Travel |Update|
Issue 239
Paramount Airways has
launched its ‘frequent flier’ programme, which according to its Managing
Director, Mr M. Thiagarajan, is different from other airlines. Paramount’s
programme is packaged as a ‘lifestyle product’. Typically, when you fly
frequently on an airline, you “earn and burn” miles, but in the case of
Paramount, the points can be redeemed for a variety of lifestyle products such
as golf course memberships, spa experiences, and invitations to major cultural
programmes. Paramount is in the process of tying up with various other companies
for offering these lifestyle experiences to its frequent fliers, Mr Thiagarajan
told Business Line. As part of the frequent flier programme, Paramount has
launched ‘Royale Concierge’ — a portal through which a frequent flier could
avail himself of a range of services such as renting a car or booking a seat in
a restaurant. He said that Paramount has set up a ‘cargo division’ to enlarge
cargo operations. The division, treated as a separate profit centre, would
facilitate sending cargo to international destinations through tie ups with
airlines that fly to those destinations. For starters, Paramount is talking to
Singapore Airlines and Lufthansa. With this facility, an exporter
in Madurai could
send samples to Germany seamlessly by booking the cargo with Paramount, Mr
Thiagarajan said.
Source: November 14, 2008, The Hindu Business Line
2. Mile high, women will get separate loos
There maybe several low-cost airlines in the
market, but none that target a specific community. Enter Saudi Arabian based
Sama Airlines, which attempts to expand its passenger base in Mumbai by
targeting the Muslim community. In a first, the airlines has introduced the
concept of separate toilets for women in their fleet of six. Despite a lean
phase in the Indian aviation sector, Sama Airlines intends to create a niche for
themselves by attracting Muslim passengers whose religious hub is in Saudi.
“Since our fares are low, passengers can fly to religious destinations in the
Middle East more often than they used to,” said Andrew Cowen, CEO of Sama.
“Since the Muslim community is conservative, we thought of having separate
toilets for women,” he said. However, the airline has no plans to introduce
perks for flyers immediately. “Our unique selling point is low fares.
Additionally, in our loyalty programme, a flyer flying with us for the tenth
consecutive time, will get the ticket for free,” added Cowen. While the airline
officials seem optimistic about their entry in the market, they have been trying
to save face after the fiasco of their inaugural flight. Not only did the first
Dammam-Mumbai flight get delayed by five hours, the return flight departed late
as well. The 73 passengers on board had to be accommodated at a city hotel and
left from Mumbai early on Thursday morning. “On our way to Mumbai we were
informed that the Indian air traffic control did not know that we were coming.
After landing, the pilots had already completed their flight duty time
limitations which delayed the take off further. But, the flight took off early
this morning without hiccups. We want to treat this incident as a test flight
and want to flush out the bad experience,” Cowen added.
Source:
November 14,
2008, Mumbai Mirror
3. Cathay may delay opening of HK cargo terminal
Cathay Pacific Airways Ltd, Hong Kong’s biggest
carrier, may delay a new cargo terminal at the city’s airport as airfreight
demand slows. The timing of all capital expenditures is “under scrutiny” as the
airline “is considering a number of options to ensure that it maintains a strong
balance sheet,” Ms Carolyn Leung, a spokeswoman, said by e-mail. Talks with
Airport Authority Hong Kong about the terminal are on-going, she added. Delaying
the $619-millionfacility, due to open in the second half of 2011, may help
Cathay preserve cash as the economic slowdown damps traffic.
Source: November 14, 2008, The Hindu Business Line
4. Airlines, agents may have to slash transaction fee
Taking a strong view of the hefty transaction fee
being charged by airlines and travel agents on air tickets, the government is
likely to ask them to either lower it drastically or do away with it completely.
