There's - Orient Aviation

COMMENTCaution needed in a time of expansionThere’s no denying the massive growth underway in India’s aviation industry. Nine domesticcarriers are operating when a few years agothere were three. In 1991 India had just 219commercial aircraft. Today there are nearly 700and another 450 are on order.Yet, even with this rapid expansion, only 2% of Indian’sone billion-plus population travel by air. Persuading the restto join them has become critical for airline operators becausethere aren’t enough passengers to fill their seats. That has ledcarriers to mount damaging ticket price wars. And more seatsare arriving by the month. Everyone is losing money.As the cover story in this first edition of Orient AviationIndia clearly shows, there is a wide belief that some playerswill go bankrupt, disappear or be merged with others. Manynewcomers, caught up in the dream of an air travel boom,have placed unrealistically large aircraft orders. They are alsobeing hampered by archaic government policies that make itall but impossible for airlines to achieve sustainable levels ofprofitability.The government fuel tax offers one example. Alreadyburdened by high fuel costs, airlines have to pay an average27% on top of that in tax, meaning fuel can take up to 60% oftheir total expenses.Now airlines may be asked to pay even more. A new taxis being mooted to fund the restructuring of the country’saviation regulatory body, the Directorate General of CivilAviation (DGCA), which is short of staff and struggling tocope with a growing industry. This is ridiculous.India must rethink its tax regime if it wants expansion ofits airline industry to proceed smoothly. It must give seriousconsideration to a significant reduction in fuel tax.But airlines themselves must also play a part by moderatingtheir fleet growth ambitions and reducing ticket discounting.The alternative is precisely what everyone is predicting: aburst bubble with resulting casualties.TOM BALLANTYNEChief Correspondent• Orient Aviation India is an occasional publicationdesigned to coincide with major aviation events in India.CONTENTS4 Growth continues, as the strugglefor profitability intensifiesOA INDIA10 Jet Airways challenges Air Indiaby looking at long-haul12 It’s double or nothing atAir Deccan16 Tax burden makes it slowgoing for GoAir18 Paramount sees profit inbusiness travel22 Carriers home in on freight growthPUBLISHED BYWILSON PRESS HK LTDGPO Box 11435 Hong KongTel: Editorial (852) 2865 1013Fax: Editorial (852) 2865 3966Chief ExecutiveBarry GrindrodE-mail orientav@netvigator.comMARCH 2007 ORIENT AVIATION INDIA 3

COVER STORYAir India: its merger with Indian is expected tobe painful but worthwhileGROWING PAINSThe merger of Jet Airways andAir Sahara was expected tospark further consolidationof India’s airline industry.Then the deal fell apart. Nowairline collapses and mergersappear inevitable as thecountry’s carriers struggle toachieve profitability in a highlycompetitive marketplace.TOM BALLANTYNE reports.Shukor Yusof, an analyst at theAsia-Pacific aviation divisionof St a nd a rd a nd Poor’s i nSingapore, is unequivocal aboutthe future of India’s fast-growingyoung airlines. Soon, some won’t be there.“Certainly, there are Indian carriers that arenot going to be around in the near futurebecause they have been too quick off themark. It has all been too rapid,” he toldOrient Aviation.Alarmingly, he is not a lone voice. Withsome 450 jets now on order, a rapid expansionin the number of players, high costs,persistent airport infrastructure problemsand deep ticket discounting, profitability hasbeen an elusive commodity over the past 18months on the Indian sub-continent.Jointly, Indian operators are estimated tohave lost up to US$400 million in 2006.While a big decrease in the price ofcrude oil used to make jet fuel is easing theburden, volatile market conditions continueto make life tough. Thousands of new seatsare coming on line every month, creating acritical over-capacity problem that is drivingthe current ticket price wars.Will there be consolidation? “Absolutely,”Jet Airways chief executive, WolfgangProck-Schauer, told Orient Aviation.“Domestically, we now have nine playersin what used to be a three-airline industry,with Indian, Jet and Sahara. This is too many.Therefore we will see consolidation.”‘Everybody is loosing their shirtsdomestically. It’s a question ofwho has the deepest pockets’Peter Hillchief executive, Sri Lankan AirlinesAnd Jehangir (Jeh) Wadia, managingdirector of no-frills GoAir, said: “Today, noone can run away from the fact that everyoneis losing money ... the more aircraft you have,the more money you lose. If governmentdoesn’t cut aviation taxes, particularly thehigh fuel sales tax, you will see someonedying over the next six to 12 months,” hewarned.Captain G.R.Gopinath, managingdirector of India’s biggest low-cost carrier(LCC), Air Deccan, has similar views.“It happened in the cell phone sector, theautomobile sector and the scooter sector.Companies were bought out or taken over.Why should airlines be any different? Theone who is robust, the one who has a goodmodel, the one who is agile and has the lowestcost will have a better chance of survival thaneverybody else,” he said.Long-time observer of the Indian aviationscene, Sri Lankan Airlines chief executivePeter Hill - his carrier is the largest foreignoperator into India - is also pessimistic.“It’s not a question of ‘will it happen?’ it’sa question of when and I am surprised oneor two haven’t happened already. Everybody4 ORIENT AVIATION INDIA MARCH 2007

