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India Autos: April volumes above expectations across segments

Nomura Equity Research believes that better April 2013 volumes could possibly be an initial sign of potential improvement in the demand environment, going ahead

Most of the Indian automobile manufacturers have reported their April 2013 sales numbers. Overall, volumes have been above expectations across all major segments (except utility vehicles), according to Nomura Equity Research in its Quick Note on the sector. UV volumes for Mahindra & Mahindra (M&M) were up 6% y-o-y as against the brokerage’s expectations of 15% growth. Even UV volumes for Toyota were weak, Nomura believes. Post 3% increase in excise duty for SUVs (in 2013-14 Budget), there were expectations of a roll-back of duty increases in April; this could have impacted volumes to some extent. One will have to wait for a few months to see if there is some slowdown in this segment, says Nomura.

 

Nomura believes that better April 2013 volumes could possibly be an initial sign of potential improvement in the demand environment going ahead. Petrol prices have been cut by Rs3 per litre (4%) a couple of days back; this should further help demand in passenger vehicle (PV) and possibly in two-wheeler segments as well, Nomura believes.

 

 

Car industry volumes declined 9% in April: Volumes in the car industry declined by around 9% y-o-y; better than Nomura’s estimates of 15% decline. On the other hand, Maruti Suzuki (MSIL) surprised positively with flattish domestic volumes (Nomura estimate: -6%) led by some improvement in petrol segment. MSIL’s market share was around 50% (around 46% in FY13).

 

Performance of other unlisted companies was mixed; Honda and General Motors have seen y-o-y growth while volumes of Ford and Toyota have seen sharp declines. Honda dispatched around 4,850 units of its newly launched Amaze sedan in April. Hyundai’s volumes have seen around 8% decline, but SAAR has improved from March 2013 levels and is indicating some growth in FY14F.

 

Two-wheeler segment records flattish volumes: According to Nomura’s analysts, two-wheeler industry volumes were flattish in April 2013 as compared to its estimate of 4%-5% decline. Bajaj Auto’s domestic volumes were above expectations (flat versus estimate of 5% decline) while Hero MotoCorp’s (HMCL) volumes were marginally below estimate. Honda Motorcycle & Scooters’ (HMSI) volumes were strong and increased by 30%; Nomura was expecting around 15% growth.

 

MHCV industry shows some improvement: Nomura estimates that the medium and heavy commercial vehicle (MHCV) industry volumes declined by around 5% in April 2013 as compared to 20%-40% decline seen over the last six months. The brokerage was expecting a 10% decline in April. Tata Motors’ volumes were above expectations (up 2%) while Ashok Leyland disappointed as volumes declined by 19% y-o-y (Nomura estimate: 12% decline). Eicher’s total CV volumes declined by 7% y-y.

 

Sharp improvement in tractor industry volumes: M&M’s tractor volumes increased by 38% y-o-y (Nomura estimate: 2% decline) in April 203. Tractor volumes of Escorts increased 43.6% y-o-y to 6,402 units. This could possibly be initial signs of revival in the tractor industry, Nomura believes.

 

The potential increase in government spending before elections will be positive for rural income and can have a positive impact on the tractor industry in FY14F. “We are currently building around 5% volume growth for M&M’s tractor volumes in FY14F; however, if this trend continues, we may even see strong double-digit tractor growth in FY14F,” said Nomura in its report.

User

Now pay for check-in baggage as ministry allows airlines to levy charges

Civil aviation ministry has permitted five domestic airlines to charge for various facilities, including a charge for the complementary check-in baggage. This has sent shock waves among the travelling community. Is this practical?  How will it affect the regular traveller?

The ministry of civil aviation made an announcement, permitting the five domestic airlines to charge for various facilities, including the issue of charging for the checked-in baggage (currently at 20 kg free), may be good news for the airlines but not for the travellers. The only good news is bottled drinking water will be given free, as hitherto!

 

 These airlines can now charge for the customarily free check-in baggage (20 kg free allowance); in-flight meals, snacks, soft drinks, etc.  Even the hand baggage, classified as “cabin baggage”, including the computers, with pre-set size/dimensions and weight, not exceeding 7-9 kg (depends upon airline and the mood of check-in-counter-staff), may also be subject to a charge.

 

Luckily, the ministry officials, or whoever, forgot to put a charge for the in-flight music or movies; one never knows, they may include this at a later stage!

 

On the top of these, for choosing one's ‘lucky’ seat or a comfortable seat with lots of leg space will now attract a price!  All these will be additional costs to the price of the ticket, irrespective of the base price, or when one booked it as an early bird or bought it in a hurry at the airport!

 

The ministry has neither announced the date when these will be effective nor any MRP fixed for each of these facilities.

 

One wonders if this proposal has been announced on the basis of applications made by the airlines, jointly or severally? Or is it the brainwave of the ministry?

 

Anyway, let’s take a look at what is really happening at the moment.

