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An open skies policy augurs well for the Aviation
Industry as private airlines offer viable travel alternatives. The
sky really is the limit!
Travel in India for
business or pleasure has of late become quicker and more
convenient-and feasible even with a last minute travel decision.
Domestic aviation in India, which until four years ago was the
exclusive preserve of government-owned Indian Airlines (IA), now
offers many more seats than in Yesteryears. The advent of a number of
air travellers more than one alternative to get to their
destinations.
No doubt the description
air taxi is demeaning to a large extent; and at least one prominent
Indian industrialist has said that he refuses to enter the field
because he found the description derogatory.
Nevertheless, the
thoroughly professional manner in which a few of the new airlines are
approaching the task at hand augurs well for the aviation industry in
India. Speedy and courteous check-in with a smile and a rose for a
lady traveller, a complimentary newspaper at the check-in counter
itself, acceptance of passengers until just twenty minutes before
scheduled departure time, international standard inflight service
with sumptuous meals and a fairly high level of punctuality-each air
taxi is vying with its competitor to provide as many of these as is
possible.
The private airlines have
begun providing both IA and the state-owned third-level feeder
airline, Vayudoot, with some sterling competition that has, in fact,
resulted in a sharp improvement in the service and punctuality levels
of both.
East West Airlines (EWA),
the most successful to date, has ten aircraft in its fleet, including
eight Boeing 737-200s with a capacity to fly 300,000 passengers per
month. The airline currently operates 64 flights a day, carrying
passengers per month. The airline currently operates 64 flights a
day, carrying passengers to 28 Indian destinations, and offering 32
transfer connections across the vast country. The airline presently
employs 4,000 people.
Satisfying meals and
courteous service have market EWA’s first year on the domestic
circuit. And it has even introduced such attractive innovations as
inflight fashion shows by some of the top models in the country.
Damnia Airways, which has been operating since March 1993 with two
aircraft also serves superb meals on board and has a first class
punctuality record. Another two air taxis that kicked off in May
1993, Jet Airways and Modiluft, have their own Unique Selling Points.
The former is using the latest generation Boeing 737-300s while the
latter has introduced First Class for the first time in India. Both
airlines plan to have at least seven to eight planes operating before
the end of the year.
It is sad that City Link
and Continental Aviation, two of the smaller operators, have had to
recently down shutters, have had to recently down shutters. The
latter a Rs.150 crore air taxi company funded by NRI’s, had
managed to carve out its own niche in the market. The company was
operating with three aircrafts-two small planes for shot hops and a
four-engined jet on the Bombay-Delhi-Bangalore-Goa route.
There are several other
operators who are running special services with just one or two small
aircraft. At the same time, there have been some who took off with
stars in their eyes, but have since either crash-landed or simply
crashed. That is as it is in any industry-an open skies policy will
see only the fittest survive.
It is our and a half
years since the time (April 11, 1989 to be exact) when the government
made the announcement of the open skies policy, whereby private air
taxis would be allowed to operate. Thirty-seven years after Tata
Airlines, the brainchild of industrialist JRD Tata, was nationalized
and converted to Air India, the era of the private sector airlines
exploded on the country’s national scene.
It appeared to be a
veritable goldmine in the sky. Rough estimates in 1989 had put the
size of the industry at Rs.1,500 crore, with more than 50,000
passengers per annum anxious to avail of the scheme. There was a
concerted rush to grab a place in the sky, applications for license
began pouring in, and every entrepreneur began dreaming of the
windfall that his very own airline would bring.
Still, it took more than
a year from the date of the initial announcement for the green signal
to start actual operations of a private air taxi service.
Non-resident Indian (NRI) liquor baron Vijay Mallya’s United
Breweries group set the ball rolling. UB Air’s 15 seater Dornier
aircraft took off on its maiden flight from Bangalore to Manglore in
July 1990.
Soon thereafter, the
second private sector airlines, Air Asiatic Ltd., sponsored and
financially backed by a group of NRI’s and based in Madras, took
flight on October 6, 1990. Its maiden flight achieved by a 737-200,
took a mere 35 passengers from Madras to Bombay but brought back as
many as 75 to Madras.
Before the advent of air
taxis, the turnover of the domestic civil aviation market was pegged
at Rs.1,200 crore of which IA’s share was Rs.1,000 crore and
that of Vayudoot Rs.200 crore. For the year 1992-93, estimates place
the total domestic aviation figure at a massive Rs.2,200 crore. Air
Taxis have claimed around Rs.300 crore of this.
