INTERNATIONAL CONFERENCE ON EMERGING NEEDS AND DEMANDS OF AIRPORTS AND AIRLINES

Aviation sector is one of the core infrastructures and a cardinal segment that has been a rapidly growing segment of every economy including the Indian economy, and is one of the fastest budding industries. With the increasing globalization, and opening up of economies, consequential liberalization and revamping of freshly enriched aviation policies, new technological innovation, developments in civil aviation and liberal managements, privatization of airlines and airports, liberal and open skies bilateral and multilateral agreements are just some of the recent developments in the global aviation industry.


New concepts of ownership and management, leasing and financing are the some of the emerging trends in India. From being a primarily, state owned industry opening up to the private players both in terms of Aviation & Airline operations had resulted in the aviation industry the phenomenal growth of the aviation industry leading to be dominated by a large number of private players, and low cost carriers. While most commercial airports belong to the public sector, and it is complicated to get enough money or construct efficient management teams within the controlled regulated governmental world. With the privatization of Mumbai and Delhi airports, and the green field airports of Bangalore and Hyderabad, and one such proposed airport at Navi Mumbai, are evidences of such changing milieu of the aviation sector, and the transforming attitude of the government towards privatization of the airport infrastructure. The city side development has also taken the shape of a PPP (Public-Private Partnership) model. In order to face these rapid changes in the industry, the airport owners and operators are devising various schematic designs and working out modules and one such scheme is that of the privatization of airports to redress the grievance of the operators.

NALSAR University of Law, is organizing a two day International Conference to focus on the emerging needs and demands of Airport and Airline sectors for a sustained growth of the Aviation Industry, and to increase awareness of the issues and requirements of this sector. For this reason, the conference will focus primarily on the Airport Sector and the Airline Sector. The Conference will provide a forum for government officials, industry leaders, academicians, business executives and students to discuss the current trends in the said areas, and to exchange best practices, develop solutions, and publicize new initiatives.

For theme details and registration form please visit:
http://www.nalsar.ac.in/AIR%20LAW%20Conference/Conference%20on%20Air%20Law.html

Booming Airfares: Why???..

With the New Year just around the corner and the festive season setting in amidst this wonderful winter month, everyone is busy planning that long awaited vacation with the loved ones. But there comes in the show spoiler - the 150% - 200% rise in the air tariffs in the domestic sector. The normal fare on an advance purchase of a week from Mumbai to Goa has increased to Rs. 10,000 to Rs 12,000 against Rs 3,800 to Rs 4,500 a month ago.

So why are airfares on the rise? A look into the issue shows three main causes: capacity cuts coupled with rising travel demand, higher oil prices and a changing business model for low-cost airlines.

Capacity cuts and rising demand

I remember reading a book by Dr. Stephen Leeb, “The Coming Economic Collapse: How You Can Thrive When Oil Costs $200 a Barrel”. Dr. Leeb had suggested that oil is on its way to becoming extinct which would send the global crude prices sky rocketing. That was the year 2006. Two years later in the year 2008 the Oil Crisis hit the world. This along with the recession that followed made it difficult for the airlines across the countries to maintain the fuel guzzling metallic birds. This led to the trimming of schedules and fleet and also saw the suspension of services in the least profitable routes. The Air Seat Miles (ASM) reduced.

The number of travellers has increased by 18.9% within the span of a year with 468.09 lakh people travelling trough the air route in between January and November, 2010 in comparison t0 393.53 lakh people in the corresponding duration in 2009 (DGCA Statistics). Despite resurgence in the commuters, the airlines have not increased the ASMs accordingly. The analysis of the capacity v. demand on a comparative year –to-year basis shows that although the demand has increased, the capacity has not been increased. Also poor seat factors continue to haunt Indian career. The load factor of Indian careers is 63.7% which is still very low in comparison to the global average. On the contrary, the airlines seem to be in no hurry to fly full strength in all routes which is a more preventive step against any possible future slump. This coupled with bankruptcies and consolidations in the recent past have not done any good.

