sabre airline solutions and the sabre airline solutions ... · communicators bronze quill, silver...

2006 Issue No. 1

Editors in ChiefStephani Hawkins B. Scott Hunt 3150 Sabre Drive Southlake, Texas 76092 www.sabreairlinesolutions.com

Art Direction/DesignShari Manning

Contributing DesignersYvette Hunt, Michelle Kennedy, Danielle McLelland, Tim St. Clair

Contributors Shaquiq Ahmed, Kathy Benson, Jack Burkholder, Vinay Dube, Glen Harvell, Roland Hollis, Carla Jensen, Tracey Lewry, Craig Lindsey, Marcela Lizárraga, George Lynch, Deborah Magee, Sandra Meekins, Gary Millward, Mona Naguib, Soona Oh, Nancy Ornelas, Wally Phillips, Jody Pickering, Jenny Rizzolo, Santosh Sah, Melvin Tan.

PublisherGeorge Lynch

Awards 2006 International Association of Business

Communicators Gold Quill.

2005 International Association of Business Communicators Bronze Quill, Silver Quill and Gold Quill.

2004 International Association of Business Communicators Bronze Quill and Silver Quill.

2004 and 2005 Awards for Publication Excellence.

Reader InquiriesIf you have questions about this publication or suggested topics for future articles, please send an e-mail to [email protected].

Address CorrectionsPlease send address corrections via e-mail to [email protected].

Sabre Airline Solutions, the Sabre Airline Solutions logo and products noted in italics in this publication are trademarks and/or service marks of an affiliate of Sabre Holdings Corp. All other trademarks, service marks and trade names are the property of their respective owners. ©2006 Sabre Inc. All rights reserved. Printed in the USA.

T a k i n g y o u r a i r l i n e t o n e w h e i g h t s

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smart. proven. bankable.

makingcontactTo suggest a topic for a possible future article, change your address or add someone to the mailing list, please send an e-mail message to the Ascend staff at [email protected].

For more information about products and services featured in this issue of Ascend, please visit our Web site at www.sabreairlinesolutions.com or contact one of the following Sabre Airline Solutions regional representatives:

Asia/Pacific Andrew Powell Vice President Level No. 05-05 Technopark Block 750E Chai Chee Road Singapore 469005 Phone: +65 9127 6927 E-mail: [email protected]

Europe, Middle East and Africa Murray Smyth Vice President Somerville House 50A Bath Road Hounslow, Middlesex TW3 3EE, United Kingdom Phone: +44 208 814 4540 E-mail: [email protected]

Latin America Marcela Lizárraga Vice President 3150 Sabre Drive Southlake, Texas 76092 United States Phone: +1 682 605 5333 E-mail: [email protected]

North America Kristen Fritschel Vice President 3150 Sabre Drive Southlake, Texas 76092 Phone: +1 682 605 5335 E-mail: [email protected]


Helping you better market, sell, serve and operate — from planning through execution.

market

sell

serve

operate

Helps airlines plan how to best offer their schedules to customers and generate the most revenue.

• Cargo management• Fares management• Inventory management

• Loyalty management• Revenue accounting• Revenue integrity management

• Revenue management• Schedule development

Helps airlines determine the best distribution channel to sell tickets to customers.

• Booking engines• Business process management• Channel distribution

• Customer relationship management• Market data and analysis

• Reservations• Shopping• Ticketing

Helps airlines make the experience easier for theircustomers throughout the travel process.

• Customer notification and trip information• Customer processing

Helps airlines manage daily operations to efficientlyfly their schedules.

• Crew management• Dining and cabin services• Flight operations

• Ground support• Maintenance, repair and overhaul

• Resource management• Schedule distribution

31

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42BlueSkies

IndiGo, as a result of India’s liberalization, will take flight later this year.

44FullRecovery

Jet Airways rapidly responds to schedule disruptions through the use of advanced technology.

OpenSkies46OpensChallenges

India’s two traditional carriers adapt to a new environment after the country’s government eased industry restrictions.

29

OnTrackIndian Railways presents strong competition to the country’s airlines.

TheCompletePackage:31India’sCargoIndustry

Air freight companies in India are positioned to seize a greater portion of the country’s cargo market.

35PowerstoBe

China and India are on their way to becoming economic powerhouses.

Makingit38Simple

Bryan Wilson, project director for the International Air Transport Association’s 100 percent electronic ticketing initiative, discusses the progress on reaching the 2007 goal.

PreparingforTakeoff:India’s40AviationInfrastructure

India’s government focuses on renovating its airports’ infrastructure.

50TakeitOnline

An increase in online air travel bookings in India has created a need for robust Web-based capabilities.

52JustCheckin’in

Congestion in India’s airports can be streamlined through superior self-serve check-in technology.

54Car“go”toIndia

Advanced technology helps cargo operators in and out of India realize continued success during a time of rapid growth.

DistributioninIndia:6Anyone’sGame

Increasing air travel introduces new challenges and opportunities for India’s travel distribution suppliers.

IndiaTraffic8ontheRise

Numerous factors contribute to India’s increase in travel.

Low-CostCarriers11GainAltitude

Low-cost airlines and new entrants in India may lead to consolidation.

MeasuringRevenueMan-14agementPerformance

Effective implementation and sound processes help airlines get the most from their revenue management program.

20SeekingGold

Liberalization has opened myriad possibilities for India’s air transport industry.

TheinPlace23toOutsource

Some of the world’s most prominent companies and airlines are outsourcing to India.

Openfor26Business

India’s airlines are poised to expand their reach through alliances and partnerships.

perspective

contents

29

don’t know if it’s a hobby, a passion, simply part of my job or, most likely, a combination of the three, but, to me, there’s nothing more exhilarating and rewarding in the air transport industry than watching a specific market

rapidly emerge. In recent years, I’ve been fascinated by India’s ability to reinvent itself. A country that has traditionally endured economic chal-lenges has become the world’s second-fastest growing nation and has transformed itself into a true economic powerhouse, resulting in rising income for the estimated 300 million people in its middle class.

Several economic indicators have shown how far India has progressed. In 2004, India’s companies realized better than 15 percent on invested capital. From 1999 to 2003, the percentage of non-performing loans dropped from about 15 percent to about 8 percent.

31

29

specific areas of their businesses to be closer and better aligned with their customers.

I’m energized about our role in helping boost India’s economy. The Sabre Holdings™ business has offices in India, both in Mumbai, which is the aviation hub of the country, and Bangalore, the Silicon Valley of India. Our offices are engaged in software development, on-time customer service delivery and operational support throughout Asia/Pacific. For our airline customers and India, it’s a win-win situation. Our Asia/Pacific-based customers have local access to us, an essential element of supe-rior customer service and relationship management. And for India, our offices have made available hundreds of jobs for local residents.

I’m excited about the opening of our Bangalore office last September. Seeing the results of such hard work and team dedication is something that makes me very proud. And if I didn’t know it before, which I did, I certainly know now that our airline customers are in good hands with our seasoned, hard-working and incredibly talented India-based professionals.

With enormous positive energy revolving around the India marketplace and so many opportunities for airlines to reach a large population of poten-tial travelers, it was obvious that we needed to dedicate an entire issue of Ascend to India. Of course, our various sections enable us to drill down on other issues in the areas of technology and different regions of the world, so I’m certain this issue will give you valuable information.

com

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y

FromPlanning68ThroughExecution

Successful airlines are able to market their service, sell tickets, serve customers and operate efficiently. The Sabre Airline Solutions® business has tools designed to help airlines achieve each of these strategic goals.

TalkingTechnology70WithRichardRatliff

New choice-based demand forecasts will enable airlines to quickly determine when they are under or over priced.

RapidReaccommodation:56AttainingHigherLevelsofCustomerService

Sabre® Reaccommodation Manager helps airlines quickly respond to flight cancellations and delays by efficiently rebook-ing customers on alternate flights.

58TheRightFix

Ramco Systems Corp. takes the lead in providing maintenance, repair and overhaul solutions to carriers in India and around the world.

Opening60theDoor

Perot Systems helped launch an economic surge in India that proves valuable to the country’s airlines.

AGame-Winning62Strategy

Ethiopian Airlines is at the top of its game in Africa’s air travel market.

65RemoteAccess

Four Canada-based airlines provide service to some of the country’s most remote towns, filling a need for travelers who would otherwise have little or no travel options.

with Tom Klein Group President, Sabre Airline Solutions/Sabre Travel Network

It’s not a coincidence that India has made such a turnaround. A number of factors, specifically liberalization and deregulation, have significantly contributed to the country’s transformation. Several businesses around the world have outsourced parts of their operations to India. A number of start-up, low-cost carriers have materialized. Several top carriers are exploring partnerships and alliances to enter India’s marketplace. The list goes on.

India’s growth potential is enormous; in 2004, 15 million passengers trav-eled domestically by air, which is only 1.07 percent of the nation’s total population. Last year, airlines in India placed aircraft orders accounting for 9 percent of the global total.

For the air transport industry, the Indian government lifted some very strict civil aviation regulations that really started the ball rolling. New competition, such as Kingfisher, SpiceJet and IndiGo, has spurred the market, giving rail services a run for its money and providing options for the country’s travelers that were once out of reach for many. In addition, the new businesses have presented numerous employment opportuni-ties, helping further boost the economy and providing greater stability for the nation’s residents.

Outsourcing has also made an enormous impact on India’s economy. Plans to build new airports to support the country’s growth in traffic may solicit assistance from foreign information technology providers specializing in airport automation. Boeing will outsource aerospace system works to India during the next 10 years. Airbus is also exploring ways of leveraging this emerging market. IT providers are outsourcing

74FollowingtheSun

The Sabre Holdings™ business offices in India provide exceptional service for local customers.

FromDistribution76toMerchandizing

Airlines in India seek ways to generate additional revenue.

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With more than 1 billion people — from diverse backgrounds in terms of religion, race, language, color and customs — India is the second most populous country in the world and the world’s largest liberal democracy. India recognizes 23 official languages spoken across its diverse regions, including Hindi and English, the official languages of the central government. Behind China, it is the fastest growing devoloping economy in the world. India is divided into 28 states and seven union territories, a few of which are highlighted here. India has a rich and unique cultural heritage and has managed to preserve its established traditions throughout history while absorbing customs, traditions and ideas from both invaders and immigrants.

Taj Majal, Agra, Uttar Pradesh

Tea Fields in Munnar

A street scene in Bangalore

Mumbai

Swami Vivekananda Memorial, Tamil Nadu

Goan Bungalow

India

Photos by:Tea fields — geopaul/iStockphoto.com; Bahai temple — ARTEKI/Shutterstock; Taj Mahal — Alejandro Lapuerta Mediavilla/Shutterstock; Street in Bangalore — Dhana Shekar/Shutterstock; Mumbai — JupiterImages Corporation; Swami Vivekananda Memorial — ARTEKI/Shutterstock; Goan Bungalow — Evgeny Itsikson/Shutterstock

With more than 1 billion people — from diverse backgrounds in terms of religion, race, language, color and customs — India is the second most populous country in the world and the world’s largest liberal democracy. India recognizes 23 official languages spoken across its diverse regions, including Hindi and English, the official languages of the central government. Behind China, it is the fastest growing devoloping economy in the world. India is divided into 28 states and seven union territories, a few of which are highlighted here. India has a rich and unique cultural heritage and has managed to preserve its established traditions throughout history while absorbing customs, traditions and ideas from both invaders and immigrants.

Taj Majal, Agra, Uttar Pradesh

Tea Fields in Munnar

A street scene in Bangalore

Mumbai

Swami Vivekananda Memorial, Tamil Nadu

Goan Bungalow

India

Photos by:Tea fields — geopaul/iStockphoto.com; Bahai temple — ARTEKI/Shutterstock; Taj Mahal — Alejandro Lapuerta Mediavilla/Shutterstock; Street in Bangalore — Dhana Shekar/Shutterstock; Mumbai — JupiterImages Corporation; Swami Vivekananda Memorial — ARTEKI/Shutterstock; Goan Bungalow — Evgeny Itsikson/Shutterstock

Bahai Temple, New DelhiUttar PradeshWith nearly 176 million inhabitants, Uttar Pradesh is the most populous state in India and the most populous state in the world. Home of the Taj Mahal in Agra, Uttar Pradesh attracts a large number of both national and international visitors. Popular cities include Kanpur, Allahabad and Varanasi, widely considered to be the second oldest city in the world after Jerusalem.

MaharashtraMaharashtra is India’s leading industrial state, contributing 23 percent of national industrial output. Mumbai, the capital of Maharashtra, handles about 25 percent of the domestic and 38 percent of the international air passenger traffic in the country. It houses the headquarters of major financial institutions, insurance and mutual fund companies and is the home of major software parks.

Tamil NaduTamil Nadu is one of the most progressive and industrialized states in India. Chennai, the state capital, is the second leading software exporter in India and the home of India’s largest IT park. The city is also the most preferred destination for high-end business process outsourcing in financial services, healthcare and other back-office services for multinational companies.

KarnatakaKarnataka is one of the most industrialized states in India. Its capital, Bangalore, has become a worldwide IT hub and is the IT capital of India, producing approximately 38 percent of India’s software. Karnataka is an ecologically beautiful land with tropical forests, beaches, thundering waterfalls and native wildlife, a fitting home to UNESCO’s Niligiri Biosphere Reserve.

National Capital Territory of DelhiThis Union Territory contains the nation’s capital, New Delhi, the economic hub of Northern India and one of the fastest-growing cities in Asia. In Old Delhi, tourists flock to attractions such as mosques, forts and other monuments that depict India’s Muslim history. Indira Gandhi Airport in Delhi is one of India’s main domestic and international gateways.

KeralaVisitors are attracted to the biodiverse state by its beaches, hill stations, tropical forests, waterfalls, wildlife, Ayurvedic health centers and monuments. Kerala surpasses the rest of the country in literacy, health care, population control, equitable distribution of income and popular participation in governance.

A Country ofDiverse Proportions

mmmmmmmmSource: Wikipedia

GoaThis tiny, formerly Portuguese enclave is one of India’s most popular domestic and international tourist spots. Although Goa has only 63 miles (101 km) of coastline, it attracts almost 12 percent of total foreign tourists arriving in India.

The travel industry in India is growing at an incredible rate, making it necessary for airlines, travel agencies, railways and

other travel-related companies to leverage technology, adopt new business models and simply work smarter. And it’s no different for distribution providers.

The increase of disposable income, uti-lization of the Internet and discounted airfares has given a boost to customers’ willingness to travel. And global distribution systems are utilized to ensure customers have immediate access to updated information, last-minute availability and immediate confirmation.

Travel distribution in India is still pre-dominantly performed through travel agencies, which account for nearly 90 percent of the country’s travel sales, and they remain the primary point of access to customers. Travel agents, who rely on GDSs, continually concen-trate on their bottom line and are increasingly

becoming aware of the fact that technology provided by computer reservations systems has to be the frontrunner if they are going to successfully control costs.

India’s travel business is expanding at a rate of 20 percent to 25 percent year over year, and all major GDS players are distribut-ing their systems in India. Today, Amadeus holds 49 percent of the market, Galileo holds 37 percent and Abacus (a partner with Sabre Travel Network™) holds 14 percent. And with the recent entrance of Worldspan, combined with a rapidly changing environment, airline distribution is anyone’s game.

Most business transactions will occur via the Internet in the near future, and GDSs will continue evolving to meet the needs of tomor-row’s travelers. Electronic tourism has quickly gained a foothold in the Indian market, with an estimated 25 percent of travel sales being conducted through the Internet as of January

A heightened interest for air travel presents new challenges and opportunities for India’s travel distribution suppliers.

By Emmanuel Phillips | Ascend Contributor

Distribution in India: Anyone’s Game

14%

37%

49%

0%

60%

50%

40%

30%

20%

10%

0Sabre/Abacus Galileo Amadeus Worldspan

ShareofIndiaMarket

RapidexpansionoftravelinIndiamayradicallyshiftmarketsharefortheworld’stopGDSs.

239Number of paved runways at

India’s airports.

49,973Number of airports in the world, accord-

ing to the 2004 CIA World Factbook.

28 millionNumber of direct, indirect and induced

jobs worldwide provided by air trans-

port, which is expected to rise to

31 million by 2010.

130+Number of airlines in the European

air transport industry. Europe also

has a network of more than 450

airports and approximately 60 air

navigation services providers.

730,750Number of U.S. revenue passenger

enplanements from June 2004 to

May 2005, with 721,743 scheduled

and 9,007 non-scheduled.

1.6 billion+Number of passengers worldwide

who use the world’s airlines for busi-

ness and leisure travel. Research

indicates that by 2010, this number

could exceed 2.3 billion.

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2005. According to industry analysts, this figure will increase to 50 percent to 60 percent in the next five years. Electronic ticketing makes up the majority of the country’s Internet sales and online hotel bookings are quickly rising. Online bookings are gaining momentum in India, as is evident from the recent announcement by Delta Air Lines that it has chosen India as its first Asian market to introduce online bookings.

Internet usage has reached whopping proportions in India, and projections call for a 54 percent growth during the next year. Travel portals are being launched at regular intervals. The online travel distribution market in India accounts for nearly 1.5 percent of the total travel market and is expected to grow to 10 percent in the next five years.

