Consumer Issues
Indian fliers attract the novelty value

Lufthansa and Japan Airways are putting up their newest planes on Indian routes. The media talks about how this is to ‘woo’ the Indian flyer. The truth lies elsewhere

 

The Boeing 787 Dreamliner project has been of personal interest to me, because it was the first one in a long time that an airline company was innovating on a lot of fronts together. In spite of the fact that Boeing took almost three years longer than the original plan for the delivery of the plane, it couldn’t have come at a better time, with jet fuel being at an all time high. The Boeing 787 delivers 15%-20% fuel efficiency as compared to similar aircraft, and is the world’s first composite-built aircraft, which means it is lighter than the traditional aluminium-built aircraft. 

While Air India is in the process of securing its 27 Dreamliners on order, and will finally get four of them from May 2012 onwards, Japan Airlines has already put the 787 on service from 1 May 2012 on its only flight from India (Delhi-Tokyo). Although I haven’t personally travelled on this plane yet, fliers on JAL’s 787s have reported all things good about this. 

But JAL brought this new plane to India for a purely a business-driven reason. They’ve had an about 70% occupancy ratio on this route over the years when operated on a larger plane, and with the 787, for the first time, they have been able to get a plane which can fly for eight  hours with about enough seats to fly the plane full. Not to forget, the fuel efficiency helps as well to trim costs. Till before 1 May, they would fly the Boeing 777 to India, which would have excess seating than required, and is a fuel guzzler by 787 standards.  The fuel-cost reduction can be the competitive advantage in today’s aviation era, as airlines go far and wide to get this impact. USA-based Delta Airlines has just bought an oil-refinery, to try and reduce its fuel cost by refining it in-house, so you can imagine how much innovative thinking is happening out there.  

On the other hand, Lufthansa has announced that it will bring the new Boeing 747-8 to India in a couple of months. The 747 is one of the biggest planes out there, with the Airbus A380 perhaps being the only bigger plane as of date. Lufthansa has been flying the famous San Francisco –Bangalore (via Frankfurt) route for over a decade now, which is often called “Bangalore Express” by the frequent flyers, offering networking opportunities 30,000 feet up in the air. The flight is usually sold out, day after day, and Lufthansa naturally feels the need for a bigger plane.

Their request for flying the Airbus A380s to India has been continuously denied by the Government of India (along with that of Emirates). This is evidently to protect the local Indian airlines, since some prominent international carriers manage to attract a lot of Indian traffic for travel to Europe and North America. For Lufthansa, India is the second largest market after the United States of America, and this delay leaves it with the only other option, to fly the new Boeing 747-800 planes, which are permitted under the current bilateral agreement between both the governments, to expand its capacity to India. The new variant of the 747 planes gives them an additional 10% capacity increase, and should hold good till the time the government changes its view about the A380. 

So, the next time you hear that an international airline is deploying a cutting-edge plane for its Indian operations, don’t be surprised. Think of it as a business-decision rather than a marketing gimmick to attract more travellers. 

AJ writes a travel and aviation focussed blog from India at www.livefromalounge.com. You can follow him at @livefromalounge on Twitter.

 

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Manufacturing growth inches up in April: HSBC PMI

“Activity in the manufacturing sector expanded at a slightly faster pace in April. While output growth moderated, partly on the back of power outages, new orders continued to pour in, including for exports,” said Leif Eskesen, HSBC chief economist for India and ASEAN

New Delhi: After three months of decline, India’s manufacturing sector grew slightly in April as new orders poured in, but the rate of expansion was limited by power shortages and was weakest so far this year, an HSBC survey said.

The HSBC India Manufacturing Purchasing Managers’ Index (PMI)—a measure of factory production—inched up to 54.9 in April, from 54.7 in March, report PTI.

A reading above 50 shows that the sector is growing, while a reading below 50 means the segment is contracting.

India’s manufacturing sector has witnessed an uptrend after falling for three months.

“Activity in the manufacturing sector expanded at a slightly faster pace in April. While output growth moderated, partly on the back of power outages, new orders continued to pour in, including for exports,” said Leif Eskesen, HSBC chief economist for India and ASEAN.

The report further noted that although manufacturing output increased, the rate of expansion slowed fractionally, and was the weakest in 2012 so far.

The survey respondents indicated that higher new orders had led to the rise in output, but power cuts had prevented firms from increasing production at a faster rate.

Capacity remained tight for the manufacturing sector in India during April as backlogs of work increased and inflationary pressures strengthened owing to rise in both output and input prices, HSBC said.

“This suggests that upside risks to inflation remain and that the RBI's rate cut could turn out to have been premature and too aggressive,” Mr Eskesen added.

In its annual monetary policy statement for 2012-13, the Reserve Bank of India (RBI), after a gap of three years, had cut interest rate by 0.50% making credit cheaper.

RBI had hiked policy rates 13 times between March 2010 and October 2011 to control persistently high inflation.

Meanwhile, there was a modest increase in employment in the manufacturing sector in April.

“The latest increase in staffing levels was only modest.

Where job creation was recorded, this was mainly linked to higher workloads,” HSBC said.

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Economy & Nation Exclusive
Sugar output up by 2.5 million tonnes till April: ISMA

According to industry experts, despite additional export for the 2012-13 sugar season beginning October, the industry will start with a carry over stock of over 5 MT

India’s sugar production has reached 25.1 million tonne (MT) till April 2012, an increase of around 2.5 MT as compared to the previous year, according to the apex industry body Indian Sugar Mills Association (ISMA). The association is also hopeful that its estimate of total 26 MT output, projected in July 2011, will be achieved. Meanwhile, traders are awaiting notification to export additional 1 MT of sugar.
            
According to ISMA, Uttar Pradesh, largest producer in India, has recorded an output of 6.9 MT and Maharashtra has produced 8.8 MT. Among the southern states, Karnataka has so far produced 3.7 MT, Tamil Nadu has 1.5 MT and Andhra Pradesh has produced 1.1 MT. The domestic demand for sugar India is about 22 MT. The sugar marketing year starts from October-September.

Meanwhile the number of sugar mills engaged in crushing sugarcane has substantially gone down. As of 1st May 2012, the total number of mills functioning was 129 against 174 last year. However, Tamil Nadu noticed a reverse trend with an increase in the sugar mills to 42 from 33 in the previous year.

The union government had allowed 2 MT of sugar export in tranches for the current season. An additional 1 MT of sugar export was allowed on 26th March by the Empowered Group of Ministers led by finance minister Pranab Mukherjee. However, the notification for the same is awaited.

Today, replying to query in Rajya Sabha, Anand Sharma, commerce and industry minister, said that the decision to allow one million tonne sugar export will be soon implemented.

According to industry experts, despite additional export for the 2012-13 sugar season starting from October, the industry will start with a carry over stock of over 5 MT.

Due to piling inventory, arrears to cane growers are increasing. “The total cane arrears of the sugar mills across the country is about Rs10,000 crore (cumulative basis) as the crushing season is coming to an end. We are eagerly awaiting the notification to allow additional sugar export,” said an official at ISMA.

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