Prolonged Period of High Oil Prices

Since 2008 the airlines have not been able to afford comparatively cheaper fuel. The price of oil has steadily been increasing over the past decade. Also adding pressure on the airlines is the fact that the Government has increased the sales tax on ATF (aviation turbine fuel) which has now been transferred to the airlines by the oil vendors. The airlines have subsequently passed on the burden onto the travellers.

Also, India did not have any Southwest Airlines (American). Southwest Airlines had cleverly purchased fuel hedges which allowed it to buy oil at a price which was one-fourth of the value of the current value (as it was then) of a barrel in the global market. By this way Southwest managed to keep its prices surprisingly low forcing the other competitors to offer tickets as very prices. However, the things have changed since then.

A changing business model for low-cost airlines.

Discount airlines, also known as low-cost carriers (LCCs), have changed the way we fly and altered our expectations for air travel. Over the years little has changed for the no-frill air transport services with simple base pricing and no food. This has helped the low-cost carriers to compete with the well-established much larger services like (Air India, Jet Airways). Deccan Airways was the first low cost airliner service in the country and it played the game smart: It kept costs low by operating a single aircraft type (ATRS – now moved towards Airbus) on point-to-point, short-haul routes, with quick turnaround times between flights. This stood in contrast to the expensive-to-maintain, hub-and-spoke models operated by the major network airlines.

But with the changing times so called "low-cost" airlines look more like network airlines. As these airlines mature, their operating costs are on the rise. As low-cost airlines seek to grow, they are rapidly expanding into larger hub airports. Hub airports (like New Delhi, Mumbai, Bangalore) are often plagued with congestion, resulting in increased flight delays which can wreak havoc on aircraft turnaround times and utilization schedules, further raising operating costs. Along with hub airports come business travellers who were earlier not in the flyers list of LCCs. But considering the large community of business fliers, these low cost cariers have gradually modified themselves to attract that business traveller. More sophisticated flyer means more facilities and therefore the airliners were forced to revamp their interiors and go hi-tech or acquire new aircrafts. And all these mean additional costs. These additional operating costs, combined with higher oil prices and rising travel demand outstripping capacity will contribute to upward pressure on airfares.

Now escalating airfare prices are seen only in the domestic sector. The international flyers are not bothered much as the fare in the international route has been by and large constant. This is because out of the three reasons for fare hike discussed above, increasing prices of fuel is not a matter of concern for the airliners in the international route as the The Air Transport Association (IATA) mandates that additional sales tax cannot be levied on fuel used by the airline for international travel.

You might be planning for that crazy weekend trip to Goa or looking forward to welcome the New Year on the beach. So don't be unhappy with the prices. All is not lost...you can treat yourself to a trip to Singapore or Bangkok instead and very much within the budget of your planned domestic vacation. Good Times...:)

The picture image used is courtesy www.IBNLive.com

The Genesis

The air transport system in India has come a long way since JRD Tata's De Havilland Puss Moth cruised through the skies in the early 1930s. Decades after Capt. Gopinath's Deccan Airways took air travel to the masses. This brought in a revolution in the sky with low cost carriers buzzing all around. What also came along were issues unaddressed followed by debates.

This blog had been in the pipeline for a long time now and traces its genesis to the ever increasing space in the newspapers that airlines consume. The second inducing point was the much talked about T3 Terminal at Delhi's Indira Gandhi International Airport which signifies the growing importance and needs of the aviation industry. Eventually the threshold has been the recent price rise in the air-tariffs which have more than doubled within a month's time, bringing back the focus on the handicaps of the industry.

This blog looks forward to analyse the legal needs of the aviation sector and keep a tab on the development of aviation law worldwide. Additionally, the blog also intends to establish itself as a platform to discuss the issues and questions in the sphere of aviation law as they come along through the flow of time.