Ancillary Services Rescue Airlines

Airlines in India are succeeding to some extent in milking a few millions of additional rupees from their customers for “extra” services that are now used to be included in their fare prices. 

The Role of Ancillary Services

Ancillary Services

Airlines all over the world are on their way to rake in nearly $110 billion in revenue this year from the sale of so-called “ancillary services”. These services have nothing to do with the operations of the aircraft: fuel consumption, maintenance, landing, parking or navigation charges. They are simply the extras best described as marketing gimmicks. These extras range from a choice of the seat to the volume of leg-space. Depending upon the way an airline fancies its marketing strategies, these may also include the ability to check one or more bags, chose an aisle seat, select seats together and/or in advance, to get reduced ticket change fees or additional frequent flier mileage points, or to get favoured check-in and security clearance procedures. Airlines clearly have today established the practice of charging more for such ancillaries.

Also ReadSilly Gimmicks Used by IndiGo for Marketing

The latest trend for the airlines has been:

to present a fully-stripped down, seat-only “Basic Economy” fares as well as various higher-priced “branded fares” that include various combinations of additional services.

But in the process, airlines have found in their customer feedback notes that they have disappointed more than half of their customers and left as many as 75% of them unhappy with their airline adventures. Such services historically were included in the price of the air-ticket. The airlines are yet to learn how to use customer data effectively to present fare options specifically tailored to the preferences of individual consumers. The skills required for revenue optimization (how a company dynamically adjusts the prices of its services to get, ideally, the highest revenue from a customer who is ready to pay for a service or product) have not yet been developed.

Also ReadAAI’s Unused Airfields Yet to be Put on Use

More and more evidence is coming up which shows that  a large segment of travellers:
– leisure travellers,
– less frequent travellers,
– high mileage business travellers and/or 
– very frequent fliers

are surely not very happy with the kind and constituents of various fare price options that the airlines offer. There is indeed a visible sense of hopelessness across the spectrum of airline patrons.

Ancillary Services


Despite that impediment, despite the still-not-well-defined way of unbundling and re-bundling service packages in their unpredictably priced fares, airlines’ efforts at raising ancillary revenues are setting new records with every passing year.

Ancillary revenue now signifies 12.2% of global airline revenue. That’s more than double considering the industry’s forecasted 5% operating profit margin in 2019. In other words, ancillary revenues have impacted greatly on airlines’ profitability.

The global industry’s $109.5 billion in ancillary revenue now is more than half of the industry’s total amount spent on fuel. In 2019, the fuel bill is expected to be around $206 billion. This trend reveals that the rapidly evolving ancillary revenues have become a vital hedge against escalating fuel prices.

The Role of ATF Prices


Airlines in India have long rued the high cost operating environment and high fuel prices. On November 20, 2019, the Parliament was informed through a written reply by the Civil Aviation Minister Hardeep Singh Puri in the Rajya Sabha that four domestic airlines including Jet Airways and JetLite, have shut their operations over the last three years for want of funds and unavailability of aircraft. The government has said that it is conscious of the financial difficulties being faced by the airlines and is responding to the industry situation.

The Minister listed out a slew of measures taken by the government to enable growth in the aviation sector. He said that the government was coordinating with all the stakeholders to resolve their issues.

As a result:
– the central excise duty on aviation turbine fuel (ATF) has been reduced,
– 100 per cent FDI has been allowed under the automatic route to ensure modernisation of airports and establish high standards,
– foreign airlines are allowed to invest up to 49 per cent in Indian carriers under the automatic routes and liberalisation of domestic code-share points in India within the framework of the Air Service Agreement (ASA).

However, the Minister made it clear that the government has no role in raising funds for private airline companies as it is an internal matter of the airline and each airline has to prepare its business plan on the basis of its own market assessment and liabilities.

The Aviation Sector Elsewhere.

 
In Thailand, Thai AirAsia, Thai Smile Airways, Thai Airways International, Nok Air, Bangkok Airways, Thai VietJet Air and Thai Lion Air have submitted a request to the government to cut the excise tax on jet fuel to avoid downsizing or shutting down operations. They said they have been badly affected by the weak economy, the local currency’s strength, and intense competition. This has reduced tourist inflows.
 
Ancillary Services
The Excise Department has proposed the seven low-cost and full-service carriers to increase the frequency of flights to second-tier provinces to enhance tourism there in return for a reduction in the excise tax on jet fuel. The Excise Department will cut the excise tax provided the airlines offer proposals that benefit the public, including more frequent flights to second-tier provinces.
”The government support is surely required if airlines are expected to take part in stimulating tourism in particular provinces,” the airlines say. “Promoting travel in second-tier provinces is crucial for Thailand’s tourism.”


