Air fare discounts and entry of a new player

Instead of raising objections, it is time for existing domestic carriers to welcome a new member, Air Costa in their fold, and serve the travelling public

Just three weeks ago, on 31st January, SpiceJet offered a 30% discount to flyers who book at least 30 days before their travel date, and this was immediately matched by IndiGo, only to be followed soon after by Jet Airways.


To benefit from SpiceJet's lower fare, travel had to be completed by 15th April. The pace at which discounts have been offered, with riders, it would be in the interest of the traveller to seek the "latest" discounts available before scheduling a trip!


While this sort of price war is going on, mostly covering the domestic travel, what has been happening is the quiet establishment of Air Costa, a regional airline, based in Vijayawada, meeting the needs of tier I, II and III towns and cities in the southern region. This belongs to LEPL Group, and is the first regional airline based in the South, currently serving six locations. At present, the airline flies four E Jets - two E 170s and E 190s.


Since Air Costa plans to operate on pan India basis, they have signed a contract with Embraer SA of Brazil to supply 25 planes each of E 190 E2 and E 195 E2, estimated to cost $2.4 billion (at 2014 price list) with a purchase option to buy 50 more of these. According to the information available, E 190 E 2 are expected in 2018 and the E 195 to enter service in 2019.


Capt KN Babu, chief executive of Air Costa said that the airline would be adding four aircrafts a year and would have 20 by the time E 190 and E 195 are delivered. When the new aircraft is delivered next month (March 2014), they plan to add three more destinations, details of which are yet to be announced. He further stated that, at the moment, they have a 73% load and are not flying to crowded metros. They will be applying for a pan India licence soon.


Just to digress for a moment, many airline companies have to opened shop and have vanished due to high fuel prices and economic slowdown since 2008. Air Mantra operated flights between Amritsar and Chandigarh and closed due to poor booking. The others, who could not make it, include Star Aviation, ZAV Airways, Jagson Airlines and King Air, according to the media.


The fact is that according to the market information, combined revenues of airlines in India is estimated at $9.5 billion on which the loss is said to be $1.95 billion due to high operational costs and irrational pricing!


In the meantime, Air Asia, the Kuala Lumpur based low cost airline, which made headlines a few months ago and has support from the Tata group, is now likely to get the Air Operating Permit, despite opposition made by a cartel of Indian Airlines to the Director General of Civil Aviation (DGCA). In fact, DGCA had received 20 objections from Federation of Indian Aviation (FIA) and BJP leader Dr Subramanian Swamy, saying that "FDI by foreign airlines had been allowed into existing Indian airlines only but not for creating JV start-ups". This has been overruled by DGCA. FIA includes Jet Airways, IndiGo, SpiceJet and GoAir. Air India has not joined the fray!


The FIA has claimed, in support, that the new airlines (meaning Air Asia) "would intensify competition in India's debt-laden and loss making airline industry, which is burdened by $12 billion of debt and $8.6 billion of cumulative losses".


Air Asia, on the other hand, is proceeding to conduct a demonstration flight and also display safety procedures, all of which may take two-three weeks before they get AOP on hand. The three member committee headed by the Director General (DGCA) have gone through the objections and complaints and have found no technical problem with the new airline being given a licence to operate!


Instead of raising objections, it is therefore time for existent domestic airlines to welcome a new member in their fold, and serve the travelling public. It is in their interest to establish realistic and yet economically workable and profitable prices so that it mutually benefits the airline and the travellers. Since slack season occurs in every industry, they would combine their expertise and seating capacity to ensure that every seat is taken and all flights have full occupancy. They must also come to terms in giving fair treatment to their own staff in terms of free or concessional fares, so that operations become viable. Why not ask the staff to use their concessional benefit, as far as possible, during the slack season? Why do they indulge in uneconomical price discounts? The fare should not at any point be just over the break-even. They may as well consider reduced flights to save fuel!