The fee came into effect after airlines decided to implement 'zero commission'
norm for travel agents from November 1, making air travel costlier. Since then,
the seller of a ticket, either the airline or the agent, have started deducting
an additional amount of Rs 350 to Rs 500 on economy and business class tickets
on domestic sector and between Rs 1,200 and Rs 10,000 on the international
tickets, depending on the distance flown. Official sources said there was no
justification to charge such high transaction fees over and above the ticket
price, which included high fuel surcharges and congestion charges. These charges
were levied following massive hikes in the prices of jet fuel. While several
international carriers had lowered fuel surcharges, the Indian carriers were yet
do so, they said. Observing that the earlier practice of 5% commission a travel
agent got on a ticket was built in the airfares, the sources said, adding that
the Union civil aviation ministry was looking into the issue and could ask
airlines to either reduce the fee or completely do away with it by finding
alternative ways to compensate their agents. However, the sources acknowledged
pressure on Indian carriers, which together accounted for one-third of the
global industry loss of $5.2 billion this year. Airlines had informed travel
agents about the "zero commission" decision in June this year, following which a
series of meetings took place between them. The date from which the transaction
fee was to come into effect was fixed for October 1 and later extended by a
month. The "zero commission" concept was mooted by International Air Transport
Association (IATA), the global umbrella body of airlines.
Source: November 14, 2008, Daily News & Analysis
5. Low-cost airlines regaining market pie from big carriers
Low cost airlines such as IndiGo, SpiceJet and
Kingfisher Red (formerly Air Deccan) seem to be regaining the ground lost to
full-service carriers over the past few months. Riding on growing number of
corporate air travellers and smarter fares compared to full-service carriers,
budget carriers have managed to get back their market share lost in the second
quarter of the fiscal. Market share of low-cost carriers jumped back to the June
2008 level of 46.4% in October after falling to 41% in the July-September 2008
period, according to a data compiled by the directorate general of civil
aviation (DGCA). While full service carriers have been reluctant to reduce fares
even in the wake of falling fuel prices (aircraft fuel price dropped by 39% in
the last three months), budget airlines have removed congestion charge on each
air ticket and introduced low fares through advance ticket booking. With full
service carriers such as Jet Airways and Air India levying a transaction fee of
Rs 350 and congestion charge of Rs 150 per ticket, budget carriers have further
managed to widen the fare gap with network carriers. While Jet Airways charge
about Rs 7,400 per ticket (including fuel surcharge and taxes) for a one way
ticket on the Delhi-Mumbai sector, IndiGo and SpiceJet charge a consolidated
fare of Rs 5,125. The Delhi-Mumbai sector command close to 60% domestic air
traffic of the country. “During July-August, fare gap between low and full
service carriers had come down to Rs 400. But now the gap is in the range of Rs
1,500 to Rs 2,000, which is helping us get back our customers,” a SpiceJet
executive said. During the first two quarters of 2008-09, both full service and
budget carriers increased the fuel surcharge, which constituted more than half
of the ticket price. This led to the fare gap between the two airlines coming
down and passengers shifting from low-cost to full service airlines. “If
passengers get full-service carrier facilities such as on-board meal and
refreshments at budget airline’s ticket price, why would they travel by low-cost
airline? Exactly this happened in the previous months but now that there is
significant gap between the two airlines’ fare, people are shifting back to
budget airline,” an aviation industry expert said.
Source: November 14, 2008, The Economic Times,
6. AAI to encash Kingfisher’s bank guarantee
The Airports Authority of India (AAI) plans to encash
Kingfisher Airlines’ bank guarantee worth Rs 60-70 crore unless the airline
comes with either cash or a concrete plan to clear around Rs 256 crore dues
within a week. However, to proceed AAI needs clearance from the civil aviation
ministry. “Kingfisher’s dues were Rs 256 crore over a month back and by now
another Rs 30 crore would have been added. They have paid only about Rs 10 crore.
We’ll wait till next Monday and if the situation remains unchanged, the action
of encashing bank guarantee could be taken,’’ said top sources. A Kingfisher
spokesperson said: “We are in dialogue with AAI to mutually agree on a timeframe
for settlement of outstanding dues. A meeting is scheduled with top-most AAI
officials next Monday.’’ Kingfisher chairman Vijay Mallya had written to the
aviation ministry, seeking instalments to clear the dues. But since Kingfisher
is the only private airline with such high dues, the ministry could not be seen
to be lenient with one player alone. The Air India-Indian Airlines combine also
has dues of over Rs 650 crore, but that matter is being treated on a different
footing between two government agencies. Apart from Kingfisher, at least two
more private airlines currently have dues that are worth more than their bank
guarantees. AAI’s dues from Indian carriers by September-end were a whopping Rs
1,012 crore and the figure went up to Rs 1,171 crore.