The United Arab Emirates’s (UAE) is home to two of the biggest global airlines, Emirates and Etihad. The share of the aviation and tourism sector in UAE economy is set to double to $128 billion; is likely to support 1.4 million jobs in the next 20 years, from 800,000 jobs now as per International Air Transport Association (IATA) observations.


Also Read: ATF Price Cut Is Steepest In Last Two Years





Indian Cricket on Top of the World

Indian Cricket

Series: Bangladesh tour of India, 2019
India vs Bangladesh, 1st Test
Venue: Holkar Cricket Stadium, Indore

Nov 14-Nov 18; but lasted till Nov 16th.

Toss : BAN, chose to bat

Scores
BAN 150,
IND 493/6 decl, and
BAN 213

India won by an innings and 130 runs. India could get 20 wickets, while Bangladesh got just 6.

PLAYER OF THE MATCH: Mayank Agarwal

Bangladesh have been defeated by India comprehensively in less than three days of play.

Team India collected another sixty points in the Test Championship and are securely placed at the top spot. The second-placed team is far too distant.

This characterises the dominance of Team India in World Cricket. Truly a world Super Power in Cricket.

Such losses can demoralise any losing team and leave its confidence in tatters. And the kind of wins that this ruthless Team India gets would go a long way in motivating India and its billion fans to let the show go on, and play another match. Hereinafter, every team will have to combat this Indian team and go through that agony.

Today, Team India is on top of world cricket. At home, it is invincible.

There have been several factors which have attributed to the rise and rise of Indian Cricket. There is no dearth of top quality players, coaches, mentors, and administrators. At any given point of time, India can now produce a team comprising a second or third string of players which can take on any International team. The strength of the bench is the true indicator of the health of the team.

In this Test, India lost their superstars, Virat Kohli and Rohit Sharma, cheaply but Mayank Agarwal saw that as an occasion to perform. He grabbed this opportunity and added to the misery of Bangladesh with a stellar double-century. And with three full days still left, Bangladesh were never in contention to even save this match.

Indian Cricket

The Indian fast bowlers continue to bring smiles on the faces of 1970-90 generation of Indian players. That was an era when the fast bowlers of West Indies, Australia, and Pakistan used to rule. India invariably used to be at the receiving end. Today, the fortunes have reversed.

Historically, the origin of the change in the Indian team fortunes is traced to the 1979 winter India – Pakistan Test series. For the first time in the history of Indian Cricket, one opponent batsman (Sadiq Mohammed) while facing India’s bowling, signalled towards its dressing room asking for a helmet. That signal marked the arrival of the 19-year old Kapil Dev. That signal, as per Sunil Gavaskar, has precisely been the turning point for Indian Cricket.

40 years later Kapil Dev has come up with a statement: “Aisa pace attack humne dekha nahi tha, socha bhi nahi tha.” (we have not seen such a pace attack, nor did we think about it).

The former captain and fast bowler Kapil Dev has showered praise on the present Indian pace attack. “Without any doubt, the fast bowlers have changed the face of Indian cricket in the last four-five years,” he said.

“I am proud of the quality of Indian fast bowlers. They have come in numbers, it is the best ever Indian pace attack,” he added.

Fast bowlers of India are at the top of their game. Even the pitch looks different when they bowl. India has a dream bowling combination today. Team India can even afford to miss its top bowler, Jasprit Bumrah. India continues to stride ahead from strength to strength due mainly to the passion with which the game is followed, played, and administered.

A similar analogy can not be applied to other cricketing Nations. As a result, the gap between the first and the second is widening, the numbers and the records are there for everyone to see.

Today the team is focussed to take the Indian cricket higher and higher. The motivation and the intent have been right as seen by its clinical performances all around in recent history.




AAI’s Unused Airfields Yet to be Put on Use

Till 2019, the staterun Airports Authority of India (AAI) is left with 126 airports, which include 50 unused airfields, including non-operational ones, which do not generate any productive value. Three years ago, the Government had come up with an ambitious plan named UDAN wherein it proposed to put such airports under some utilisation. But, the scheme could not take off as anticipated.

Also Read: 84 Routes Under the UDAN Scheme Have No Operator Now

Today, the government has realised that the country needs more number of airline pilots. It feels that there is a burgeoning demand for pilots in India and overseas. A new school of thought has emerged in the aviation ministry. That is, more schools for pilots should be opened up because India does have adequate human capital and it can produce enough pilots to meet not just its own demand but also supply pilots to the world!