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)


“Love what you do,” says Sharmila Bhide of Calsoft
According to Sharmila Bhide of Calsoft, entrepreneurship gives one the opportunity to make her own mark. Her 16-year old technology venture, which employs around 500 professionals, is a specialist in software product development services with niche expertise in storage, virtualization, cloud-computing, embedded, and networking
With this simple mantra in mind Sharmila Bhide co-founded Calsoft about 16 years ago. The company specialises in software product engineering services with niche expertise in storage, virtualization, cloud computing and networking. With highly skilled resources, innovative business models, and reusable accelerators IP (Internet Protocol), Calsoft helps its customers to minimise ‘time-to-market’, improve quality and reduce risk of failure of their software products. Calsoft Pvt Ltd has a turnover of Rs90 crore and aims to go up to Rs125-130 crore by the end of this year. The company has a team of 500 professionals and has successfully completed more than 200 projects. Ms Bhide is an MBA from Yale University, a CPA (Certified Public Accountant), and has a Bachelor's degree in Computer Science. After gaining experience from companies like Hedgeware and Oracle in the US, she shifted to Pune in 1997 and started the company a year after. 
Read an excerpt of her interview with Hitisha Jain of Moneylife
Hitisha Jain (ML): Tell us something about Calsoft? When was it started?
Sharmila Bhide (SB):  We started Calsoft in 1998. We are software consulting company. I came back from the US to Pune in 1997, and we (me and my husband) were figuring out what to do? At that time, outsourcing was relatively in its initial stages and internet access was not as easily available. That was the environment in which we started Calsoft. 
ML: What inspired you to turn entrepreneur?
SB: Our education and work experience was appropriate for starting a venture like Calsoft. My husband holds PhD in computer science while I did my Bachelors in Computer Science and then my MBA from Yale University. There I worked in a software company called Hedgeware, which deals with hedge funds. After that, we both worked in Oracle where I was Product Manager on the application side and he was on the derivatives side. So, we both had the appropriate background and it seemed like an absolutely right model to take it further. We came back with few contacts from US and we started outsourcing.
ML: Has it been smooth sailing, or did you face any challenges while starting your business?
SB: The first challenge was to settle into the Indian environment after shifting from the US. During the first few years, there were a couple of times when we thought of packing our bags and moving back. Dealing with the various factors out here was really tough for us at that time. Luckily, in the IT sector with Software Technology Parks of India (STPI) being the primary government window to deal with, it was relatively easier and cleaner to do business here.  And I think, in a year and half things just got into place. 
ML: How did you arrange the startup capital for your business?
SB: We started with just Rs4 lakh, but, we have been cash positive from day one. When we started Calsoft, we had Hewlett Packard (HP) as our client and they were ready to start working with us even before we formed the company. In fact, the name of the company, its registration and other formalities happened because HP wanted to put our name in their system and they pushed us to ensure a formal incorporation. We were lucky enough to have client in hand even before starting the company. 
ML: What drives you to work everyday?
SB: I enjoy going to office. It keeps you mentally stimulated; you get to meet a lot of people and you can make decisions on your own. I can’t imagine being at home and doing nothing. 
ML: What are the future plans for you and Calsoft?
SB: Till about four to five years ago, we were trying to establish ourselves in this niche area. We didn’t wanted to be a general consulting company like Infosys. We wanted to be specialist. So after brainstorming for about four or five years, we decided on growth as the driving factor for future. So, we came up with a five year plan. We are aiming at 50% growth on a year-on-year basis and we achieved it last year. Initially, it was more about creating a brand name for Calsoft, as a high-end product outsourcing company. Now, the first priority is growth then working on technology. 
ML: What are your plans and projects for the coming year?
SB: We have a whole bunch of clients working in several niche areas. We have several big companies for whom we have on-going projects with large teams, which go on for years and years. And then we have individual products that we do for some companies, which is the very core work that we do. 

