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Are Low Airfares Really Helping Airlines In India To Grow?

Global airlines are looking to enter India, lured by the by a domestic travel boom and what’s expected to be the world’s third-biggest aviation market by 2025.

Yet India has proven to be a highly competitive market, where profits are scarce and the life expectancy of weaker airlines is anything but certain.

The best example of this is the recent fall of Jet Airways. Jet Airways India Ltd, one of the first carriers to launch after the market opened up in the early 1990s, is struggling to handle the cost of its day to day operations and are in dire need of liquid cash.

This is the sign of financial distress in a market which struggles with high fuel prices, airfare wars and a depreciating rupee. The competition is set to intensify if Qatar Airways follows through with its proposal to start a short-haul flights in the country.

To give you a small insight into why this is happing , we did some digging around and found some interesting points.

Running The Rat Race

The Indian aviation sector is slowly heading towards reaching a scenario similar to the telecom sector, which faced immense disruption since the data pricing war started.

At present, airlines regularly offer major discounts and cashback offers on flights as they want to ‘snatch’ more passengers from the railways & their competitors to fill up more spots.

Many aviation experts say that the major problem facing the sector is a “low-cost” airfare war that is driving ticket prices unrealistically low, even to such an extent that airlines cannot cover their operating costs.

The woes faced by Jet Airways are similar to those faced by other Indian carriers that are struggling to remain profitable. This is despite filling nearly 90 percent of their seats and recording a sharp increase in domestic passenger numbers over the last four years.

Although the higher demand in the sector reflects as growth, it does not necessarily add up to profitability in terms of revenue generation. Experts have termed the growth in the airline sector as “unhealthy” and even profitless.

The Real Killer

With the entry of budget carriers such as IndiGo and SpiceJet since the mid-2000’s, full-service carriers like Jet Airways & Air India that have higher overhead costs, such as in-flight meals and entertainment, have been forced to offer discounts to passengers looking for a great bargain.

For instance, in 2015, SpiceJet offered base fares of as low as Rs 65. Average ticket prices for New Delhi to Mumbai, the world’s third-busiest route, fell 15 percent to 3,334 rupees in July-August 2014.

“Such fares are “not sustainable,” yet there’s “no choice” but to keep offering them” Rahul Bhatia, the billionaire co-founder of InterGlobe Aviation Ltd. that operates IndiGo, told analysts after almost all of its quarterly profits were wiped out.

To Robert Mann, the New York-based head of aviation consultancy R.W. Mann & Co., the Indian market now resembles that of the U.S. 30 years ago after the government freed ticket prices from federal controls in 1978, setting off a fare war.

According to Mt Jagat Puri who’s a pilot by profession, “Ticket prices on key and popular routes are always under sustained pressure from various carriers”. He went on to say that, some of the prices are unreasonable and this leads to an unhealthy fare war.

India’s airlines have particularly suffered because passengers are highly price-sensitive despite spiralling jet-fuel prices and high local taxes that reach as much as 30 percent.

India Flying At A Loss

The Indian government also has had to prop up its loss-making national carrier Air India, pouring in taxpayer money to keep planes in the air. In July 2018, the government pumped in €261 Million to keep Air India operating.

Air India has found itself in dire financial straits over the past decade, saddled by a gigantic debt amounting to around €7 billion and having to beg the government for bailouts.

But while the government is looking at infusing fresh capital in Air India, the private airlines need to fight for themselves in a hostile market.

What Is The Solution?

With margins slipping, fuel prices not showing any signs of coming down and little likelihood of the government lowering taxation on jet fuel, the only option with airlines is to raise fares.

While airlines are now introducing measures to curb passengers from increasing flight load (recent baggage rule change), much more needs to be done to make the sector profitable again. 

Other than that, industry veterans such as Kapoor feel there is a need to focus on real growth, which can only be achieved by matching global costs and not trying to compete with the Indian Railways. 

However, it would be extremely hard for airlines to move away from the low-cost model as passengers may again go back to travelling on trains. This is where the airline industry lacks the pricing power and is forced to offer low prices. 

Conclusion

There is little that can be done to change the fortunes of the sector which is facing increased stress due to rising ATF prices and pressure from depreciating rupee.

Considering that Indian airline carriers pay the highest for ATF due to local taxes to the tune of 30 per cent, the only intelligent move is to increase ticket prices and aim at real growth rather than a boost triggered by discounts.

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Smog Delays Flights In Bengaluru, Chennai & Delhi!

Flight operations were disrupted at major airports across India today morning, after heavy fog & smog took over.

Due to smog, flights were disrupted in Bengaluru, Chennai & Delhi. Airlines have forewarned passengers of likely delays in the coming few days. On Sunday too, as many as 35 flights were delayed in Bengaluru, 30 in Chennai.

The departure and arrival delays continued through the day at the airport and as many as 18 flights arriving at Chennai, some of which were flying from Kuwait, Sharjah and Delhi, had to be diverted to Bengaluru and Hyderabad airports.

According to Bengaluru International Airport Limited(BIAL), a result of the fog, the departure of 35 flights and the arrival of another 16 flights were delayed yesterday. The tech hub’s airport has an average of 300 departures and arrivals each on a daily basis.