India’s pilot shortage

India’s shortage of pilots, especially of commanders, is increasing as airlines expand aggressively. According to industry estimates, the country now has about 8,000 pilots and its airlines will require an additional 17,000 in the next 10 years. There is also global demand for pilots, especially from carriers in China and the Middle East.

India’s current pilot producing capacity is not enough to meet the country’s needs. It has 32 training institutes that produce about 300 pilots against the requirement of 800 a year. The country’s fast expanding carriers have to hire foreign pilots otherwise they have to cancel flights at times. Jet Airways pilots, for instance, found jobs quickly with other carriers when the airline went  bankrupt recently.

AAI’s disused airfields may be turned into pilot academies

As such, the government has started work on a plan to turn the AAI’s ideal airfields into pilot academies. It is not considering their Real Estate virtues even after the flopped UDAN show. Those properties could have been utilised much more profitably by recognising its real-estate value and setting up a suitable industry by utilising judiciously the locally available resources.

The said plan envisages to activate as many airports — either non-operational or the ones used only sparingly — as possible. There could be various other airports or airstrips that could be used for pilot training.

Also Read: Republic Airways Offers OU Pilots Job Opportunities

The AAI board has rcently approved the proposal and formed a three-member panel headed by former Indian Air Force chief Fali H Major to decide on the number of airports that can be offered to pilot schools. It has not yet clarified how it will mobilise funds for such a venture. There is still no co-ordination among the general education system, and the Industry. Flying training in India is more expensive than many other countries, and one reason is taxation on fuel for trainer aircraft. The government must come up with a viable plan, it may have to look at the option of providing subsidies to make this scheme a success.

Air Force chief Fali H Major is an independent member of the AAI board. The others on the committee, which is to submit its report in three months, are Vineet Gulati, AAI’s member (air navigation services), and Anil Gill, deputy director, Directorate General of Civil Aviation (DGCA).

The idea came from director general of civil aviation Arun Kumar, also a member of AAI’s board, said persons with knowledge of the matter.

The team headed by the former IAF chief Fali H Major now has a challenging task in hand. It has to justify the government’s decision of opening up more pilot schools like this on three main counts:

  • the pilot training program must be cheaper than the prevailing rates
  • a commercially better utilisation of the land that other real-estate schemes could have provided
  • should not depend upon the government’s sops, subsidies or any other form of concessions

This has become more significant since the UDAN scheme has flopped miserably before. In all probability, the Team Fali may like to consider an option which stems from the potential of non-aeronautical revenue which is inherently associated with every airport – functional or non-functional. 

Experts said the initiative will need to be augmented by other measures. Shakti Lumba, a former pilot who used to head operations at Air India and IndiGo says, “There are things like weather, visibility and Air Traffic Control factors that should be taken into account while deciding on the airports that will be shortlisted for flying institutes. The government should also provide incentives.”




Broken aviation complaints system favours the interests of airlines over passengers: Which?

Which? has recently criticised Ryanair compensation arrangements.

Nowadays, airlines are able to pick and choose between schemes which suits them. It can result in different results for the victim passengers.

According to Which?,  a major overhaul of aviation complaints is needed. All airlines should be made to sign up to a single dispute resolution service that makes binding decisions within a reasonable timeframe.

The situation arose because of one recent Ryanair’s behaviour.

Which? has disclosed that Ryanair was asked to pay more than £3.6 million in handling fees and compensation in 2018. But it quit the aviation complaints body which later became a controversial decision.

Ryan Air

With such ostrich like actions, airlines shirk their responsibilities towards their passengers. Ryanair may apparently have saved millions for itself – but it invites a huge loss in its credibility. It leaves its passengers jumping from pillar to post to get the compensation they deserve. This happens when Ryanair like airlines refuse to pay out when their flights are delayed or cancelled.

Also ReadAfter Thomas Cook, Norwegian Seems to be Headed Into Bankruptcy

The aviation world has recently seen airlines go bankrupt one after another. A given airline has to go through a number of difficulties like strikes, bad weather, maintenance issues, bird-hits, delays and stiff competition. Besides, airlines regularly undergo a plethora of other financial problems. But, they are all well-known risk factors. The due cover must have been envisaged before undertaking an airline business.

Most of the largest airlines flying from the UK are signed up to one of two UK schemes, Aviation ADR or CEDR. Although both have been authorised to handle escalated passenger complaints,  none of these have become mandatory since 2016.