The GDS channel, though still strong, faces several challengers as content provid-ers look to alternative distribution methods. The hospitality industry is increasingly looking toward online travel intermediaries in place of GDSs. In India, the rapid expansion of low-cost carriers is causing a clash of view with tradi-tional airlines. Traditional carriers are operating through traditional GDSs while LCCs have moved to Internet-based models.

However, the traditional GDS model is still relevant in India. Airlines continue to pay commissions to travel agents, and recently, Kingfisher Airlines, one of the country’s new-est carriers, introduced a 10 percent commis-sion per sale to travel agents and will distribute its inventory through GDSs.

One of the fastest-growing segments in India is travel insurance, and most of the insurance suppliers distribute their products through GDSs using their own Web sites.

Rich product offerings and unique fea-tures aimed at meeting diverse customer requirements has led to an increase in the number of travel insurance players aggres-sively promoting overseas travel.

Last year was an extremely healthy one for travel in India, and the biggest ben-eficiary of this unprecedented growth was the Indian consumer. The country’s middle class and rapidly increasing domestic tourism segment is spurring growth in its high-end travel segment.

The years ahead will bring new chal-lenges for distribution systems in India. This year, distribution companies will focus on mak-

ing themselves more relevant to all sectors in the tourism industry — airlines, travel agents and other service providers. Going forward, every distribution channel will have to provide innovative offerings with cutting-edge technol-ogy that will provide products that will bring value to their customers. a

Emmanuel Phillips is managing director for Sabre Travel Network

in India. He can be contacted at [email protected]

IndiaPassengerNumbers(millions)

Year International %change Domestic %change Total %change

1990-00 13.3 2.9 12.9 6.9 39.0 5.5

2000-01 14.0 5.4 14.0 8.8 42.0 7.7

2001-02 13.6 -2.7 13.2 -5.9 40.0 -4.9

2002-03 14.8 8.8 14.5 9.6 43.7 9.4

2003-04 16.7 12.3 16.0 10.9 48.7 11.4

2004-05 19.5 17.0 20.1 25.0 59.6 22.3

Indiahasexperiencedsignificantgrowthinpassengertrafficyearoveryear,withanexceptionalboostoccurringbetween2003and2005.

Source: Ministry of Civil Aviation

FlightPlans

Airline YearfoundedNumberof

planesorderedValue*

(inbillions)

Air India 1953 68 US$8.1

Indian Airlines 1953 43 US$2.2

Jet Airways 1993 50 US$9.1

Air Deccan 2003 62 US$2.6

GoAir 2005 50 US$3.3

Kingfisher Airlines 2005 78 US$6.0

Paramount Airways 2005 5 US$0.14

SpiceJet 2005 20 US$1.3

AirlinesfromIndiaareonanaircraftbuyingspree.

*Includes options and plans as well as list and declared prices. Source: Bloomberg

Photo by K. Pichumani/The Hindu

India’stravelindustryisrapidlymovingtowardelectronictourism,withanestimated25percentoftravelinIndiabeingsoldviatheInternet.

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During the last few years, India has been one of the fastest-growing air travel markets. With a total population base of

greater than 1 billion people, India represents a huge potential market. Even though it is known as a developing country, India has a 300-million-strong middle class that travels frequently by air domestically and abroad. While domestic traffic has taken off recently, India also has strong natural international traffic — more than 25 million people of Indian origin live in other parts of the world, including the Middle East, the United Kingdom and the United States. In addition to expatriate travel, business travel has increased, resulting in strong overall growth in travel to and from India.

International traffic in and out of the country is currently estimated at 23.5 million passengers per year, which has been increasing steadily for the past few years, with 2005 being a strong growth year — increasing by almost 17 percent. With liberalization of the air transport industry, this trend is expected to continue. Based on the Inter-national Air Transport Association growth rates, international traffic to and from India is expected to increase to 33.4 million pas-sengers by 2010.

The main components of traffic to India include: Expatriate travel — About 25 million people of Indian origin who live abroad provide a strong ethnic travel market attractive to air-lines. November through March, which is a mild winter season in India, is the strongest season for travel to India. Summer holiday season shows another seasonal peak due to vacation travel.

Global sourcing — The trend toward global sourcing has increased interest in India because it has a large base of skilled, English-speaking workers who are attrac-tive to multinational companies. The trend started in the early ’90s with call centers. India has now become a hub for software development, and airlines are catering to the market with direct services to development hubs such as Bangalore in southern India.

Student travel — Each year, between August and September, thousands of students leave India to study at western universities. This constitutes a strong seasonal market out of India. During summer breaks, some of this traffic returns to India for vacation, adding inbound traffic.

Growing economy — India has been on a strong growth path for the last few years, thanks to liberalization. Indian gross domes-tic product is growing at an average rate of 7 percent and is expected to continue at this rate for the next few years. As incomes increase, resident Indians have more dispos-able money and have started taking holidays abroad.

TrafficBreakdownbyRegionThe Middle East is the largest single regional market out of India, owing mainly to migrant labor from India working in the Middle East. This market constitutes 33 percent of total international traffic for India. Air India, Indian Airlines, Gulf Air and Emirates carry the larg-est amount of traffic between India and the Middle East.

Europe is India’s second-largest market — 19 percent of the total — with the United Kingdom constituting the bulk of it. The United Kingdom has strong historical links with India. Many European points, such as Frankfurt, Germany, and Paris, France, are major gate-ways for traffic beyond destinations such as the United States.

North America represents 15 percent of international traffic to and from India — the largest international growth market from the United States. About 1.4 million people of Indian origin live in the United States. India is also the largest source of foreign students in U.S. universities. In addition, growing business links, particularly the global sourcing market, has created increased business travel to India.

HowAirlinesareRespondingAs the market continues to expand, both Indian and foreign carriers are responding aggressively to market growth. Indian carriers have taken the lead by expanding domestic and international services. At the Le Bourget Airshow last year, Indian carriers ordered 190 new jets — the largest total for any country and almost 9 percent of the world’s orders for

TheMiddleEast,largelyduetoIndiannationalsworkingthroughouttheregion,representsthelargesttravelmarketforIndia.Butotherregions,suchasNorthAmericaandEurope,aregrowingrapidlyasIndialiberalizesitsairtransportindustry.

North America

15.4%

Latin America0.3%

Oceania2.8%

Africa3.1%

Other Asia25.6%

Europe19.3%

Middle East33.5%

RegionalBreakdownofInternationalTrafficto/fromIndia

ManynativeIndianstravelabroadtoattendcollegeatwesternuniversities,contributingtoarushinoutboundtrafficduringAugustandSeptemberandaheavyincreaseofinboundtrafficinMayandJune.

Photo by S Gopakumar/The Hindu

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new jets in 2005. Growth in capacity last year was particularly remarkable due to increased liberalization. This trend is likely to continue in the next few years if aircraft orders are any indication.

Air Sahara and its new owner Jet Airways are the largest private carriers that have recently started serving international des-tinations. State-owned Air India and Indian Airlines are not far behind. Air India is trans-forming itself with a large order for long-range jets for the first time in 10 years.

International carriers are also mov-ing rapidly into the growing market. With the advent of super-long-range jets such as the 777-200ER, non-stop services between India and the United States have become possible. American Airlines and Continental Airlines were the first carriers to take advan-tage. Continental Airlines started non-stop service between Delhi, India, and Newark,

New Jersey, in October. American Airlines began non-stop service from Chicago, Illinois, to Delhi in November. Air India, which, so far has had the largest share of the U.S.-India market, is contemplating non-stop service to U.S. destinations to maintain its share. And to cater to the growing information technol-ogy business, Delta Air Lines announced new service to Chennai, India, via its European gateways.

Liberalization of bilateral agreements created opportunities for growth from London, one of the largest and most con-strained markets from India. Recent bilateral agreements increased capacity by more than 100 percent between the United Kingdom and India. Taking advantage of this, Virgin Atlantic and British Airways announced increases in service to India last year. Air Sahara became the second private carrier after Jet Airways to announce service from India to London.

Previously, Air India was the only Indian carrier that served the market.

The Indian market has a strong growth potential given the large population base and growing income and economy. This provides growth opportunities for airlines serving the market. Airlines are taking these opportunities into account as the growth during the last year indicates. And this is just the beginning. a

Vijay Bathija is senior principal of marketing and planning, and

Khaled Al-Eisawi is manager market research and analysis for the

consulting practice for the Sabre Airline Solutions business. They can

be reached at [email protected] and [email protected].

Based on the International Air Transport Association growth rates, international traffic to and from India is expected to increase to 33.4 million passengers by 2010.

HigHlight

ThelastfiveyearshaveseenagrowingtrendofincreasingtravelintheIndiamarket.Forecastscallforgrowthtocontinueforatleastthenextfiveyears,reachinganestimated33.4millionpassengersby2010.

EstimatedO&DInternationalTrafficto/fromIndia

2009 20102007 20082005 20062003 20042001 200240

35

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25

20

15

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LocalandinternationalairlinesarerespondingtotheboomingIndiamarketbyincreasingthenumberofavailableseatstoandfromthecountry.Afteryearsofmoderategrowth,capacityincreased24.6percentfrom2004to2005.

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Photo by G. P. Sampath Kum

ar/The Hindu

Fueled by rising disposable incomes and coupled with globalization and partial deregulation, the domestic aviation mar-

ket in India is witnessing an unparalleled prolif-eration of new entrants, the majority of which are low-cost carriers.

Low-CostCarrierGrowthIndia’s aviation sector enjoyed a healthy 11 percent increase in domestic passengers from 2003 to 2004, which further grew to an excep-tional 25 percent in 2005, coinciding with the launch of Air Deccan, India’s first LCC. The impact of Air Deccan can be clearly seen on its Guwahati-Delhi route. After the carrier began serving the route in October 2004, the average daily passenger load increased from 162 to 215 while fares declined from an average of 6,000 rupees (US$135) to 4,000 rupees (US$90).

The clear correlation in the demand and the price of air travel in India reenforces what has been observed in other sectors — that India is a price-sensitive market with huge sales potential at low prices. This especially bodes well for the growing ranks of India’s low-fare airlines.

While the rise in gross domestic pro-duct and a changing urban lifestyle is leading to a higher propensity to travel, much of the growth of air passengers driven by the LCC segment is coming from the conversion of rail passengers (see related article on page 29).

“Approximately 20 percent to 25 per-cent of all our passengers are first-time flyers,” said Gaurav Agarwal, head of marketing for Air Deccan. “We grow the market in part by lowering prices on established routes and get-ting the train customers to fly. In each of our

While low-cost carriers have left a considerable imprint on India’s aviation industry in recent years, some debate whether or not more entrants will lead to consolidation in the long term.

By Steve Dumaine | Ascend Contributor

Low-Cost Carriers Gain Altitude

DomesticAirPassengerGrowthinIndia2002-2005

YearPassengers(millions) %change

2002-03 14.5 9.6

2003-04 16.0 10.9

2004-05 20.1 25.0

Low-costcarriersinIndiahavegainedamoreprominentpositioninthepastthreeyears,fuelingasignificantincreaseinairtravelers.

Source: Indian Ministry of Civil Aviation

India’slow-costcarriers,suchasKingfisherAirlinesandAirDeccan,aregrowingtheirmarketsharebywinningbusinessfromthecountry’srailwaysystem.Approximately20percentto25percentofAirDeccanpas-sengersarefirst-timeflyers,manyofwhomhavepreviouslytraveledviarail.

Photo by Jan Kertzscher/PlanePictures.net

Photo by Dana Ward/Shutterstock

Photo by Dana Ward/Shutterstock

Photo by V. Ganesan/The Hindu

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flights, we get at least 40 to 50 passengers who get off the trains.”

India has a significant indigenous travel market; the state-run railway network accom-modates roughly 5 billion total passenger trips, of which approximately two billion are long-distance domestic trips, while the num-ber of domestic air passengers is only 15 million. Every day, 800,000 passengers travel by first- and second-class air conditioned rail, compared to just 40,000 airline seats available. At the right price, some railway passengers, those traveling in the more elite classes, are likely to shift from rail to air travel.

“What we do is price between two spectrums,” said Sanjay Kumar, general man-ager of sales and marketing for SpiceJet. “Our highest fare is around 20 percent to 40 percent lower than the normal economy fare of full-ser-vice airlines, and our lowest fare is close to the air conditioned fare on Indian Railways.”

It is no surprise that the Ministry of Civil Aviation estimates air passenger numbers to grow to 59 million by 2010. Low-cost carriers, which will transport an expected 5 million pas-sengers in 2005 and 2006, or approximately 20 percent of total domestic passengers, are

also ramping up capacity to prepare for further growth based on fleet orders already placed with aircraft manufacturers. The market share of low-cost carriers is likely to approach 30 percent by next year.

BusinessModelsIn India, similar to other regions of the world, LCCs with a mix of business models are emerging. Air Deccan, for instance, approach-es the market as an add-on retailer.

“We make no efforts to lure high-end passengers; our target is the smart traveler who values his money,” said Air Deccan’s chief executive officer and founding managing director, Capt. G R Gopinath, in a recent issue of Express Travel and Tourism.

How does the carrier do it? It offers some of the lowest cost alternatives on key routes.

In October, Air Deccan launched an in-flight shopping scheme called “Brand for Less” with AVA Merchandising, part of the Indian arm of the global merchandising group Envision Merchandising.

“This will also help us get incremental revenue, which will help us reduce fares fur-

ther,” said Capt. Gopinath.Other new startups are incorporating a

pure-play strategy by focusing on their air prod-uct with low fares and low costs. SpiceJet’s stat-ed goal is to be “a low-fare, no-frills airline that aims to make air travel accessible to everyone.”

“We are looking at purely a low-cost model,” Kumar said.

Likewise, GoAir expresses its desire to be “commoditizing air travel” and promises “a quality-consistent, quality-assured and time-efficient product through affordable fares.”

Recent trends focus on development of more hybrid business models in India. Paramount, for example, represents an upscale pure-play business model and aspires “to pro-vide world-class designer products and unpar-alleled comfort, giving true value for money.”

The airline targets the business travel market and offers premium-class services on its flights but not economy class.

Kingfisher Airlines, on the other hand, has adopted many characteristics of traditional full-service carriers. The carrier’s motto says it all, “The Kingfisher class experience aims to take air travel beyond just getting from here to there.” This includes seatback in-

Low-CostCarrierBusinessModels

A global study of low-cost carriers by Sabre Airline Solutions identified five predominant business models, which represent a continuum. There are many carriers that use a hybrid of these models, but they generally represent the unique strategies observed in the industry.

Businessmodel Description Globalprototype Indianexample

Add-on retailers Demonstrate a singular focus on managing costs and being the lowest-cost player in the markets they serve. Offer a highly basic product and rely on very aggressive low fares to stimulate demand. Rather than targeting a specific customer segment, these carriers seek to attract a broad base of customers through low fares. Developing ancillary revenues (on-board sales, fees for bag-gage) are critical for building profitability and further subsidizing even lower fares.

Ryanair Air Deccan

Pure plays Build brand based on an “every-day low-price” concept and offer a basic product. Utilize low fares to stimulate new demand, but profitability is driven predominantly by air travel as opposed to ancillary revenues.

Southwest SpiceJetGoAir

Upscale pure plays Maintain cost-conscious approach but provide a more sophisticated product that often includes frills such as larger seats, in-flight entertainment and business-class seating. Brand is based on cus-tomer experience, while pricing reflects value versus other similar product offerings in the marketplace.

jetBlue Paramount

Transitional Represent a hybrid between low-cost carriers and traditional carri-ers. Make tradeoffs involving complexity of their business model and costs such as developing a network route structure rather than point to point and forming alliances with other carriers through codesharing or interlining.

Gol Kingfisher Airlines

Charter hybrid Charter operations represent a majority of their business. However, these carriers also sell scheduled seats on charter flights to augment their business with higher-yield passengers. Many exist in Europe and came about as a reaction to the consumer travel trends and LCC competition.

Air Berlin

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flight entertainment, extra-wide seating, pre-assigned seats and meal service. In addition, Kingfisher Airlines confirmed orders for 20 ATR 72-500 turboprops, which Nigel Harwood, Kingfisher’s chief operating officer, describes as “feeder aircraft” for the carrier’s Airbus routes. This clearly implies a network route structure as Kingfisher Airlines grows.

Similar to their global brethren, Indian LCCs have embraced long-held marketing strategies: price competition and differentia-tion. Although business models in India may be closely related to their global counterparts, Indian LCCs have uniquely adapted them-selves to their market. Some aviation leaders in India dispute that the country’s LCCs really have a cost advantage.

“With two-thirds of your fixed costs that you can’t touch — be it fuel, navigation charg-es, landing fees, pilots’ salaries — it doesn’t make sense to me,” said Naresh Goyal, chair-man and founder of Jet Airways in a recent Airline Business article.

However, LCCs still are able to achieve numerous benefits due to their busines model. Kapil Kaul from the Centre for Asia Pacific Aviation estimates that Indian LCCs can reduce their costs by 15 percent to 20 percent versus legacy carriers by adhering to a simplified business model. SpiceJet’s Kumar is even more optimistic.

“What is controllable with us? Staff uti-lization, distribution costs, operational issues, high density [route] and [aircraft] utilization benefits, and manpower capabilities such as multi-tasking,” he said. “With that kind of structure in place, you could probably realisti-cally achieve cost differentiation of 20 percent to 40 percent versus a full-service airline such as Jet Airways or Indian Airlines.”

