The article below from NYTimes.com has been sent to you by psa188@xxxxxxxxx /--------- E-mail Sponsored by Fox Searchlight ------------\ I HEART HUCKABEES - OPENING IN SELECT CITIES OCTOBER 1 From David O. Russell, writer and director of THREE KINGS and FLIRTING WITH DISASTER comes an existential comedy starring Dustin Hoffman, Isabelle Hupert, Jude Law, Jason Schwartzman, Lily Tomlin, Mark Wahlberg and Naomi Watts. Watch the trailer now at: http://www.foxsearchlight.com/huckabees/index_nyt.html \----------------------------------------------------------/ Budget Fares Change Face of Air Travel for Indians September 10, 2004 By SARITHA RAI BANGALORE, India, Sept. 9 - Three-year-old Harsha could not stop chattering about flying in an airplane. Her mother, Kusum Baid, a 29-year-old Bangalore homemaker, was also eager, and a little anxious. On Aug. 25, Ms. Baid boarded a flight for the first time in her life and, with her two children, flew from Bangalore to New Delhi to visit her family. Air travel has traditionally been pricey in India, something for corporate executives and well-to-do vacationers. But now the country's first no-frills airline, Air Deccan, is beginning to make flights between major cities affordable for many middle-class Indians like Ms. Baid. "At 700 rupees ($15) a flight, I might think of flying again in a few months," said Ms. Baid, whose husband has a computer repair business. The flight Ms. Bain and her children were on was Air Deccan's first. Sharing the airplane with them were several other first-time fliers - an indication of the pent-up demand for affordable air travel among India's consumers, including some of the 13.5 million people who travel by train each day. Until now, domestic air travel has been exorbitantly priced, with tickets for some routes more expensive than those for overseas destinations much farther away. But airline industry analysts say the situation is changing. At least half a dozen other airlines are planning to offer low-cost flights within the country, and the Center for Asia Pacific Aviation, a consulting group based in Sydney, Australia, projects that India's domestic air travel market will increase to 70 million passengers a year by 2010, more than four times as many as the present level of 15 million passengers. "Low-cost airlines will unlock a massive aviation and tourism growth potential," said Kapil Kaul, the group's senior vice president for the Indian subcontinent, who noted that India's air travel rate of 0.8 percent per capita is one of the region's lowest. Among those leading the rush to begin discount airlines is the industrialist Vijay Mallya, who owns India's biggest liquor company. Mr. Mallya's Kingfisher airline, named after his popular beer brand, has just signed a deal to buy four Airbus aircraft, with an option to add eight more later. Mumbai-based Jehangir Wadia, heir to the Bombay Dyeing textile empire, is in the early stages of planning a low-cost airline called Go. The Virgin Group, which is headed by Sir Richard Branson and is the corporate parent for some 200 companies, is also exploring investing in low-cost airlines in India and China. Will Whitehorn, a spokesman for the group, said, "We are looking at these markets to invest in, either using the Virgin brand or as straightforward equity investments with the creation of our own branded airlines being the more likely route in the long term." While all this might resemble a gold rush, it is far from clear that there is gold to be found in the market. Nearly a decade ago, when India's government first privatized the domestic airline industry, several players jumped in. But many private companies collapsed because of the lack of a clear civil aviation policy, coupled with high operation costs. Airport user charges in India are double those of Dubai and Singapore, and aircraft fuel is 78 percent more expensive than in Southeast Asia. In addition to the government-owned Indian Airlines, the only companies left from that time are the privately owned Jet Airways and Air Sahara. Mr. Kaul of the consulting group said, "Vested interests by incumbent airlines, regressive regulation and excessive bureaucracy have suppressed the growth of the industry." India still does not permit a foreign airline to hold an equity investment in a domestic airline, although overseas investors and financial institutions are permitted to own minority stakes. The previous government, led by the pro-market Bharatiya Janata Party, was expected to change aviation policy on the recommendations of a government panel, but it was defeated in elections in May. The new government, led by the National Congress Party with crucial support from the Communist Party, has shown no inclination to change policy. In its recent budget, however, the government raised the cap on foreign investment in domestic airlines to 49 percent from 40 percent. "We are not a mature market like the United States, so we have to tread with caution," said Praful Patel, minister for civil aviation in the new government. Mr. Patel said the government would announce a comprehensive aviation policy by the end of the year, and would allocate money to improve infrastructure like airports. In this environment, Air Deccan and its founder and managing director, G. R. Gopinath, 51, a retired army captain, are charting a new course. Taking advantage of a willingness to spend by middle-class Indians, and a liberalized economic environment, Mr. Gopinath's low-cost airline offers flights that connect major Indian cities, at prices as low as a fifteenth of those of other airlines. Like discount airlines elsewhere, Air Deccan is slashing operating costs by putting more seats in the aircraft than full-service airlines, reducing in-flight services and premium services like frequent flier programs, using only one type of aircraft to minimize maintenance costs, having quick turnaround times to increase aircraft utilization, and selling tickets over the Internet. The world over, budget airlines operate at half the cost of full-service airlines. On a recent morning, in the throes of juggling three telephone calls and sorting out last-minute details for his inaugural low-cost flight, Mr. Gopinath declared that Air Deccan would revolutionize the way Indians travel. "Our flights are populated by ordinary folk including truck drivers, schoolteachers and retired government workers," Mr. Gopinath said, adding with a touch of hyperbole that in a year's time the carrier would give wings to "300,000 such humble Indians." That will be no easy task. Air Deccan has already had to traverse India's labyrinthine bureaucratic channels to accomplish such routine tasks as setting up ticketing and check-in counters, and to get quality control and maintenance clearances from civil aviation authorities. The airline began a year ago with a few small aircraft offering short-haul flights to smaller Indian towns. Today, with seven Airbus aircraft and several smaller planes offering 60 flights daily across the country, Air Deccan is giving its competitors a jolt. With tickets that start at 500 rupees (plus an additional 200 rupees in airport taxes) for flights connecting the major cities, Air Deccan's average prices are half those of regular airlines. Customers are watching gleefully in hope of an airfare war. Air Deccan's 700 rupee fare requires 90-day advance booking, but competitors' walk-in fares for a Bangalore-Delhi flight can be 10,890 rupees ($237). Already, there are signs that Air Deccan has had an impact on other carriers' prices. The government-owned Indian Airlines is offering customers who fly between major Indian cities a connecting flight to a smaller destination for an additional 1,000 rupees ($22). And a private carrier, Air Sahara, has reduced its fares up to 69 percent on travel between popular routes linking major cities like Mumbai, New Delhi and Bangalore. In Mr. Gopinath's words, the price war is "all daggers drawn." Eventually, discount airlines catering to budget travelers will coexist with traditional airlines serving the corporate and high-end segment, industry analysts say. In the meantime, low-cost airlines look set to change the face of India's travel industry, for both business people and tourists. "India is no longer a country of one billion people," Mr. Gopinath said. "It is a country of one billion hungry consumers. http://www.nytimes.com/2004/09/10/business/worldbusiness/10air.html?ex=1096104431&ei=1&en=f2bec663cdd8ac6e --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! Click here: http://homedelivery.nytimes.com/HDS/SubscriptionT1.do?mode=SubscriptionT1&ExternalMediaCode=W24AF HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@xxxxxxxxxxx or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@xxxxxxxxxxxx Copyright 2004 The New York Times Company