In the first 11 months of 2018, Aviation ADR received more than 14,000 Ryanair complaints and the airline was told to pay out more than £2.6 million to passengers in compensation between October 2018 and the end of March 2019, according to the most recent complaints data.

Ryanair also had to pay at least £75 for each complaint Aviation ADR handled – suggesting a bill for more than £1 million in fees alone during 2018.

Also Read: Boeing completes Ryanair 737-800 deliveries

But after Ryanair cut ties with the arbitration scheme at the end of November 2018, only 553 passengers in total pursued claims with the Civil Aviation Authority in the following four months – resulting in a huge saving in fees and compensation for Ryanair. It can not be compelled to pay out even if the aviation regulator finds the ruling in a passenger’s favour.

As of April 2019, 466 of these claims were unresolved and official figures do not reveal if anyone had received compensation.

Even when Ryanair was with Aviation ADR, passengers complained of waiting as long as a year to receive any money – despite a pledge that claims would be processed within 90 days.

Which? has suggested the aviation sector to have a single mandatory resolution scheme which handles complaints swiftly and has some real power to implement.

This will possoibly put an end to the current damaging behaviour.

Until these changes are made, it will continue to be far too easy for airlines like Ryanair to get away from  promptly refunding consumers who are left out of pocket through no fault of their own.

Rory Boland, Which? Travel editor said: “The broken aviation complaints system allows them to wriggle out of paying compensation and putting many people off claiming at all. The uphill struggle that many have faced trying to claim the compensation they are owed has left thousands of holidaymakers significantly out of pocket for delayed and cancelled flights. It demonstrates why all airlines must be made to sign up to a single resolution scheme with real power to ensure passengers are treated fairly and money is paid out where it’s due.”




Virgin Atlantic Could Not Grow In India Due to Jet Airways Collapse

New Delhi: The closure of Jet Airways (India) Limited changed the India growth plans of Virgin Atlantic. The British airline, which had a code share partnership with Jet Airways, then started its own services between London and Mumbai, as per the airline’s country manager (India) David Hodges.

“We had a code-share partnership with Jet Airways, and we planned to grow that,” Hodges said adding, “Unfortunately, the grounding of Jet Airways changed our growth plans.”

Also Read : Explainer: Jet Airways crisis

One airline books its passengers on its partner carriers and provide seamless travel to destinations, where it has no presence by virtue of Code-sharing.

Virgin Atlantic will now start its own daily flights between London and Mumbai from 27 October to utilize the space vacated by Jet Airways, which operated three daily flights on this high demand sector. Jet Airways also flew a daily flight between Mumbai and Manchester.

“There was a lot of capacity (between Mumbai and London/Manchester). We were looking to increase our presence in the partnership with Jet Airways and probably fly one Virgin Airways flight between England and India (of the flights flown by Jet Airways),” Hodges said. “We need to be quick and nimble (after Jet’s grounding). So, we decided to start our own services between London and Mumbai.”Virgin Atlantic

Virgin Atlantic currently also has a daily flight between London and New Delhi.

Jet Airways suspended operations in April because of a severe cash crunch. A consortium of 26 banks led by the State Bank of India (SBI) has approached the National Company Law Tribunal (NMCLT) to recover dues worth more than 8,500 crore.

As things stand, Jet Airways has run a loss of more than 13,000 crore in the past few years. Its total liabilities amount to more than 15,000 crore even as lenders have been trying to sell the beleaguered airline as a going concern, but without much success.

Hodges said Virgin Atlantic was looking at forging new partnerships with Indian airlines, which could help the airline get traffic from smaller Indian cities and town. The airline, which already has an interline partnership with Vistara, is looking to forge more such partnerships or code share agreements with other Indian airlines.

“Now, the plan is how we grow in India. Having a code-share with Vistara is definitely an option for us,” Hodges said. “Interline with Vistara has given us great connections from Mumbai and New Delhi. It’s however not very simple. Lots of commercial considerations and decisions will have to be made for this alliance.”

An interline agreement is typically signed between two or more airlines to handle passengers when their itinerary involves travelling on multiple airlines. Such agreements allow passengers to change flights to one on another airline without having to check-in again.

Interlining agreements differ from code-share agreements as the latter usually refers to numbering a flight with the airline’s code even though the flight is operated by another airline.

Meanwhile, going ahead, Virgin Atlantic could look to operate between cities other than New Delhi and Mumbai, and London as the airline plans to tap the number of passengers traveling to England and Europe from other Indian metros.