To contain costs, Air Deccan doesn’t even provide free newspapers because it would require more time for attendants to clean the aircraft between flights.

LCCs in India are also highly innovative in managing their sales and distribution channels. Like other developing econo-mies, Internet and credit card penetration is characteristically low. However, rather than relying largely on traditional distribution channels, LCCs have developed new sales channels to reach the broadest possible customer base. In March 2005, Air Deccan entered a partnership with Hindustan Petro-

leum Corp. Ltd., a petroleum refiner and retailer with 4,400 retail outlets, which enables the carrier to sell tickets through HPCL’s gas stations. In addition, Air Deccan has recently implemented technology giving its customers the ability to book flights via mobile phones using NGPay’s mobile payment platform.

The future appears bright for LCCs in India. Yet, while air travel is expected to grow by more than 20 percent a year in the coming years, many believe that India, like the more

mature LCC regions in the world, will eventu-ally see more consolidation. Kaul predicts that by 2010, there will be just three large LCCs in India, with another three or four smaller regional players. a

Steve Dumaine is a senior principal in airline strategy and planning for the

Sabre Holdings™ business. He can be contacted at [email protected].

ExpectedLow-CostCarrierFleetGrowthinIndiaAirline Startdate Expectedfleetsize Timeframe

Air Deccan August 2003 75 2010

Kingfisher Airlines May 2005 65 2010

SpiceJet May 2005 20 2008

Paramount October 2005 10 2010

GoAir November 2005 36 2009

Magicair Announced 20 2008

East-West Announced 40 2010

IndiGo Announced 100 2012

Indus Announced 10 2007

Air One Announced — —

Total 376

TheliberalizationoftheIndianairtransportmarkethascreatedopportunitiesfornewairlines,manyofwhichhaveadoptedalow-carrieroperatingmodelandhaveannouncedaggressivefleet-growthplans.Iftheairlinescarrythroughontheirannouncedplans,almost400additionalaircraftwillbefillingtheskiesoverIndia.

Source: Center for Asia Pacific Aviation (Data does not factor in some carriers that have plans to fly but have not announced fleet details.)

Despiteuncontrollablecostssuchasjetfuelandlandingfees,theCentreforAsiaPacificAviationestimatesthatlow-costairlinesinIndiacanlowercostssignificantlymorethantradi-tionalcarriersbyfollowingasimplifiedbusinessmodel.

Photo courtesy of GoAir

Photo courtesy of The Boeing Company

Photo courtesy of Embraer

Photo courtesy of Airbus

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A successful revenue management pro-gram is the culmination of process, peo-ple and technology that are effectively

harnessed to maximize revenues. Measuring performance of the revenue management process during its evolution from inception to steady state is probably the single most important task to ensure the process is indeed contributing to the success and adding to the bottom line.

The introduction of a revenue manage-ment process at an airline generates incre-mental revenues. This is achieved with over-booking controls, discount fare mix controls, origin-and-destination controls and control of group passengers. However, the feat of rev-enue management is contingent on people, process and technology coming together, and the value generated can vary significantly by airline. There is a strong business case for investing in revenue management, and airlines should examine all stages of the evolution of revenue management from inception through “go live” and steady state.

Today, most of the top 50 carriers around the world have already made an investment in revenue management. How-ever, several carriers in the top 300 are still contemplating investing in the practice. Broadly speaking, there are three stages in the evolution of revenue management within an airline: Investment and the chief executive officer buy in,

Go-live validation and monitoring key perfor-mance indicators,

Steady-state operations and continuous demand management.

It begins with a tentative decision to invest in revenue management followed by the validation exercise and commitment to make it work. The second step constitutes the “go live” and subsequent validation of rev-enue-management-influenced performance. The third stage is essentially getting the most

out of revenue management in a steady-state operating environment.

InvestmentandtheCEObuy-inInvesting in revenue management requires commitment from senior management to adopt the processes across the airline. Many chief executive officers have a keen interest in revenue management given the competi-tive advantage and impact on the bottom line. Without this commitment, revenue goals can-not be achieved. There are several complex decisions that need to be made to add revenue

to the bottom line, and without CEO commit-ment to revenue management, this can never be accomplished.

Key challenges that cannot be overcome without a commitment toward revenue man-agement include: How to accurately forecast products and services,

How to allocate capacity to derive the optimal mix,

How to minimize spoilage, How to retain market share without risking revenue dilution,

Airlines can get the most from their revenue management program by ensuring it is implemented effectively and processes are in place to validate its performance.

By Ben Vinod | Ascend Contributor

Measuring Revenue Management Performance

Passenger modelingBookings, cancellations, spill, upsell, recapture, upgrades, depar-ture process (left at gates, depar-ture boarding compensation)

Forecaster

Networkoptimizer

Requests Accepts /rejects

Historicalbookings

Forecasts

Optimalcontrols

BookingsPassenger storefront

Inventory controls

Aneffectivesimulationmodelrequiresthreecomponents—theairline’srevenuemanagementprocess,asimulationenvironmentandthepassengerdecisionmodel.Byusingthismodel,anairlinecandemonstratethereturnonitsinvestmentinarevenuemanagementprogram.

Airline revenue management process Passenger decision model

Core simulationEvent queue handling, simulation clock, event data handling, statistics collectors

Scenario generation• Estimate unconstrained book-

ings, cancellations, no-shows• Generate simulation events

Airline data PNR,

bookings, inventory

open/close

Scenarios, Simulation Data

Audit trail and log

Summary reports

PassengerSimulationModel

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How to maintain an acceptable quality of service to retain customers,

How to adjust capacity to match demand to supply for optimal performance.

The first stage involves the justification process by modeling business requirements and constraints that are specific to the operat-ing route structure and characteristics of the airline. Developing a simulation model consists of three core components — simulation envi-ronment, airline revenue management process and passenger decision model.

An important consideration for simula-tion is to use actual passenger name record data augmented with spilled passengers based on historic open/close information by booking class from the reservations inventory system. This approach to simulating passenger behavior is a departure from the traditional Monte Carlo simulation technique. Also, the pas-senger modeling module should replicate the specific inventory control structure that will be supported in the airline’s reservations system.

The output of the simulation model will include all the pertinent performance indicators such as network revenue, revenue per avail-able seat miles, revenue per revenue passen-

ger miles, load factor, spoilage and over sales. The incremental revenue statistics from the proposed environment compared to the base-line (current environment) will demonstrate the payback on investment.

The simulation model is also required to understand what enhancements in the future provide maximum return on investment and can be used for extensive “what-if” analysis. Airlines have the option to develop a simula-tion model on their own or become part of a consortium with companies, such as the Sabre Holdings™ business, that provide unrestricted access to a sophisticated simulation framework.

Overcoming the CEO hurdle does not end with the simulation analysis. In fact, it is simply the beginning. The next step would be to iden-tify the vendor of choice, establish an organiza-tional structure with the right people and skill sets for the organization, and establish the reve-nue management playbook based on a detailed business process reengineering exercise.

“Go-Live”ValidationandMonitoringkeyPerformanceIndicatorsThere are two broad categories of perfor-mance measures that can be tracked after

going live with revenue management — pre-departure statistics and post-departure statis-tics. Monitoring performance measures over time serves two purposes. First, it is used as a yardstick to compare month-over-month and year-over-year measures. Second, it detects weaknesses in the revenue management pro-cess and identifies corrective actions that need to be taken quickly.

Post-DepartureStandardMeasuresThe historical performance of a flight is calcu-lated after flight departure. Post-departure per-formance metrics can be broadly classified as standard performance measures and revenue opportunity measures.

Post-DepartureRevenueOpportunityMeasuresThe revenue opportunity model represents the second broad category of post-departure performance measurement. It determines the incremental revenue earned as a percentage of the maximum revenue opportunity avail-able through perfect revenue management. Increases in revenue opportunity measures over time demonstrate the improvements in the revenue management process. This approach can estimate revenue management performance at the flight or network level of detail by determining both the potential for revenue gain through revenue management and the proportion of the revenue potential that was actually achieved.

The potential for revenue gain may change over time as external factors change. However, the proportion achieved will corre-late with revenue management performance. Thus, the model provides a consistent mea-

Steady-state operation continuous demand management

“Go-live” validation monitoring KPIs

Investment and the CEO hurdle

RevenueManagementTransitionandPerformanceMeasurement

Thethreestagesintheevolutionofrevenuemanagementwithinanairlineleadtothedevelopmentofanoptimalprogramthatdeliversthemostvalue.

ComponentsofPerformanceMeasurement

Pre-departurestatisticsandpost-departurestatisticscanbeusedtomonitorperformanceovertime.Suchmeasurescanprovideabasisofcomparisonandidentifyweaknessesintherevenuemanagementprocessesthatneedcorrecting.

Performancemeasurement

Expectedperformance(predeparture)

Historicalperformance(postdeparture)

Corporateperformance

Modelperformance

Standardperformance

Revenueopportunity

Corporateperformance

Modelperformance

ComponentsofDiscountAllocationRevenueOpportunity

Thetotalrevenueopportunitycanbedividedinto spoilage, dilution and revenue gainedthroughtherevenuemanagementprocess.

$$$$Spoilage

$$$Dilution

$$Revenuegained

$Minimumrevenue

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Post-DeparturePerformanceMeasuresCorporatemeasures Description

Load factor The ratio of onboard traffic to available seats expressed as a percentage. An alternate definition is the ratio of revenue passenger miles to the available seat miles expressed as a percentage.

Yield Passenger revenue per revenue passenger mile/kilometers.

Revenue per available seat miles/kilometers

This is considered the single most important measure and the ratio of passenger revenue to available seat miles/kilometers.

Market share Represents an estimate of the proportion of total traffic in a market. Can be estimated from market information data tapes and passenger shopping data.

Oversale (denied boarding) rate Calculated separately for voluntary and involuntary denied boardings. It is the ratio of number of denied boardings to the number of passengers boarded expressed in denied boardings per 10,000 passengers boarded.

Spoilage Represents the number of empty seats on closed flights.

Spoilage rate Ratio of number of spoiled seats to the number of passengers boarded expressed as a percentage.

Over-sale cost Cost of customers who were denied boarding. Should be tracked by airport. Components of denied boarding costs are voucher costs, meals, ground transportation and goodwill. Expressed in unit of currency per person by airport.

Load factor on closed flights This is the correction factor for incorrect overbooking. Measurement is based on open/close status throughout the flight by booking class and calculated as a weighted average by flight leg and base compartment.

Closing rate Probability that demand for a booking class exceeds the available seats in the class.

Employee productivity Average number of employees Seat capacity per employee (seat miles/kilometers)

Passenger load per employees (ton miles/kilometers)

Revenue per employee

Standard measures of employee productivity and usually reported year over year. Productivity statistics are important since employee compensation constitutes a significant part of the operating costs.

Modelmeasures Description

Forecast errors Errors associated with demand forecasting, cancellation rate forecasting, boarding rate forecast-ing. Common measures include mean absolute deviation, standard error, bias, weighted mean absolute percent error and mean squared error.

Pre-DeparturePerformanceMeasuresCorporatemeasures Description

Booked load factor The ratio of onboard traffic to available seats expressed as a percentage. An alternate definition is the ratio of revenue passenger miles to the available seat miles expressed as a percentage.

Expected load factor The expected load factor of a flight at departure based on current bookings, forecast of remain-ing demand and inventory controls.

Expected revenue Expected revenue of a flight at departure load based on current bookings, forecast of remaining demand and inventory controls.

Expected yield Expected passenger revenue per revenue passenger mile/kilometers.

Expected revenue per available seat miles/kilometers The ratio of expected passenger revenue to available seat miles/kilometers.

Spill rate by class

Ratio of spilled passengers to unconstrained demand to date for a future departure. This statis-tic must be computed by leg class or service class depending on inventory control method. If the spill rates are not ascending from the highest valued class to the lowest, it identifies a prob-lem with how discount allocations are set.

Closing rate Probability that demand for a booking class exceeds the available seats in the class (pre-depar-ture closing rates).

Modelmeasures Description

Forecast errors Errors associated with demand forecasting, cancellation rate forecasting by reading day interval. Common measures include mean absolute deviation, standard error, bias and mean squared error.

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sure, which enables airlines to track relative performance over time. In addition, the model also provides a specific revenue benefit associ-ated with revenue management. This capabil-ity enables airlines to quantify the benefits associated with performance improvements due to system or procedural changes or costs associated with poor performance. This mea-sure can be applied across flight departures by time or geographic regions or system to measure aggregate performance.

Discount allocation spoilage represents empty seats that result from premature clo-sure of discount classes in spite of excessive demand for a flight that is a direct result of over estimating show-up rates and/or demand for higher-valued booking classes. The revenue customer opportunity statistic is cal-culated from the optimal mix achievable up to the actual boarded count-by-flight leg, meaning that: Dilution equals actual revenue subtracted from revenue customer opportunity,

Spoilage equals actual revenue plus dilution subtracted from maximum revenue oppor-tunity.

The revenue opportunity measures can be calculated by flight leg or flight number as well as at the network level of aggregation. To compute the measures for a flight number or network will require that a deterministic linear program be solved.

Pre-DepartureStandardMeasuresThe pre-departure performance of a flight is monitored to take corrective actions when a flight’s expected performance is in doubt. There are several key measures associated with corporate performance and model perfor-mance, including: Booked load factor, Expected load factor, Expected revenue, Expected yield, Expected revenue per available seat mile/kilometer,

Spill rate by class, Closing rate.

IsolatingRevenueManagementPerformanceIsolating the performance of the airline reve-nue management process translates into determining the incremental revenues gener-ated with optimal revenue management con-trols without considering other environmental influences.

Measuring the direct revenue benefit that can be attributed to revenue management is difficult to estimate since it is difficult to isolate the impact of revenue management controls from external factors. Typical exter-nal factors that impact revenue management performance include pricing actions, capacity changes, competitive activity, changes in the

business climate and new low-cost entrants in the market.

Frequently, multivariate models are used to fit a response surface model to the significant variables that impact incremental revenues and, hence, isolate the revenue impact of revenue management controls. This approach has only met with limited success due to noise in the calibration process. A common approach is to normalize the fares and recalculate all the pertinent statistics to determine the benefits that can be attributed to revenue management.

Airlines operating in an origin-and-des-tination inventory control environment should store the total bid price and associated fare value of the reservations request on the passenger name record before ending the transaction in the reservations system. The total bid price is calculated at the time of sell for determining availability. Once this data is captured in the PNR, on a post-departure basis, the incremental contribution that can be attributed to the revenue management process can be determined.

Steady-StateOperationsandContinuousDemandManagementRevenue management serves a central role in an organization. When considering an invest-ment in revenue management, an airline should evaluate the short- and long-term benefits. For a typical airline, most revenue management resources are focused on the short-term goal of maximizing revenue with a given sched-ule and fare structure. However, long-term

revenue management planning often has sig-nificant positive financial impact as well. Long-term revenue management planning must consider the marketing plan encompassing flight schedules, fares, group and off-tariff sales practices, distribution methods, passen-ger handling policies, frequent flyer program, and advertising. Because so many functions are involved, long-term planning must be con-ducted at the corporate level.

Key performance indicators associated with revenue management should be tracked and monitored across organizational silos, given its relevance to the key stake hold-ers. This end-to-end transparency horizontally (across organizational boundaries) and vertical-ly (within an organizational hierarchy) should be leveraged by the CEO to enable zero latency in decision making.

Business process integration across var-ious functional areas — revenue management, capacity planning, marketing, operations, fleet planning, pricing, reservations, sales and dis-tribution — is required for effective deci-sion making. This entails the optimal use of revenue management data (both inputs and outputs) for effective decision making across the major functional areas in airline planning and operations.

As is most often the case, forecast accu-racy is blamed for poor corporate performance. If forecasts were perfect, achieving the target performance measures would be a non issue. The typical symptoms indicate that forecasts

Capacity planning

Sales

DistributionFleet

planning

Operations

ReservationsPricing

Marketing

Revenuemanagement

Variousfunctionswithintheairlinecanben-efitfromaneffectiverevenuemanagementprocess.Usingrevenuemanagementdataacrossthemajorfunctionalareasofanair-linecanleadtoimproveddecisionmaking.

Acombinationofproactivemanagementandimprovedforecastaccuracycanhelpanairlinemakeitsplan,whichmeansitwouldmeetrevenueandmarketsharetargetsaswellasachievetargetcustomerservicelev-elsandcosttargets.

ForecastAccuracyvs.ProactiveManagement

Proactivemanagement

Passivemanagement

Earnings/shareestimate

Deliver onthe plan

Improve forecastaccuracy in plan targets

ImpactofRevenueManagement

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may be accurate at a macro level (e.g. market), but not accurate at the itinerary class level where seat inventory is consumed. Frequently, situations may arise when too many discount seats have been sold, resulting in higher-valued passengers being spilled. As a direct consequence of these issues, there tends to be passing the blame among sales and rev-enue management and operations when plans are not met. What the functional silos fail to recognize is that the business environment is becoming too dynamic to just rely on forecast-ing accurately to drive performance.

