At 8.9%, the economy is on a roll

The Indian economy is booming. The country’s GDP grew a robust 8.9% in the first quarter of this fiscal, the highest in comparable quarters since 1999-2000. Inflation dipped for three consecutive weeks to 4.56% for the week ended September 16.
The GDP spurt was on the back of a very strong 11.3% growth in manufacturing. Services continued to do well with a 10.6% growth in output, against 9.8% a year ago.

But agriculture stayed sluggish with 3.4% growth, the same rate at which it grew in the corresponding period last year. The GDP growth reported in the corresponding period last fiscal was 8.5%.

Commenting on the high GDP growth in Q1, finance minister P Chidambaram said, “Since 2004-05, GDP has grown at 7% plus every quarter except Q2 of 2004-05. In the last five quarters, growth has moved up a notch.”

With sound economic policies and fiscal prudence, the GDP growth could be maintained at 8% or above every quarter, he said, adding pushing financial sector reforms was vital for sustaining the momentum. The finance minister said maintaining GDP growth at current level was contingent on “adequate credit flow to productive sectors at reasonable rates.”

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ATF price cut today, but no cheer for travellers

In what could bring cheer to the airline industry for the first time in eight months, aviation turbine fuel (ATF) prices are set to drop 6-7% (between Rs 2,500 and Rs 3,500 per kilolitre). Oil marketing companies are likely to announce the price cut on Saturday.

The move is in line with the recent fall in global crude oil prices. In the last eight months, ATF prices have climbed almost 27% to Rs 49,610 per kilolitre, severely denting the bottomline of airlines.

However, flying in the domestic skies may not get any cheaper. Despite the proposed reduction in ATF prices, airlines—both low cost carriers and full service carriers—don’t intend dropping fares as they hope to recoup the heavy losses suffered earlier.

No reduction is planned in fuel surcharge which is currently at Rs 750, airlines sources said. SpiceJet director Ajay Singh said, “We are not considering a reduction in fuel surcharge since we have been absorbing the jet fuel price hike for the last eight months.” Just last month, surcharge was raised Rs 100 to Rs 750.

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Now, LCCs to woo religious travellers

 Low cost carriers (LCCs) plan to engage Indian Railways in yet another battle for travellers’ attention with their plan to introduce packages for the religious traveller, which, till now, was the exclusive domain of the railways. India’s first low-cost carrier Air Deccan is in talks with several state governments, including Madhya Pradesh and Andhra Pradesh, to bundle religious places as a package tour.

“While all the airlines focus on leisure travellers, a vast market for devotees remains untapped. We hope to start a packaged tour to holy places including Shirdi, Puri, Tirupati and Vaishnodevi among others in the next 2-3 months”, said Air Deccan chief revenue officer John Kuruvilla. Interestingly, while several new entrants are set to woo religious and leisure travellers.

A Mumbai-based car rental service operator and vehicle asset management company City Group is planning to float a low cost airline for high value cargo and pilgrimage charter.

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GITC to launch copter tourism

Great India Tour Company (GITC) is all set to introduce a new concept in the tourism scenario in the State with the launch of helicopter tourism offering short trips to various enchanting locations in the State.

This venture is a pioneering one, aimed at transferring tourists from one place to the other to save time and the discomfort of surface travel, Mr E. M. Najeeb, Chairman, Great India Tour Company Pvt Ltd said.

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Delhi-Himachal flight to cost just Rs 1,000

A price war has begun in the Himachal Pradesh skies, with Jagson Airlines announcing a huge drop in air fares from Delhi to any destination in Himachal Pradesh for just Rs 1,000. 
 
This decision comes barely days after Deccan Airways announced the beginning of trial flights, before planning regular flights next month, to Kullu and Dharamsala from Delhi. 
 
Before Deccan announced its entry in the skies of the hill state, Jagson had the monopoly in the region, due to which air fares were also some of the highest in northern India. 
 
“From the beginning of next month you can fly from New Delhi to Shimla, Kullu or Dharamsala for only Rs 1,000,” said Jagson Airlines Vice-President Koustav M Dhar. 

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Air Deccan’s No 2 in domestic skies

The battle for No 2 position in the domestic skies has finaly been settled in favour of low-cost airline Air Deccan.The latest Directorate General of Civil Aviation (DGCA) figures, released this week on the regulator’s website, for June ’06, show that national carrier Indian has fallen to 20.8% while the Bangalore-based Air Deccan’s share has grown to 21.2%.

Jet Airways still occupies the top position, with a 32.3% share. This was first reported in ET on July 25. DGCA figures on airline shares are released after a three-month lag.

Air Deccan, which currently operates to 55 destinations with 265 flights daily, will be augmenting its fleet. It has placed an order for 96 new aircraft, which will be delivered over 96 months.

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Taneja Aerospace plans Rs 150 cr investment

Taneja aerospace aviation ltd said on Satarday that it has got shareholders’ approval for investment up to Rs 150 crore.

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Air Deccan in $150mn MRO pact with Lufthansa

Budget carrier Air Deccan has signed a $ 150 million agreement with Lufthansa Technik for repair and overhaul of its Airbus fleet of aircraft.

“As per the 10-year contract, Lufthansa and its Indian subsidiary, Onestop Airline MRO Support will independently serve the fleet of 60 Airbus A-320 airplanes of Air Deccan,” Warwick Brady, COO of Air Deccan, said here.

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Deccan Aviation to Cut Some Routes as It Seeks Profit

Deccan Aviation Ltd., which posted a loss in the 15 months ending June 30, said it will stop flying some routes, as it seeks to achieve profitability by 2008.

India’s largest low-cost airline is “rationalizing some routes” and cutting back unprofitable capacity, Warwick Brady, Air Deccan’s chief operating officer, said in an interview in Mumbai today. The Bangalore-based carrier aims to carry as many as 8 million passengers in 2007, compared with 4.5 million this year, he added.

Deccan, Jet Airways (India) Ltd. and other carriers in the country are facing increasing competition, which is squeezing their margins. Deccan made a loss of 3.41 billion rupees ($74 million) in the 15 months ending June, and its stock price has plunged 31 percent since an initial share sale in May.

“We are laying the foundation for the turnaround,” said Brady, who joined Deccan from Ryanair Holdings Plc last year. “Our aim is to break even on as many routes as possible by cutting operation costs.” He didn’t say which routes may be affected by the plan.

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Interview – David Mulford, US Ambassador to India

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