“I have spoken to a number of Indian airports, and this is an interesting opportunity. There are also other high growth cities across South and North India,” Hodges said. “Bangalore is the next natural city we want to fly from in future, and one that we are currently not flying from.”

Virgin Atlantic will operating its Boeing 787-9 (Dreamliner) fleet between London and Mumbai. The airline currently operates Airbus 330 aircraft on its London-Delhi route. The airline hopes to also provide onward connections to destinations in Europe, South America, North America and South Africa from London for its passengers flying from India.

“Ultimately, we want to be able to compete with bigger airlines like British Airways in terms of network and network size,” Hodges added.




Thomas Cook Collapsed, Other European Airlines on Brink

Thomas CookA sad story of Thomas Cook: being reported only for the sake of reporting.

Its official now. By 23 September 2019, the 178-year-old company, Thomas Cook (TCG.L) along with a trio of subsidiary airlines has collapsed. Its stores across Northamptonshire have shut their doors. Thomas Cook branches in Weston Favell and Northampton’s Abington Street have also closed for good. Two travel stores in Kettering in Lower Street and at Asda, stores in Wellingborough’s Swansgate Centre and Corporation Street in Corby have also closed.

Hitherto known as a travel giant, its thousands of employees have been rendered jobless. This includes about 1,000 workers at their nearby Peterborough HQ.

Today, the grand old travel firm finds itself being put into compulsory liquidation. A weekend of frantic talks could not save Thomas Cook. Tens of thousands of its holidaymakers have been left in the lurch around the globe.

The closure of Thomas Cook and the subsequent cancellation of all its flights has forced the launch of an operation by the Government and the Civil Aviation Authority (CAA). It is one of the largest repatriation in recent British history. This has been codenamed Operation Matterhorn.

This repatriation is hugely complex and the CAA and the government are working around the clock to support the Thomas Cook customers. All such passengers currently overseas who are booked to return to the UK over the next two weeks will be brought home as close as possible to their booked return date by providing new flights to return to the UK.

A CAA spokesman clarified:

“The Government and the Civil Aviation Authority are now working together to do everything we can to support passengers due to fly back to the UK with Thomas Cook between September 23 and October 6. Depending on your location, this will be either on CAA-operated flights or by using existing flights with other airlines.

If you are already abroad you will find all the information you need about your arrangements to get home on this website. If you are due to depart from a UK airport with Thomas Cook Airlines, please do not travel to your UK airport as your flight will not be operating and you will not be able to travel.

These repatriation flights will only be operating for the next two weeks (until October 6). After this date you will have to make your own travel arrangements. From a small number of locations, passengers will have to book their own return flights.”

Also ReadJet Airways pushed further to the brink of collapse

Virgin Atlantic is one of the airlines taking part in the CAA scheme. A Virgin Atlantic spokesperson stated: “We’re sorry to learn that Thomas Cook has ceased trading earlier today and recognise the impact on its customers and staff in the UK and abroad. Virgin Atlantic is working closely with the CAA to repatriate Thomas Cook customers impacted in Cuba, Jamaica and the United States, to ensure they will be able to complete their journey as planned. We have allocated available space on our scheduled flights, and are also providing special flights to repatriate Thomas Cook passengers abroad.”

Similarly, a representative for the easyJet airline stated: “We are sorry to see the news about Thomas Cook and appreciate the anxiety that their customers will be facing now. easyJet is working with the CAA to provide a fully crewed A320 aircraft to support the repatriation efforts over the coming days.”

Besides, British Airways is also offering flights for Thomas Cook passengers returning to the UK from destinations like New York, Los Angeles, San Francisco, Las Vegas, and Cancun.

Aviation analysts observe that the strains that sank Thomas Cook weigh on other European airlines as well. Several such companies are struggling with similar problems.

Two small operators, Aigle Azur and XL Airways, are before the French bankruptcy courts today. The list of similar bankruptcies is long: Monarch, Air Berlin and Alitalia failed in 2017, Primera and Cobalt in 2018, and Germania, Flybmi and Iceland’s WOW so far in 2019.

Today in aviation sector, there is very little left for cheer. Larger European carriers are not immune from the threat of collapse. Regional operator Flybe’s sale to a Virgin Atlantic-led consortium just managed to avoid its closure. Third-ranked low-cost operator Norwegian Air (NWC.OL), which has bled cash while making inroads in the transatlantic market, somehow managed to get a reprieve from creditors last week, postponing repayment on $380 million in debt for up to two years.

Customers can find out how to book on to the repatriation flights through the CAA website: www.thomascook.caa.co.uk.