Putting revenue management processes aside for a moment, ultimately, the most impor-tant issue is that an airline focuses on making the plan happen. The plan involves meeting revenue and market share targets for the cur-rent period, achieving target customer service levels to protect future revenues and achiev-ing cost targets. A paradigm shift is required to manage demand continuously to effectively manage the business even if the forecasts are not accurate. Continuous demand management requires active monitoring of key per-formance indicators and proactively reviewing alerts to take the necessary corrective actions to ensure the plan can be achieved. This rapid sense-and-respond capability of continu-

ous demand management addresses demand variability positively to ensure the plan’s targets are met.

Based on the recognition that variability in a competitive environment is too high to consistently forecast accurately, how can revenue management performance measures be used proactively to make the plan happen consistently in spite of high variability in demand? An airline must embrace the para-digm of continuous demand management, which requires putting processes in place that account for variability and then proac-tively using all the business levers available to respond to make that plan happen. This is accomplished by proactively balancing cur-rent and future goals as well as revenue and costs by using all means available to take cor-rective action.

To address variability, latency should be overcome to ensure proactive management. Latency results because of slow propagation of information resulting in excessive cycle times for decision making.

Revenue management does not address the cost side of the equation, which is an anathema for most unprofitable airlines today. On the cost side of the equation, the same framework can be used to monitor and deliver

Optional loop

PLAN

EventsandAlertsResolution

Events setup, KPIs, thresholds,

frequency of monitoring

Themanagementofevents,whichservesasacentralnervoussystem,canbeestablishedandorchestratedforproactivedecisionmaking.

Continuous monitoring and generation of

alerts

Categorize alerts

Root cause analysis

Recommendbusiness lever

Execute business lever

EXECUTE

“What-if” analysis

Therootcauseanalysisframeworkofaneventhelpsanairlineunderstandwhatcausedthedeviationfromtheplanandthebusinesslever(supplyordemand)thatshouldbeinvokedtotakecorrectiveaction.ArootcauseanalysisshouldbeconductedoneachKPI,suchassystemrevenue.Theactivationofthebusinesslevermaylieindifferentorganizationssuchaspricing,revenuemanagement,salesorcapacityplanning.AsimilardecisiontreewillberequiredforallKPIsthatneedtobemonitoredtoensureconsistencyindecisionmaking.

Event

Promote new packages

Lower availability forlow-value class Q that

negatively impacts yield

Reduce capacity in market

Revise overridesfor desired markets

to incent travel agent

Match competitor price

Promote underperforming markets

Re-optimize price list and file new higher

margin fares

Increase availability for class K by point of sale

RootCauseAnalysis BusinessLever

Market entity Byield below plan

Market entity Brevenue below plan

Market entity Ayield below plan

Market entity Arevenue below plan

Market entity Cyield below plan

Market entity Crevenue below plan

Ineffective promotions

Yield below plan

Sales volumebelow plan

Point of sale LONbelow plan

Inventory by classbelow plan

Booked class varianceskewed to lower class

Competitor price drop

Ineffective promopackages

Systemrevenuebelowtarget

Revenue management role Pricing role Sales role Capacity planning role

Alerts,RootCauseAnalysisandResolution

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on cost targets for the current period and also deliver on targets for efficiency improvements that drive lower costs in the future.

Event management is central to the orchestration of continuous demand manage-ment based on alerts generated from rev-enue management performance measures. The management of events serves as a central nervous system. This requires the definition of revenue management KPIs at distinct levels of aggregation, frequency of monitoring (by the minute, hour, day, week, etc.) and possible recourse for a corrective action by invoking a demand or supply lever. Events can be estab-lished and orchestrated for proactive decision making.

Demand levers include pricing actions, promotions, sales incentives and overrides. Supply levers include capacity changes, change frequency on markets served and entering new markets. Typically, the effects of invoking a demand lever can be realized immediately while supply levers are less agile, and the impacts will only be realized after

a few weeks.The payback from revenue management

is usually realized within weeks and rarely exceeds a year. As a general rule, the larger the airline, the faster the payback on the initial investment. This is because the incremental costs of deploying a revenue management solution for a larger airline is much smaller than the magnitude of the incremental benefit. Even for airlines with as few as 50 to 75 departures per day, the return on investment can still be measured in weeks or months. However, the deployment of revenue management is not a panacea for generating incremental revenues and profitability. To guarantee ROI, a com-mitment is required from all levels of man-agement, starting with the CEO, to establish the revenue management process and define roles, responsibilities and accountability for actions taken.

To get the most out of a revenue man-agement program requires the continuous monitoring of pre-departure and post-depar-ture measures to provide continuous feedback

and take corrective actions. With its portfolio breadth, the Sabre Airline Solutions® business is working with several airlines, small and large, to establish processes to monitor the plan with standard reports for performance measurement. The ultimate challenge is to automate this framework to ensure consistent actions based on events.

Ultimately, in steady state, revenue management plays a key role to “make the plan happen” with the process of continuous demand management. Implementation of rev-enue management awareness enterprise wide is critical to ensure transparency across the organization and leverage key revenue man-agement-related performance indicators to ensure that revenue plans are met by enabling zero latency in decision making. a

Ben Vinod is chief innovator for

Sabre Airline Solutions. He can be contacted at [email protected].

To guarantee ROI, a commitment is required from all levels of management, starting with the CEO, to establish the revenue management process and define roles, responsibilities and accountability for actions taken.

HigHlight

1843 Year William S. Henson, a British

inventor, patented plans for a steam-

driven airplane that had many of the

basic parts of a modern airplane.

1913 Year Igor I. Sikorsky, a Russian

inventor, built and flew the first

four-engine plane.

1958 Year the Boeing 707 began the first

U.S. jet transport service between

the United States and Europe.

1896 Year Samuel P. Langley of the

United States flew a steam powered

model plane.

1953 Year the first turboprop transport,

the Vickers Viscount, began regular

airline service.

1983 Year a Rockwell Sabreliner became

the first plane to cross the Atlantic

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Relaxed government regulations have opened countless opportunities for India’s air transport industry.

By Lynne Clark | Ascend Staff

There is a gold rush in the skies over India. And it seems that every venture capitalist in the world with the requisite 444 million rupees (US$10 million) to launch a private airline wants to stake a claim. India’s new breed of aviation entrepreneurs represents businesses from breweries, distilleries and public relations companies to textile con-glomerates and billionaire families.

Many are motivated by the prospects of money and glamour associated with air-lines. Many want to change the aviation world similar to the way Southwest Airlines’ Herb Kelleher and Ryanair’s Tony Ryan have done. All see gold on the Indian aviation horizon.

TheSunriseSectorIndia is the world’s second most emerging aviation market after China.

“The country, which just 10 years ago had a total operating fleet of 150 aircraft or less, suddenly led the order book at the Paris Air show in 2005 with 190 new aircraft orders,” said Vijay Bathija, senior principal with the consulting practice for the Sabre Airline Solutions® business.

Fueling the orders is a perfect storm of opportunity created by the simultaneous relaxing of government policies on foreign equity ownership, new open-skies policies, rising income levels among a growing Indian middle class and an unexploited potential in India’s tourism.

“I didn’t need a McKinsey [& Company consultant] to tell me there’s a market here,”

said Capt. G R Gopinath, managing director of Air Deccan. “What we are witnessing today is the birth of a new industry. Aviation is no longer a taboo, and it is now becoming an integral part of the country’s economic development.”

Open-SkiesPoliciesPerhaps agreeing with Capt. Gopinath and other industry observers, the Indian govern-ment last September implemented aggressive policy changes and bilateral air service agree-ments with more than 15 nations including the United States and the United Kingdom, almost instantly increasing the number of flights into and out of India.

Soon after, the government cleared an almost 14-year request by the two state-owned airlines, Air India and Indian Airlines,

to expand their fleets. In October, the government raised the foreign investment limit in the local aviation sector from 40 percent to 49 percent, and non-resident Indian investment up to 100 percent is now permis- sible in domestic airlines without government approval. However, the government policy bars foreign airlines from taking a stake in a domestic airline.

During the past 12 months, India has signed a number of open-skies agreements, signaling its readiness to modernize aviation policies. Already, the Indian government’s new openness is showing results, including: Bilateral pacts with Sri Lanka and Singapore; Granting multiple-carrier status to Indian air-craft by three Association of Southeast Asian nation countries — Singapore, Malaysia and Thailand;

SpiceJet photo by Joe G. Walker/MyAviation.net; Jet Airways photo by M Radzi Desa/MyAviation.net; Kingfisher Airlines photo by Torben Guse; /MyAviation.net; AirDeccan photo by Jan Kertzscher/PlanePictures.net; GoAir photo by Olav Rhensius/Propfreak Collection

Allowing low-cost airlines from these ASEAN countries to enter India;

Permitting private Indian airlines with five years of flying experience to fly to all global destinations except the Gulf. Until now, private local airlines were only allowed to operate within the country.

KeyPlayersClearing skies have cleared runways for more planes in India. State-owned and private air-lines are vigorously expanding their fleets, and foreign players are rushing in to stake their claim in the Indian aviation goldmine.

Currently, liveries from 19 carriers cross the skies over India. With the exception of Air India and Indian Airlines, newcomers are all privately held.

With its recent acquisition of Air Sahara, Jet Airways has emerged as one of the strongest and largest domestic carriers in the country, with nearly 50 percent domestic share.

“Jet Airways just recently started inter-national service,” Bathija said. “While it is still losing money in the international circuit, it is well-positioned for the future. Scale matters, and Jet Airways is the largest private carrier with rights to international destinations and a strong domestic network.”

Among low-cost carriers, Air Deccan remains the leader. The country’s first “no-frills” airline is a business unit of Deccan Aviation Private Limited, India’s largest private heli-charter company.

“We were already successfully into the business of chartered flights where we got a lot of calls from people wanting to go to destinations that were unconnected,” said founder Capt. Gopinath, a former captain in the Indian Air Force. “This started the initial thought process. Our country is vast, the infrastructure is poor, air connectivity is bad; all these factors were considered. I realized that if anybody needed low-frill aircraft, it was India.”

Combining Southwest Airlines and Ryanair business models, Air Deccan began operations in August 2003 with one aircraft and one regularly scheduled flight a day from Bangalore, India, to Mangalore and Hubli, India. Today, it connects 44 cities with 180 flights to destinations throughout India.

The cornerstone of Air Deccan’s aggres-sive growth is rock-bottom fares to attract railway passengers to upgrade to air travel. During the past few years, the carrier has offered

special promotional fares at virtually half the price of a railway ticket to many destinations.

Air Deccan’s phenomenal growth spurred the entry of nearly a dozen low-cost carriers in India, and it faces stiff competition from Kingfisher Airlines, SpiceJet and GoAir.

“The new challenger on the scene is the colorful Kingfisher Airlines,” said Bathija. “Modeled on the international Virgin Atlantic, it is growing rapidly and has achieved almost 6 percent of the domestic market share within a few months of operation.”

Kingfisher Airlines is a wholly owned subsidiary of United Breweries Holdings Limited, the UB Group’s investments hold-ing company. The UB Group is one of India’s largest companies with revenues of 87 billion rupees (US$2 billion) and is the largest Indian manufacturer of beer and liquor. Based in Bangalore, Kingfisher Airlines is India’s first and only private airline to receive the pres-tigious “New Airline of the Year” award in 2005 for Asia/Pacific and the Middle East from the Centre for Asia Pacific Aviation within six months of commencing operations.

WhowillSurvive?With many of the nation’s newcomers in the start-up phase, it’s too early to predict who the survivors will be.

“This is the second round of aviation lib-eralization in India,” Bathija said. “In the early 1990s, private carriers started services as air-

taxi operators and later converted to scheduled operators. However, due to either the restric-tive route policies or level of funding, many carriers folded. This time, the market is much more enthusiastic, and the operating environ-ment is much less restrictive. The chance of success for many carriers is much greater this time around.”

Of course, the success of newcomers and established carriers depends on whether the Indian government follows through on promises to further liberalize the aviation mar-ket and improve the quality of airport infra-structure.(See related article on page 40.)

“Infrastructure is a major concern,” said Bathija. “While plans are being developed to upgrade facilities or lay ground work for new airports, the lead time for these plans to come to fruition is very long. The good news is that the government realizes that capital is required and is moving fast to privatize major airports.

“A skilled labor shortage, particularly for cockpit crew, is also a challenge carriers must face,” Bathija continued. “Kingfisher Airlines is opening its own pilot training academy. So while there will be some growing pains, I am confident that growth will continue. There will be consolidation successes and failures. However, I expect the total supply of seats to continue growing and demand to keep pace.” a

Lynne Clark can be contacted at [email protected].

BeyondtheCoreBusiness

Airline Owner Business

Air Deccan Captain G R Gopinath Helicopter charters

Kingfisher Airlines UB Group Breweries/distilleries

IndiGo InterGlobe Enterprises Global travel technology

SpiceJet Royal Holding Services Royal Airways/Kusagra family

GoAir Bloomberg Dyeing Textiles

SomeofIndia’scarriersarecapitalizedbysuccessfulbusinessesinotherindustries.Thefinancialstrength,powerfulleadershipandwell-knownbrandsofthesecompaniesprovidetheinitialstabilitymanystart-upairlineslack.

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India’s tremendous growth in air travel, liberalized government policies, and significant regional demand for aviation products and services has some of the world’s most prominent companies and airlines outsourcing to India.

By Shail Maniar | Ascend Contributor

The in Place to Outsource

Amid roaring jets over the skies of Bangalore, India, the information tech-nology hub of India and home of state-

run aviation major Hindustan Aeronautics Ltd., the country signaled its desire to emerge as a major aviation outsourcing destination in the presence of more than 350 aerospace firms at the Aero India 2005 air show.

This claim is supported by a recent con-vergence of key catalysts for the Indian aviation industry: an escalating domestic travel market, favorable aviation policies by the current Indian administration, and a large domestic market for aviation products and services fueled by a spurt of new domestic start-up airlines. For India to play a formidable role in the aviation outsourcing business, the country must grow in every aspect of the industry — services, products and manufacturing.

HistoryandEvolutionTraditionally, Indian companies in the aviation outsourcing business were limited to offering contract information technology services to regional airlines primarily in the areas of host development and back-office revenue account-ing services. The key driver was availability of a large, inexpensive and skilled work force, positioning India as an IT services provider in the early to mid 1990s. The year 2000, or Y2K, created a huge one-time demand in India for host development and maintenance services primarily for airlines, which were highly sus-ceptible to the millennium bug. This enabled many Indian companies to establish relation-ships with airlines’ chief information officers in the region and solicit additional business after the turn of the century.

With no market for products and ser-vices in the local domestic India market, the growth in aviation outsourcing was limited to IT and business process outsourcing services. WNS is one business that has been very suc-cessful in making scale matter in customer contact, passenger revenue accounting, and

operations and back-office support business process outsourcing services. The leading BPO company has been highly focused on operating and managing critical business pro-cesses in the travel, insurance and financial services domains. In 2005, WNS upstaged Wipro Spectramind from the top spot among India’s back-office and call center companies.

StrengthsandWeaknessesTo succeed in India and offer a range of prod-ucts and services domestically and to regional travel and transportation businesses, the cur-rent crop of providers will need to be flexible and quick to market. The boutique players such as Kale Consultants and SkyTECH Solutions that focus on a limited portfolio of products and services seemingly have an advantage: Investment dollars to be spent across fewer products, resulting in a richer functional offering,

For India to play a formidable role in the aviation outsourcing business, the country must grow in every aspect of the industry — services, products and manufacturing.

HigHlight

Photo by Shaju John/The Hindu

Leadingglobalcompanieshaveoutsourcedpartsoftheirbusinesstoprovideimprovedcustomerserviceaswellasremaingeographicallyconvenienttotheircustomers.

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AviationOutsourcinginIndia

These companies are rapidly transforming from offering services to building a healthy travel and transportation product portfolio.

Company Profile Based Majorproductofferings

Kale Consultants Incorporated in 1986, India public offering in 1999

Mumbai Passenger and cargo revenue accounting, air cargo management, BPO services, consulting

Bird Information Systems

Part of the The Bird Group — a conglomer-ate of companies — RDM, Amadeus (India), Arvato Services India

Gurgaon Reservations system, Web-based hosting for low-cost carriers, BPO solutions

IBS Group Initiated operations in 1997, acquired TopAir in 2002 and Avient Solutions from Honeywell in 2003

Trivandrum Reservations system, flight management, staff travel management, operations control, crew management, airport operations, cargo management

These businesses are consolidating their positions as global providers of IT solutions and services for the travel and transportation industries.

Company Profile Based Serviceoffering

Hexaware Technologies Formed in 1990. India public offering in 2001. Merged with Aptech Software in 2001

Mumbai Outsourcing of application development and maintenance, host development services

WNS In India since 1996. Formerly a subsidiary of British Airways. Private global equity inves-tor Warburg Pincus owns a majority stake. Ranked the No. 1 BPO firm in India

Mumbai Customer contact, passenger revenue accounting, operations/back office support

InterGlobe Technologies

Established in 1998 as a JV between InterGlobe Enterprises and Cendant Corp.

Gurgaon IT services — development/maintenance, loyalty program management, IBEBPO Services — customer contact, fares management

Aviation Software Development Consultancy India, Ltd.