is loosi ng t hei r sh i r t sdomestically. It’s a questionof who has the deepestpockets,” he said.T he st r uggle forpassengers, and the losses,may soon escalate. Industryinsiders expect a viciousdomestic ticket price warto start around June whenthe low season arrives andcarriers battle to fill seats.Even worse, several newLCCs are on the sidelines,ready to enter the market.They include Omega Air,Mega Airways, Magic Air,East West, Indus, PremierStar Air and MDLR Airlines.The country’s existing carriers becameso concerned about the cost pressures ontheir industry late last year they formed anew body, the Federation of Indian Airlines(FIA), to lobby on such issues as the highgovernment fuel tax that drives up costs.The chairman is Air India chief, VasudevanThulasidas.Chris Tarry, head of U.K.-based transportstrategy consultancy CTAIRA (Chris TarryAviation Industry Research and Analysis), isanother analyst who believes consolidationis inevitable and will likely occur through acombination of airlines leaving the marketor merging. But he warns this is no panacea.“It’s not just putting one business togetherwith another,” he said. “There has to be astructural gain from doing it.“The reality is the cost benefits tend tobe more illusory than real. It is importantto be realistic about what is achievable onthe cost side. It is difficult. There are a lot ofissues, from pilot seniority to what officesyou are going to close and how to integratethe workforce. Generally speaking it takestwo things: very strong management - and alot of cash,” he said.The one consolidation now is the mergerof international carrier, Air India, anddomestic/international Indian, formerlyIndian Airlines, both government-owned.The move will create one of the Asia-Pacific’s biggest airlines, with a fleet ofmore than 100 aircraft. But no one expectsit will be easy.There has been talk for decades aboutmerging the two and the union will finallyofficially be in place on April 1. At that stage,however, it will be a merger in name only.Air India’s Thulasidas won’t comment inAir India chairman,VasudevanThulasidas: themerger with Indianbegins on April 1detail, but he has said that,once final cabinet approvalis granted, the two airlineswill take the legal stepsnecessary for the merger,a process that could takeup to four months. Totalintegration is not expected tobe completed until the end of2008 at the earliest.Analysts don’t expect thetransition to go smoothly,with several pointing tothe difficulties surroundingsimilar moves in recentyears, such as the mergerof Qantas Airways andAustralian Airlines andthe coming together of Japan Airlines andJapan Air System. Both were plagued byproblems involving the integration of thecarriers’ different businesscultures. In Japan, the mergerbecame so complex it led tomanagement losing focuson core business operations,triggering huge financiallosses.Air India and Indianare unlikely to be muchdifferent. Minister for CivilAviation, Praful Patel, has‘I know banks ... who areeyeing the sector very closely.But they are still reluctant [toinvest], until they are satisfiedthe basic structure is … inplace’Shukor Yusofanalyst, Standard and Poor’sCivil aviationminister Praful Patel:he’s concerned thebubble may bursthad to guarantee staff thatthe merger “would involveno retrenchment, no cuts orlosses in pay scale, perks orallowances”. In itself, thisdecision will severely limitthe new joint carrier’s abilityto rationalize and trim costs, according toanalysts.Nevertheless, Patel said the two airlineswill gain US$$113 million annually after themerger, with the cost of the integration itselfbeing somewhere between US$34 millionand US$45 million. In the end, according toPatel, it will enable the carriers to optimizeexisting resources through improvementsin load factors and yields on commonlyservicedroutes as well as deploying “freedup” aircraft capacity on to new routes. “Itwill provide maximum flexibility to achievefinancial and capital restructuring throughrevaluation of assets and cleaning up offinancial books,” he said.However long it takes and whateverhurdles have to be overcome, even rivalsthink it makes sense. Jet’s Prock-Schauertold Orient Aviation a merger “is absolutelymoving in the right direction”. He does notsee a stronger, revived government operatoras a threat.“It is a first step in consolidation. It is alsoa logical fit because you have a primarilyinternational carrier merging with adomestic, regional, international carrier,” hesaid. “It will have a lot of synergy. Naturallyevery merger has its complexities and it hasto be executed properly, but it is a good move.I firmly believe the stronger a combined AirIndia-Indian, the better itis for the whole industry,because then we can alloffer high quality productat higher prices.”With foreign airlinesnow moving up to 75% ofinternational traffic to andfrom India, he believes themerger will ultimately helplocal carriers claw backmarket share to at least 50%.“In a country like Indiathere is easily room for two,maybe three, full-serviceinter national car r iers.There is no doubt that thereis room for a combined AirIndia-Indian and a big Jet Airways offeringa strong domestic-international network,”said Prock-Schauer.As for other mergers or airline collapses,it is extremely difficult to identify likelycandidates. According to Standard andPoor’s Yusof, “you can’t separate the‘wannabees’ from the guys that will makeit in the long run.“There is going to be consolidation in thevery near future because they can’t possiblygo on at this level. The infrastructure interms of airports and the number of pilots tofly these aircraft are not there,” he said.The concern is hardly surprising. Lastyear’s capacity increase of 45% is expectedto slow down to below 25% this year, butthere are still a lot of new seats arriving ona monthly basis.In its latest Current Market Outlook,MARCH 2007 ORIENT AVIATION INDIA 5

COVER STORYTax issues bring carriers togetherNews last month that India’s finance ministry is set onwithdrawing an exemption on withholding tax for leasedaircraft sent a shockwave through the industry.Little wonder. If forced to pay the tax, airlines will have to findtens of millions of dollars a year at a time they can least afford it.Take, for example, an Airbus A320. The average monthly leaseis about 1% of the aircraft’s value, or around US$400,000 perplane. An average 20% withholding tax – it varies depending onwhich country the aircraft is leased from – adds up to an annualtax payment of $960,000 for each jet.An estimated 150 aircraft are under lease with Indian domesticoperators so the bill would be nearly $150 million a year. But withmore than 450 planes now on order and a large number of thosebeing taken under lease agreements, the cost would become farhigher. And this is no long-term plan; the ministry has a targetdate of April 1 for its implementation.Developments such as this, along with heavy existing taxesand other worrying issues, prompted India’s airlines, often bitterrivals in the air, to come together for the first time late last yearand forge a new industry body, the Federation of Indian Airlines(FAI), to lobby for change.“Ultimately, we all agree as airline owners that we haveto reduce costs, improve the tax regime and improve aviationpolicies,” said Jehangir (Jeh) Wadia, managing director of lowcostcarrier, GoAir, one of the founding members. VasudevanThulasidas, chairman and managing director of Air India, is itsfirst chairman.“The real benefit . . . will come from preventive measuresand these are improving the policies, reducing the tax burdensand trying to ensure that the framework governing aviation as awhole is far more liberalized,” said Wadia.The finance ministry’s latest move to glean more moneyfrom the industry isn’t the airlines only beef. FIA has becomeincreasingly active since its foundation, speaking out stronglyon several issues, particularly the hefty sales tax applied to fuel.This varies from state to state, and between fuel for jets andturboprops, but it can be as high as 39%. For jet operators itaverages around 25-30%.The federation has written to government asking that it bedramatically lowered, to as little as 4%, a move that would giveairlines a massive financial boost during difficult times.It has also asked government to allow domestic carriers tohedge fuel, up to 40% of some operator’s costs. Hedging is onlyallowed at the moment for international flights.Boeing projected that India will need 856new commercial jets worth US$72 billionbetween now and 2026. Airbus’s forecast iseven higher, some 1,100 planes worth $105billion by 2025. The aircraft manufacturerspredict India’s air travel market will growat close to 8% annually in the next twodecades, compared with a worldwide averageof 4.7%.The industry is starting, however, froma low base. Andrew Herdman, directorgeneral of the Association of Asia PacificAirlines, said the scale of Indian aviation,with an estimated 37 million domesticpassengers in 2006, remains small in relationto a population of 1.1 billion and a stronglygrowing economy.“The Indian airlines as a group carryapproximately 2.2% of global passengertraffic and even less cargo. The potentialtherefore remains enormous and willcontinue to attract further investment,despite the current challenges confrontingthe industry,” he said.Foreign tourist arrivals into India reached4.43 million last year, up from 3.92 millionin 2005. Foreign exchange earnings fromtourism have shown strong growth from $5.7billion in 2005 to $6.6 billion last year.CTIARA’s Tarry believes the capacityissue is the key to who survives and whodoesn’t. “It’s the amount of capacity cominginto the market and the pace at which thatcapacity comes in,” he said. “What we seein India is a number of airlines which areeither operating, or not yet operating, or werenot operating when they placed significantorders for aircraft. The issue is the abilityfor that equipment to be absorbed profitablyand, more importantly, if the infrastructurecan cope,” said Tarry, who remains to beconvinced that all the aircraft ordered willbe delivered.After over-capacity comes infrastructure.Airport and air traffic congestion continuesto cause significant inefficiencies in thesystem. “It is the biggest bottleneck we havein Indian aviation,” said Prock-Schauer.New airports are being built in severalcities and improvements are underway atothers, but modernization takes time. InGoAir managing director Jehangir Wadia (left) signs up for 10 new AirbusA320s: everyone is losing money, he says6 ORIENT AVIATION INDIA MARCH 2007

