Companies & Sectors
AAI refuses to allow Kingfisher lessors to take back aircraft

AAI's contention is that it cannot let the aircraft go, as it too has to recover dues of about Rs300 crore on account of landing and parking fees from the near-bankrupt Kingfisher Airlines of Vijay Mallya

 
Mumbai: Airport Authority of India (AAI) has refused to allow the lessors to take back about half a dozen aircraft rented out to Kingfisher Airline, reports PTI quoting sources.
 
The lessors want the aircraft back as Kingfisher Airlines (KFA) has defaulted on rentals.
 
"AAI has said no...to Kingfisher lessors to allow them to take back six aircraft parked at Chennai airport," sources said.
 
One of the lessors has sent a legal notice to AAI for not passing the releasing order.
 
AAI's contention is that it cannot let the aircraft go, as it too has to recover dues of about Rs300 crore on accounts of landing and parking fees from the near-bankrupt KFA.
 
When contacted, an AAI spokesperson confirmed the development, and added that the authority is exploring several options to recover its long-pending dues.
 
The airline, which has not paid salaries to its employees for the past five months (some have not been paid for six months), has been defaulting on payments to AAI, oil companies, aircraft leasing companies and the government tax authorities.
 
A KFA spokesperson could not be contacted for comments.
 

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Life Exclusive
Bollywood Box Office Unplugged-I: Why the first day and first week is make or break

Once, the barometer of success for films was platinum, golden and silver jubilees. How times change. Today, its the first week that matters for box office success  

Online bookings of new releases open Wednesday. But savvy marketers ensure that the excitement starts building weeks and months before ticketing action as the movie stars are in your face promoting the movie. They are at the mall next door, the pub downtown, gate-crashing weddings (yes, 3 idiots did it) – even the most uninitiated can predict whose movie is releasing next at the box-office. Then there is the music video launch, Page3 plugs, YouTube clips, fun-bites on Facebook, Twitter teasers, online trailers, video games and more. The idiot box joins the frenzy with Amitabh Bachchan turning up as guest anchor, Akshay and Sonakshi getting face time at a cricket match, or reality shows of all hues being invaded by your favourite stars. From neighbouring auntyjee to officewale Sharmajee and your teenager’s “Chhamak chhalo” grooves, the idea is to get everybody caught up in the frenzy before cash registers start ringing on Friday.

A few discerning ones wait to read the reviews or sneak previews. Enter the analysts. Taran Adarsh, Rajeev Masand, Anupama Chopra, Raja Sen, and many more—the list is long. Reviews pouring in on Friday. Rajeev Masand’s review is Googled more than say, “home loans” in India. Taran Adarsh and Rajeev Masand have over 150,000 followers each including many opinion–makers themselves among their followers. Anupama is not far behind either.

Since movies get booked well in advance, bookings for much-hyped movies happen before getting feedback from your trusted social circle. You bank on the stars promoting it and on analysts. An exhortation by Amitabh or SRK carries trust. Film reviewers, the pied pipers of cinemagoers in a star-crazy nation, carries credibility. Tragedy strikes when movie after movie, hyped by stars and reviewers turns out to be a disaster. Millions of hours wasted. Crores of rupees down the drain or into undeserving pockets! You wish the stars and reviewers had not lied and you had not trusted their hype.

Movie business for you- Reincarnated
Now for the dynamics of how it works. There was a time, when movies released in theatres could run for years, secure in the knowledge that nobody would steal the reels. That’s because you had to go to a theatre and couldn’t view it on your cable, notebook computer or smart phone. The barometer of success was platinum, golden and silver jubilees.

How times change. Today, movie releases need to beat the pirates by simultaneous release in as many theatres as possible. Only the rupee matters and this can also come from music rights, overseas distribution, satellite rights or video/web/YouTube releases, in-film advertising, etc. But this analysis will focus only on the box office for 33 recent releases.

Industry rides on blockbusters
In terms of budget of box-office (BO) collections, the film industry works due to blockbusters. Much like the US pharma industry, which survives on blockbuster drugs like Viagra, the film industry needs a booster dose of some mega success stories, to feel secure.

 
 
 

This sets in motion a sequence of desirable and undesirable actions. A lavishly mounted movie also needs a lavish marketing budget in order to recover costs. Distributors demand item songs which make cash registers ring and every cog in the wheel from stars to cinema hall owners work at making it succeed; and the first week is make-or-break time. With stakes so high, it also needs friendly reviewers to tailor ratings to suit the industry rather than the cine-goer who forks out just Rs200 for a ticket.

The mantra is simple—after the shoot, take what you can in the first week and scoot before word-of-mouth reality sinks in.

