson, although he declined to reveal the publications that would be scrapped. THAI AIRWAYS Thai Airways International (THAI) is seeking to reduce its weight load by skimping on fuel reserves, a policy that might cause some jitters among passengers although the airline insists the policy is in keeping with the European safety standards. The national carrier is aiming to halve its contingency fuel reserves as part of its weight-loss measures. One THAI executive said such a move on the Bangkok- London route, for instance, would mean shedding about 2 tones in weight — amounting to a fuel reduction that would save $800. In the Philippines, airlines have taken less innovative measures to cut weight.

PHILIPPINE AIRLINES
Flagship carrier Philippine Airlines has already limited free checked in baggage to 23 kg on its North American service, while domestic carrier Air Philippines has cut its daily service from Manila to three southern cities.

CATHAY PACIFIC
Others are looking to more expensive, long-term methods such as replacing their fuel guzzling aircraft with more fuel-efficient aircraft. The same move is being employed by Hong Kong’s flagship airline Cathay Pacific which sees fuel-efficient aircraft and route management as the key to saving fuel. The airline posted a 125 per cent drop on net profits for the first half of 2008 compared to the year before, blaming the relentless increase in fuel prices which it said rose 60 per cent to $132 a barrel over those six months. In May, the airline took delivery of the first of six Boeing 747-400 ERFs (extended range freighters) that benefit from higher fuel effi- ciency. “These new, efficient aircraft are going to help us get through this crisis,” said the Cathay’s Chief Executive, Mr. Tony Tyler, while emphasizing that the airline would not do anything to lessen the product. “We’re asking our passengers to pay more so we don’t want to give them less. We need them to fly Cathay Pacific and we keep coming back.”

KINGFISHER
But the prize for the most ‘innovative’ weight-watching has to go to Kingfisher, which has admitted saving pennies on their fuel bill by reducing the amount of washroom water carried on board. They are encouraging passengers not to ‘spend a penny’ (visit the washroom). With experts claiming that every flush at 30,000 feet saves enough fuel to power a car for 10 km, this move is not as silly as you would first think. As the well-worn adage goes: ‘Every little bit helps.’
Source: August 27, 2008, The Hindu Business Line

2. Kingfisher, SIA battle it for Singapore market
For decades, more than 70 per cent of the business and first-class passenger market between India and Singapore has been controlled by Singapore International Airlines (SIA). But homegrown Vijay Mallya’s Kingfisher Airlines is all set to challenge that with daily flights to the island city starting September 18 from Mumbai, a move that has prompted SIA to respond by adding more India-Singapore flights and increasing discounts. Kingfisher is wooing SIA’s high-margin business and first class passengers by deploying the state-of-the-art Airbus A330 and offering premium services. “We are positioning ourselves as a premium Indian carrier with a ‘wow’ product on the route,” said Rajesh Verma, executive vice-president, Kingfisher Airlines. “We are aware that there are established carriers like Singapore Airlines flying for years and they have deep pockets too. But we will get loads because we will offer a competitive product at competitive pricing,” he added. The twin configuration A330 will have just 30 seats on Kingfisher First and 187 King Class seats (which are economy seats Kingfisher does not have a business class). First-class passengers will also be pampered with a chef on board, professional bar-tender, a jacket ironing facility and asocial area with seat massages SIA is already responding to the challenge by launching five more morning flights a week from Delhi, taking the total to 14 services a week ex Delhi. “We are also looking at an increase of frequencies to Bangalore but that is slated for later in the year,” said Foo Chai Woo, general manager India, Singapore Airlines. “Our aspirations will be to operate double daily to Chennai and Bangalore just like Mumbai currently. Looking ahead, we also need to increase flights to other key cities like Hyderabad as the market develops further,” Foo added. Singapore Airlines executives said the airline is also offering discounts of between 33 and 66 per cent on return economy fares on its new flights. This will lead to some fare wars on the route as Kingfisher also has to fill its economy seats. Kingfisher, however, says that it does not want to get into a price war but will respond to any challenge. Travel trade experts point out that for Kingfisher the timing is right as it will launch just as the leisure season picks up. Load factors during the festival season go up 40 per cent between October and December.
Source: August 27, 2008, Business Standard

