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January 16 - February 25, 2021
The first airmail service in the world, demonstrated in 1911, is engraved in the name of India.
The Indian sky was liberalized again under the Narasimha Rao government, and with the passage of Air Corporations Transfer of Undertakings and Repeal Act 1994,2 the monopoly of government corporations finally came to an end.
On 18 February 1911, a French pilot named Monseigneur Piguet3 took off on a Humber plane from the historic town of Allahabad and flew across the Yamuna River to Naini carrying 6,500 mails. The distance covered was barely 10 kilometres, but by undertaking this short flight, Piguet became the first person in the world to flag off airmail service and he brought India on the global aviation map forever.
The government did draft a sketchy ‘Air Rules’ in 1912, but the Department of Civil Aviation was set up only in 1927.4 The scenario changed with the enactment of the Aircraft Act 1934,5 which continues to be the primary governing legislation for the Indian sky till date, albeit with many amendments.
The Aircraft Act 1934 was more in the nature of announcing the government’s overbearing authority and control over the Indian aviation sector, rather than being a facilitating act for the development of the sector.
Till 1935, the India office of the British government had authority over what is now India, Pakistan, Bangladesh, Burma, as well as Aden and some territories around the Indian Ocean.
Not long after, Madras and Bombay were also connected to Delhi via Pune and other centres in between.
The footprints of regional aviation, which is very much the focus of the government now, was laid by the then rulers of Jodhpur, Gwalior, Indore, Mysore and many others like them. The colonial government at the time was inclined to develop aerodromes at only those places which were of administrative and strategic importance to it.
India was fortunate to have exceptional people and institutions, such as J.R.D. Tata, Nevill Vintcent, Maharaja Umaid Singh of Jodhpur, Grant Govan, Seth Walchand Hirachand, Mirza Ahmad Ispahani, Biju Patnaik and the Bombay Flying Club to lead the development of impressive aviation footprint in India.
Legend has it that J.D. Choksi, the legal adviser of Tata Sons then, suggested redrafting the terms of profit sharing which, in effect, would have drastically cut Nevill’s profit percentage. J.R.D., after pondering over it for a few days, however, took the conscientious decision to retain the original contractual terms. He opted for the ethical treatment of his partner rather than getting swayed by narrow commercial considerations. That was J.R.D.!
Grant founded the Roshanara Cricket Club in Delhi and later became the founding president of the Board of Control for Cricket in India (BCCI) in 1928.7 Grant also founded the Delhi Flying Club in 1928 and Indian National Airways Ltd. in 1933—India’s second scheduled airline after Tata Airlines. The airline had a weekly passenger and freight service between Calcutta and Rangoon, and Calcutta and Dhaka.
The founder of Walchand Group was a maverick. Hailing from a Jain family of Wankaner in Gujarat, Walchand had made Solapur—in the erstwhile Bombay Presidency—his home. A restless entrepreneur, he kept giving shape to ideas which were truly pioneering and visionary for their time. Seth Hirachand established India’s first modern shipyard, set up the country’s first car factory—Premier Automobiles (which made Fiat cars in India)—near Mumbai and was also a major sponsor of India’s first homegrown news agency, Free Press of India, which he co-founded with Annie Besant and M.R. Jayakar.
Seth Walchand was also the main founder of India’s first aircraft manufacturing factory, Hindustan Aircrafts Ltd. (HAL), which commenced production on 23 December 1940. This factory later became Hindustan Aeronautics Ltd. (HAL).
he rescued two key Indonesian independence leaders, Sukarno and Sutan Sjahrir, who later became the first president and the first prime minister of Indonesia respectively. The duo was airlifted by Biju Patnaik from a remote hideout in Indonesia, where they were hiding to escape capture from their then Dutch colonial masters, and were brought safely to India.9 For this daring act which played a pivotal role in the independence of Indonesia, Patnaik was honoured by Sukarno with the title of ‘Bhoomiputra (Son of the Soil)’—Indonesia’s highest civilian award. Biju Babu remains the only
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Established in 1928, the Bombay Flying Club rightly calls itself the birthplace of civil aviation in India. The Club was informally established alongside the western end of Juhu Aerodrome in Mumbai, and has been the training ground for many aviation legends. J.R.D. Tata became the first person to get his pilot license from this club in 1929, while India’s first women commercial pilots Rabia Futehally and Mohini Shroff10 are also alumni of this institute.
With World War II coming to an end in 1945, there was a sudden spurt in new air service launches. What really fuelled this rush was the availability of cheap, wide-bodied military aircrafts (by the standard of that time) which could be easily converted for civilian use.11 Aircraft manufacturers laden with overflowing inventory were eager to dispose of their stocks at whatever price they could fetch.12 So even though the Indian entrepreneurs got their aircrafts cheap, their flight was short-lived—the government had other plans.