So “Sheela ki jawani” seduces you to theatres and it’s a while before the public discovers that Tees Maar Khan is not even a makkhi-maar. Katrina’s gyrations to Farah Khan’s direction collected a cool Rs49 crore this time, out of the movie’s total business of Rs61 crore. What does that tell you? Similarly, RA-One slumped from Rs91 crore in the first week to Rs15 crore in the second. Dhobi Ghat dropped 89% after hype that ensured some first week bookings had vanished. Budhdha hoga Tera Baap, Mausam last year were among the others which went the same way.

Now look at performances in the first half of the current year.

 


The high first weekend collection is projected as validation of film’s BO superiority. This happens occasionally, like with 3 idiots, but in most cases, the hype about the opening weekend is entirely fake or good marketing. On the way out of the theatre, many people realize they have been had, but since it is all about entertainment, the reaction is amusement rather than outrage. The following two charts, based on BO collections, show how much is at stake. (Only Hindi movies released in first half of the year, between Jan-Jun 2012 and surviving at least a week at box-office are considered. There is a whole alternate business revenue stream of music rights, satellite rights, merchandizing agreements, in-film advertising is not the subject of this analysis.)
A week is a long time in Hindi films. Especially, if it is the first week. It is analyzed down to each day by film trade analysts and watched for its trending collections. We notice some very interesting insights and trends.
 

On an average, two-third of a movie’s BO collection is done before business before the second week begins. On an average, a movie’s BO collection drops to one third of the previous week, every week, till it disappears into oblivion—this is the one-third rule. The graph above shows aggregate week-wise collections post-release.  Movies that beat this rule are the winners. For instance, a dark horse like Vicky Donor could see collections drop just 5% less in week two. A movie whose BO collections drop 65%-70% in a week is primarily rejected by audience; that an Agneepath still earns Rs100 crore is due, in no small measure, to the inability to cancel bookings made before its Friday. They are still trade hits but not by popular choice.

Here is a plan that seems to work. If viewers are numbed by a blast of star power and publicity blitz to ensure that first week plans are full before reviews, social media feedback or word-of-mouth reach them, the producer can make a killing. This explains why they pull out all the stops and plan a release with such care. For a good movie, the progress path is altogether different—we will examine this in the next part.

I often wonder what is “the first day first show” business all about? Why are we willing to risk viewing a film without reading the reviews? Does the early bird catch the worm or is it that the early worm gets caught?

COMING NEXT: Releasing tomorrow is part II of this three-episode article. We analyse the BO performance of all Bollywood movies released in first half of 2012 to show which ones tricked you into buying a ticket with their marketing hype and which ones were genuine hits.

(Sandeep Khurana is the founder and principal consultant, QuantLeap Consulting services, based at Hyderabad. An ex-army officer, he is well-read and experienced in government and corporate sectors. Sandeep holds a management degree from Indian School of Business. He has interest in social media, analytics and operations. He likes to watch all good movies. He can be reached at [email protected] or his twitter id is @IQnEQ.)

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COMMENTS

KAPIL B KHANNA

4 years ago

Dear Sandeepji...Its great analysis and a few words of caution for small time film makers..Creative people like me are very much enthusiastic about visual art but have no muscles to pull it off in the vast ocean..we will be torn to pieces bits by bits..In India , film making has no future as its totally controlled by a few like our stock market..Remakes and publicity is what has remained of filmmaking.. Its being run by MBA's and not creative people...These MBA's are not concerned about creativity but money..hence so much fuss, publicity stunts etc..What was an undisputable art of visual story telling has come down to an art of disrepute,controversies and almost porn material just to sell and make collections...!! Whatever good movies are being made is because of low budget and corporate help..

REPLY

Sandeep Khurana

In Reply to KAPIL B KHANNA 4 years ago

Appreciate your feedback and fully empathize with your concerns. Please await a followup series with insights on how to think out of the box n take constructive steps. Slow change but it's happening already. Signs are positive. And good thing is good cinema is such a win-win for everybody-viewers, producers, distributors etc.

KAPIL B KHANNA

In Reply to Sandeep Khurana 4 years ago

Sure Sandeepji...If we give up who will encourage the others..?? I guess its our moral responsibility of writers and makers to keep up the hopes and keep the lights alive..People surely look upto us to deliver..If there will be no heroic stories of a maker there will be no makers at all..Thanks for your reply..Will surely look forward to your following insights..Have a great day..

shubh

4 years ago

Cool

Firdaus Khan

4 years ago

Great read & unequivocal analysis, esp. the chart about 2nd week collections in comparison to week 1. Should put an end to ridiculous claims about sub-standard movies being runaway hits of the year.....its rather insulting to India's sensitivity to & pride in cinema. Corporatization of Bollywood has ushered in spin masters that play the short term game of cashing in early. Tele rights, having lost their margin, could be another push factor.