Wholly owned subsidiary of Tata Consultancy Services, Ltd. Originally formed as a JV between TCS and Singapore Airlines

Chennai End-to-end solution development primarily in mainframe environment, business consulting and application maintenance

Tata Consultancy Services

In India’s top 3 IT services company. Public offering in 2004

Mumbai Consulting, IT services (host development), BPO

These foreign entrants are establishing global development and delivery models in India.

Company Profile Based Majorproductofferings

SkyTECH Solutions U.S. based and formed in 1999. JV between United Airlines and The Chatterjee Group. Marketing rights to jointly develop/market/customize UAL’s flagship aviation products globally.

New York, New York (Kolkata)

Flight scheduling, drug/alcohol testing, aircraft/engine health management, airport resource management, gate assignment/planning

Sabre Airline Solutions Initiated operations in March 2005 Southlake, Texas (Bangalore)

Global development, delivery and research

Boeing U.S. civil and military aircraft manufacturer Seattle, Washington

Will source US$1.9 billion of aerospace sys-tems work, maintenance and overhaul facil-ity in IndiaBuild a pilot training school in India

Accenture Global management consulting, technology services and outsourcing company. Wholly owns Navitaire (formerly Open Skies of HP)

Minneapolis, Minnesota (Bangalore)

Customer contact, passenger revenue accounting, operations/back office support

IBM Global services business focused on the airline vertical

White Plains, New Jersey (New Delhi)

IT services for travel and transportationConsulting and integration services

Flexibility to provide fully customized solutions to a customer, resulting in a solu-tion that will likely work for contracted customers,

Excellence in a particular domain, resulting in best-of-breed offerings.

On the flip side, challenges remain in marketing their products and services glob-ally — strengthening their sales and marketing teams, increasing global support capability and “thinking big” would certainly be near-term objectives.

Customers expect a one-stop shop for solutions that integrate well within their offer-ing and meet their customers’ needs. The value proposition of offering a limited prod-uct portfolio is weak. In addition, customers expect some level of consulting services to be bundled with product offerings, enabling domestic and regional carriers to better realize return on investment of their IT spend and gain access to best business practices from mature aviation markets.

FutureTrends—InnovationandnewCompetitorsLocal Indian companies focused on servicing the travel and transportation sectors, such as Kale Consultants and The IBS Group, will continue to broaden their product offerings. Innovation and investment into new tech-nologies and products will likely be their key growth drivers. With a domestic market led by world-class, service-oriented airlines such as

Jet Airways and Kingfisher Airlines and a surge of new low-cost carriers, both airline business models will demand newer and more flexible ways of using technology for their businesses.

The Indian government has already made a decision to privatize New Delhi and Mumbai airports, and the remaining metros Chennai and Kolkata will follow soon depending on the success at the first two airports. New airports are currently being built in Bangalore and Hyderabad. Foreign IT companies specializing in airport automation could potentially partner with local counterparts in India to outsource the automation for these airports, which offer considerable business potential. Will the next-generation biometric check-in systems or radio

frequency ID-based baggage tag systems be developed in India in the near future? There is a high probability of this happening sooner than later.

Indian IT outsourcing leaders — Infosys and Wipro — are scratching the surface to provide services to travel and transportation businesses. Both have enormous economies of scale, global presence and marketing reach. Between them, they efficiently run the IT infrastructure of some of the largest insurance and banking institutions in the world. There is no doubt they will succeed in the travel and transportation industries. Traditionally, major global travel companies have outsourced to U.S. IT service providers, such as IBM and EDS. The future could see the same travel companies outsourcing data centers, desk-tops and key back-office operations to Indian IT leaders.

Accenture currently has 25,000 employ-ees in India, China and the Philippines, and it plans to hire an additional 25,000 during the next two to three years. Accenture is a classic example of leveraging global marketing and sales strengths with a delivery structure (cost, scale and efficiency) based in India. Coupled with a very strong IT consulting practice, Accenture is positioning itself to be a formi-dable player in the aviation space.

Aviation outsourcing in India took a huge leap up the value chain when The Boeing Company agreed to outsource aero-space systems works valued at US$1.9 billion to India during the next 10 years. The U.S. aerospace firm is also committed to set up an India-based maintenance and overhaul facility as well as a pilot training center. Boeing made the decision under a counter-trade agreement between New Delhi and Wash- ington, D.C., whereby Air India agreed to purchase more than 60 aircraft. This is an emerging business in India and faces tough competition from established players such as China and Japan.

Airbus is also looking at various options of leveraging India as one of the largest aero-nautical complexes in Asia, with total capacity to make and maintain a wide array of civilian and military aircraft and avionics. State-run Hindustan Aeronautics will play a key role in exporting and supporting aerospace systems development in India.

India is well on its way to becoming a powerhouse in offering aviation products and services to global customers. However, the road to being an aviation manufacturing hub is littered with challenges, such as infrastructure, logistics and competition from China. a

Shail Maniar is managing director for the Sabre Airline Solutions business

in Bangalore. He can be contacted at [email protected].

Customers expect a one-stop shop for solutions that integrate well within their offering and meet their customers’ needs.

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Infosys,oneofIndia’stopoutsourcingcompanies,benefitsfromarapidlymaturingoutsourc-ingindustry,witharecent21percentboostinprofits.

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Relaxed regulations

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was a liberating year for aviation in India.

Liberalized business practices in the second most populous country in the world are already creating unprecedented expansion in India’s civil aviation, including opportunities for carriers to integrate with the worldwide airline network. India is rapidly liberalizing its business practices with bilateral agreements for economic trade. Information technology was the first sector to take off. The telecom sector, which the Indian government deregu-lated a few years ago, was the second. The Indian civil aviation sector promises to be a third “thrust” sector of the Indian economy, largely because of the steps taken to open it to competition.

In 2005, new air transport accords re-placed antiquated agreements that placed restrictions on services between countries. These restrictions included limits on cities that could be served and pricing. An open-skies agreement with the United States, replacing agreements signed in 1956, provides for open routes, capacity, frequencies, designations and pricing, as well as opportunities for cooperative marketing arrangements, including codesharing.

This liberalization of aviation business practices has created a huge expansion of mar-ket demand. International and domestic carri-ers are already taking advantage of these new opportunities. India’s domestic markets make up 60 percent of its market demand. Domestic low-cost carriers are growing to satisfy this increase. New market entrants Kingfisher Airlines and SpiceJet have already grabbed mar-ket share and show no sign of slowing down.

Internationally, the new bilateral agree-ments have allowed India’s international departing seats to rise by 16 percent year over year (average six months from June through November) while international passenger demand for the same period has risen by 14 percent.

The new accord with the United States is already having a multiplier effect by open-

ing up more capacity for business people and tourists from the United States to visit India and more Indians to visit the United States. Carriers have already reacted to the new rules. For example, Continental Airlines and American Airlines began non-stop ser-vice between New Delhi, India, and U.S. destinations late last year. Delta Air Lines expanded service to India, adding Chennai. Air India added Chicago, Illinois, and Los Angeles, California, to its routes, and Jet Airways and Air Sahara — which has been purchased by Jet Airways — have plans to start service to the United States through Europe.

Last year, four domestic low-cost carri-

ers began operations and many more are on the horizon. The liberalized India marketplace could also lead to acquisitions and mergers that would further change the industry. The Jet Airways/Air Sahara merger, for example, positions the combined carrier in both domes-tic and international markets. International carriers, such as Jetstar Asia, started interna-tional low-cost flights from Singapore to Kolkata and Bangalore, India, while British Airways increased weekly flights from 19 to 35, and Air France has added service into Bangalore. In 2005, Air India added several internation-al routes, for example, London Heathrow, Birmingham and Frankfurt in Europe; Seoul,

Jet Airways Air India Air Deccan Indian Airlines Kingfisher Airlines Air Sahara Spice Jet

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JetAirwayscontinuestobeIndia’sdomesticleaderinmarketsharealthoughtheliberalizationofthemarkethasleadtothelaunchofnewcarriersthathavecutintoitslead.NewentrantssuchasSpiceJetandKingfisherAirlineshavecombinedtoquicklygrabmorethan10percentofthemarketinthelastyear.

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Korea, and Kuala Lumpur, Malaysia, in Asia; and Toronto, Canada.

This liberalization of business practices has opened the door for increasing alliance memberships and codeshare opportunities as well. Alliance partnerships have the potential of shifting positive market share. Air India has codeshares with Swiss International Air Lines, Austrian Airlines, Asiana Airlines, Singapore Airlines, Air France, Aeroflot Russian Airlines, Emirates, Kuwait Airways, Air Mauritius, Malaysia Airlines, Lufthansa German Airlines, SilkAir, Turkish Airlines and Thai Airways. Indian Airlines has limited codeshares with Gulf Air and SriLankan Airlines.

Air Sahara started a codeshare agree-ment with American Airlines in November.

“We are looking at a global footprint spanning Europe, the United States and South-east Asia,” said Air Sahara President Ronojoy Dutta.

The two carriers have created a seam-less connection from 25 major cities in India to 125 cities in the United States, through their Delhi and Chicago hubs. By combining strategic schedule adjustments in top connect-ing markets and increased screen presence, Air Sahara will increase load factors and mar-ket share.

Air Sahara’s 23 connecting flights from New Delhi to destinations across India will carry American Airlines flight numbers, which will provide greater choice of connections between the two countries. The agreement would not only lead to both airlines jointly selling each others’ tickets on their India-U.S. network, but would also place each others’ flight codes in their respective services on the sector. Air Sahara is also hinting at the possibility of join-ing a global airline alliance.

How will Indian carriers leverage these factors to their advantage? The key to man-aging rapid change is the effective use of airline best practices and technology. The airline industry has honed its planning and scheduling practices through the use of opti-mization models. Airline best practices quan-tify market opportunities, measure the impact of competitors’ changes and enable carriers to respond quickly to their rapidly changing environment. Through the integrated use of schedule management and operations tools, airlines optimize their origins and destinations and maintain their optimized strategy through day of operation. As airline networks grow, scheduling, pricing and revenue management activities become more complex. Adding des-tinations to a network increases the potential O&Ds for sale geometrically, making it much more difficult to keep track of competitive changes. The potential exists for low-fare local passengers and international connecting passengers competing for the same inven-tory on a flight. To realize the full potential of large, highly diversified networks, airlines need

to focus on managing schedules, fares and inventory across the network rather than on a flight-by-flight basis.

State-of-the-art technology supports air-lines’ strategic planning and enables them to carry those plans through to day of operation. The Sabre Airline Solutions® business also has a variety of tools to help airlines better manage their networks. The Sabre® AirFlite™ Planning and Scheduling Suite seamlessly integrates core flight scheduling functions such as sched-uling, profitability forecasting and analysis, fleet assignment, and slot management with shared interfaces and database information. This integration improves forecast perfor-mance and accuracy and reduces turnaround time, resulting in a flexible, stable and efficient tool.

The integration of scheduling and the Sabre® AirOps™ Suite supports dynamic control of schedule changes to ensure optimal sched-ule performance. An airline must continually decide which markets to serve and how often, when to fly and which type of aircraft to assign to a specific route. It also needs to track slot rights as well as evaluate the profitability of various scheduling alternatives and codeshare opportunities to stay ahead of the competition. When an airline environment is changing rap-idly with new entrants, codeshares, alliances and mergers and best practices, innovative tools provide critical advantages over com-petitors. The AirFlite suite supports all planning and scheduling functions and is designed to

generate significant revenue and reduce oper-ating costs.

In addition, the Sabre® Fares Manage- ment Systems monitor both domestic and international pricing activity and provide pric-ing analysts the tools to identify and analyze pricing changes. From a revenue management perspective, the Sabre® AirMax® Revenue Manager has the capability to forecast demand at the O&D level and create optimal inventory levels for the entire network. The Sabre® AirMax® Availability Processor System supplements an airline’s reservations system to evaluate reservations requests by the net-work value of the O&D city pair rather than on a leg-by-leg basis. The AirOps suite ensures these plans are carried out through day of operation.

Liberalization and change creates oppor-tunities to penetrate new markets and gain market share in existing ones. Advanced tech-nology and business practices enable airlines to manage this opportunity. The right tools managed properly enable them to visualize their strategies as well as manage their sched-ules, markets, fares and inventory and react quickly in the rapidly changing worldwide land-scape of airline service. a

Billie Jones is a senior consultant

for the consulting practice at Sabre Airline Solutions. She can be

contacted at [email protected].

Liberalizationofbusinesspracticesintheaviationarenahaspresentedopportunitiesforanincreaseinalliancemembershipsandcodeshareagreements,whichhavepotentialtodriveupmarketshare.IndianAirlinesisoneofmanycarriersinIndiatakingadvantageoftheserelationships,withcodeshareagreementswithGulfAirandSriLankanAirlines.

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med Yousuf/The Hindu

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For every passenger who boards an air-plane in India, more than 300 passengers board trains. At first glance, these sta-

tistics seem like a windfall for the country’s centrally managed rail system, but in fact, they show the enormity of the potential air travel market. And, recently launched low-cost air-lines are stepping in hoping to lure this market into discovering the benefits of flight. In par-ticular, they are targeting India’s upper-class

rail passengers, who account for about 20 percent of rail’s revenues. Perhaps for the first time in its more than 150-year history, India’s rail system is facing direct competition.

Rail service was introduced to India in 1853, and by 1947 — the year of India’s independence — there were 42 separate rail systems. In 1951, the systems were brought together into a single state-owned company, Indian Railways, which is the second-larg-

est rail system in the world, as well as the biggest employer. For decades, rail has been the country’s principal mode of passenger and freight transportation, playing a key role in the economic and social development of the country. More than 60,000 kilometers of track and 8,000 trains carry more than 13 million people each day throughout all parts of the country and to neighboring Nepal, Bangladesh and Pakistan.

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Despite the emergence of low-cost airlines in India, Indian Railways’ passenger traffic and earnings continue to rise, making rail a strong competitor to the air transport industry.

By Lauren Lovelady | Ascend Staff

On Track

RailVersusAirFareComparisonRailclassesAirline/rail Fullfare Promotional/discount

Rail first A/C 4,175 rupees NA

Rail second A/C 2,210 rupees NA

Rail third A/C 1,485 rupees NA

Full-serviceAirline/rail Fullfare Promotional/discount

Indian Airlines 8,685 rupees 3,965 rupees

Jet Airways 9,800 rupees 4,000 rupees

Air Sahara 8,000 rupees 3,888 rupees

Low-costAirline/rail Fullfare Promotional/discount

Air Deccan 3,550 rupees 2,828 rupees

SpiceJet 3,650 rupees 2,250 rupees

Kingfisher Airlines 3,960 rupees NA

AlthoughrailremainsthedominantmodeoftransportationinIndia,faresofferedbylow-costcarriersmaysoonbegintoattractpassen-gers,particularlythosetravelinginfirst-andsecond-classaircondi-tionedrailcars.Thethree-weekadvancepurchasefaresonlow-costcarriersfromDelhi-Mumbai,forexample,arecomparabletothoseofferedbyrailinpremiumclasses.

For150years,railservicehasbeenthemostcommonmeansoftravelinIndia,buttheincreaseoflow-costcarriersinthecountryandamuch-improvedeconomypresentsenormousopportunitiestoconverttheserailpassengerstotheair.

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Air-conditioned express trains, intro-duced as an alternative to once prohibitively expensive air travel, connect most major cities. The majority of rail passengers, however, trav-el in overcrowded and sometimes outdated lower-class carriages. For most of India’s population, rail is the least expensive and most popular mode of transportation. But that is all changing.

The recent emergence of low-cost carriers is placing air travel within reach of thousands of middle-class Indians eager for alternatives to a sometimes congested and unpredictable rail system. Perhaps more impor-tantly, these airlines are stimulating economic growth and development by focusing services on secondary cities and towns with airstrips that have gone unused since the end of World War II rather than the country’s handful of crowded, big-city airports with established carriers.

The results are encouraging. Due to increased accessibility, these secondary loca-tions are now being evaluated with interest by businesses desiring to expand or relocate from overpopulated areas. With fares as low as 487 rupees (US$11), passengers can fly to these destinations once only accessible by train, arriving in a fraction of the time.

Does this mean India’s rail system is destined to become obsolete? Not likely. First, it’s important to realize that the majority of India’s population will most likely continue to utilize the rail system as its primary mode of transportation for a number of reasons.

Despite plunging air fares, some will never be able to afford the price of an airline ticket.

Others will have no interest in experienc-ing the unfamiliar. And for many people, it’s a matter of convenience. For example, an hour-and-a-half train or bus ride may be required to reach the nearest airport from a remote village, followed by an average one- to two-hour wait at the airport to check in, clear security and board the aircraft. After a two-hour flight, another hour-long train trip to the final destination is required for a total of five-and-a-half to six-and-a-half hours. The same trip via train may take seven hours, but the majority of cities, towns and villages have centrally located train sta-tions with easy access to neighborhoods and businesses. Getting from point A to point B may take longer, but it’s not nearly as complex.

What it does mean is that India’s rail system must upgrade and reposition itself to effectively compete in the 21st century. Under increasing pressure to invest in improving and modernizing Indian Railways’ infrastructure, the government recently allo-cated a special fund of 133 billion rupees (US$3 billion) to help renovate decaying tracks, rebuild bridges and update a manually operated, outdated signaling system, which has been blamed for a number of accidents. Progress has been slow, but the appearance of low-cost carriers with competitive fares may prove to be the catalyst needed to jump start this enormous project.