By 1953, global aviation had already taken off in a big way. Starting 1950, international air traffic grew in double digits every year till the first oil crisis of 1973. Sadly, India had missed the flight due to its prolonged restrictive policies. Air traffic growth and connectivity remained abysmally low in India. It will take another forty years for the Indian aviation to resurrect again.
March 1953, the Indian Parliament passed the Air Corporation Bill, which was legislated into an act in May of the same year. The objective of the act was ‘to provide for the establishment of air corporations, to facilitate the acquisition by the air corporations of undertakings belonging to certain existing air companies and generally to make further and better provisions for the operations of air transport services.’13 With the enactment of the act, all licences granted for scheduled operations under the Indian Aircraft Act 1934 ceased to be valid.
Post nationalization, two airline corporations were formed—Air India Corporation for international scheduled operations and Indian Airlines Corporation, primarily for domestic operations and to also serve a few neighbouring countries. Seven existing airlines—Deccan Airways, Bharat Airways, Kalinga Airlines, Himalayan Aviation, Airways-India, Indian National Airways and Air Services of India—were merged with Indian Airlines, while Air India Ltd. (Tata Airlines had become a public limited company on 29 July 1946, and was renamed as Air India Ltd.) became a public corporation and the national
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The nationalization of Air India is often seen as an undesirable and myopic move by then socialist Prime Minister Jawaharlal Nehru to stymie the growth of private enterprise and unleash his version of socialist economy.
the fact remains that post World War II, the air transport sector was rapidly nationalized around the world, across most countries. The process had begun in Great Britain even before World War II. Notwithstanding the commitment of liberal democracies to free market economy and the development of private enterprise, shattered economies, weak financial institutions, frail private enterprises, legacy issues, rising strategic importance of air services and the absence of a robust regulatory framework post-World War II forced governments to take over and nationalize airline business.
World War I had a deep impact on the financial condition of the aviation business—as much as it impacted nations’ economies. In the mid-war phase, the leading nations of the world also suffered from ‘The Great Depression’ which began from 1929 while its impact lasted till the end of 1930s. The consequential severe economic slowdown resulted in the shrinkage of the global economy by more than 15 per cent between 1929 and 1932. In many countries, the rich eventually suffered as much as the poor. The entire financial system came under heavy stress while a large number of banks collapsed wiping
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The massive aviation take off was primarily the result of economic surge that happened between 1950–1970, a period which is also referred to as ‘The Golden Age of Capitalism’. During this phase, the world economy grew at over 4.5 per cent on average, each year.
The average length of a flight doubled from 903 kilometres in 1950 to 1,816 kilometres in 2000,29 but it has not changed much since then—with 1,827 kilometres in 2012. Longer flights and expanding passenger numbers generated a strong expansion of total passenger kilometres (pkm) travelled—up to 193-fold from the 28 billion pkm in 1950 to 5.4 trillion pkm in 2012.30
Innovations and technological advancement enabled higher speed, more passengers per aircraft and better cost control, which resulted in lower fares.
More and more flyers around the world opt for LCCs for short-haul flights, which are typically of less than three-hour duration. As flying has become a necessity, saving wherever one can has begun to make serious sense to flyers—prevailing wisdom being why pay a fat premium for things like a skimpy breakfast or a tiny glass of juice or little bit more of leg space when it’s a matter of just one or two hours. Flyers increasingly prefer to stuff themselves at home or enjoy a wider spread at airport lounges than pay a fat sum on-board.
However, it is the only airline among the biggest ten worldwide whose market capitalization is more than its annual revenue, reflecting the robustness of its business model amongst other things.
Point-to-point service rather than a hub-and-spoke model continues to be its strong point which allows it to have quicker fleet turnround.
The airline doesn’t believe in hiring people with fancy management degrees for any position, especially freshers. It believes that real learning happens on the job and not in the classroom.
Ryanair had become Europe’s number-one airline by passenger numbers in 2016,36 and a year later, it also became the first European airline to have carried over one billion passengers.
In 2017, Ryanair operated more than 2,000 daily flights from 215 destinations in 36 countries. It has a fleet of 430 Boeing 737 aircraft and a booked order of another 240 Boeing 737, which is a critical component of its strategy to play with lower fares, gain 200 million customers by 2024 and cement its leadership position.
One of the core decisions he took was to continue future operations with one type and one class of aircraft in order to cut down on training and maintenance costs. This also strengthened Ryanair’s relationship with the aircraft manufacturer while providing a better bargaining power.
This decision proved even more beneficial to Ryanair in the long run as Boeing 737 class of aircrafts offers the largest seating configurations—from 85 to 215.
Development of robust ancillary revenue streams has been another strong point of Ryanair. Today, over 20 per cent of its revenue comes from ancillary services.
Ryanair launched an ambitious running program called ‘Always Getting Better’,39 which focused on improvements on every operational front with greater customer satisfaction as the core objective. A wide range of customer service and digital enhancements such as a new website and app, new uniforms and cabin interiors, allocated seating and tailored business, and leisure and family products were launched in the first four years of this programme.