COVER STORYthe meantime, construction work meansinconvenience for passengers and delays ontaxiways and runways.“We need many more movements perhour than we have currently,” he said. “Weall lose a lot of money because of ATC delays.Sometimes you are circling for 30 or 40minutes in peak hours, especially at Mumbaiand Delhi. But these things are being lookedat and we hope we can see results in the nexttwo to three years.”GoAir’s Wadia points the finger at poorinfrastructure management. Mumbai airport,for example, is capable of handling 30 millionpassengers a year. Last year it handled only16 million, yet it has a bad reputation forcongestion.Arriving international passengers wereforced to queue for up to two hours to clearimmigration until Minister Patel ordered 40more immigration desks. “Now nobody hasto wait longer than five minutes. That’s anexample of how a commonsense approachand speedy decision-making can bring quickresults,” said Wadia.Up to $45 billion in investment isexpected in the country’s civil aviationsector in the next five years, higher than anyother sector. Modernization and rebuildingof 35 secondary airports is underway, as wellconstruction of new airports at big hubs likeMumbai. Cargo facilities are also beingupgraded.Nevertheless, Patel has been deeplyconcerned the airline bubble might burst,bringing about a repeat of a boom andbust cycle that occurred in the early 1990s,when a number of players, including EastWest, Damania and ModiLuft, went out ofbusiness.He has already moved to make it moredifficult for new carriers to launch, askingprospective entrants to provide more detailedbusiness plans before they can get a licence.They will also need to have at least fiveaircraft and more cash before they can startflying. Currently, new airline companiesneed $6.8 million in paid-up capital to start.They will now need to have $11.4 million.Late last year he called the country’sairline chiefs together to discuss the problems.Among possible measures discussed was avoluntary scheme under which they wouldslow their capacity increases.Patel is also strengthening the regulator,the Directorate General of Civil Aviation(DGCA), giving it more teeth to better copewith the increased number of airlines andaircraft.‘The issue is the ability for[new aircraft] to be absorbedprofitably and, more importantly,if the infrastructure can cope’Chris Tarrytransport strategy consultantIt is understood the DGCA will berestructured along the lines of the U.S.Federal Aviation Administration (FAA)and the European Aviation Safety Agency(EASA).The minister is planning to set up anAirport Economic Regulatory Authority toregulate airports, many of which will becomeprivately-owned.While all this is going on, strategicinvestors, both in India and overseas, areshowing increasing interest in the sector. AirDeccan is considering selling a 10 to 15%stake for up to $100 million to raise money forexpansion. LCC SpiceJet recently raised $65million from big investors, including the TataSpiceJet: it raised US$65 million from big investorsGroup, Isthimar (a Dubai-based privateequity firm), BNP Paribas and GoldmanSachs. GoAir, Kingfisher Airlines andAir Sahara are reportedly trying to raisemoney to fund expansion.CTAIRA’s Tarry said there was noshortage of investment money across alot of industry sectors and “there are a lotof suggestions the slide rule is being runover numerous airlines.” But he pointedout the global airline industry last year, onaverage, made a 2.3% margin, or around$10 billion in operating profits.“Within that there a number of airlinesmaking money and making returns inexcess of their cost of capital. But theyare very few,” said Tarry. “Even withinthe low-cost, or what I call the new-modelairline, sector there are very few airlinesthat generate more than their cost ofcapital. So you have to be very selectiveand you have to be sure that what youinvest in is going to enhance your capitalrather than destroy your capital.”Tarry, who has spent a lot of timein India, believes the current airlinecycle shows signs of peaking in 2007-08,with a consequence that affordable capitalwill become scarce for airlines whosefundamentals are not solid.Said Standard and Poor’s Yusof: “I knowbanks - and we are talking about Europeanand North American banks - who are eyeingthe [Indian aviation] sector very closely. Butthey are still reluctant [to invest], until theyare satisfied the basic structure and the thingsthat are required are in place.“There will continue to be more interestin aviation and Indian airlines, but you won’tsee any real commitment in any Indianairlines yet. People are being very cautious,and they should be.”8 ORIENT AVIATION INDIA MARCH 2007

EXECUTIVE INTERVIEW: JET AIRWAYSJet challengesthe old orderToday Jet Airways is India’s number onedomestic carrier. Tomorrow, it wants to takeon the world, chief executive, WolfgangProck-Schauer, tells TOM BALLANTYNEJet Airways chief executive, WolfgangProck-Schauer, won’t say Jet Airwaysintends to displace national flag carrierAir India as the country’s biggestinternational airline. But there’s littledoubt that’s the plan – and sooner ratherthan later.The vision of founder and chairman,Naresh Goyal, India’s 16th richest man, isfor Jet to be “among the top five airlines inthe world ... so I’ll leave it at that,” Prock-Schauer told Orient Aviation.“If you look at our fleet development, wehave 60 aircraft. We will have 90 by 2008-09. We have ordered a further 10 B787s fordelivery in 2011 and also plan to significantlygrow our B737 fleet. So we will be quite a bigcarrier in the not too distant future.”As India’s top domestic airline, Jetalready has a 30% slice of the home market.It operates 47 B737s, mostly late model NewGeneration types, and eight ATR 72-500turboprops. But it only has five widebodyjets – three A340-300s and two A330-200s. Intercontinental capacity, however,is about to rise dramatically while systemwidecapacity is being expanded at some 35-40% a year.From next month, 10 B777-300ERswill begin to arrive. There are options ona further 10. Twelve A330-200s are also onorder. Deliveries of the 22 widebodies willbe completed by October next year.That will open the door to increasingforays into promising new long-haul marketsand bring a significant shift in the balancebetween Jet’s domestic and internationaloperations. Overseas flights now accountfor 22% of revenue. That will rise to 50%in two years. It is a critical strategy in anincreasingly competitive market, because thegross yield per passenger on internationalflights is now US$362, compared to $125 ondomestic services.Like most Indian airlines, Jet hassuffered losses from high fuel costs, intensecompetition and overcapacity. It recorded a$101 million profit in the financial year endedMarch 31, 2006, but the last 12 months havebeen challenging. Hit by falling yields andlower load factors, it lost $10 million inthe first quarter of the 2006-07 year, thenanother $12.5 million in the second quarter,before clawing its way back to a $9 millionprofit in the third.The turnaround was due to an increasein the system-wide load factor of close to70%, much higher than the quarter before,allied to a reduction in the break-even seat10 ORIENT AVIATION INDIA MARCH 2007