On the customer-service front, Indian Railways is exploring electronic ticketing and

frequent traveler programs in specific markets, as well as a passenger profile management system. The railway has utilized computerized reservations centers throughout the country for the past few years. In addition, timetables are being modified, food and beverage ser-vices enhanced, routes extended, and frequen-cies to popular destinations increased. In direct response to time savings gained by air travel, the speed of trains on some routes will be accelerated. Low occupancy trains and desti-nations will be eliminated. And approximately 2,500 special trains, many to popular tourist destinations, will run this year.

As an integral part of India’s past and present culture and economy, the country’s rail system is not likely to disappear despite the challenges it currently faces internally and externally. Even with the upstart of several low-cost carriers last year, Indian Railways’ passenger traffic grew by 10 percent and its earnings by 12 percent. The good news, there-fore, for both the rail and air travel businesses is that India’s transportation sector is experi-encing extreme growth in passenger demand fueled by a developing economy. More than ever, this vast nation of more than 1 billion people is on the move, and its citizens now have more choices than ever before for getting to their destinations. a

Lauren Lovelady can be contacted at [email protected].

RailstationsinIndiaserve13millionpassengerseachdaytovariouspartsofthecountryandtoneighboringcountries.

Photo by Lazyoldsun, Creative Comm

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Steel. Oil. Produce. Automobiles. Livestock. Clothing. Electronics. If it can be sold, it can be shipped. A broad range of

imports and exports keeps India’s cargo busi-ness thriving. Today, 30 percent of the value of the country’s international trade moves by air, giving air transporters a significant opportunity to tap into India’s cargo industry.

With liberalization, removal of export/import controls and a buoyant economy, India’s air cargo business is flourishing and set to grow by 10 percent annually. All parameters point to a favorable future due to the height-ened capabilities of Indian manufacturers to compete with others and an improvement in quality and delivery schedules. Export/import volumes are likely to rise by 12 percent to 15 percent during the next couple of years, which, according to Air Cargo Agents Association of

India, is significant, though India’s share in the world trade remains relatively small. Open-skies policies among countries and the elimina-tion of quotas in the textile sector will further fuel growth in the cargo market.

The air cargo potential in India shows much promise: It has grown at a rate of about 12.4 percent a year during the last 10 years (domestic and international — growth by volume).

It has a current growth rate of 18 percent. Its growth rate year over year in 2006 is expected to reach 20 percent.

Its air freight traffic is expected to double by 2010, and the four metros (Delhi, Mumbai, Chennai and Kolkata) will handle twice the tonnage.

Talking about India leads to an inevitable comparison with the other Asian giant, China.

How does India compare with China’s air cargo segment? The jury is still out.

In 2004, the total Indian cargo market was about 1.2 million tones while in the same year, Hong Kong airport generated 3.1 million tones, Shanghai 1.9 million, Beijing 662,000 and Guangzhou 632,000. On the whole, China’s airports generate six times the tonnage of Indian airports.

For air freight volumes, the standard for emerging markets is that air freight should grow twice that of the national gross domestic product. While the Indian economy is growing

With 60 percent of India’s cargo handled through ground transportation, air freight companies are poised to take a greater slice of the country’s cargo market.

By Mukundh Parthasarathy | Ascend Contributor

The Complete Package: India’s Cargo Industry

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WorldrankingofIndia’sairportsbasedonaircargotraffic:

Mumbai .................. 58 Delhi ....................... 70 Chennai ................ 120 Kolkata .................. 168

WorldAirCargoMarketPercentage

Indiacurrentlymakesuponly4.5percentofthetotalglobalaircargomarket,indicat-ingconsiderableuntappedpotentialforcargotraffic.NoIndianmetroairportsevenrankinthetop50intheworldbasedonaircargotraffic,whereastwootherAsianairports—HongKongandTokyo—areamongthetopfive.

India 4.5%

Rest of the world

95.5%

100% = US$200 billion

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at 7 percent, the cargo traffic volumes at the three largest Indian airports — Delhi, Mumbai and Chennai — grew by just 7 percent com-pared to the world average of 5 percent, based on volumes from 1995 to 2004.

Looking at the traffic growth between the major airports in India, only Chennai has been growing at an average of 10 percent while Delhi and Mumbai grew by less than 6 percent.

KeyContributorstoGrowthBurgeoning trade in pharmaceuticals, textiles, gems, jewelry and perishables are key growth drivers in India.

Surging exports from sectors such as textiles, pharmaceuticals and fast-moving con-sumer goods have improved India’s air cargo business. The sector is growing at a rate of 20 percent annually in terms of volume. The export/import policy 2004-2009 of the Indian government has set a target for the sector to improve its share in total global trade from the current 0.8 percent to 1.5 percent.

Half of India’s air freight exports and imports are related to the textile industry — consumables and machinery going in, cloth-ing and footwear coming out. A huge upside is predicted in the growth of healthcare-relat-ed shipments as Indian pharmaceutical com-

panies gain prominence, resulting from low-cost framework and abundance of well-trained scientists.

KeyPlayersAir cargo has moved from a monopoly to a competitive industry in recent years. Growth in air freight services has been attracting various new and existing airlines. Apart from the two national carriers, Indian Airlines and Air India, new entrants such as GoAir and Kingfisher Airlines have proposed playing a bigger role in the Indian air freight market. This is after Blue Dart Aviation had, for several years, been the country’s sole dedicated cargo airline, operat-ing for its parent courier company, Blue Dart Express.

Air India is still India’s major air carrier, but its position is threatened by new entrants as well as the aggressive strategy pursued by international carriers flying in and out of India. Major global air cargo carriers seek to tap the Indian market, and there has been a surge in interest since last year: DHL, which has taken control of Blue Dart, intends to emerge as the largest logistics and express cargo provider in India.

British Airways World Cargo plans to make Mumbai and Delhi its mini hubs for Asia, expecting to double capacity and revenues from India.

Emirates SkyCargo and Korean Air Cargo entered into a codeshare agreement for cargo capacity on two key routes — to Delhi and Mumbai.

Singapore Airlines Cargo plans to increase services to India by almost tenfold.

Thai Cargo plans to expand services to India.

IndianGovernment’sRoleThe rapid growth of air traffic in India and its insufficient airport capacity is prompting the Indian government to further deregulate its civil aviation policy. The measures taken by the government to boost growth include abolition of the national carrier monopoly and continued expansion of open-skies policy. This provides incentives that attract many foreign airlines and stimulate creation of new private carriers.

The government, in a move to create favorable conditions for national and foreign airlines, has decided to abandon its high-tariff regime and reduce landing fees by 15 percent. To aid regional airport development, it has waived landing fees for aircraft carrying less than 80 passengers. Travel tax has been abol-

Air India

AirIndia,whichhas10percentoftheIndiancargomarket,receives10percentofitsrevenuesfromtransportingfreight.Bothfiguresmaycomeunderpressureasmorecargooperationsenterthemarket.

Share of cargo revenue in the revenue for Air India (FY 2004-05)

10%

Cargo

Rest of the players

90%

Other 90%

Share of Air India in the air cargo market in India (FY 2004-05)

AirIndia’sCargo MarketShare

10%

FromMonopolytoCompetition

Air India exited the cargo market during mid 1990s due to losses.

For several years, Blue Dart Aviation was India’s sole dedicated cargo airline.

Most cargo movements took place in the belly of passenger aircrafts.

Air India reentered the air cargo space.

Indian Airlines also started air cargo operations.

National carriers Indian Airlines and Air India are ramping up their cargo activities.

New entrants such as Jet Airways, GoAir and Kingfisher Airlines plan to capture a significant share of the air freight market.

Many global players such as British Airways, DHL, Singapore Airlines, Emirates SkyCargo, Korean Air Cargo and THY Cargo are very keen on India.

Competition stage

Oligopoly stage

Monopoly stage

AstheIndiangovernmentrelaxesrestrictionsinairtransport,thecargoindustrywillmovefromapuremonopolytoamoreopen-competitionenvironment.

Export/import volumes are likely to rise by 12 percent to 15 percent during the next couple of years, which, according to Air Cargo Agents Association of India, is significant ...

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ished, and the excise duty on aviation fuel has also been reduced.

Air India and Indian Airlines, to facilitate freight movement, are converting old passen-ger aircraft to cargo carriers. Both Air India and Indian Airlines are creating separate divisions for cargo. The airlines are considering leasing aircraft for cargo operations. The two state-owned airlines are likely to enter the capital market early next year to raise funds. The air-lines are in the process of appointing advisers for an initial public offering.

ImpactofCargoGrowthThe Indian government recognizes civil aviation as one of the pillars of economic development and employment for the future, but it will be difficult to answer whether stronger economic growth will lead to better profits for airlines.

This will depend on the new passenger capac-ity hitting the market. Until a few years ago, only Air India and Indian Airlines were allowed to operate international services, while foreign carriers were forced to make payments to Air India in return for traffic rights. Now that private carriers are being allowed to fly internationally, air freight rates may also come under pressure.

HurdlestoOvercomeInadequate airport infrastructures (see related article on page 40), security systems and outdated technology pose key roadblocks, which are stifling the growth in air cargo traf-fic. Approximately 50 percent of international traffic rights remain unused under the bilat-eral system due to airport capacity constraints. India has more than 240 airports. A large num-ber of them are unused or underdeveloped,

whereas large metro airports such as Mumbai or Chennai are bursting with traffic and becom-ing congested.

The need to improve existing infrastructure at airports is increasingly being emphasized and felt. Modification plans are being executed, but analysts feel that these would not be adequate in the long term. Cargo handling and infrastructure related to movement of goods in and out of the country are limited.

Mumbai’s Chatrapati Shivaji International airport, which continues to be India’s major gateway for international air cargo, has two runways that intersect each other, with an average air cargo movement of 15 flights per hour. The situation is so poor that the airport faces congestion during certain times when the demand exceeds capacity. The lack of

TopDriversofImportandExportGoodsinIndia(ValuesinU.S.$Million)Exportcommodities April2003–March2004 April2004–March2005 Change Weight

Petroleum: crude and products 3,568.44 6,792.14 90.34% 8.57%

Gems and jewelry 10,573.38 13,705.43 29.62% 17.29%

Machinery and instruments 2,776.3 3,493.06 25.82% 4.41%

Drugs, pharmaceuticals and fine chemicals 3,310.73 3,712.57 12.14% 4.68%

RMG cotton (including accessories) 4,789.66 4,567.2 - 4.64% 5.76%

Importcommodities April2003–March2004 April2004–March2005 Change Weight

Gold 6,516.93 10,259.33 57.43% 9.58%

Petroleum: crude and products 20,569.60 29,844.10 45.09% 27.87%

Machinery (except electrical & electronic) 4,743.59 6,550.64 38.09% 6.12%

Pearls, precious and semi-precious stones 7,128.70 9,423.45 32.19% 8.80%

Electronic goods 7,506.18 9,739.04 29.75% 9.10%

India’sTopExportandImportDestinations(ValuesinU.S.$Million)Exportcountry April2003–March2004 April2004–March2005 Change Weight

Singapore 2,124.84 3,795.51 78.63% 4.79%

People’s Republic of China 2,955.1 4,586.28 55.2% 5.79%

United Arab Emirates 5,125.61 7,098.14 38.48% 8.96%

United States of America 11,490.11 13,265.6 15.45% 16.74%

Hong Kong 3,261.83 3,651.33 11.94% 4.61%

Importcountry April2003–March2004 April2004–March2005 Change Weight

United Arab Emirates 2,059.85 4,581.96 122.44% 4.28%

Switzerland 3,312.75 5,817.92 75.62% 5.43%

People’s Republic of China 4,053.23 6,746.66 66.45% 6.3%

United States of America 5,034.86 6,291.49 24.96% 5.88%

Belgium 3,975.92 4,566.29 14.85% 4.26%

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availability of land for further growth limits the scope for expansion.

The India cargo industry has proposed that the second airport at Mumbai should be a cargo hub so existing cargo operations can be shifted to the new location, which many of the country’s cargo transporters favor. Also, a mech- anized transit cargo terminal is proposed to be located at the airport. In addition, there is great-er need to strengthen security check points, closed-circuit television checks, security audits and test checks using undercover agents.

Most of India’s systems are legacy, which do not conform to latest technology. Additionally, most systems are manual and need automation. This is all the more surpris-ing given the fact that software has been India’s major growth industry during the last decade. Airlines operating into India do not

accept advance sale of space or a neutral air waybill, two important features of any cargo system or portal, mainly because there is no legal framework for this because India is gov-erned by the Warsaw Convention.

After weighing all the parameters affect-ing the Indian air cargo market, there is still a vast untapped potential in India, which currently accounts for a mere 4.5 percent of the total world air cargo market while the country moves toward becoming the third-larg-est economy in the world behind the United States and China. Indian metro airports do not come even under the top 50 in the world based on air cargo traffic, whereas two other Asian airports are among the top five — Hong Kong and Tokyo. So all signs are promising, and there is cautious optimism about India becoming an airfreight hot spot. a

Mukundh Parthasarathy is product marketing manager for cargo solutions

for the Sabre Airline Solutions®

business. He can be contacted at [email protected].

Photo by Dinodia Photo Library

SurgingexportsinvarioussegmentshaveimprovedIndia’saircargobusinesstoUS$9billion.Boomingtradeincertainkeyindustries—suchaspharmaceutical,gemsandjewelry,dyes,machinery,textiles,per-ishables,engineering,autopartsandchem-icals—hasfueledmuchofthegrowth.

Photo by Suraj Shetty/iStockphoto.com

Photo by Melissa Schalke/BigStockPhoto.com

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The two emerging nations of China and India are drawing much attention for their potential to become economic powerhouses.

By Hans Belle and Vera Lye | Ascend Contributors

Powers to Be

Participate at any airline industry con-ference these days, and you’d almost always see China and India featured as

key topics for discussion. This is not a surprise, however, since corporations around the world are wide-eyed about the attractively healthy economic figures that come out of these countries — and most are scrambling to get the first cuts of the pie.

There’s no doubt China and India will be economic strongholds during the coming years, but questions still remain: Who will be the forerunner? How big is big? When will they fulfill all the expectations and predictions that have been made of them? What kinds of challenges are present today?

One thing is for certain, it is not going to be an easy road to the top.

China’sEconomyReforms in China started in the late 1970s with the phasing out of collectivized agriculture, fol-lowed by liberalization of prices, fiscal decen-tralization, increased autonomy for state enter-prises, the foundation of a diversified banking system, the development of stock markets,

the rapid growth of the non-state sector, and the opening up of the country to foreign trade and investment. Last year’s key moves included the sale of equity in China’s largest state banks to foreign investors and refine-ments in foreign exchange and bond markets. According to the U.S. Central Intelligence Agency World Factbook, these moves have resulted in a more than tenfold increase in the county’s gross domestic product since 1978. Measured on a purchasing-power-parity basis, China, in 2005, stood as the second-largest economy in the world after the United States, although the country still ranks lower in terms of income per capita, and 150 million Chinese fall below international poverty levels.

The robust growth in economy, albeit in sporadic areas within the country, has led to a fast-growing middle class, eager to col-lect stamps in their passports and grow their travelogues. As such, China’s travel figures are equally impressive. Outbound travel from China is growing at high rates, and its numbers are staggering. By 2020, outbound travelers from mainland China are estimated to reach 115 million annually, becoming the world’s

China’sStrength

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IndiatakestheleadoverChinaininforma-tiontechnologyandservicesexports,andwitheachyear,thegapbetweenthetwonationscontinuestowiden.By2010,IndiaisexpectedtoearnnearlyUS$80millionintheseareas,whileChinawillproducelessthanUS$15million.

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DuringthenextdecadeoutboundpassengersfromChinaareexpectedtoreach115millionayear,whichwillbecomethelargestsourceofoutboundtouristsglobally.

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largest source of outbound tourists. Currently, only 2 percent of its population travel out of China, according to the Pacific Asia Travel Association. In 2003, the number of Chinese overseas travelers surpassed that of Japan, making it the largest outbound market in Asia. In 1988, with the exception of Macau and Hong Kong, Chinese citizens could only travel to Thailand. Today, more than 70 countries have approved destination status. According to the World Tourism Organization, China is among the top 10 nations for out-bound tourism. From 1994 to 2003, the total number of outbound Chinese tourists reached nearly 100 million, at an annual growth rate of 13.87 percent.

The opening up of China and the subse-quent flurry in tourism development has also led to growth in inbound tourism. The World

Tourism Organization reports that in 2004, China had already risen from fifth to fourth position in the world’s top tourism destinations, displacing Italy. International visitor arrivals went up 26.7 percent to 41.8 million.

“China could replace the United States as the third-most visited destination soon, with the United States just 4.3 million arrivals ahead of China,” according to a Centre for Asia Pacific Aviation report. “Staging the Olympics in Beijing come 2008 will undoubtedly bolster these numbers even more.”

India—theCompetingNeighborDespite shared borders and similar successes in recent years, India’s growth path and future looks different than China’s. India’s economy is diversified — from traditional village farming to a range of modern industries and high-tech services. The service sector is the fastest growing and has the largest share in gross domestic product, accounting for about 48 percent in 2000. Business, communications, financial, community and trade services as well as hotels and restaurants are among the fast-est-growing sectors.

