For Frequent Flyers, The Going Gets Good
For the frequent flyer, there's change on the horizon
The global business traveller never had it so good. As we launch the third edition of our annual guide, we find the travel landscape changing rapidly, almost by the minute. New technology is leading the change with better devices, more gadgets and apps aimed at helping sort out the uncertainties that traditionally go hand-in-hand with travelling. But most of the big changes that will impact you over the next year are a result of a delayed wave of liberalisation, which is sweeping the travel business in India.
After a lull of almost a decade, 2014 will see two major airline launches in India. The decision to allow foreign direct investment is leading up to more cross-border equity tie-ups with cash-strapped Indian carriers. Airport privatisation is on a roll and will extend to six smaller airports in the coming years. Roadblocks for hotel construction are coming down, at least relative to the previous decade. At the top end, global chains, including most recently the Ritz-Carlton, have opened for business. But there is even more action in the mid-segment, where the biggies are fighting it out, almost town by town, with local players like Indian Hotels, ITC and Lemon Tree. In the ‘below Rs 4,000 a night’ segment, at least a dozen new chains with pan-India reach are firmly in business.
There is also a revolution brewing in travel distribution. The fruits of online sales are now more widespread and available across products. The most visible change is in the process of booking hotel rooms. Online travel agency (OTA) Cleartrip tells us that it offers a choice of about 600 hotels in and around Delhi alone. The number of rooms available is growing in almost every town. Rival OTA MakeMyTrip has been expanding its hotel linkages to smaller cities, signing up with dozens of hotels to offer their inventory for sale online. In some ways the aggregators seem to be finally catching up with India Inc, which has been going into smaller towns for business.
We’ve sussed out the travel landscape and present four big trends that will change the way you travel in 2014.
An A380 can carry about 420 flyers in its economy class on the lower deck and 105 in its famed upper deck
The A380 experience
In 2011, the government had banned A380 operations into India to protect Air India from competition. This ban was lifted in January. Three carriers— Emirates, Singapore Airlines and Lufthansa—have sought permission to fly the planes into four Indian airports that are ‘code F compliant’ (able to receive the aircraft). Two of these are likely to start operations by this winter, possibly even earlier. In a three-class configuration, which all these airlines have opted for, the plane can carry 525 passengers of which about 420 fly in economy class, and the rest in the famed upper deck.
Singapore Airlines was the first to start operating the plane in 2007, after ordering it in 2000. Though flying the ‘Superjumbo’ is no longer a novel experience worldwide, airlines have gone the extra mile to make this product special.
Emirates, which flies five times a day to Mumbai, could replace two of its flights with one A380. The experience is particularly delightful for business and first class passengers, who board from an aero-bridge connected to the top deck. In the business class on Emirates, they can enjoy suites with personal mini-bars and two TV screens—a high-resolution 17-inch one fitted with the new entertainment system that offers hundreds of movies on demand, and a second smaller screen on the side table to play games or write emails on.
Emirates, Korean Air, Qantas and Thai Airways have a bar and lounge in the upper deck. Singapore Airlines allows passengers to create a double bed, by combining two suite seats.
For economy class passengers, A380 means lower fares. Operating a single, larger aircraft instead of two smaller ones is far more economical for the airline. Filling seats on a single flight is also, usually tougher. On most routes that the plane operates on, economy class fares are about 20 percent cheaper than on smaller planes.
Two airlines and many alliances
After GoAir launched in 2005, India’s airline business has been in a funk. For nine years, no national project has dared get off the ground. Instead, three carriers have either folded up or were sold. This is set to change in 2014, with two high-profile startups.
Tata-SIA and AirAsia India will both be very different organisms compared to their predecessors.
For one, both hope to start as international carriers. The ministry of civil aviation has declared that it will waive the rule requiring airlines to be at least five years old before they can start flying overseas. Even if the airlines don’t start international flights on day one, both have business models that rely greatly on global linkages. Tata-SIA, likely to be the first to start, will feed on traffic brought in by Singapore Airlines. AirAsia India will link up to other carriers in the AirAsia group that operate to Bangkok and other hubs in India.
The other difference is that both come well-funded and backed by established airline operators. Consider that the last three airlines to launch were from the confectionary, media and travel agency businesses. Of course, there are still many slips, and most are likely to be regulatory. But travel agents say the new launches will even out fares in the domestic market.
AirAsia India will surely stimulate an entire class of first-time flyers, as it has done in all the markets it has entered.
Frequent flyers will also experience big changes with the rollout of the Jet Airways-Etihad partnership and Air India’s entry into Star Alliance, the largest airline grouping in the world. Both partnerships increase the reach of the Indian carrier as Air India flyers will be able to earn and burn miles on its domestic and international network as well as its 28 members who reach 195 countries around the world.
The bottom line? More connections, more options and much more flexibility.
Bizjets have a new flavour
Indian business jet owners have over the decades bought planes from four or five legacy plane-makers. Gulfstream, the world’s largest by sales, Canadian business jet-maker Bombardier, Cessna, Hawker Beechcraft and Dassault have divided the market among themselves. All the five OEMs have the advantage of reliable maintenance facilities and spare support. No surprise that owners rarely looked elsewhere. But this is changing fast.
Brazilian jet-maker Embraer is beginning to nose out the traditional North American dominance. Kerala-based jewellers Joyalukkas and Kalyan Jewellers have opted for Embraer planes. Other users in India include charter operator Invision Air, AirOne and the IAF. Sources in the general aviation business say at least half a dozen other billionaires are considering buying Embraer aircraft.
The reason is that the plane-maker offers more bang for the buck, says a pharma-entrepreneur. “Economics of ownership are a key factor in these times and Embraer is competitively priced,” he says. Globally, too, corporate jet sales had peaked at 1,315 in 2008, according to the General Aviation Manufacturers Association, a US-based trade group. By 2012, deliveries had fallen to 672. They are picking up now.
In India, demand had fallen in the past two years, but a few orders are trickling in, say aircraft makers. Embraer offers aircraft in all the major segments from the entry-level light jets—the Phenom 100 and the Phenom 300—to the heavier mid-sized Legacy series that can go further and faster, and its biggest product—the Lineage 1000 in the heavy jet category.
Ahmedabad-based Adanis, whose business interests now span across continents, are reported to be looking at the Legacy 600 or the Lineage.
Mumbai’s new airport terminal
Somewhere in the next one year, domestic flights will shift from Santa Cruz to the new Terminal 2 (T2). The facility has opened to great reviews from passengers, though some of its features are still under wraps. Two of them that will be unveiled in the coming months are:
Pranaam: This is a paid-for guest service facility on the lines of Marhaba offered at Dubai airport. Passengers can buy hassle-free experience at the airport for themselves and their families by paying a little extra. Pranaam GVK Guest Service packages are available in three tiers. At the top tier, for Rs 5,000, passengers are received at the curbside, provided assistance through check-in, are given access to a Pranaam lounge and escorted to the flight. Passengers not wanting the full-suite can avail of only the lounge access, transit service or arrival services for a lower price.
New lounges: If you are a frequent flyer and were used to the mod-coms at individual airline lounges—like Singapore Airlines’s Silver Kris or the Emirates lounge—get ‘unused to’ soon. Mumbai airport will have only two lounges, one for first class and the other for business class passengers. The two lounges are still being built and will open only by the middle of 2014.
(This story appears in the 07 March, 2014 issue of Forbes India. To visit our Archives, click here.)