3. Airline puts premium tag on inaugural overseas link
Kingfisher Airlines is positioning its inaugural international link between Bangalore and London as a premium service, as it takes on British Airways, its main rival on the route. The airline will launch daily flights between India’s tech hub and the British capital starting September 3, the second carrier to do so after the UK’s national airline. Kingfisher is pricing its round trip for economy-class travellers at Rs 43,520 compared to British Airways’ Rs 43,875. A round trip in the Kingfisher First Class will cost Rs 1,61,800 and an official of the Bangalore-based carrier said it was pricier than the average Rs 1.4 lakh charged by British Airways. However, travel industry sources put BA’s going rate for its business-class tickets at Rs 1,64,750, even though a fare cut by the carrier to counter competition from Kingfisher is seen as a possibility. At the time of going to press, it was not possible to obtain a comment from British Airways. Travel industry sources also said that nearly two-thirds of the British carrier’s passengers stop over in London en route to other destinations. Kingfisher is expected to announce in a few days alliances with international carriers so that its passengers to London can link up for onward travel. As Kingfisher spreads wings internationally, a non-stop flight from Bangalore to San Francisco on the US west coast is also on the cards. Kingfisher says first-class passengers on its Airbus A330-220 link between Bangalore and London can expect, among other things, an inseat massager, five-course meals, a social area with a bar and even a spectacle-cleaning service! The flight from Bangalore will leave at 8.40 am and arrive at London Heathrow’s Terminal 4 at 2.50 pm, local time. The return flight will depart Heathrow at 10.05 pm and arrive in Bangalore the next day at 12.35 pm, local time. UB group chairman Vijay Mallya’s Kingfisher Airlines bought out low-cost carrier Deccan last year to earn the right to fly abroad. Carriers with less than five years of domestic service cannot fly overseas and Deccan completes five years at the end of this month. Bangalore will be the hub for Kingfisher’s wide-bodied aircrafts and international operations.
Source: August 27, 2008, The Economic Times

4. Jet, SpiceJet to drive fares still higher
Domestic airlines, pummelled by surging crude oil prices in the past two years, are planning to hike fares for the seventh time this year. The steady rise in jet fuel prices has made it tough for the airline industry to stay afloat without fare hikes. Jet Airways, the country’s largest full-fledged carrier and low-cost airline SpiceJet, are considering fare hikes ahead of the start of the peak travel season in September-October. “Existing fares are not justified: We need to increase fares by at least 20% over the next two months to minimize losses,” Jet Airways chief commercial officer Sudheer Raghavan told ET. “Jet will increase fares by 10% early next week and another 10% from October,” Mr. Raghavan added. On the Mumbai-Delhi sector, Jet’s economy fares may rise by Rs 350, while business class fares may climb by Rs 300. Crude oil’s strong surge to nearly $150 levels over the past two years has badly affected the profitability of airlines. Carriers have increased fares six times this year with hikes in fuel surcharge. But that has not been enough to wipe out the red ink from most balance sheets. According to estimates by the Centre for Asia Pacific Aviation (CAPA), India’s airlines are likely to lose a combined $1.5 billion this fiscal, more than double a year earlier, because of the surge in jet fuel prices. Air India and Kingfisher, too, are contemplating fare hikes from September.

Festive season brings fare hikes
“WE are planning to increase fares by 10-12% in the September-October period, the festival time, on a few sectors,” said SpiceJet chief financial officer Partha Sarathi Basu. Crude oil has recently slid from its record highs to trade at around $116 per barrel, but airlines say that they need another round of hikes to stay afloat. Jet fuel prices, which account for 35-40% of the total operational cost of a carrier in India, have risen by 100% in the past one year. ATF prices have gone up from Rs 21,000 per kilo liter in 2004, to over Rs 71,000 now. “After the lean season, the coming months are the times, when airlines look forward to good business and increase fares during the September-October period,” Mr. Basu added. Airlines will have to increase their base fare to minimize the gap and achieve break-even. For a long-distance flight, a passenger now pays Rs 2,900 as fuel surcharge, Rs 150 as congestion surcharge and Rs 225 as passenger-service fee, besides the basic fare.

Source: August 27, 2008, The Economic Times

5. End of flight for brand Air Deccan
Air Deccan, which introduced the concept of low-cost flying in India, will cease to exist from next week and replaced by Kingfisher. The airline, which was taken over by Kingfisher, will stop using DN code for its flights, instead will start using the owner’s IT code. This transition will happen even as Air India-Indian Airlines and Jet-Sahara (now JetLite) combines continue to use different codes for each airline. “We are going to be on a common platform,’’ a Kingfisher official said when asked about the two codes. Under the common IT code and Kingfisher brand, the group will offer three levels of service to passengers—economy and business class in the full service Kingfisher and an all economy section in the budget carrier. The change of code for Deccan is happening quite fast as the airline was not on global distribution system (GDS). Kingfisher has been working on bringing the two airlines on a common platform for some time now as there were many complaints that a Deccan ticket being bought on Kingfisher website costs more than if it purchased on Deccan website. On the other hand, AI, Indian Airlines, Jet and JetLite are on GDS because of which the coming together on a common platform is not easy. As a result, they use AI, IA, 9W and S2 codes. While NACIL is working to have a single code, Jet and JetLite are yet to take a final call on merging the two airlines. A decision on merger, and common code could be taken later this year.