factor to 68.7% which increased yields.Cost-saving initiatives and lower fuel costsmade up the rest of the equation. For the firsttime, international operations came close tobreak-even.Overcapacity has been a particularissue in India as an array of young airlinesintroduced large numbers of new aircraftinto the fast-expanding domestic market.Last year, fleets increased by 45%. “Weare not out of the woods yet, but we seecapacity induction slowing down,” saidProck-Schauer.Importantly, that should also reduce thelevel of ticket discounting that has batteredairline profitability, leading in part tocombined losses by Indian carriers last yearof $400 million.Coupled with this, Jet is driving aheadwith moves to bring down its overheads,renegotiate contracts and improve assetutilization. At the same time, it is trying toreduce distribution costs by increasing directonline bookings from the current 8% to 25%,saving up to $10 on each ticket.But it is on the international front thatthe airline will see the most significant shiftin emphasis in the next few years and itsnew aircraft purchases underline that fact.Austrian-born Prock-Schauer, who took overat the helm in June, 2003, said the B777 waschosen because it was optimized for longerroutes of up to 14 hours, the A330 for flightsof 10 hours and below.“The B777 will be focused on the UKand North American routes and the A330on regional Asian routes, Africa and thinnerEuropean routes. From the beginning of2008, when current government policy willallow us, we should also be flying to the Gulfregion,” he said.Jet currently has a modest offshorenetwork. It flies to Colombo, Kathmandu,Singapore, Kuala Lumpur, Bangkok andLondon. That will begin changing in Augustwith the launch of flights from Mumbai toBrussels and on to New York. This will befollowed later in the year by a Mumbai-Shanghai-San Francisco service, as well asa flight to Toronto via a point in Europe.Prock-Schauer made it clear that Jet’splan is not simply to add destinations for thesake of rapid network expansion. “Londonis our only European destination at themoment. We have a strategy that, wheneverwe fly to a destination, we want to offer highfrequency,” he said. “Right now we havefour flights a day into London Heathrow;two daily from Mumbai, one from Delhiand one from Amritsar.“When we started we wanted to firstestablish a critical mass and we have nowdone that at Heathrow. The next step is toopen a second destination in Europe, whichis Brussels.“There we are tying up with local carrierSN Brussels, to give us good feed and toconnect to other European cities throughtheir flights.”More European destinations are likely tofollow. Jet is evaluating Germany, France,Switzerland and northern Italy.Two other areas are high on its list ofnetwork priorities: the Gulf region andChina.“Traffic between India and the Gulf ishuge. Some four million Indians are livingthere and these people tend to come homeonce or twice a year,” said Prock-Schauer.Growing economic links between Indiaand China also excite Prock-Schauer. Airtraffic between the two is light but, with theHimalayas getting in the way of land links,expanded air connections make a great dealof sense.“What we see now is tremendous growth.The whole relationship between India andChina is changing rapidly,” he said. “There ismuch more interaction, trade and tourism, soI see big potential in air traffic growth. Thatis the reason we want to start flights throughto China this year with a continuation to SanFrancisco.”‘What we see now is tremendousgrowth. The whole relationshipbetween India and China ischanging rapidly.’Wolfgang Prock-SchauerProck-Schauer believes Jet’s majorchallenge looking forward is to achievegood profit margins.“You have to keep your costs undercontrol, despite the fact there is a lot ofupward pressure on costs because ofthe scarcity of personnel, such as pilots,engineers and other professionals,” he said.“Managing the expansion is anotherbig challenge because we are growingsystem-wide, at 35-40% annually. Youhave to manage that and achieve profitablegrowth.”However, he believes Jet is wellpositioned, particularly in terms of trainingthe personnel it needs.“We can train all categories. We havetwo B737 simulators and we are getting twomore, one a B777 and the other an A330,” heJet Airways: China routes this year?said. “We can generate 150 pilots annuallyon our own. We can train technicians andmaintenance people as well as cabin crew.The airline which has all the infrastructureneeded to provide those personnel will havea huge competitive advantage.”With nine domestic car riers nowoperating and most losing money, Prock-Schauer doesn’t believe everyone willsurvive.“The question will be: who is best fundedand who is best managed? These are theairlines that will survive. The others will goout of business,” he said.He is certain that Jet Airways will notbe one of the casualties. “We have seen inthe last quarter that we really can achieve aprofit,” he said.“I think we are best positioned with thenetwork strength, the established customersand product quality we have, to move forwardand achieve our plans.”MARCH 2007 ORIENT AVIATION INDIA 11