The relaxation of government controls has been a boon for foreign trade and investment in some areas. However, high tariffs and limits on direct foreign investment are still in place. Last year, the Indian government liberalized invest-ment in civil aviation, telecom and construction.

Economic analysts, quoted in Economy Watch, said India’s share in the world’s gross domestic product is set to rise from 6 percent to 11 percent by 2025, while that of the United States may fall from 21 percent to 18 percent. By 2025, the Indian economy is projected to be about 60 percent the size of the U.S. economy. And by 2035, India is predicted to be a larger growth driver than the six largest countries in the European Union, though its impact will be a little more than half that of the Unites States.

India, which is now the fourth-largest economy in terms of purchasing power parity, will overtake Japan and become the third major economic power within 10 years, according to Economy Watch.

Like China, the growing middle class has led to an explosion in travel — especially out-bound travel. India’s outbound tourist market is now hot on every tourism marketer’s list. Just the fact that Indians have overtaken the Japanese as the highest per diem spenders in the world, averaging US$200 a day, is enough to bring tourism practitioners knocking on India’s doors. And this high spend is backed by high volumes of traffic as well. In 2004, 6.2 million Indians traveled abroad.

Although still lagging in relation to out-bound numbers, inbound tourism is not fair-ing badly either. India’s Ministry of Tourism reported that international visitor arrivals in the

first 10 months of 2005 rose 13.5 percent from the previous year, to 3.6 million, while tourism earnings increased 20 percent to 229.6 billion rupees (US$5.1 billion).

China’sandIndia’sHealthandWealthHowever, it is not a rose-petaled path to the top. Numerous challenges confront the governments of these two countries. In both China and India, wealth and development is disparate, owing to the sheer largeness of each country and the relative newness of economic development. In China, for instance, about 69 percent of the population is still rural, and most of the wealth exists in the coastal cities.

China’s banking system presents one of the largest challenges for its government. A recent Deloitte & Touche report suggests two critical areas that need immediate action: corporate governance issues arising from the changing legal status of state-owned commer-cial banks into joint-stock companies, and the implementation of a deposit insurance system and necessary controls.

“To ensure that the government will achieve rapid and robust progress, China’s financial system should be enhanced in a way that will foster greater transparency, build inter-national investor confidence and reduce the like-lihood of conflicts of interest,” the report said.

India’sserviceindustry—includingfinancialinstitutions,hotels,restau-rantsandtradeservices—holdsthelargestportionofgrossdomes-ticproductandaccountedforabout48percentin2000.

... India’s share in the world’s gross domestic product is set to rise from 6 percent to 11 percent by 2025 ... By 2025, the Indian economy is projected to be about 60 percent the size of the U.S. economy ... And by 2035, India is predicted to be a larger growth driver than the six largest countries in the European Union ...

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In India, the disparity in wealth distribu-tion is also an issue. Almost two-thirds of its population still lives in rural poverty. However, to address the matter, India’s government recently passed a bill in parliament to embark on an ambitious antipoverty program to help spread more widely the benefits of the coun-try’s rapid economic growth.

Challenges in India’s financial infrastruc-ture also exist. Simplifying procedures and relax-ing entry barriers for business activities is impor-tant, as is the ease with which firms are able to enter into and exit from business activities.

India also faces other concerns — con-trolling population growth (India is the second-highest populated country in the world after China). In terms of density, India exceeds China since India’s land area is almost half of China’s total land, and developing world-class

infrastructure to sustain growth in all sectors of the economy presents challenges.

IntheSkiesAs their economies evolve, the aviation industry in both countries has taken similar flight plans. Last year, the Chinese aviation industry ordered 580 aircraft from Boeing and Airbus — propelling the two manufacturers toward a record year. The General Administration of Civil Aviation of China forecasts Chinese airlines will take delivery of 100 to 150 aircraft each year between now and 2010, according to a CAPA report about Chinese aviation. The report also indicated the country’s fleet will rise from 900 at the end of 2005 to 1,600 by 2010.

Interestingly, China’s aviation industry saw more earnings in one year alone (2004) than in the entire previous decade. However, much like the other world’s airlines, Chinese airlines struggled with profitability, mostly due to high fuel prices.

India was more of the same story. In 2005, international and domestic air traffic grew by 20 percent or more; at least five new carriers took to the skies, and massive fleet orders were recorded. The expansion comes not exclusively from news players — senior airlines have also been in the spending mood, buying new aircraft and announcing route and capacity expansion plans along the way.

With low-cost carriers firmly footed in the aviation scene, secondary cities are prospering.

In an increasingly liberal aviation envi-ronment, foreign players are also jumping on the bandwagon. Key markets such as the United Kingdom, Germany, France, Singapore and the United States are seeing capacity expand.

“Strong economic growth of 8 percent, increasing international trade and enhanced destination marketing of India overseas is likely to see continued strong demand for inbound and outbound services,” according to a CAPA report on India.

WhoWillbetheForerunner?With such staggering numbers and optimistic predictors, the challenge for China and India is to have supporting infrastructure match the

growth — a challenge that, though not insur-mountable, will not be simple.

For all the analyses and commentaries about which country will lead, there is perhaps something to be said about cooperative suc-cess — one country’s success will likely spur the other to higher grounds. And for foreign players looking to these two countries for new market share, there are probably synergies and opportunities to ride both waves. India and China both represent huge opportunities for growth, and businesses would be remiss to overlook either one. a

Hans Belle is vice president of marketing for the Sabre Holdings™ business in Asia/Pacific. He can be contacted at

[email protected]. Vera Lye can be contacted at [email protected].

InDecember2005,BoeingandAirIndiaformallyannouncedanorderagreementfor68airplanes,valuedatmorethanUS$11billionatlistprices.Itisthesingle-largestcommercialairplaneorderinIndia’scivilaviationhistory.


Photo by Dinodia Photo Library

Photo by Ron Hohenhaus/iStockphoto.com

Photo by Bijoy Ghosh/The Hindu

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A conversation with Bryan Wilson, project director for the International Air Transport Association’s 100 percent electronic ticketing initiative.

Since its inception in 1945 in Havana, Cuba, the International Air Transport Association has created various stan-

dards, practices and procedures to provide the world’s travelers with safe, reliable, secure and economical air service.

Growing from 57 members to 265 span-ning 140 nations around the world has been anything but simple, yet the prime organiza-tion for inter-airline cooperation strives to bring simplicity to its members through its most recent and, possibly, most influential industry initiative — Simplifying the Business. Simply put, the project is designed to bring conve-niences to the traveling public while keeping costs to a minimum through less complex practices.

One of the most pressing aspects of the five-pronged plan is the aim at moving the global airline industry to electronic ticketing by the end of 2007, saving the industry up to US$3 billion a year — approximately US$9 per ticket.

Recently, Bryan Wilson discussed the progress on reaching the 2007 100 percent e-ticketing goal.

Question: 100percentelectronictick-etingisanambitioustarget,andIATAhasmapped stages to reach this goal. Yourecentlyannouncedthattheadoptionper-centage for electronic ticketing had risenfrom 25.4 percent to 40.7 percent, mean-ingyoubeatthe2005targetof40percent.Whatwasyourmainchallengeinachievingthis,andhowwasitovercome?Answer: In 2005, our biggest challenge was to create the awareness that the elec-tronic ticketing challenge was a reality — that meant getting it onto the top of the to-do list at every airline. Overall, we’ve significantly improved the market penetration of electronic ticketing as big airlines have surged forward

with implementation. This was largely driven by growing customer acceptance. Travelers in mature markets have seen electronic ticketing as a step forward. This, in turn, created the momentum for some smaller airlines to move rapidly toward 100 percent adoption where electronic ticketing was already being used across their sales and route networks. But the success of electronic ticketing really reflects the commitment of airlines to imple-ment projects that are a win for themselves (better service, lower costs), a win for agents (removing logistical complexity and associated costs) and a win for passengers (elimi-nating lost tickets and the need to collect paper tickets as well as avoiding the stress of queues at airport ticket desks). Good products sell themselves.

Q: Thisyear’stargetincludesachieving70percentelectronicticketing.Whatareyourkeystrategiestoachievethisobjective?A: To achieve 70 percent by the end of this year, we have a different type of challenge. To a certain extent, we’ve picked the low-hanging fruit; now we’ve got to crack the more difficult parts of the electronic ticketing puzzle. We have to quickly address airlines whose systems don’t support electronic tick-eting or that have not prioritized electronic ticketing, countries with regulatory hurdles, airports where ground handlers are choosing to ignore electronic ticketing, interline electronic ticketing, and, inevitably, those customers or agents who may still be resistant to going electronic.

This year, we intend to build upon the relationships we have developed with the electronic ticketing managers at the 350 air-lines around the world that use IATA Billing Settlement Plans. We have extensive data detailing the progress carriers have made in rolling out electronic ticketing, including

their status with respect to interline electronic ticketing agreements. We intend to keep a regular channel of communication with them via our 100 country managers, who have been well briefed on the essentials of elec-tronic ticketing. Depending on their responses, we will come back with more expert advice on how to move forward or help where they have problems with third-party vendors.

Q: What has been the response to yourSimplifying the Business initiative acrosstheindustry?A: The Simplifying the Business — StB — initiative was launched with the full support of our board of governors and annual general meeting in May 2004. It will contribute US$6.5 billion in annual industry savings through pro-cess change. Our industry is still relying on standards and procedures built up during the past 50 years. Many of these consequential processes fail to embrace opportunities pro-vided by newer technologies. So StB projects are designed to bring modern technologies into practice in ways that will simplify and enhance the customer experience while reduc-ing airline costs.

Airlines are delighted at the opportu-nity to lower costs and improve the customer experience, particularly at a time when no-frills carriers are not burdened by equivalent paper-based practices.

It is true that some airlines see the requirement for technology change as a real challenge, but the vast majority recognizes the need to move forward. In this day and age, standing still is not an option.

Q: Manycountrieshavegovernmentown-ershiporinfluenceoverairlinesorairports.Hasthiscreatedanyspecificissuesfortheelectronicticketingmandate?

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A: I can think of very few examples of gov-ernment ownership of airlines or airports being in itself a problem for electronic ticketing. But there are several examples where government policies are a hindrance.

There are a few countries where legisla-tion actually requires a paper ticket to be issued to the customer for air travel. Governments need to understand that allowing an electronic ticket to be issued and kept by the airline while providing an itinerary receipt to the passenger should fulfill the same need. Other countries have fiscal procedures that currently make use of paper tickets for receipts or foreign currency control. Some require the ticket for security procedures at airports. We believe there are fairly simple workarounds for these problems. However, airlines, regional airline associations and IATA have to make the right representa-tions to governments. The key argument is that if the rest of the world is moving to 100 percent electronic ticketing, why can’t this country as well?

At airports, our primary concern is where a government is backing a single ground han-dler that is only using a departure control system that does not support electronic ticket-ing. During the course of this year, IATA will be working with those airports to ensure that flights can continue to be handled to the satis-faction of airlines and passengers.

Q: Where can airlines and ground han-dlersgoiftheyneedhelpachievingIATA’smandate, and what has IATA done tosupportthem?A: Airlines and ground handlers are offered considerable support by IATA:

We have a StB support portal at http://www.iata.org/whatwedo/simplibiz1 that provides a wealth of information about all the StB projects — more extensively about electronic ticketing.

We offer workshops to explain electronic ticketing and other StB projects — again listed on the Web site.

We continue to stay in close contact with airline StB managers at a local level and offer direct advice as needed.

We encourage airlines and ground handlers to approach their system providers to ask about the electronic ticketing compliant ver-sions of their systems.

Q: Today, many airlines have more than200interlineticketingagreements.Willthisbe sustainable in a world of 100 percentelectronicticketing?A: Through the years, many airlines have gradually increased the number of interline agreements. And, as you say, some large air-lines have well in excess of 200. But let’s be clear that the reduction in interline agreements

during recent years is happening independent of electronic ticketing. Some airlines, for exam-ple Aer Lingus, have reduced the number of partners they have or actively prioritized some partners over others. This is almost always true for airlines in an alliance. In the last few months, we have certainly seen some airlines, such as Alaska Airlines and Air Canada, declare their intentions to only convert a fraction of their interline agreements into interline elec-tronic agreements. The stated reasons reflect a desire to consolidate their partnerships in general and a realization that it is not cost effective to build and maintain an IET for a low volume of customers.

At IATA, we assess that airlines could still carry the vast majority of their existing interline passengers with only a small portion of their interline partners. The 80/20 rule seems

to apply. If airlines choose to only implement IET agreements with their preferred partners, they will still support the majority of the inter-line activity today.

Q: The recent economics of the industryhave resulted in a shortage of investmentfunding. How can electronic ticketing beactivated globally in such a constrainedenvironment?A: Running an airline continually requires investment — in people, planes and process-es. The returns from implementing electronic ticketing are significant. Apart from the obvi-ous areas such as paper stock, printers and supporting ticket on departure at airports, we advise airlines to consider how electronic tick-eting moves them toward cheaper distribution channels and self service for passengers at airports.

But the cost to an airline of not imple-menting electronic ticketing is also an impor-tant consideration. Without electronic ticket-ing, airlines will need to distribute their own paper tickets, and they will inevitably lose the majority of interline traffic as other airlines will simply be unable to accept paper from 2008. In a nutshell, there are savings to implementing electronic ticketing and costs to not imple-menting it. Each on its own would probably more than justify the business case.

Q: Therehavebeenaccusationsthatelec-tronic ticketing only really benefits largerairlines.Whoreallybenefitsfromelectronicticketing,andwhy?A: It is certainly true that electronic ticketing offers huge savings to big airlines, especially if they have simple route networks and few interline partners. But many of these big car-riers have had to make large investments in system changes as they tend not to use industry system providers that can spread the electronic ticketing cost across many custom-ers. So we have also seen many small airlines simply upgrade to the electronic ticketing versions of their passenger service systems and roll out electronic ticketing very quickly and cheaply. Both groups are very happy with electronic ticketing — and their customers and agents are even more delighted.

For airlines running their own systems, and especially those that are smaller and have not maintained a regular stream of upgrades to support electronic ticketing component technology such as EDIFACT messaging, an electronic ticketing upgrade seems a large and expensive project. However, sorting out their systems so they can compete in the 21st cen-tury with efficient processes will bring much more benefit than just electronic ticketing.

In some ways, I see electronic ticketing as driving all airlines toward investing in mod-ern technology to become more productive, which is what the aviation industry requires.

Q: How do you intend to celebrate NewYear2008?A: Well, that’s a good question. I don’t know yet, but I am confident it will involve celebrating the achievement of 100 percent electronic ticketing!

I think it will become quite clear several months earlier whether we have achieved a high enough electronic ticketing penetration and have removed the remaining obstacles. Inevitably, there will be some airlines that will still be implementing more interline electronic agreements in 2008, but I am committed to making sure the IATA challenge is complete. Of course, there is much more to do in this dynamic and exciting industry, including com-pleting the other StB projects. a

... our biggest challenge was to create the awareness that the electronic ticketing challenge was a reality — that meant getting it onto the top of the to-do list at every airline.

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India’s significantly improving economy and rapidly growing air transport industry have the country’s government focusing on overhauling its airports’ infrastructure.


Preparing for Takeoff: India’s Aviation Infrastructure

ndia’s “air travel revolution,” declared last December by Civil Aviation Minister Praful Patel, won a major skirmish Feb. 1

when the Indian government approved bids by two public/private partnerships pledging 184 billion rupees (US$3.5 billion) to modernize the country’s Delhi and Mumbai airports.

A consortium comprising Indian firm GMR and Fraport, a German airports opera-tor, won the bid for modernizing Delhi’s Indira Gandhi International Airport Delhi. Indian group GVK and South African Airports were awarded the Mumbai International Airport project. The airports in Mumbai and Delhi handle half the total air traffic in India — 520 and 450 flights daily, respectively. According to projections, the airports will handle three times more traf-fic by 2010, numbers that imply Mumbai and Delhi will be as busy as Hartsfield-Jackson Atlanta International Airport and Chicago O’Hare International Airport are today.

The Delhi and Mumbai bid victories came after more than a year of bureaucratic wrangling and political opposition to privatizing Indian airports, and more than eight years after a 1997 government report identified the need for a rapid infusion of foreign capital to update the state-run airports called a “disaster” by Hong Kong investor Marc Farber.

The wins cost Patel valuable political capital — to settle a four-day strike by airport workers in January, he was forced to prom-ise union leaders in writing that none of the employees of the state-run Aviation Authority of India would lose their jobs. Deal opposition also came from bidders who failed to get the contracts and are now challenging the bidding process in court.

These are the types of bottlenecks the International Air Transport Association warned that the Indian air transport sector could ill afford. Speaking last October at a meeting host-ed by the Confederation of the Indian Industry in New Delhi, IATA General Director and Chief Executive Officer Giovanni Bisignani said, “The

Indian air transport sector is among the most vibrant and fastest growing in the world, but it could be a much greater catalyst for economic growth if critical bottlenecks in the system are removed. The most urgent is infrastructure, particularly Mumbai airport. We need results fast, or a great start could turn into a disaster.”

GrowingProsperityThe Indian economy is surging. By 2040, per capita gross domestic product is expect-ed to be 445,000 rupees (US$8,442), up from an estimated 36,390 rupees (US$691) now, according to Goldman Sachs Group, Inc. Budget airlines are making travel more affordable for more Indians. In 2004, 6 million Indian tourists traveled overseas, a 15 percent increase from 2003.