Will be interesting to progress with your perspective (parts 2 & 3)to probably validate the truism that 'quality sells itself' (aka the new trend of independent cinema)

Timely analysis Mr. Khurana!

- Firdaus Khan
Faculty, ICBM-SBE, Hyd.

REPLY

Sandeep Khurana

In Reply to Firdaus Khan 4 years ago

Thanks, Firdaus.

Cheating at the Olympics

Like corruption, if the state is both player and referee, there is a much higher probability of fraud, because nothing can police itself. This is especially true when the economic stakes are high and national pride is involved

Last week there was a big scandal at the Olympics. Four of the badminton teams appeared to have thrown their matches. Watching the matches on television was fascinating. The Chinese team managed eight serves directly into the net. They didn’t even attempt to make their misses look reasonable. It was blatantly obvious that they were trying their best to lose. After the Chinese team started, they were followed by the Koreans and the Indonesians. During the match, the judges exhorted the players to play their best. They were ignored as was the crowd who booed loudly and even demanded their money back.

The reason why the players—four South Koreans, two Chinese and two Indonesians—were trying to lose was so they could get better spots for the matches that mattered. The governing body of the sport, The Badminton World Federation, disqualified the eight players saying that they had “conducted themselves in a manner that is clearly abusive or detrimental to the sport”. But is that the real moral here? Probably not. This incident is not so much about the Olympic ideal as it is about the true nature of corruption.

Besides it wasn’t only the badminton players. Chinese swimmer, Ye Shiwen, had an incredible last minute spurt in the women's 400-meter individual medley. She set a world record with a time of 4:28.43. Not only was it a world record, her speed during the last 50 meters even exceeded that of male US medal winner Ryan Lochte. Immediately there were some questions. The World Swimming Coaches Association executive director John Leonard called the performance ‘disturbing’. Understandably the Chinese were furious that aspersions were cast at their new hero. In the light of other athletes accomplishments, Ye’s feat was perfectly plausible and her anti doping tests came up clean.

The past history of China’s participation in the Olympic Games does at least provide some basis for the questions. The Chinese Olympic program is heavily dominated by the state. It follows the old “Soviet system”. Chinese sports officials travel the country to find young talent. The kids are then placed in special schools for an intense regime of training with absolute obedience to the coach. The result of this system has been spectacular. By the Beijing Games in 2008, China had doubled its medal take. It now wins more than any other country, over a 100 medals and 51 of those were gold.

But like corruption if the state is both player and referee, there is a much higher probability of fraud, because nothing can police itself. This is especially true when the economic stakes are high and national pride is involved. According to the former chief doctor for the Chinese gymnastic team, doping was state sponsored in the 1980s. Seven Chinese swimmers were caught at the 1994 Asian games in Hiroshima, Japan, and another Chinese swimmer was caught at the 1998 world championships in Perth, Australia.

The Chinese government’s involvement in ensuring victory is not old history. The minimum age for gymnasts at the Olympic is 16. However smaller size is an advantage for gymnasts and so younger athletes have an advantage. According to her Chinese passport issued by the government, gold medalist He Kexin was 16. The New York Times cited online records from official Chinese news media which listed her age as 14.

But it is not just the Olympics where government interference has been costly. Even though Mao himself played the sport and Deng Xiaoing was a football fanatic, China has not even come close to winning a World Cup. Its present FIFA ranking is a miserable 68. This is for one reason. According to The Economist Chinese football is “flagrantly and undeniably terrible and corrupt”.

The good news is that it is getting better. After a scandal originally uncovered outside the country in Singapore, there was an investigation and cleanup in 2009-2010. But the problems are sure to continue for the simple reason that the state organization charged with policing the game, the Chinese Football Association, was also involved in the corruption. Like the Communist Party, the government cannot arrest itself.

The problem is also that China, like other emerging markets, is a relationship based system, not a rule based system. Connections and relationships make a big difference. Games are won or lost and which players play for which teams depends a lot on who owes who a favour.

These scandals have nothing to do with the character of the Chinese, Asians or anyone else. Certainly the highest economic incentives in the world have tainted American sport with its share of cheating. The difference has to do with the institution. German athletes stopped using drugs when they stopped being East Germans. But as long as the government of any country becomes a player in any sport or any business, there are certainly going to be problems.

(William Gamble is president of Emerging Market Strategies. An international lawyer and economist, he developed his theories beginning with his first hand experience and business dealings in the Russia starting in 1993. Mr Gamble holds two graduate law degrees. He was educated at Institute D'Etudes Politique, Trinity College, University of Miami School of Law, and University of Virginia Darden Graduate School of Business Administration. He was a member of the bar in three states, over four different federal courts and has spoken four languages. Mr Gamble can be contacted at [email protected] or [email protected].)

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