EXECUTIVE INTERVIEW: AIR DECCANAir Deccan: 21 new ATR turboprops are on the wayDeccan still goes for growthWe’re gearing up for the ‘big bang’ and it’s coming soon, says carrier’s founderBy Tom BallantyneThe man behind India’s firstand largest low-cost carrierdoesn’t pull his punches. AirDeccan’s growth over the lastyear has been “breathtakinglystaggeringly phenomenal,” says CaptainG.R. Gopinath, founder and managingdirector. And that’s no idle boast. Whateverparameters are used, the Bangalore-basedairline has far outstripped competitors interms of expansion.“Our fleet size doubled from 20 aircraftto 42,” Gopinath told Orient Aviation. “Thenumber of passengers doubled; this year wewill be carrying eight million. Seat capacitydoubled; revenue tripled. We are now thecountry’s second largest airline with closeto a 20% market share.”Air Deccan, which currently operates 19A320s and 23 ATR 42-320s, 42-500s and72-500s, has 60 new A320s and 21 ATRson order for delivery over the next six years,although expansion will slow in the shortterm. This year it will take four more A320sand eight ATRs and in 2008 eight A320sand six ATRs, as it continues its strategyof linking previously unserved secondarytowns with major cites.All this is coming at a time when mostof the industry is losing money and thereare dire predictions some operators will goout of business because there are too manyseats on the market. But Gopinath makes noapologies. He believes over-capacity is partof the natural business cycle of a growthindustry.There are parallels with other emergingbusinesses, such as those dealing with mobilephones, automobiles, scooters, televisionsand white goods, he argued. “When youset up initial capacity for an emergingeconomy, where a large part of the middleclass which has got purchasing power hasnot yet adopted the lifestyle, then there isAir Deccan founder G.R. Gopinath:he expects a huge shift by 2008a sudden appearance of too many products,or too much capacity. The moment thereis over-capacity it creates panic. It createsan aberration in the market and there is adownward spiral on pricing.”Five years ago, mobile phone companieswere struggling to get 100,000 subscribersa month, he said. Some disappeared or weretaken over. Today, the survivors have upto six million subscribers a month and aremaking huge profits, even though rates havedropped dramatically.His point? The proportion of India’sbillion-plus population using air travelremains below 2%. But when the consumershift already seen in these other sectorsfinally occurs, there will be dramaticchanges. “It will not be gradual. Suddenly, itwill explode. It will take maybe another yearor 18 months. I am confident by 2008 therewill be a huge shift,” said Gopinath.And that means big money. “We areconfident that by 2008 Air Deccan will bea cash machine. It will be the SouthwestAirlines of India, but with a difference. Themodel is different from Southwest Airlinesbecause India is different,” he said.In the meantime, Air Deccan is strugglingto stay in the black, although it made a netprofit of US$21.9 million in its second quarterending December 31, thanks to additionalincome of $30 million from the assignmentof aircraft purchase rights to Investec Bank12 ORIENT AVIATION INDIA MARCH 2007

of the U.K. That followed a $97.6 million lossin the first quarter.“We are still not in operating profit, butwe produced a net profit [in the Decemberquarter] because the losses came down andwe had that other income which allowed us toget into net profit. Actually, in December, wewere in operating profit,” said Gopinath.Fierce price discounting as a resultof overcapacity is one issue affectingprofitability. “Twelve years ago a Bangalore-Delhi ticket was 12,000 rupees ($272.67).Today, if I sell it at 4,900 rupees at 80%occupancy, I am in profit. But I’m not getting4,900. I’m getting 300 or 400 rupees less. I’mjust short of my break-even and that is whatis causing the problem,” he said.Gopinath, however, is convinced AirDeccan has a huge advantage through thecountry’s largest route network, its largestdistribution network and, most importantly,the lowest costs per seat kilometre in theindustry.T he c a r r ie r r e c e ntly ove r t o okgovernment-owned Indian to take secondplace in terms of domestic market share.Jet Airways is the leader. But Air Deccanflies to 60 airports compared to Jet’s 46 andIndian’s 43.Meanwhile, its call centre, set up fouryears ago, now handles 20,000 calls a day.“We are the largest e-commerce site in the‘The Air Deccan strategy andvision is that every Indian mustfly. We must tap the energy andthe resource of the other Indiaand not just Mumbai-Delhi’G.R. Gopinathcountry, grossing $1.5 to $2 million everyday by Internet. We have 7,000 points ofsale, 1,200 IATA travel agents and 4,500non-IATA points of sale,” said Gopinath.These outlets make up part of AirDeccan’s unique approach, reaching millionsof rural Indians by selling tickets throughlocal shopkeepers such as butchers, bakersand greengrocers.“The Air Deccan strategy and vision isthat every Indian must fly,” he said. “We musttap the energy and the resource of the otherIndia and not just Mumbai-Delhi. You needto enlarge the market.“We are in the forefront of creating thatconsumer shift by going to these smalltowns, opening them up and integratingthem with the large metros. That is the onlyway forward, not only for Air Deccan, butalso for the country in terms of generatingequitable economic growth.”Gopinath is now considering the sale ofa 10%-15% stake in Air Deccan, a movethat could raise up to $100 million to fundexpansion. Large industrial houses in Indiaand strategic investors from overseas havelong been sitting on the sidelines of theairline industry “waiting and watching,wondering if LCCs would succeed in India,whether competitors would bury Air Deccanor whether there really was a middle class outthere who will fly”, he said.Now a number of investment bankershave approached the carrier and showna “huge interest”, he said. “They wereinterested in having a dialogue and I said:‘yes, come with proposals and we’ll take alook.’ If the market turns, we may not take it[the investment].“If it drags on and we feel we need a littlemore cash, perhaps we will. We are keepingour options open.”Another option for the airline is flightsoverseas. In India an airline has to be inoperation for five years before it can winrights to international routes. In Air Deccan’scase, that will be in 2008.“We will definitely look at the inner circleof the A320 range, “said Gopinath. “Theseare places such as Sri Lanka, Singapore, theASEAN [Association of South East AsianNations] region as well as the Middle East,where there’s a large population of Indians.But the five-year rule suits me, becauseright now I’m concentrating on the domesticmarket.”Kingfisher a jewel in ATR crownATR c h i e f e x e c u t i v e , F i l i p p oBagnato, said a strong recovery inthe turboprop market had produceda 30% increase in turnover, fromUS$542 million to $700 million, forthe company’s 2006 financial year.Speaking at a press conference where heannounced the results, Bagnato said ATR nowhad 126 customers in 70 countries, with 11 newcarriers added to its client list in 2006. Newregional customers signed up by ATR last year wereThailand’s Nok Air, Sun Air in Fiji, Indonesian AirTransport and Transmaldivian in the Maldives.Airlines ordered 63 aircraft in 2006 with 17 of thenew planes – all ATR 72-500s – bound for India’sKingfisher Airlines (15) and TransAsia Airways(2) of Taiwan respectively. Kingfisher ordered 20ATR72-500s in November 2005 and another 15 ofthe aircraft type in February last year.Following the Kingfisher order, ATR signed its largest GlobalMaintenance Agreement ever with the Indian carrier, valued atATR chief executive,Filippo Bagnato: ATR72-500 aircraft has 15%less fuel consumptionper person than aEuropean carUS$50 million for spare parts and maintenance ofthe carrier’s ATR fleet.Kingfisher is also the first airline to install inflightentertainment systems in all seats of its ATRs as wellas light emitting diode (LED).ATR will deliver 44 new aircraft in 2007 andanother 60 airplanes the following year, businesspredicted to take turnover at the Toulouse-basedcompany to US$1 billion.Bagnato said new turboprops have importantgrowth potential in emerging markets in Russia andChina as well as South America and Africa.Other recent developments for ATR were theestablishment of a parts and spares centre inAuckland in 2006, a similar facility in Delhi and acustomer support centre in Bangalore.ATR said in a statement issued with the profitannouncement that its ATR72-500 aircraft has 15%less fuel consumption per person than a Europeancar and 60% less than a 70-seat jet.ATR financial partners are Alenia Aeronautica and EADS.MARCH 2007 ORIENT AVIATION INDIA 13