Source: August 27, 2008, The Times Of India

6. Mallya trims Kingfisher’s mega fleet expansion plan
High oil prices and mounting losses have taken their toll on Kingfisher’s ambitious plan of expanding fleet size. The Vijay Mallya led airline had ordered 10 long haul Airbus A-340s but is now going to take only three of these. It has also deferred the deliveries of 32 A-320s ordered by both Kingfisher and Deccan prior to their merger. “Our order for five A-340s has been converted to A-330s (that have a range of India-UK type of routes). We are negotiating with Airbus to sell two A-340s and will take three of them that will be used for nonstop flights to US,’’ said a Kingfisher spokesperson. At current high jet fuel prices, an ultra long-haul flight like Bangalore-San Francisco or Bangalore-New York planned earlier has become unviable. Jet Airways has no direct flight to US and Air India is the only Indian carrier with two daily non-stop flights to US. A one-stop flight to US via Europe or Southeast Asia is a better option for airlines in these times as they can pick more passengers and cheaper fuel on the way. Kingfisher is also deferring delivery of 32 A-320s that were supposed to join the fleet in 2008-09 but will now do so only in 2010-12. Only 16 more A-320s will join the airline in 2008 and 2009. The A-320 family aircraft is mainly used for domestic flights in India or for flying to neighboring places like Gulf or southeast Asia. Domestic air travel has taken a severe beating due to high fares that airlines are now charging due to a mix of factors like high fuel price and lower passenger traffic. “We are in negotiation with Airbus. The A-380s are due in 2012. The orders placed for A-350s will begin from 2013. More A-330s, in addition to the five we have just got, will now join the fleet from 2010,’’ a Kingfisher spokesperson said. According to industry insiders, Kingfisher has been losing money like all other Indian carriers.
Source: August 27, 2008, The Times Of India

7. Virgin Atlantic profit climbs
Virgin Atlantic, the British airline controlled by the entrepreneur Richard Branson’s Virgin Group, said its annual profit rose 38 percent, helped by an increase in bookings from business travelers. Virgin Atlantic, which specializes in long-haul flights to North America, the Caribbean, Africa and Asia, said its underlying pretax profit for 2007-08 was £60.9 million, up from £44 million the previous year. The carrier attributed the increase to a rise in business travel bookings, with premium passenger numbers up 22 percent on the year.

Source: August 27, 2008, Financial Chronicle

8. Now, Indian talent to propel jet Airways
Naresh Goyal-promoted Jet Air­ways, the country's largest private airline, has decided to run the airline completely on Indian talent. Jet has already started working on a model to gradually re­place all its foreign hands with local talent over next three yean. If Jet implements the desi model, it will have to find replacements for some of its top level executives and CEO. Jet's day-to-day operation is run by Wolf­gang Prock-Schaucr, who is holding the CEO position. Jet Airways chief commercial officer Slid-heer Raghavan told ET: "We will gradually make Jet Airways a fully Indian-run airline. The process has already started and the com­pany is emphasizing more on Indian origin hands." It is learnt that Mr. Goyal will be in­volved in recruiting top level executives with Indian origin from foreign airlines. "Jet is in a growth phase at the global level and it needs local talent to bank on. Indian staff are more equipped to provide comfort­able and feel-good journey to Indian passen­gers travelling overseas with us. Moreover, Indians possess more soft skills, which can make a great difference in a sector like air­lines," Mr. Raghavan added. Jet is estimated to require about 1,500 cabin crew for its in­ternational operations. It has around 25% share of the Indian market. The plan to run the airline by Indians will help Jet to save time and energy as the ap­pointment of foreign hands—including for­eign pilots and cabin crew—is a long-drawn process involving elaborate clearances from the regulatory authorities, said an analyst. Jet is also evaluating the option of setting up a pilot-training school to overcome the shortage of local talents. For the past three years, Indian cabin crew are sought after by foreign airlines. Gulf airlines are the main re­cruiters of them. Initially, Indian carriers were forced to hire foreign pilots, co-pilots and cabin crew as In­dia did not have the required number of them. The situation has now changed. In­dustry experts said that local Indian hands are readily available in the current scenario as pilots and cabin crews as many have lost their jobs due to grounding of flights and rationalizing routes of aviation companies. In 2005, the government allowed airline operators to hire foreign co-pilots, senior pi­lots or commanders till July 2010 as India did not have enough trained pilots. Director Gen­eral of Civil Aviation Kanu Gohain had said recently that 1,490 foreign pilots were given licences last year to seek work in the Indian civil aviation sector. At present, India has 944 foreign pilots — 810 commanders and 134 co-pilots.