 

Excepting for full service airlines like Air India and Jet Air, others also offer services of various kinds, like in-flight food (meals/snacks) at a price.  A seasoned traveller either takes his/her meals/snacks at the exit point in the airport, most of which have fairly well-organized eateries or chose do so on arrival at their destination.

 

Now, first things first, in review of this proposal.  Almost everywhere (except for international travel passengers) one check-in baggage of 20 kg has been “free allowance” so far. International passengers, if they have to connect and take a domestic airline for travel internally, are extended the courtesy of two baggages (23 kg or 50 lbs in case of US origin) to facilitate their arrival.  Whether they will be affected by this new ruling is a question, though, it looks unlikely.

 

However, what is really happening is that passengers manage to carry several hand baggages right through the check-in counter to the security area, obtaining cabin-baggage-tags; once in a while. However, a surprise security/hand baggage check is done as the passenger boards the coach that ferries him/her to the aircraft, when it is taken away and put in as a “checked-in” baggage, at no extra cost. This needs to be curtailed as overall aircraft weight is of paramount importance for the safety of all.

 

Truly speaking, a visit and a surprise inspection (at any airport) will reveal the actual practice prevalent and the check-in staff  turn a blind eye (at their own discretion and peril) to let this happen with impunity. This has to stop because such extra hand baggage is a hindrance for a responsible traveller when he/she finds no space to put the legitimate luggage.

 

This writer, who has extensively travelled for the last five decades, would like to raise the following issues that also need to be properly covered, if and when the system actually comes into force:

 

a) Cabin baggage rule (computers/ladies hand bags, etc) must be strictly classified and enforced; simply because the passenger has obtained and attached a cabin baggage tag alone should not give a clear ‘passage’ to the carrier of these bags;

 

b) If the 20 kg “free allowance” as at present is withdrawn uniformly by all domestic airlines, this should be automatically factored in the price. Any (excess) weight chargeable should be clearly mentioned on the airlines' portal.  Rate factor should be uniform;

 

c) A declaration form, duly signed by the passenger, certifying the contents of the baggage must be taken at check in; one copy to be retained by the passenger, in case of claims;

 

d) Aircraft types and seat configuration must be clearly stated/shown to the passenger/booking agent at the time of reservation, particularly when extra charge is levied for the chosen seat. In case of online booking the cost of the chosen seat as well as others available must be clearly shown;

 

e) If after a seat allocation is made/occupied, should there be a change—because of crew/steward request—this must be in a written document and the benefit given to the seat-losing passenger (many times couples are given seats far away from each other; children are separated from parents, etc). If passengers themselves exchange seats, it should be free;

 

f)  Similarly, if the ordered pre-paid food is not available for any reason, the passenger should be entitled to a free meal of his/her choice (available on the aircraft), plus a compensation for non-performance of the delivery of contracted food. A suitable document should be issued by the steward in charge of the flight; 

 

g)  In case of lost baggage or delayed delivery (flight missed), as a result of    departure/loading problems, the passenger shall be compensated. Besides, the luggage shall also be delivered at no extra cost within 24 hours; and yet will be entitled to compensation and the quantum to be fixed. In case of ‘lost’ baggage, standard aviation rules will apply, taking into account the declaration given by the passenger at the departure point;

 

h)  Any departure delays, beyond 30 minutes, for any reason, the passenger need to be duly compensated; if the connecting flight is lost, the carrier will provide all necessary assistance for his/her onward connection, including overnight stay, full board, transportation costs, etc;

 

i) Most airlines have club membership programmes for encouraging and frequent flyer ‘points’. The five domestic airlines may jointly create a frequent flyer programme that will permit inter-changeability of the points earned and passengers encouraged to use these to covert them to actual travels. Or better still, the points may be permitted for use to set off against ‘unbundled’ services like a meal, snacks or even to cover baggage charges!

 

By no means is this list exhaustive. Moneylife readers are most welcome to make this more comprehensive so that every passenger’s interest is duly safeguarded.

 

 (AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was 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.)

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COMMENTS

arun adalja

4 years ago

good point if plane is delayed for more than 30 minutes then compensation is to be given.once flight was delayed for 4 hours due to runway repair and heavy traffic and i have to cancell my trip.for such cases full refund must be given and proper seating arrangements to be provided at the airport.airlines are changing prices every hour.why such things allow?

REPLY

CA PRADEEP AGARWAL

In Reply to arun adalja 4 years ago

But, My Dear who will listen to you? THE DECISION MAKERS SIT IN THEIR CABIN ON PLUSH SEATS AND EVERY REQUIREMENT AT THEIR COMMAND WITHOUT ANY IFS AND BUTS-BEHAVE LIKE SPOILED BRAT, WITHOUT ANY MANNERS WHATSOEVER.

Vinay Joshi

In Reply to CA PRADEEP AGARWAL 4 years ago

My Dear, pl can you as a CA explain the difference between 'low fare' & 'low cost', airline.