EXECUTIVE INTERVIEW: GOAIRIt’s slow going for India’s low-cost operators. TOM BALLANTYNE hears whyMumbai-based GoAir won’t pick up the pace until good times are on the horizonTaxing problems for LCCsJehangir (Jeh) Wadia, managingdirector of family-owned, low-costcarrier (LCC) GoAir, believes thatIndia’s budget operators must face upto reality. Overcapacity, ticket pricewars and a high government taxation regimemake it virtually impossible for them to cutcosts in the same way as their counterpartselsewhere.Take just two expenses: tax paid togovernment and cash forked out to petroleumcompanies. Together, they represent astaggering average 60% of total costs.“If you compare that to the averageLCC abroad, it wouldn’t be more than20% there,” said Wadia. “The governmenttaxes are archaic. They haven’t beenreformed. They haven’t been benchmarkedat the international standard. They areeffectively the same taxes that have beenaround for decades. They haven’t taken intoconsideration what they need to do in orderto help grow the industry.”The biggest bone of contention, in fact, isa sales tax on fuel, payable above the actualcost. It varies between 20% and 40% fromstate to state. Wadia’s airline pays an averageof 27%.GoAir launched in November 2005 with asingle A320 flying between Mumbai, whereit is based, and Coimbatore. Within 12months it had carried 1.2 million passengersand grabbed a 4% market share. Now it hasa fleet of seven A320s operating 67 dailyflights to 13 destinations.While that may sound impressive, Wadiaargues that in Indian terms it is slow going.“Everyone in India seems to have gone madbringing aircraft in. Yes, it is aggressiverelative to Singapore or other airlines inAsia. But compared to some of my airlinecompetitors, is it is pretty conservative,”he said.The reason is simple. “Moving forwardthere are certain issues with the aviationindustry in India. Costs are too high,revenue is low. Today ... everyone is losingmoney. The simple conclusion is that the‘Today everyone is losingmoney. The simple conclusionis that the more aircraft youhave, the more money you lose’Jehangir Wadiamanaging director, GoAirmore aircraft you have, the more money youlose,” he said.Wadia believes it could take anywhere upto three years for the industry to take a turnfor the better. “Taxes have to be reformedand the number one tax that needs to bereformed is the sales tax on fuel. If that camedown to say 4% we would see tremendousgain overnight,” he said. But, if this doesn’thappen, especially with the current amountof capacity coming into the market, a carriercould go under in the next six to 12 months,he said.Wadia, who heads the Wadia Groupwith interests in a wide range of businesses,from textiles to clinical research, has anotherwarning: a further round of fare wars withthe potential to spark further losses isimminent.India is a seasonal market with Octoberto June the peak. June through to October isthe low season. “I think the low season willextend to November if not early December.That means there will be a prolonged lowseason due to extra capacity. The price warwill be excessive and it will start kicking infrom June,” he said.Yet, in the face of all this gloom, Wadiais confident GoAir will not be one of thecasualties. He has fewer aircraft than manynew Indian carriers, therefore his lossesare less. His 100% equity in the companymeans he has 100% of assets to sell whilecompetitors have sold so many of theirs thatthey have few left. “My company is 100%funded by my family and therefore we havethe ability to sell up to 49% to raise moneyif we need to,” he said.GoAir is looking at various proposalsfrom outside investors, including foreigninterests. Its strategy takes into account thatthe good times may not arrive for a while. Ithas 10 A320s on firm order and another 10under option. The first won’t be delivereduntil late this year. Further deliveriesare spaced out to fit in with an expectedimprovement in market conditions in abouttwo years.16 ORIENT AVIATION INDIA MARCH 2007

Wadia also operates a “flexible fleet plan”.He reduces the fleet during the low seasonand increases it in the high season. “BecauseIndia is a cyclical market and the costs are toohigh, we looked at how we could be flexibleand agile. The solution is bringing in aircraftin October and getting rid of them by June,”he said.GoAir is able to acquire short-term, wetleasedaircraft from operators in Europe,where the peak travel seasons are oppositeto India. “European operators have aircraftsitting on the ground and they are willingto heavily discount them. Also there are noadditional fixed costs for us because theseaircraft don’t come in to operate new routes,they come to add frequency to existingroutes,” he said.Wadia lists other issues that are damagingLCCs’ chances of improving profitability.Among these are infrastructure constraints.“We don’t have enough parking spaces toallow us to have six [to] nine aircraft per base,therefore reducing the cost of running a nineor 10 aircraft fleet plan,” he said. “You haveto park three in one city, two in another city,one in another and four or five in another. SoBRIEFLYGoAir managing director JehangirWadia: he’s expecting a price warultimately it doesn’t help you reduce costs; itmeans you have higher costs.”Take-off and landing rights are alsoscarce, particularly at major airports. Thisreduces a carrier’s ability to capitalize byadding frequencies on primary routes,thereby achieving economies of scale. Theyare forced to put capacity on to secondaryroutes where margins per seat are less. “Themore you have to do it, the worse it gets,”said Wadia.G oA i r h a s no pla n s t o expandinternationally in the foreseeable future.“To be successful in Asia you need to have avery large critical mass in India,” said Wadia.“Unless you have that it is pointless pickingprice wars with the likes of Tiger Airways andAirAsia. You must have at least 15 millionpassengers flying on your airline before youcan think of going international.”For now, Wadia will stay with a smallfleet focussing on existing routes ratherthan expansion. “Basically you have tostabilize your existing fleet, be the numberone operator on the routes you have and makesure these routes are insulated. Do not growunless you are number one on these routes,”he said.“Ultimately GoAir finds it easier todefend 11 airports than it would defending30. We are in a consolidation phase and wefind that to be a very prudent strategy untilthe industry turns. Then we will be moreaggressive in our fleet plans.”SR Technics opens Indian officeSR TECHNICS, which is now owned by a Middle Eastconsortium that includes Dubai Aerospace Enterprise(DAE), opened its first sales office in India on February 1.“The Indian aviation market is in the midst of sizeable growth,”said Declan O’Shea, SR Technics’ executive vice-president sales,marketing and business integration at the office’s opening inMumbai.“By opening a sales office we can be as close and responsive aspossible to our customers and their needs.”SR Technics has had a regional office in Hong Kong since 1996.Training centre joint ventureATR and Air Deccan have opened a joint training centrein Bangalore to train the carrier’s pilots for the 36 ATRs,including 30 ATR 72-500s, the low-cost carrier hasordered since 2005.The centre is equipped with a full flight trainer developedjointly by ATR and Canadian simulator manufacturer, MechtronixSystems. See p.12, Double or nothing at Air Deccan.Mechtronix has secured more than 100 customers worldwidesince introducing its first flight training device product line in 1997.A year ago, it beat the big brand names when the Civil AviationFlight University of China (CAFUC) ordered three “Ascent” fullflightsimulators (one B737-800 and two Citations) and six flighttraining devices from the company.MARCH 2007 ORIENT AVIATION INDIA 17