There is a difference of
opinion between IA and the Planning Commission on the projection of
growth at a rate of 11.5 percent. This means that this year alone the
turnover of the civil aviation sector in India could easily rise by
another rRs.250-300 crore.
The experiment with a
private airline had actually been launched in the late 1970s well
before Vayudoot got off the ground. Three pilots, Anant Kulkarni,
Kulin Ashar, and Dilip Kataria, who found it difficult to get jobs
with either Air India or IA, formed Godensun Aviation. They operated
a tiny nine-seater Beechcraft on two scheduled
routes-Bombay-Kolapur-Bombay and Bombay-Ratnagiri-Bombay-apart from
doing charters.
The airline did
reasonably well initially and the two routes became so popular that
seats were always in demand. Kataria, the brain and major moving
force behind the company then tried to get official permission bring
in a 19-seaste King Air aircraft. He got hopelessly embroiled in red
tape and with the Beechcraft developing recurrent problems, the
company finally went bankrupt in 1982. But they had shown that a
feeder airline could be a viable proposition; and that may have been
a consideration when the open skies policy was announced in 1989.
Four years down the line,
the runway to success is littered with false starts, nose dives and
crash landings. Consider the casualty list. The owners of Air Asiatic
fell out with each other and the company’s aircraft, a Boeing
737 was repossessed by its lessor. UB Air’s Dornier was grounded
for a long time after it made a belly landing in October 1991. Both
the Boeing 727s of Continental Aviation were grounded for more than
six months before they were permitted back in the sky and the airline
eventually has had to close down.
Singapore-based NRI
tycoon Rajan Pillai, former chief of Britannia Industries, was also
pretty serous about starting an executive jet service in India. He
recruited former Air India Managing Director Rajan Jetley; and the
two made several trips to Delhi. However the Gulf war nipped their
plans in the bud; and Pillai’s subsequent financial problems and
the court battles with his erstwhile partners have precluded the
chances of the Britannia group’s launching air taxi operations
in India.
Thus, there are just a
few who have managed to stay afloat. EWA, which completed a year of
operation in February 1993, has been going from strength to strength.
It has eight Boeing 737-200s and two Fokker F-27s in service at the
moment, and is looking to both enlarge its route network and augment
its fleet strength with either Saab or British Aerospace aircraft.
India International
Airways has been doing charters for multinationals like Nestle, Du
Pont and Tetrapak; Delhi-Gulf Airways is running a helicopter charter
service; and Jagson Airlines has regular flights from Delhi to Shimla
and Kullu. However, what all operators have in common is a long and
dreary list of complaints.
Top of the list is the
Air Corporation Act, 1953, which has put the brakes on the
developmental plans of air taxis. The entry of these private airlines
is considered to be a violation of the spirit of the existing Act.
The main problem created
by the outmoded legislation is that it prevents private operators
from publishing their flight schedules, forces them to operate at
least as many short, unremunerative routes (below 700 kilometers) as
the longer, more lucrative sectors, and also restrains them from
operating on any scheduled route either two hours before or after the
arrival or departure of an Indian Airlines flight.
In a move that could have
far-reaching consequences, the Lok Sabha’s standing committee on
Civil Aviation and Terrorism has recommended the scrapping of the Air
Corporation Act-a move that has been pending for over a year. This
would result in the abolition of the monopoly of public sector units
in the civil aviation sector.
Other concessions
suggested by the committee pertain to the reduction of the inland
travel tax for the private sector-from the present rate of 15 percent
rate, and abolition of the rule that all aircraft, irrespective of
their size, should have a co-pilot on board. It has also recommended
that the present scheme of charging a flat inland travel tax should
be substitute by a graded one for encouraging small operators.
The legislation will be
taken up for discussion in the winter session of Parliament. However,
other government regulations have also acted as speedbreakers on the
development of the private airlines. There continues to be foreign
exchange restrictions, flight and safety checks, restrictions on
import of spares, inadequate hangar space, and lack of maintenance
infrastructure, to name just a few.
Engineers are also
unhappy that flight checks imposed on them are many more and
farstricter than those for Vayudoot. Claims one, These checks are
supposed to be standard for any airline, anywhere in the world.
Such snags ought not to
be a problem to Jet Airways, whose fleet consists of the
later-gerations Boeing 737-300 aircrafts. The average age of their
three aircraft is 2.5 years. The most important factor in our favour
is equipment, insists Naresh Goyal, chairman of Jet Airways. No one
in India operates the B737-300 aircraft. It is best aircraft in its
segment in terms of reliability, performance, maintenance and
comfort.
However, lack of hangar
space has been a severe problem for all the air taxi operators. The
Delhi based Modi industrial group has been running its own small
fleet of private aircraft for company executives for more than a
decade, but for a long time they were not given hangar space at
Delhi’s Palam airport, despite applying for it several times.