Reaching the top is tough, but retaining the leadership position is tougher. Ryanair has ensured its lead through continuous innovations and by offering better services than its competitors.
the cool and calculated strategy of an LCC founded by Stelios Haji-Ioannou—a young scion of a wealthy British Cypriot family. EasyJet, stylized as easyJet, commenced its operation in 1995 with the motto, ‘Making flying as affordable as a pair of jeans’.
easyJet’s focus on keeping its operational and structural cost low allowed it to offer more affordable fares as compared to legacy or FSCs. According to its management paper, this cost advantage is created through a combination of factors, including:41 • Aircraft configuration enabling a higher number of seats per aircraft. • Higher load factor and aircraft utilization driven by its point-to-point model. • Younger and advantaged fleet deal reducing ownership and maintenance costs.
EasyJet’s management is also of the view that the airline’s strategy of building on its competitive advantages, i.e., an unparalleled network and market positions, efficient low-cost model, well-known brand and strong balance sheet, will enable it to keep delivering sustainable and disciplined growth and handsome returns for shareholders. However, what has also worked for easyJet is that now it is a professional-driven company, as the founders, who are also the largest individual shareholders in the company, are no longer part of the Board.
McCall focused on improving better on-time performance—better than before, better than the competition. She told employees that if an airline couldn’t keep up with on-time performance, it meant it treated its customers with little respect. To improve its image, particularly among corporate travellers, she introduced attractive plans which forced the competition—including Ryanair—to up their game. She demolished a psychological barrier among Europeans and made travelling LCC a respectful and wise decision, thus making huge inroads in corporate world.
So what worked in AirAsia’s favour? Six key factors contributed to making AirAsia a leader, which include: • Fortuitous timing. • A well thought-out and well-executed business model. • Excellent relationship with the home government. • Strong relationship with funding and advisory institutions such as Credit Suisse which helped it secure capital for its ambitious expansion plans. • Faith and reliance on homegrown aviation managers to steer the company. • Ambition backed by diligence and energy to execute its growth plans.
At 2.13 US cents per ASK, AirAsia X also has the lowest operational cost for any airline in the world.
Secondary airports help bring down operational cost and were major enablers for LCCs in offering lower fare in the USA and Europe. Facility charges such as parking, hangar and shops are also lower at secondary airports. The savings earned by operating from secondary airports in turn enable LCCs to pass benefits to flyers by way of lower fare.
So, to cut down the fare, LCCs here primarily rely on no-frills, minimal free or complimentary services, lower manpower per aircraft, greater seat density and charging extra for all possible products and services which a flyer may need.
The existence of a large number of airports throughout the length and breadth of the country, even if with just basic facilities, was a major facilitator for giving a swift take off to the Indian aviation boom once the sector opened up in the 1990s.
Airports Authority of India (AAI) currently manages a total of 125 airports, which includes 11 international airports, 81 domestic airports, 8 customs airports and 25 civil enclaves at defence airfields.
Today, India has seven international airports, including Indira Gandhi International Airport, Delhi; Chhatrapati Shivaji International Airport, Mumbai; Kempegowda International Airport, Bengaluru; Chennai International Airport, Chennai; Netaji Subhas Chandra Bose International Airport, Kolkata; Rajiv Gandhi International Airport, Hyderabad; Cochin International Airport, Kochi; Sardar Vallabhbhai Patel International Airport, Ahmedabad, and Pune Airport, which handle more than one million passengers a year.
Work to upgrade 35 non-metro airports by providing world-class infrastructure facilities is underway at Ahmedabad, Amritsar, Guwahati, Jaipur, Udaipur, Trivandrum, Lucknow, Goa, Madurai, Mangalore, Agatti, Aurangabad, Khajuraho, Rajkot, Vadodara, Bhopal, Indore, Nagpur, Visakhapatnam, Trichy, Bhubaneswar, Coimbatore, Patna, Port Blair, Varanasi, Agartala, Dehradun, Imphal, Ranchi, Rajpur, Agra, Chandigarh, Dimapur, Jammu and Pune.
When the aviation sector reopened to private sector, there was an influx of all kinds of people wanting to make it big here. They wanted to capitalize on big service gaps that were not being filled by national carriers. And with middle-class income predicted to rise sharply, the aviation market was set to boom. They expected smooth sailing. Glamour was another factor which drew people.
First, it was not an outright purchase. The deal, which only much later came to be fully understood by competition, was on the lines of ‘sale and lease back’ arrangement, which provided IndiGo a few key advantages. The bulk order had enabled it to bargain a handsome discount over the list price and at the same time, IndiGo had assured itself an uninterrupted supply of planes when the demand was predicted to soar. Moreover, as per the terms of its arrangement with Airbus, any technical glitches or issues with engines were to be taken care by Airbus or the engine supplier. Also, by entering into
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