EXECUTIVE INTERVIEW: PARAMOUNT AIRWAYSDon’t try booking economy on Paramount Airways; it doesn’t exist.Managing director, M. Thiagarjan, tells TOM BALLANTYNE whyIN THECOMFORT ZONEParamount Airways hardlycaused a ripple when it waslaunched some 18 months ago.With just one plane, a 75-seatEmbraer 170 regional jet, it hadonly two services, from Chennai to its homebase, Coimbatore, and to Cochin.Today, Paramount has five Embraers and42 routes linking cities across southern India.Another 15 Embraer 170/190 series jets aredue to arrive over the next two years. It hasadded Bangalore, Hyderabad, Madurai,Vizag, Trivandrum and Tirupathi to the listand, according to managing director, M.Thiagarajan, is now on the verge of spreadingits wings further afield.The final goal, he says, is to blanket thecountry, giving prominence to secondarycities where he believes real growth lies.What makes Paramount unique in India,is that it has no economy class. It is targetingfirst and business class travellers, a strategythat appears to be paying off in a regiondriving India’s economic growth.“On the sectors we have been flyingfor more than six months we are chock-ablock,”said Thiagarajan. “We have 26% to27% market share and we have pushed themarket leader, which was predominantlyJet Airways in these regions, into secondposition. That shows how acceptable theParamount product has been.”What Paramount offers its passengersis front-end pampering at near-economyprices through spacious seats, a choice of16 hot meals that can be ordered at the timeof reservation and on-board service thatincludes tablecloths, damask napkins, crystalglasses and fine bone china. It also providesvalet service to help customers carry theirbags to check-in. They are then escorted toa lounge and on to the aircraft.“We are neither a low-cost carrier nor arewe a full-service carrier. We have positioned‘I always had aviation close to myheart. I have been able to convertmy passion into something moremeaningful.’M. Thiagarajanmanaging directorParamount Airwaysourselves as a new breed of airline, a highvaluecarrier, or HVC. We stand for full valuefor money,” said Thiagarajan.The airline is owned by the ParamountGroup, one of India’s foremost textilemanu fact u rers, based i n Madu r ai.Thiagarajan, a third-generation member ofthe family that began the business, is alsomanaging director of the company that runsits textile mills. A private pilot, at 30 he isone of the youngest airline chief executivesin the world.He resists any suggestion the group hadto make a giant leap to move into aviation,arguing his family’s interests have alwaysbeen diverse.“It’s not that it’s a quantum leap fromtextiles to something totally new. Therehas been a gradual evolution. I alwayshad aviation close to my heart. I havebeen able to convert my passion intosomething more meaningful and intoa powerful business proposition,” saidThiagarajan.“We didn’t rush into the aviationindustry because it was the flavour ofthe season. We studied the reasons forairline failures around the world andlooked into the positive and negativepoints of different airline models.“We have always been able to createa niche position where others follow us,rather than the other way around. Wewanted to bring the same thing intoaviation.”Paramount focussed first on southernIndia for two reasons. It was homeground for the airline and also, as thecountry’s fastest-growing region, it hadattracted major financial institutions andinstitutional investors, as well as growingindustries.“As a strategy we wanted to saturateone region. Today we are almost at thatstage. No other airline provides the frequencyand connectivity that we do in the south. So,perhaps in another couple of months, we willexpand,” said Thiagarajan.The plan is to replicate the Paramountmodel throughout the country. “By 2010 or2011 we see ourselves as a national carrierhaving flights all over India and we willsaturate the whole of the country,” saidThiagarajan.Paramount doesn’t offer the cheapestseats in town, aiming instead at attractivefares for corporate customers and high-endleisure travellers.18 ORIENT AVIATION INDIA MARCH 2007

EXECUTIVE INTERVIEW: PARAMOUNT AIRWAYSMany of the corporate flyers would traveleconomy on other airlines, paying towardsthe top end of the listed fare because theynormally book at short notice and can’t getbig discounts.While other airlines complain aboutcongested airports and infrastructureconstraints, Paramount remains happy withits lot.These potential problems were includedin the carrier’s business plan. “As a shrewdbusinessman there is no point in getting intoa new business and then complaining there isa problem with infrastructure and a problemwith this and that. Ultimately, if you jumpinto the water you have to swim in it,” saidThiagarajan.“We knew there were going to beinfrastructure problems and bottlenecks.So we carefully factored them all into ourbusiness plan. That’s why today we are notdirectly hitting Mumbai and Delhi. That’swhy we are giving equal prominence tosecondary cities, which is where I see the realpotential for growth in the years to come.”Although the airline does not release fullfinancial results, Thiagarajan readily admitsthe balance book remains in the red, althoughall routes that have been operated for moreParamount’s first Embraer 170:it will soon have a 20-strong fleetthan six months are showing a profit.“We are introducing new flights almostevery month and obviously when you start,it takes time to stabilize. As an organizationwe are yet to show a positive bottom line,”he said.Although it remains a small operator,Paramount has gained recognition on theinternational stage.Thiagarajan flew to Frankfurt, Germany,last month to receive a prestigiousInternational Arch of Europe award forbusiness innovation and quality, in this casefor the carrier’s HVC business model.The world is beginning to take note of thelittle carrier with big ambitions.Trainers step up the paceBy Tom BallantyneCanadian simulator and traininggroup CAE is to build a US$20million centre in Bangalorethat will ultimately train 1,000cockpit crew a year – the samenumber estimated to be needed by India’s carriersannually as they take delivery of an additional400 aircraft over the next five years.The centre, which will open before the endof this year, will be operated in co-operationwith Airbus. It also will offer cabin crew andmaintenance training as well as flight operationssupport on A320 and B737 aircraft, which makeup the bulk of India’s domestic fleet.Jeff Roberts, CAE’s group president,innovation and civil training and services,said the facility will be close to Bangalore International Airport atDevanahalli and also serve operators in the surrounding region.“We realized the strategic importance of opening a training centrein India. The Indian aviation industry is growing rapidly and facessignificant pilot shortages. Establishing this training centre further20 ORIENT AVIATION INDIA MARCH 2007strengthens our relationship with our Indiancustomers,” he said.CAE has been in the Indian market for thelast 35 years, traditionally with Air India andIndian, and more recently through Jet Airways,Air Deccan, SpiceJet, Indigo, Air Sahara andKingfisher Airlines.Its decision underscores the heightenedinterest in ramping up training facilities.In December, Airbus announced it plannedto more than double its investment in India to $1billion in the next 10 years.Some $300 million of that will be spent ona separate pilot training centre and another$250 million on an engineering facility inCAE’s Jeff Roberts: meeting Bangalore.the needMeanwhile, Boeing has also announced itwill spend $185 million to set up a maintenance,repair and overhaul (MRO) facility and an aeronautical and flighttraining centre at Nagpur.Several foreign flight academies, including a number fromthe U.S., Australia and Europe, are known to be negotiating withprospective Indian partners to open flight schools.

