Companies & Sectors
AirAsia launch on 12th June, despite FIA protests!

As a low cost, no frills airline, AirAsia will be a completely new experience for air travellers in India. Travellers who have been used to 'free' bonanzas like extra baggage allowance, hand bags, service on board and other amenities, will now have to forego these luxuries!

According to press reports, with the Air Operators' Permit (AOP) from Directorate General of Civil Aviation in place, Air Asia is scheduled to launch its inaugural service from Bangalore to Goa, on 12th June, with a single A 320 aircraft.


As a low cost, no frills airline, it will be a completely new experience for air travellers in India. Travellers who have been used to free baggage allowance, hand bags, service on board and other amenities, will now, have to forego these luxuries! In fact, in Air Asia's flights, they will have to pay for every single service that is offered.


With even check-in baggage dis-allowed, the only concession appears to be a 7kg hand baggage. No doubt, the well trained staff will ensure that the rules are strictly followed.


However, the DGCA appears to have already objected to the AirAsia baggage plans, which envisages pre-booked check-in baggage upto 15kgs being charged Rs199 (as against Rs300 if checked in at the counter); the rates go up to Rs498 (upto 20kgs), Rs999 (upto 25kgs), Rs1,499 (upto 30kgs) and Rs1,999 (upto 40kgs). Should the passenger check baggage in at the counter, every kilo above 15kgs will be charged Rs250. So, passengers who usually carry a lot of luggage may obtain a cheap fare ticket, but literally pay through the nose for their luggage. It appears that the DGCA has already advised AirAsia to remove these charges detailed on their web site, and have directed them to approach the regulator for approval. Details of the luggage charges may be announced in a day or two.


Also, as a general airline practice, when tickets are cancelled well in advance, taxes are also refunded after deducting a certain percentage for cancellation; last minute cancellation gets no refund at all. Existing Indian carriers refund fares subject to a maximum cancellation charge of Rs1,500. Who knows, the domestic carriers, who have been raising these objections to prevent AirAsia from taking the sky, may now come out with a more lenient policy on baggage, apart from cut-throat air fares they are offering to spite AirAsia!


A discussion was expected between Prashant Kumar, Chief of DGCA, and AirAsia representatives with regard to the baggage charges . Indian passengers are known to carry huge amounts of luggage wherever they travel. The proposed baggage policy from AirAsia might just change this quintessentially Indian habit.


Loss making domestic carriers like SpiceJet, and others like GoAir and IndiGo have also reduced their prices in to meet the price challenge from AirAsia. Apart from fighting on the price front, the Federation of Indian Airlines (FIA) have filed a case in the High Court at New Delhi, scheduled for hearing on 11th July.


AirAsia began its quest for entry into the Indian market some 15 months ago. Though they may be starting operations with just one aircraft, their plan is to bring in one more every month. Besides, June is not the peak "season" month for travelling, and they expect to have a few more when the peak season starts.


The major issue facing AirAsia is the verdict of the High Court. If it goes against them, they may have to postpone their flights or make an appeal, in which case, the FIA would have won the initial advantage. However, it remains to be seen how the High Court rules.


In the meantime, both the Airline industry and the hospitality industry are hoping that the Finance Minister would make suitable provisions in the ensuing Budget to reduce taxes on the hospitality sector and jet fuel. After all, the increased cost of jet fuel is eventually passed on to the passenger.


The outcome of the dog fight between FIA and AirAsia will also affect the Tata-SIA full service airline that is now awaiting AOP. In this new airline, Tata Sons hold 51% stake and Singapore Airlines 49%. This new airline, when it takes off, is expected to bring about a major change in the airline industry in the country in terms of passenger comfort and service.


Which is why, perhaps, domestic airlines are doing what they can to prevent both AirAsia and Tata-SIA coming into the scene, as they will be hard to beat. Their entry is what the air travellers hope to see in the near future.

(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.)


MP Rajeev Chandrasekhar asks FM to make regulatory bodies accountable

According to the independent MP, we have a situation in India where regulators have failed deliberately or because of incompetence, but are still not held accountable

Rajeev Chandrasekhar, an independent member of the Rajya Sabha, who is also a member of the Standing Committee on Finance, has requested Finance Minister Arun Jaitley to undertake a comprehensive review of independent regulators; for significant reforms in governance and building or rebuilding credible and performing regulatory institutions that are capable of handling challenges of economic regulation in today's India.