The terminology is 'low cost', airline!

Why are you commenting on airlines? That too cryptic, meaningless. As a CA give details to put up your point.

Why can't you comment about a fraudulent member - Sunil Kumar Gupta- ouster, to be struck off?
He has shamed ICAI!?

Being in Delhi, present your professional expertise in your comments.

Regards,

CA PRADEEP AGARWAL

In Reply to Vinay Joshi 4 years ago

Not a question of alleging each other, the question is whether you are being listened and your concerns are taken due care? Because I have seen that nobody wants to exercise the due operational part only those things are taken care off which suits them.

VIKAS SIVARAMAN

4 years ago

In A Fragment on Government, Bentham says, "it is the greatest happiness of the greatest number that is the measure of right and wrong" and describes this as a fundamental axiom.
I think it's time to protest the deep nexus between airlines and the civil aviation ministry. instead of protecting the average air traveller and addressing his needs first the ministry chooses to burden him further. And for the benefit of a few. Do you really believe that the adminstrators and owners of airlines did not know the risks they were taking when they started their airlines? And now that their grand plans have gone awry they are they being sheltered by the very ministers that we have elected to power to safeguard our interest? As it is airlines are allowed to openly fleece the average air traveller. Holiday seasons see airfares skyrocket with no restraint but a feeble warning from the aviation ministry that is scornfully ignored by the airlines. Delays, flight cancellations, baggage loss, late arrivals, ill run bussiness class lounges, ill trained ground staff, inadequate legroom, dirty filthy, unusable public toilets at airports etc etc cause immense agony to passengers and should therefore entail automatic prescribed compensation to the passenger. Its probably only in India that an average air traveller is so taken advantage of and with no compensation of any kind for the umpteen excesses of airlines.
It's time that air travellers lined up their list of demands and presented the list to the so called minister of civil aviation and demanded that he first address their problems with the airlines before he decides to further the profit of a select few benefactors.
The perpetrators raise the global practices analogy when it suits them. Global practices also mean that there is adequate compensation for the misdemeanours of the airlines.
That PRAFUL Patel rolled out the red carpet for Naresh Goyal's airline is no secret. His dictat brought the national carrier to its knees and he personally benefitted immensely. When news of his shenanigans began to surface he promptly quit the ministership but by then he had made his millions from Goyal.
So time to stand up and demand what is rightfully our rights and not meekly accede to ministerial and industrial beneficiaries! Fight, traveller, fight for your right!!!

REPLY

CA PRADEEP AGARWAL

In Reply to VIKAS SIVARAMAN 4 years ago

What I feel as a CA the officers sitting in offices, their income source should be choked and should be asked to compensate the travelling class, then they will know the difficulties of travellers.

Vinay Joshi

4 years ago

First & foremost distinguish between 'low fare' & 'low cost', airline & the 'terminology', vis-a-vis the present scenario in the Indian context.

Hope the economy class passengers are not made to carry business / first class passengers baggage!

RyanAir wanted to charge for the usage of the toilet, it was shot down, who had in 80's popularized the concept of 'unbundling' & many airlines have revenues to boost their bottom line.

If you want to know more of the horrifying experiences of 'unbundling' in Europe faced by Indian traveler pl read TOI, Mum,ED, May 2,2013. [for that matter many such harrowing aspects.]

Air Asia's South East Asian model will not work in the South Indian hub they are targeting as their fixed cost will be up to 85%.

I know 'Emirates & Cathay', are better.

I've been a member of EEPC since nineties.

Regards,




REPLY

CA PRADEEP AGARWAL

In Reply to Vinay Joshi 4 years ago

A day will come when these Airlines will ask to carry own bags and walk to the planes and no service will be provided all on paid basis.

Regards

CA PRADEEP AGARWAL

In Reply to Vinay Joshi 4 years ago

A day will come when these Airlines will ask to carry own bags and walk to the planes and no service will be provided all on paid basis.

CA PRADEEP AGARWAL

4 years ago

Corruption among the highest, income among the lowest

CA PRADEEP AGARWAL

4 years ago

Our Govt. is hell bent to sell its citizens but in the gutter on the guise of International Segregation, whereas income in our country is not as in Europe/USA/Canada/Australia etc.

Emerging Voice

4 years ago

If the new rules are to be implemented, first all airlines must publish the current breakup of charges for these items. So we know what we have been paying today.
As Most Airlines have base fare of Rs1, thet will have breakup of these charges as below :-
1. Seat selection Rs 0.10
2. Chkin Baggage 20Kg Rs 0.40
3. Hand Baggage Rs 0.10
4. PAX Fare Rs 0.40
Then they must not be allowed to charge more than this sort of breakup. In other words, 20Kg/30Kg should have a Upper Limit of charges. Similarly all other charges should have a Cap else AIrlines will again be fleecing the PAXs.

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