Source: November 10, 2008, The
Times Of India
7. Air Arabia falls most in two weeks as Gulf shares plunge
Air Arabia PJSC, the low-cost carrier that posted
a 30% increase in third-quarter profit, declined the most in two weeks in Dubai
trading after falling oil prices pushed Dubai shares to their lowest since
February 2005. "The fall in Air Arabia's share price could be attributed to the
general market trend as the company's third-quarter net income was impressive,"
Kareem Murad, vice president of research at Shuaa Capital PSC, said on Sunday.
Air Arabia declined 5.1%, the most since October 27, to close at 1.11 dirhams.
The stock has lost 44% in 2008. The Dubai Financial Market General Index dropped
5.9% to 2631.46.Third-quarter net income advanced to 214 million dirhams ($58.3
million) from 165 million dirhams a year earlier, the Sharjah-based airline
said.
Source: November 10, 2008, The Financial Express
8. Jet Air-KF tie-up faces MRTPC investigation
Anti monopoly body MRTPC has directed its
investigative unit DGIR to probe into the operational alliance formed between
two private carriers, Jet Airways and Kingfisher Airlines, following a plea
filed by BJP leader Kirit Somaiya seeking a "detailed study and inquiry".
Admitting the petition, Monopolies and Restrictive Trade Practices Commission
bench headed by Justice O P Dwivedi has directed its investigative unit director
general of investigations and registration to look into the matter and submit a
preliminary investigation report.
Source: November 10, 2008, The Times Of India
9. IndiGo beats headwinds, plans to hire more staff
At a time when several domestic airlines are
looking to prune their staff strength, the Delhi-based low cost airline, IndiGo,
is on the lookout for more pilots, cabin attendants, customer service and
airport service agents. “There is no deceleration in our growth plan. You have
to take a long-term view, not a 90-day view, of life. We are doing more number
of flights now, than a few months ago. We have an aircraft delivery virtually
every six weeks for the next few months. So it is only natural that we will need
more people,” the newly appointed President, Mr Aditya Ghosh, told. The airline,
however, refused to specify the number of people it was planning to hire. “It is
difficult to quantify the number of people that we need because as we grow, we
also enjoy benefits of scale,” Mr Ghosh said. The airline, which started two
years ago with a single Airbus A-320 aircraft, currently has a fleet of 19 . The
economic slowdown and decline in passenger numbers have forced several airlines
to look at pruning costs including deferring delivery of aircraft, cutting back
on routes and laying off staff. IndiGo officials claimed that they have been
seeing a healthy growth in passenger numbers and had no plans to defer delivery
of any of the 100 Airbus it has ordered. In the recent past, both Kingfisher
Airlines and Jet Airways have asked their staff to leave. While Jet Airways
offered a “voluntary retirement scheme” to more than 300 of its staff, it was
also planning to lay off about 1,900 of its staff. The decision was, however,
taken back after a wave of protests. In late September, Kingfisher announced
that 300 employees had “parted ways” with the company – a move that will bring
about a saving of more than Rs 5 crore annually. Air India was also considering
a sabbatical scheme for its non-operational staff to take leave for between 2
and 5 years. The implementation of the scheme is expected to help save the
state-owned airline between Rs 16 crore and Rs 20 crore annually. The issue of
staff lay off was also raised at a meeting that the Ministers of Civil Aviation
and Petroleum had recently with the top brass of Kingfisher, Air India and Jet
Airways. At that meeting, it was made clear to the airlines that they should not
lay off any of Their workers
Source: November 11, 2008, The Hindu Business Line
10. Qantas, China Eastern in code-share deal
Qantas plans to grow its China network, with daily
China Eastern codeshare flights between Shanghai and Chengdu and Xi’an. Qantas
general manager sales and distribution, Rob Gurney, said, “Growth in both
business and leisure travel sees us currently operating 10 flights per week
between Australia and China – seven to Shanghai and three to Beijing. “To
complement these Qantas-operated services, daily onward connections from
Shanghai will now be available with China Eastern to both Chengdu and Xi’an.”
The expansion of QF's partnership with China Eastern also includes a daily
return codeshare service between Shanghai and Beijing operated by China Eastern.
Members of the Qantas Frequent Flyer programme will earn points on the new China
Eastern codeshare flights.
Source: Financial
Times London;17.11.2008
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