Mr Chandrasekhar, in the letter sent to the Finance Minister wrote, "We have a situation where regulators have failed deliberately or through incompetence, but are still not held accountable. There are instances of malafide conduct on the part of regulators that are obvious and known, but no action has been possible because of ambiguity of oversight over these regulators. Hundreds and thousands of crores of Taxpayer money has been impacted by regulatory orders and decisions, and there has been unfortunately little or no debate or review of these decisions."


"The recent payment crisis at the National Spot Exchange Ltd (NSEL) was yet another example of poor oversight and regulation, adding to the already severely impaired and adversely affected credibility of the Indian finance sector on the back of recent allegations of money laundering by public and private banks in the country, and the depreciation of the rupee," the MP said in his letter.


Under the existing architecture, the financial sector is regulated by eight agencies, which are Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority (IRDA), Pension Fund Regulatory and Development Authority (PFRDA) and Forward Markets Commission (FMC), Securities Appellate Tribunal (SAT), Deposit Insurance and Credit Guarantee Corporation (DICGC), and Financial Sector Development Council (FSDC).


However, from the consumers’ perspective, the track record of these regulators is a huge disappointment. In fact, there is hardly an example of an investor or saver receiving satisfactory redressal of his grievances from these regulators.


When first introduced in India, independent regulators were envisioned as strong and credible institutions that would safeguard consumer interest and act as catalysts for investments by ensuring a predictable set of ground rules. Instead, they have declined and morphed, in most cases, into a second bureaucracy - indistinguishable in conduct, will and performance from the regular bureaucracy.


Moneylife has been highlighting  the issue of regulators and their lack of accountability towards investors and savers. Key regulators like, RBI, SEBI, IRDA, PFRDA and FMC do not have any mechanism to directly engage with savers.


Consequently, regulated entities like mutual funds, investment banks, insurance companies, banks and their industry associations such as Association of Mutual Funds of India (AMFI), Association of Investment Bankers of India (AMBI), Association of National Exchanges Members of India (ANMI) and Indian Banks' Association (IBA) do not engage with savers either, which is a sad state of affairs.


In fact, almost all industry 'summits' or seminars of insurance companies, capital markets and banks do not even have a token session or panel discussion that invites their investor or customers.


Here is the letter sent by the MP...




2 years ago

Classic examples are IRDA and SEBI.

Irrational and impractical/consumer unfriendly decisions by these authorities has done much more damage to Citizen's confidence in sectors which regulates these authorities.( Frauds in Insurance and stock market/Mutual funds).

Hope real estate regulator comes with MUCH MORE accountability.

This will help in boosting housing industry and confidence of buyers.

Mumbai Metro to begin operations from Sunday, finally!

The Mumbai Metro service will start at 5.30am and continue till midnight with a total of 16 rakes deployed on the sector, serving the glamour and IT centres of Versova and the business and manufacturing areas of Ghatkopar at a speed of 80kmph

From Sunday, 8th June, the 11.4kms long Versova-Andheri-Ghatkopar east-west corridor with 12 elevated stations en route will become operational, proving to be a boon for Mumbaikars, especially with monsoons around the corner.

The Metro service will start at 5.30am and continue till midnight with a total of 16 rakes deployed on the sector, serving the glamour and IT centres of Versova, and the business and manufacturing areas of Ghatkopar at a speed of 80 kmph, RInfra's Mumbai Metro One Pvt Ltd chief executive, Abhay Mishra, told reporters in Mumbai.

The Mumbai Metro project has been plagued by delays, litigation and cost over-runs. There have also been protests from various quarters about the proposed increase in fares. Anil Galgali, an RTI activist and chairman of the Mumbai-based non-governmental organisation (NGO) Athak Seva Sangh, in a letter to Maharashtra chief minister and Mumbai Metropolitan Region Development Authority (MMRDA) Prithviraj Chavan, said that as per the state government's notification, the minimum fare ought to be Rs9, while the maximum fare ought to be Rs13 at least during the initial year of operations.The increased fare band of Rs0 to Rs40 may not go down well with commuters.  

The 12 stations on this new service are Versova, DN Nagar, Azad Nagar, Andheri, Western Express Highway (WEH), Chakala, Airport Road, Marol Naka, Saki Naka, Subhash Nagar, Asalpha Road and Ghatkopar.

The entire Mumbai Metro project will be 146.5 km once completed, and is estimated to cost nearly Rs20,000 crore, scheduled to be completed by 2021.


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