CARGO UPDATECarriers home in on freight growthNew cargo players prepare to take on their foreign counterpartsBy Tom BallantyneViews differ over how bigthe air cargo business inIndia will become. Aircraftmanufacturer Airbus forecaststhe country will need 165 fullfreighters by 2025. Minister for Civil Aviation,Praful Patel, says 500 dedicated cargo planeswill be required by 2016.The correct answer probably liessomewhere in between, but there’s no doubtthat, as India’s economy continues to boom,there’s plenty of new business to be donein a sector currently dominated by foreignairlines flying to and from the country.Among those pushing ahead with plansto fly freighters are Air India and Indian,formerly Indian Airlines, who are soon tobe merged, Jet Airways, Kingfisher Airlinesand even low-cost carriers Air Deccan andGoAir.In January, Air India announced plansto launch its first freighter services in Juneand July, with two converted A310 aircraft.It is also looking at converting another eightA310s and five B737-200s in the near futureand it may lease two B747-400 freighters forlonger-haul services.“This is the first step towards becominga serious cargo player in India. As we inductnew passenger aircraft into our fleet, weplan to convert older aircraft for freighterservices,” explained Air India chairman andmanaging director Vasudevan Thulasidasafter laying the foundation stone for anew cargo handling facility at BangaloreInternational Airport.The first two A310s, which are being sentto Germany for conversion, are expected tooperate from India to Frankfurt, Paris andShanghai under Air India’s plans for anintegrated international-domestic cargonetwork. The carrier has also set up a taskforce to study the financial viability ofconverting B737-300s into freighters.Meanwhile Indian has said it willestablish a dedicated freighter cargo complexat Nagpur and is currently in the process ofconverting five of its B737-200s.Jet Airways, the country’s biggestAir India: the carrier may lease two B747-400s for use as freightersdomestic operator and fast expanding on theinternational front, has also foreshadowedfull-freight operations, possibly by the endof the year.Also eyeing up the cargo business isnewcomer Kingfisher Airlines, ownedby beer tycoon Vijay Mallya. No specificdetails of aircraft or launch date have beenannounced, but Mallya is known to considerit a huge opportunity. He has confirmed that‘As we induct new passengeraircraft into our fleet, we planto convert older aircraft forfreighter services’Vasudevan Thulasidasmanaging director, Air Indiaa name - King Cargo - has been identified fora freight division.GoAir managing director, Jehangir (Jeh)Wadia, told Orient Aviation its freighterdivision, GoCargo, would be a purelydomestic operation and should launch beforeJune as a separate business with independentmanagement. “At the moment we are stillevaluating turboprops versus narrow-bodiesversus wide-bodies,” he said.India currently has only one domesticcargo airline, Blue Dart Express, controlledby DHL Worldwide Express. Blue Dart hasfive B737-200Fs and two B757-200SFs andoperates scheduled night express cargoservices as well as domestic and regionalfreight charters.It will soon be joined by Hyderabad startupFlyington Freighters. Last year it placed aUS$1 billion order for four B777 freighters,then in January ordered six A330-200 cargocarriers. It plans to begin operations beforeyear’s end, focusing on point-to-pointoperations to destinations in West Asia,Europe and the U.S.Foreign firms are also getting in on the act.Global express freight giant, FedEx, movedlate last year to acquire its Indian partner,Prakash Air Freight, for $30 million, so itcould boost its position in the local market.Rival, United Parcel Service (UPS), is alsopursuing an aggressive expansion strategy.The Indian government has pusheddomestic airports to prepare to handleinternational freight and has backed themodernization and building of new air cargofacilities at airports across the country. Thereare also plans for foreign investors to ownas much as 74% of Indian cargo airlines,compared to the 49% permitted now.Indian airports handled 342,000 tonnesof domestic cargo during 2005-06 against325,000 tonnes in 2004-05, a 5.3% growth.But there was a 10% rise in internationalcargo in the same period, from 739,000tonnes to 814,000 tonnes. Home or abroad,there’s money to be made out of freight.22 ORIENT AVIATION INDIA MARCH 2007

Join aviation leaders fromacross the region – and the world– at Greener Skies 2007in Hong Kong on 29-30 MarchThe conference programme features points of view fromsenior airline management, equipment manufacturers,airports and government. The full conference agenda ispublished at www.orientaviation.com/co2LIMITED SEATS. BOOK NOW!29-30 March, 2007Conrad International Hotel, Hong KongSpeakers include:Chew Choon SengCEOSingapore AirlinesGiovanni BisignaniDirector generalIATAPhilip ChenCEOCathay Pacific AirwaysTony TylerCOOCathay Pacific AirwaysAndrew HerdmanDirector generalAAPASecure your place at this important conference for onlyHK$1988 (includes all conference sessions and galadinner). Register now at www.orientaviation.com/CO2 orcomplete the form below and fax it to us on +852 2865 39664 easy waysComplete and fax this registration form to us at+852 2865 3966www.orientaviation.com/CO2 Book to reserveonline or download booking form.greenerskies@orientaviation.com for a copy of thebooking form to pay or reserve your space.Mail this completed form, together with payment toWilson Press HK Ltd., GPO Box 11435, Hong Kong*Please remember to replace the + with the IDD exit code for thecountry you are calling from.Information protection: The personal information that you provide to OrientAviation, the organisers of Greener Skies 2007, will be held on our databaseand will not be shared with any other company or individual. Orient Aviationviews privacy and security of your information as a priority and will make allefforts to protect your personal information.Cancellation policy: Should you be unable to attend, a substitute delegate isalways welcome at no extra charge.Copyright © 2007 Wilson Press HK Ltd.Yes, please register me for Greener Skies 2007 conferencesessions and gala dinner for HK$1988 (approx US$255)Please complete all fields below.Name: (Mr/Mrs/Ms)Job Title:Employment Sector:Company:Address:Postcode:Telephone:Email:Country:Fax:Please charge my VISA MASTERCARD AMEXCard No.:Cardholder Name:Expiry Date:Signature:Date:Security code:Or please find attached my cheque / money orderOr please invoice me for bank transfer or cheque