Meanwhile, Delhi, which celebrated Lohri on Sunday along with Punjab, woke up to a misty Monday morning. The minimum temperature in Delhi was recorded at 6 degrees Celsius. Flight to and from Indira Gandhi International airports were also delayed.

Today, Tamil Nadu celebrates the Bhogi festival, wherein bonfires will be lit. Bonfires combined with high humidity, low temperature and moisture may cause smog, which will disrupt visibility further.

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Government Clears Plan For Greenfield Airport In Arunachal!

The dream of having an airport in Arunuchal Pradesh’s capital city is on its way to becoming a reality after the union finance ministry on Friday cleared the proposal for the greenfield airport in Hollongi.

The Ministry of Environment and Forest and the Steering Committee of the Ministry of Civil Aviation had also cleared the proposal for the greenfield airport on December 28Th.

Chief Minister Pema Khandu said the greenfield airport, estimated at a cost of Rs 1,055 crore, will be a state-of-the-art infrastructure which will propel economic development besides improving connectivity for the local population.

After a detailed discussion, the Public Investment Board of the Finance Ministry approved the land acquisition rate as proposed by the committee and endorsed by the state government.

However, the board noted that it would be the responsibility of the state to hand over the land free of all encumbrances to the Airport Authority of India and set a target to have the airport ready within 4 years.

According to Mr Pema Khandu “It’s matter of great joy for Team Arunachal that today the decades-old dream of having our own airport has been realized. I thank the the government of India for their unstinted support in having this project see the light of day,”

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Check-In Vs Carry-On Luggage: Which Is The Best Travel Option?

If you fly regularly, you must have had this question as to check-in your bag or carry it with you.

Fees, the risk of lost or damaged luggage and waiting time aside, deciding whether to check your bags or carry on boils down to your top priority when traveling. Is it comfort, time or money?

Whichever factor tips the scales will let you know how you’ll be traveling for your next trip.

But before we get into this debate lets see what exactly do the terms “Check-in Luggage” & “Carry-on Luggage” mean.

What Exactly Are “Carry-on” & “Check-in” Bags?

A carry-on bag is the type of luggage travellers are allowed to take into an airplane. On the other hand, checked baggage is transported in the cargo area of the airplane.

Airplanes are designed with luggage compartment spaces to store carry-on luggage. The storage space is situated in overhead lockers or under seating.

Depending on which airline or country you fly from, carry-on bags are also labelled as hand baggage or cabin luggage.

Here’s a list of essential items you can pack in your Carry-On Luggage:

  • Important travel documents (E.g. Passport)
  • Money
  • Items of monetary value (E.g. jewelry)
  • Daily medications
  • Electronics
  • Toiletries (E.g. toothbrush and toothpaste)

There is no standardized ‘one-fits-all’ rule when it comes to carry-on luggage weight and size. Rather, individual airlines are entitled to change carry-on bag size requirements. Examples of factors that determine how big your carry-on luggage can be include booking class and the model of aircraft.

The Checked Baggage Vs Carry On Debate

Travel experts are of the strong belief that traveling with carry-on luggage makes travel easier because “there’s no way the airline can lose your luggage if you haven’t checked anything”.

Famous travel writer, Ali Garland is opposed to checked in luggage because she dislikes getting, “weighed down by heavy bags” and would rather avoid having to “deal with expensive checked bag fees.”

But, as the saying goes “there are always to sides of a coin”!

Many people believe that checking in your luggage is easier. They are prepared to pay checked bag fees to forego the nightmare of trying to cram all their travel necessities in a small carry-on bag.

Ask Yourself These Questions Before You Choose

When it comes to choosing whether to check your bags or carry on, don’t feel like you have to come up with a perfect answer for all of your travels. Instead, just decide what makes the most sense for your next trip.

  • Do you need extra room for souvenirs? Are you willing to ship them or do you want to have them on you on your way back?
  • Are you able to pack light for this trip? Or are the activities varied enough that you need more?
  • Do you like to have more with you when you travel? Or does the idea of carrying less make you feel freer?
  • Are you okay with carrying all of your bags on the plane versus dropping them off at check-in?

Is It Better To Check Your Bags Or Carry On—Yes or No?

In a nutshell, it depends!

However, here’s what we suggest you should do the next time you fly:

  • If you really want to save money, then you should carry on your bags. (Just make sure you check your airline’s policy to ensure they don’t charge a fee for this.)
  • If you really want to save time, then you should pay for priority boarding and carry on your bags.
  • If you really want to maximize comfort, then you should check your bags but make sure your carry on has all the conveniences you want for the flight.
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Authorities To Start Expansion Work Of Bengaluru Airport In 2019!

Bengaluru’s international airport is expecting passenger traffic to surge by 70% over the next two years as multinational companies pour money into the city known as the Silicon Valley of India.

Airport authorities laid out plans on Thursday for a nearly $2 billion investment that will add a new terminal and a second runway, boosting the airport’s capacity to 45 million passengers per year.