Most operators entered
this field with the attitude that they were setting up manufacturing
units. Operating a service industry of this nature is however, far
from simple. The pitfalls of that approach are best reflected in the
case of Air Asiatic, which took off with big planes, with the
intention of competing with IA and Vayudoot instead of trying to
complement their services.
However, despite a high
mortality rate, the sector continues to attract new players who can
learn from the mistakes of their predecessors. High flaying godman
Dhirendra Brahmachari bounced back from recent anonymity to launch
Air Aparna, which flies helicopter charters. Jagson Airlines too has
a scheme which is off the beaten track. It operates a weekly Himalaya
Darshan flight, which takes tourists for an attractive joyride around
the Himalaya peaks.
And so far as innovative
ideas are concerned, Mesco Airlines from Delhi is examining the idea
of operating a flight from the congested central Business District
South Bombay to Pune-160 kilometers away by road. The airline may use
an amphibious aircraft, which will take off from the sea at Nariman
Point in South Bombay, thus totally bypassing the already-over
crowded domestic airport at Santa Cruz. Then there is Indo-Pacific
Aviation, which has announced its plans of starting an air taxi soon,
and is in the process of acquiring aircrafts.
Whether all these
proposals do eventually take off from the drawing board or not, is
not certain. What is, however, important is that there are still
enough enterprising people willing to have a go at the air taxi
business. And there is no doubt that the private airlines are
spreading their wings further afield.
Even as this article is
being written, comes the news that East West (EWA) has been invited
by the Maldives government to function as its national airline. The
Maldives have no national airline and the government of the small
nation has been scouting the market seeking operators at the global
level.
Operations are likely to
commence by end 1993. The Maldives government will hold shares in
the international portion of the airline’s operations, but 65
percent of the net earnings will go to EWA, which will thus
contributed substantially towards India’s foreign exchange
kitty.
The agreement makes EWA
the first private airlines to go international, and even gives it a
quasi-government status with a foreign country. The airline plans to
have a base at Trivandrum from where a route ahs been planned to the
capital city Male. Subsequently, WEA will connects Male to important
sectors in the Arabic Gulf.
In the second phase of
its expansion, the fleet strength will be doubled to twenty aircraft,
several of them being the latter-generation Boeing 737-two-and-a-half
to three hours. In that much flying time abroad, we can earn three
times as much!
The Civil Aviation
ministry has thus far been non-committal on the entire subject, but
the EWA-Maldives pact may now force them to take a decision,
particularly as precious foreign exchange is coming to India, thanks
to an NRI whose efforts have been recognized globally.
Not to be left behind,
the other major air taxi operator in the country, Jet Airways, has
also come up trumps. The only air taxi operator in India to operate
thus far the more spacious, fuel-efficient Boeing 737-300 aircraft,
the Bombay-based Jet Airways launched operation on May 5 this year,
and already serves 12 destinations from its headquarters. Now it is
in the process of acquiring an international touch.
An overseas corporate
body, which enjoys some facilities for investments in India, needs to
have a dominant share-holding of an NRI; and under the proposal
submitted, 60 percent of the shares will be held by the Jet Airways
chairman Naresh Goyal, who is an NRI based in London.
Jet Airways hopes to lure
substantially more foreign tourists into India, and to earn much more
foreign exchange. The airlines is projected to earn around US$ 32
million in foreign exchange in its first year of operation. This
figure is expected to go up to $ 70 million in the second year, and
to $ 100 million in the third year of operations.
You see, the airline
business is capital-intensive, and modern operations call for support
facilities which cannot be built up overnight declares Goyal. If
India can invite foreign participation-and that, too 100 percent
overseas holding-in areas like fast food units or soft drinks
manufacturing, I can see no justification in restricting investment
in such high-priority areas as airlines.
Jet Airways currently
operates with four B737-300 aircraft, and another four are scheduled
to join the fleet between October 1993 and March 1994. A further
four are expected to come in the final quarter of 1994, so that, by
the end of next year, the airline will have a dozen aircraft. Six
more of the latest generation planes have been planned for 1995, to
maintain the pace of expansion and consolidation.
In a vast country, where
the demand for airline seats fare exceeds the combined capacity of
Indian Airlines and Vayudoot, it cannot be doubted that there is
tremendous scope for private air taxi services. With their returns
being directly dependent on the quality of service they offer, and
the punctuality rate they maintain, they cannot afford to let their
service deteriorate. And that, to the harassed domestic Indian air
traveler, is really good news!
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