Source: August 27, 2008, The Economic Times

9. Airlines ask state to slash ATF sales tax to 4%
All major airlines on Monday demanded a sizeable cut in the sales tax on aviation turbine fuel (ATF) across the state at a meeting convened by the state government on development of smaller airports. Vijay Mallya of Kingfisher Airlines pointed out that the sales tax on ATF in Mumbai and Pune is 32%, much higher than cities in other states. He cited examples of Andhra Pradesh and Kerala, where the duty has been slashed. The tax component has stood at a constant 32% in Maharashtra even as ATF price had shot up from $40 per barrel to $130, he added. Earlier this year, the state government cut the sales tax on ATF from 32% to 4% for all cities in the state except Mumbai and Pune under a policy aimed at promoting air traffic in smaller cities. Representatives of the Indian Airlines Federation, however, demanded that the duty be brought down to 4% for the entire state as most airlines refilled in Mumbai and Pune, and flying all the way to distant locations like Aurangabad or Nagpur was not feasible. “The demand is under consideration. Airlines have demanded the duty cut as part of a larger strategy to develop air traffic in the state and put all districts on the air map,” an industry department official said. Meanwhile, in a related but separate development, a leading private airline has promised Mumbai-Nanded-Latur-Mumbai service in a couple of months from now, as desired by the chief minister. Like almost all his predecessors, chief minister Vilasrao Deshmukh too is keen to put his hometown, Latur, on the aviation map. “After his intervention, a leading private airline has agreed to start flying this route,” a government official said. The Directorate General of Civil Aviation is expected to issue air worthiness certificate to Latur and Nanded airports in about a week, industry department officials told ET. Both these airports are being developed by the Maharashtra Industrial Development Corporation (MIDC). A DGCA team will make a second visit to Latur on Tuesday, sources said. The leading private airline told the state government on Monday that it had already finalized the schedule for Mumbai-Nanded-Latur-Mumbai flight operations, sources said. “Introduction of air service in these cities has been on agenda for quite a long time. It will open other avenues for socio-economic development of these backward places,” a senior MIDC official said. Sources said the Mumbai-Solapur route too was likely to be operationalised in two months. The MADC, a state-owned entity designated to develop airports at tier-II cities, is developing the Solapur airport. Incidentally, all such CM-driven air services started in the past have been closed, an official pointed out.  
Source: August 27, 2008, The Economic Times

10. 7 more airports by 2010: CM
By the end of the decade, the state government is planning to add seven more domestic airports to its already existing 15 airports in the state. The cities that will see the brand new airports are Shirdi, Solapur, Phaltan, Dhulia, Karad, Jalgaon and Chandrapur. The state expects to build the airports through private sector participation. Chief minister Vilasrao Deshmukh, while presiding over a meeting with members of the Indian Airlines Federation said that the state wants to pursue a policy that would foster intrastate air travel. Plans are also on to improve the domestic airports. The existing ones will be upgraded by bringing them at par with international standards. While laying emphasis on the need of more airports in the state, Mr. Deshmukh said "In the earlier days, air travel was considered a luxury but times have changed. Now it's a necessity for people who want to save time," he said adding that the psychology of air travel needed to be changed. The Maharashtra Airport Development Company, which is the nodal agency under the state civil aviation department, is already into infrastructure development programmes in the state. But die development will not be possible without the support of airlines. The latter have demanded a cut in fuel prices so as to reduce their losses and realize the state's dream. Mr. Vijay Mallya, who headed the delegation of airline operators said that the sales tax had remained constant at 32 per cent right from the time when fuel was $40 per barrel and even today when it is $130 per barrel. He pointed out that this has caused losses for the airlines. "If the state wants to promote inter-state air travel, then reduction in sales tax is a necessity," said Mr Mallya adding mat other states such as Andhra Pradesh and Kerala have already reduced sales tax and are reaping the benefits of their decision. Maharashtra could emulate their example and help the industry. The chief minister also considered Mr Mallya's suggestion that the state should take up the issue of new airports and coordinate with the government of India and the Airport Authority of India in this connection.

Source: August 27, 2008, The Asian Age

Prepared by
Jennifer Kumar, BBA (NAU) Alumni
Skyline Business School
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