The Kempegowda International Airport, already the third busiest in India with 27 million passengers in 2017-18, is expecting traffic to triple in the next 10 years.

Authorities have said that they plan to make Bengaluru Airport as big as the Heathrow Airport in London. (London’s Heathrow Airport had about 78 million passengers walk through its terminals in 2017)

Along with a new terminal, Bangalore International Airport Ltd is also nearing completion of a second runway, capable of handling Airbus’s A380s(The World’s largest aircraft) and operating in near zero visibility.

The parallel runway construction at Kempegowda will be finished by the end of September 2019. The second runway will be four kilometre long.

The new terminal T2 will be built in two phases. The first phase will have 25 million passenger capacity. The new terminal will be environment-friendly and will adhere to the ‘The city of gardens’ image of Bengaluru. The terminal building will have lush green cover with trees specific to the city.

By September 2019, 3,000 acre will be developed out of the 4,000 acre the airport has. The airport is also in talks with airlines in India to make the Bengaluru airport their hub.

India’s total passenger traffic rose about 16.5 % in 2017-2018 to nearly 309 million, according to the Airports Authority of India, making it one of the world’s fastest-growing aviation markets. Boeing Co expects the country to become the third-largest commercial aviation market by the early 2023.

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Brand New Commercial Complex To Come Up At Chennai Airport!

Passengers travelling to the Chennai airport will soon be able to shop at a mall, watch a movie & stay in a hotel.

Airports Authority Of India is going to build these facilities in the 2 multi-level car parks which are being build on either side of the airport.

The ministry of environment and forest has given the green signal for construction of these facilities as part of the six-level 2,000-car park project.

Here are the details of this project:

  • The mall and multiplex will come up in the complex on the east side of the airport metro station while the hotel will come up on the west side.
  • There will be seven levels of parking in the east block and six levels in the west block.
  • The parking lot with its mall and hotel would be connected to the airport building using a link bridge
  • This link bridge would connect to the walkalator tube that runs parallel to the domestic and international terminal
  • Initially, the mall and the hotel were meant primarily for the passengers but visitors too would be able to make use of them.

The hotel will help transit passengers find good accommodation without travelling to the city. Transit rooms are no longer available at the airport as the old domestic terminal complex, which housed them, has been pulled down to construct an integrated terminal.

The airport currently sees a traffic of more than 5,000 cars a day. The multi-level car park will also be of help when the integrated terminal is completed.

AAI has started work which is expected to be completed by July 2020.

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Airports Authority Of India Bans “Single-Use” Plastic At 129 Airports

If you pay close attention to most things you purchase at an airport, you’ll notice that they are mostly wrapped in plastic.

However, in a bid to make the airports greener, the Airports Authority of India (AAI) has imposed a ban on single-use plastics at 129 airports across the country.

According to a statement made by AAI, all airports will gradually become plastic-free, and this is the first step that the authority is taking towards going green.

Ahmedabad, Bhopal, Bhubaneshwar, Chandigarh, Dehradun, Indore, Kolkata, Madurai, Pune, Raipur, Tirupati, Trichy, Vadodara, Varanasi, Vijayawada and Vizag airports have already been declared plastic free. These airports were selected on the basis of the third-party assessment carried out by the Quality Council of India(QCI).

Various steps have been undertaken to eliminate single-use plastic items at passenger terminals and city side. These steps include banning of single-use plastic items like straws, plastic cutlery, plastic plates etc.

Elaborating upon the next step in this implementation, AAI said that it has also asked the QCI to check how the ban has been implemented at 34 airports across the country that handle about 10 lakh passengers every year.

Going a step ahead in making airports green, the AAI plans to use plastic waste to lay new roads and repair old ones on the city-side of its Chennai airport. The pilot project will be undertaken in either Madurai, Chennai or Thiruvananthapuram.

The project will be implemented for city-side roads first, and if successful, it will also be extended to run along the compound wall of the airports and later, on taxiways.

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Bengaluru Airport Launches Women Friendly Taxi Service!

Cab services driven by women for female passengers were flagged off at Bengaluru’s Kempegowda International Airport(KIA) on Monday.

Karnataka State Tourism Development Corp (KSTDC) and Bangalore International Airport Ltd (BIAL) launched an all-women-run taxi service, Go Pink Cabs.

As the project is being run on an experimental basis, there are currently 10 taxis available, piloted by women drivers.

Apart from Uber, Ola, Karnataka Taxi, MegaCabs and Meru Cabs, women will now be able to book a Go Pink Cabs ride from KIA.

The cabs will be equipped with safety features, such as GPRS tracking and an SOS switch in case of any emergency. Solo female travellers or group of women can avail the cab services.

The pink cab service will be functional 24 hours and priced at Rs 21.50 per km during the day and Rs 23.50 per km at night.

According to KSTDC Managing Director Kumar Pushkar, the service has been implemented with an objective to provide a safe and secure mode of transport for women travellers from the airport, while also creating opportunities for women drivers to be self-employed.

The initiative is an effort to contribute to the socio-economic development of women from villages around the airport by recruiting women drivers from the vicinity.

Based on passenger feedback and demand, Go Pink Cabs will expand its fleet in the months to come.

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