ML: Who do you see as your main supporters?
SB: For me, my main support is my family. If, I am able to manage both work and my personal life, it is because of their support. Calsoft started with only four engineering freshers, who were employees along with me and my husband making a total staff strength of six. We have several engineering colleges in Pune, these student are full of curiosity. They will put in 18-19 hours to get the work done. Our client really appreciates this commitment. So, while recruiting we looked for such students and they proved to be our supporters.
ML: Do you think it is important to encourage entrepreneurship in India, especially among women?
SB: Yes, indeed. It is very important for women to have an identity of their own. Either you sit at home or have a career where you may be working with someone. It is very difficult for a woman to work and balance family. So, working in big companies can be difficult for women. But, as an entrepreneur, you can manage your time and family, as there is flexibility. You can maintain your individuality at the same time.
Entrepreneurship gives you the opportunity to make your own mark. It allows you to take your own decision. In a corporate career, I believe that women find it harder than men. I can work from home and start my day with emails; I don’t have to be physically present in office at 9am to get the things done. There are no time constraints as such, so entrepreneurship provides you that much more flexibility when you are the boss. 
ML: What challenges, if any, did you face as a woman entrepreneur?
SB: I think, leaving my kids at home for the first time was difficult choice. I actually cried when I left for office. When your child is sick, then your heart is somewhere else and you are rushing to work to get things done. That’s the only emotional challenge. Other than that, women are capable of handling the entire situation.
ML: What are the best ways to connect in your industry – which national and local networking organisations, conferences have you found most valuable?
SB: Storage Networking Industry Association (SNIA), Software Exporters' Association of Pune (SNEAP) and National Association of Software and Services Companies (NASCOM), are where you meet people who are on the same platform and speak same language. This really helps.
ML: Will you share with us your secret weapons – what business apps, tools or mottos help you run your business and life efficiently? 
SB: You have to be good at what you do. People are not going to respect you unless you know your stuff and you do it well. You need to articulate it well and communicate your vision. You should have the ability to take decision and stick to it. Decision making comes with the ability to take risk and you cannot be like “should I do this or that” or I want someone else to say OK, so if something goes wrong, it wont fall on me. So, being an entrepreneur you should be good at your work and know what exactly you want. 
ML: What are major opportunities for women to start their own businesses?
SB: It depends on the career, the woman has and what her background is. Today, you can do anything. There are so many things, which are happening like you can be passionate about cooking, you can be passionate about travelling. The world is at your feet. You have to love what you do.  
ML: Who is your role model?
SB: I don’t think I have any role model. Actually, I have never consciously thought about it before you asked me that question.  Role model as a concept is so different. How can you model your life with someone else? You are going to face different challenges; you are going to be in different environment. 
ML: What three things would you advise aspiring women entrepreneurs?
SB: Firstly balance your work and family, particularly children. They do need you. Secondly, having communication channels open all the time is very important. Thirdly, love what you do.
(In the run up to International Women’s Day on 8th March, Moneylife is running a series of Women Entrepreneurs who have made a mark. If you know women who ought to be featured in this series, do write to us with details at [email protected]. And if you are a women entrepreneur wanting to expand your business and grow, do keep in touch with our not-for-profit entity at foundation.moneylife.in - we may have some news in store for you!)




3 years ago

This is truly inspirational. We need more Women Entrprenuers like you!


3 years ago

- lame interview.
- You should ask questions about what polcies and changes have you implemented specifically for woman and get the feedback from their staff to know the truth.
- this is a show off, no content in this.

Avinash Murkute

3 years ago

Good One

Reliance refutes Kejriwal's allegations terming it as 'baseless'

According to RIL, the continued tirade of baseless allegations being made by AAP against the company and its chief Mukesh Ambani appears to be instigated by vested interests

Mukesh Ambani-led Reliance Industries Ltd (RIL) on Tuesday refuted allegations made by Aam Admi Party leader Arvind Kejriwal about bank accounts of the company and its chief.


In a statement, RIL said, "As stated earlier it is being reiterated that neither Reliance Industries nor Mr Mukesh Ambani have or had any illegitimate accounts anywhere in the world."


"The continued tirade of baseless allegations being made by AAP against us appears to be instigated by vested interests," the company said.


On Sunday, while speaking at a rally, Kejriwal cited two bank account numbers claiming that they belonged to Ambani brothers, Mukesh and Anil. This was done as part of challenging Bharatiya Janata Party (BJP)'s prime ministerial candidate Narendra Modi to get black money back from Swiss banks.


Reliance said it has business interests in several countries with turnover of thousands of crores in rupees. "As a part of their normal business, these international subsidiaries of Reliance Industries deal with several global banks. These accounts are fully compliant with all regulations and are disclosed in their appropriate jurisdictions and in India," the company said.




3 years ago

What does AAP has to say on these refutations

We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)