Recently, India displaced the United States as the second-most-favored destination for foreign direct investors after China, accord-ing to consulting firm A.T. Kearney, Inc.

Foreign-owned factories, software com-panies and call centers are opening in India in unprecedented numbers, and their executives are traveling into the country more often, making the need for modern airports an urgent priority.

Clearly, market forces are overcoming incessant government meddling and stifling bureaucratic inertia, which has characterized India’s airline segment. Investors are seeing this developing industry as a goldmine of oppor-tunity. India today has the world’s largest mid-dle class of 300 million people and the fourth-largest economy, growing 7 percent annually.

Photo by Shaju John/The Hindu

Theestablishmentofcallcenters,suchasthisoneinChennai,hasresultedfromtheneedofbusinessesindevelopedcountriesforcost-effectiveBPOservices.India,wherethecostoflaborislowerthanindevelopedcountries,offersamoreeconomicalalternative.

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A lack of modern airports has allowed only 15 million people a year to travel by air, compared to the more than 13 million who travel by intercity trains each day. India boasts many of the world’s millionaires — 61,000 as of June 2004 — and more than 300,000 Indians pay for first-class rail tickets daily, costing approximately the same as many low- price air fares. The number of flights per person is only 0.014 per year, fewer than in Haiti and just a fraction of the United States and Australian rates of 2.02.

The potential is not lost on industry prognosticators. According to IATA, Indian carriers placed more than 550 billion rupees (US$12 billion) in new aircraft orders at the 2005 Paris Air Show. Jet Airways and Indian Airlines posted profits last year, even with high fuel costs. In 1991, India had two carri-ers, state-owned Air India and Indian Airlines. Today, there are 11 and four more are set to begin operations.

Traffic is expanding rapidly. IATA fore-casts international passenger traffic growth of 8.4 percent annually between 2005 and 2009, and as high as 12 percent when adding domes-tic travel. Freight is also expanding. The Indian market for international freight is expected to grow by nearly 10 percent annually during the next five years.

InfrastructureHurdlesThe market is growing. The potential is great. But can the infrastructure support the rapid growth? Detractors have decades of inertia to back them up. Aviation tourism writer Rabindra Seth said, “Airport infrastructure has always been built for yesterday, never for tomorrow.”

Prior to 1990, India’s aviation sector was controlled by a heavy-handed government bureaucracy and party politics that rejected free competition, foreign investment and for-eign goods. Dozens of state-sponsored com-missions, studies and inquiries have confirmed that the civil aviation sector was a pawn to dispense political patronage.

Overregulation and mismanagement have left a legacy of a grossly underdeveloped air transport industry plagued by delays, safety concerns, low customer satisfaction levels and operational problems. In addition to more airports, India needs more pilots, flight crew and air traffic controllers.

According to the Business Standard, a leading Indian financial newspaper, delays of anywhere up to an hour have become par for the course in airports such as Delhi and Mumbai. Both airports typically handle 25 to 28 flights an hour, compared to 40 per hour per runway at most international airports.

Lack of adequate runways increases airport turnaround time. Extra fuel for delayed landings and takeoffs in India may cost each air carrier nearly 7 billion rupees (US$131 million)

annually, according to rediff.com, an Internet portal focusing on the global Indian economy.

Inadequate parking bays in Delhi and Mumbai are forcing many carriers to park their fleets in nearby metropolitan areas such as Hyderabad, Ahmedabad and Chennai. By 2010, experts predict both Delhi and

Mumbai will need 50 more bays. And these bays need to be bigger. The current parking bays cannot accommodate an aircraft the size of the Airbus A380.

SkiesClearedforChangeModernizing India’s airport infrastructure is a monumental task. But India’s Secretary for Civil Aviation Ajay Prasad is optimistic the country’s politicians have finally grasped the need for urgent reforms if the country is to take advantage of the unprecedented upsurge in its economy. He cites “blue sky” reforms currently being implemented based on recommendations of the Naresh Chandra Committee. The Chandra Committee, named for its chairman, a former cabinet secretary and respected civil servant, recently published an extensive report on problems within the aviation sector, identifying four key steps to solving them: Establish a level playing field and remove the extortionate tax regime via lower taxes and charges across the entire industry,

Promote private equity participation by reducing barriers to entry,

Strengthen the Directorate General of Civil Aviation by ensuring it is adequately manned to regulate all important disciplines such as airworthiness, flight operations and monitor-ing air traffic control services,

Develop institutional mechanisms that pro-vide support for socially desirable but uneco-nomic services.

The New Delhi and Mumbai deals are evidence of the government’s commitment to change. In addition to these international upgrades, Unique Zurich Airport AG recently began constructing a new, privately owned air-field in Bangalore, the “Silicon Valley” of India and very soon its biotech hub. The Bangalore International Airport at Devanahal is scheduled to open in 2008.

Besides Delhi and Mumbai, the Aviation Authority of India has proposed to modernize 35 non-metro airports to world-class stan-dards. Another 50 are being considered for improvement.

Under the proposed plan, the govern-ment will adopt a “cluster approach” where

five airports in a zone will be grouped together under a joint venture.

“Since there are many small airports in a zone that are loss making, we are going to club them with the profit-making airports in a particular zone or region,” said Prime Minister Patel. “This will help fund the modernization program of the airports as well as develop-ment of all the airports that will happen simul-taneously. By 2010, the work is expected to be completed.”

Other short-term measures meant to clear India’s runways include: Proposed relief packages aimed at high fuel taxes and navigation charges,

Finalization of a long-term national civil avia-tion policy,

Approval of private companies to sell jet fuel,

Agreement allowing third-party ground handling,

Revamping of how routes are awarded, Incorporating air traffic control, Limited open skies to cater for peak season requirements,

Liberalizing international routes with neigh-boring countries comprising the 10-member Association of Southeast Asian Nations,

A flexible approach to airport financing and easing of foreign direct investment, with 74 percent allowed without government approval for airports and up to 49 percent in airlines. Non-resident Indians can take a 100 percent stake in domestic airlines without approvals.

The government promises major struc-tural reforms are just months away from being announced. The skies over India are worth watching. a

Lynne Clark can be contacted at

[email protected].

By2010,India’sgovernmentwillrevampitsmainairports,suchastheIndiraGandhiInternationalAirport,tohelprelievecongestionduetoincreasedtraffic.

Photo by Shanker Chakravarty/The Hindu

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IndiGo, one of the newest low-cost carriers in India, is set to take advantage of the increasingly liberalized air transport market.

Later this year, the skies over India will become even more blue. IndiGo, a new low-cost Indian domestic airline launched

by InterGlobe Enterprises, created a stir in the industry by ordering 100 Airbus A320 aircraft, the largest single order in India’s aviation history.

“The aviation industry in India is on the threshold of the next big revolution, and IndiGo is ideally positioned to fill the fast emerging need for reliable, efficient and economical air travel,” said Rahul Bhatia, managing director of InterGlobe Enterprises and co-owner of the airline. “IndiGo will also make a humble yet significant contribution to India’s growth by creating employment opportunities directly and through ancillary services.”

The launch of IndiGo reflects the coun-try’s burgeoning air transportation industry. Government liberalization has led to a rapid increase in the number of airlines serving the nation. Since 2004, seven new carriers have announced their launch, challenging the two

state-owned carriers that previously domi-nated the market.

Business in other industries, see-ing the potential of India’s aviation market, have launched airlines, including a brewery (Kingfisher Airlines), a textile company (GoAir) and helicopter charters (Air Deccan).

InterGlobe Enterprises — the foremost travel conglomerate in India, offering airline and aviation management, travel-related ser-vices, travel technology, travel distribution ser-vices and hotel development and management services — is also looking to capitalize on the aviation sector with IndiGo.

InterGlobe Enterprises partnered with Rakesh Gangwal, an experienced aviation executive with more than 20 years in senior management positions at United Airlines, Air France and US Airways. Bhatia and Gangwal, CEO of WorldSpan, own a combined 20 per-cent of the airline. Their initial US$80 million stake is set to increase to US$250 million by

2008. The remaining amount of the airline’s equity is held by financial institutions.

“The 21st century belongs to India,” Gangwal said. “We feel privileged at the pros-pect of contributing to the growth of India’s aviation sector. IndiGo will serve the nation’s air travelers with superior customer service and provide great value for the money.”

The start-up carrier has one of the best- financed launches in aviation history with an initial funding of 3.5 billion to 4 billion rupees (US$79 million to US$90 million). The airline has also added an executive team with vast airline experience, including Chief Executive Officer Bruce Ashby, Chief Operating Officer Steven Harfst and Chief Financial Officer Riyaz Peermohammed.

“IndiGo has a strong business plan to operate in one of the fastest-growing aviation markets in the world,” said Ashby, a 20-year airline industry veteran including stints at US Airways, Delta Air Lines and United Airlines.

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“This is a once-in-a-lifetime opportunity to come in at the ground level as the CEO to guide the airline initiative from one of the most professional aviation groups, InterGlobe.”

In April 2005, the start-up airline received its No Objection Certificate from the Indian government to launch scheduled services. In July 2005, the airline placed its blockbuster aircraft order, worth US$6 billion at list prices, and will take delivery of eight aircraft by the end of the year, nine more next year and one every month thereafter.

IndiGo’sBusinessModelThe airline plans to adopt a low-cost carrier model, with fares expected to be competitive with those of other low-fares airlines such as Air Deccan. The fares are expected to be 40 percent lower than those of full-service carriers.

IndiGo will operate as domestic spe-cialist on category A routes (between metro cities) and on category B (between metro and second-tier cities) routes. Indian regulations mandate that a carrier operate for five years before serving international routes.

IndiGo’sBiggestChallengesDespite its advantages, IndiGo faces several issues it must overcome: Shortage of skilled resources (pilots, flight attendants, ground crew) — Shortage of skilled resources is seen as the single-larg-est threat to Indian carriers, especially new entrants. Indian carriers have had to offer double and triple compensation packages to attract talent. It has also resorted to hiring foreign professionals at a premium.

Oil prices — Indian carriers have experienced a drastic decrease in their profitability margins due to high fuel costs, which are expected to present a significant challenge to IndiGo.

Lack of airport infrastructure to support the rapid growth of air travel — Many of India’s main cities lack the airport facilities to sup-port the current levels of traffic, much less the increases in travel marked by low-cost entrants.

Natural calamities (fog, floods, storms) — 2005 was a challenging year to India’s air-lines due to unexpected severe rain, floods and fog. India’s Director General of Civil Aviation (equivalent of the U.S. Department of Transportation) has issued new stringent regulations mandating that pilots for India’s carriers who are not trained to handle fog conditions will not be allowed to land at the nation’s second-busiest airport, Delhi.

Indigo’sKeyDifferentiatorAviation industry watchers believe IndiGo’s biggest advantage will be its size. With 100 aircraft, it will be able to serve all airports in the country with multiple connections. With its substantial start-up financing, the airline will be able to grow rapidly and connect the lucrative metro routes with flights every half hour, something that will take traffic away from existing operators.

Another key benefit comes from InterGlobe’s expertise in handling ticketing and inventory management for other airlines.

Travelers, aviation experts and com-petitors are watching IndiGo closely. IndiGo’s launch is expected to bring down average fares and increase frequency between key cities, and travelers are expected to benefit the most.

As a result of Jet Airways’ US$500 mil-lion buyout of Air Sahara in January, IndiGo, Kingfisher Airlines, GoAir and Air Deccan announced an agreement to share engineer-ing resources, equipment, technical man-power and training requirements to cut costs of operations (all four carriers fly Airbus air-craft). In addition, the four-member league is expected to transfer passengers between each other’s flights on an agreed flat fare in case of disruptions or over bookings.

Significantly, the airlines agreed not to poach licensed manpower from each other, subject to sharing technical manpower and training instructors. They are expected to establish a common compensation package for all licensed expatriates.

It is a dynamic time in the India market-place marked by the launch of new entrants such as IndiGo. With its capitalization and large aircraft order and low-cost business model, the blue skies promise to take on the shade of IndiGo.

Ramesh Premkumar is an India-based regional director for the Sabre Airline

Solutions business. He can be contacted at [email protected].

By Ramesh Premkumar | Ascend Contributor

IndiGo’s launch is expected to bring down average fares and increase frequency between key cities, and travelers are expected to benefit the most.

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FullRecoveryThrough the use of�

integrated, advanced decision-support systems,

Jet Airways can quickly and ef�f�ectively overcome

unexpected schedule disruptions.

By Michael Clarke Ascend Contributor

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Airline flight schedules and operations are susceptible to unexpected disruptions that result from crew shortages, severe

weather patterns, system congestion and air-craft failures. These problems are exacerbated in emerging countries with still-developing airport and air traffic control systems that are straining to support airline traffic levels. The phenomenal growth of airline passenger traffic and aircraft movements in the Indian sub-con-tinent as a result of deregulation is a case in point.

Since 1990, India’s domestic airline industry has experienced more than 100 percent growth in aircraft movements, with more than 10 new airlines starting or planning to start operations in an already congested environment. On the international front, the signing of more liberal bilateral agreements, as well as open-skies agreements, has resulted in impressive growth of scheduled opera-tions. At the same time, there have not been any significant improvements or expansion of airport facilities. (See related article on page 40.)

Even before this massive growth in commercial air traffic, Indian airlines were exposed to restrictive operations as it is a

well-known fact that airport and air traffic control facilities in the country are barely able to support commercial airline operations. In addition, most major airport facilities share airside and air traffic control services with the military. In many situations, major commercial airports will temporary close to support military activities and/or training. This usually happens on short notice, severely impacting an airline’s planned operations. Also, government regula-tions require scheduled airlines to maintain air services to secondary markets proportional to the level of service offered in major markets (such as Mumbai, Delhi, Bangalore, Chennai, Kolkata).

Like most operating environments,the Indian domestic airline market is often prone to disruptive weather patterns. During December through February, airports in cities such as Delhi are closed for periods of up to five hours due to early morning and late evening fog. This has a significant impact on the daily operations of scheduled carriers. Airports are sometimes closed for several days due to extremely heavy rains during the monsoon season. Last August, both the international and domestic airports in Mumbai (the financial center and major gateway city) were closed for runway flooding. Granted, they both share the same runways, along with the military base. Once the airports

re-opened, scheduled carriers were forced by the government to reduce their operations by 30 percent for three subsequent days.

Working under such demanding condi-tions, Jet Airways elected to acquire Sabre® Decision Manager, an innovative tool within the Sabre® AirOps™ Suite. Decision Manager is a fully functional decision-support system developed for airline schedule recovery. The system currently considers aircraft mainte-nance routings, crew connection assignments, passenger origin-and-destination itineraries, operational constraints (air traffic slots, airport slots, curfews, gates, weather alerts), and relevant market considerations (coverage, rev-enue, equipment requirements). Jet Airways is currently in the process of implementing Decision Manager to deploy it in conjunction with Sabre® Movement Manager, another sys-tem within the AirOps suite. Decision Manager has been developed to seamlessly integrate with Movement Manager as well as the Sabre® FliteTrac® system.

An effective schedule recovery sys-tem has to consider aircraft maintenance, crew scheduling, passenger itinerary, airport resource allocation and network operational constraints to accurately account for typical decision making within an airline. Decisions on whether to cancel or delay a scheduled flight have to be based on the bottom-line benefit to the airline. It’s not just important to consider the number of passengers on the aircraft, but also what revenue contribution comes from the flight. In addition, an airline controller has to consider all possible solution options including potential equipment substitutions and dynamic flight schedule adjustments. Such decision-making procedures require timely access to passenger itinerary data in conjunction with aircraft and crew assignments.

Since Decision Manager derives all the requirement data and information directly from the centralized flight operations database, sug-gestions proposed by the system will adhere to prevailing operating conditions and restric-tions. For example, if a particular airport is unable to support operations of a specific type of aircraft, Decision Manager will not assign this aircraft type to operate into the given air-port. Of course, the solution generated by the decision-support system will depend on the integrity and accuracy of the data stored in the centralized database. If an aircraft’s minimum equipment list is not updated after a scheduled maintenance event, Decision Manager may inadvertently prevent the aircraft from being assigned to a specific flight with special opera-tional requirements. As such, the successful deployment of Decision Manager will dictate a well-established data management proce-dure. One of the benefits of implementing a decision-support system such as Decision Manager is establishing consistent decision making across the airline. In many cases, indi-

vidual airline controllers make split decisions that have a significant impact on the carrier’s profitability. By standardizing the decision-mak-ing process, managers can be confident that the optimum decision has been made based on suggestions provided by Decision Manager. Decisions made that consider all aspects of the airline’s operations (resources, costs and revenue) will ensure that the airline is always focused on the bottom line. In addition, the ability to make quick yet accurate operations

decisions will enable Jet Airways to maintain its competitive market position as India’s lead-ing carrier. For carriers in rapid growth mode such as Jet Airways, having a scalable deci-sion-support tool in place will support smooth operations even in uncharted skies. a

Michael Clarke is a principal research scientist for the research team for the Sabre Holdings™ business. He can be


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Afterthedownturnoftheindustryin2000/2001,thedomesticIndiaairtransportationindustryisdisplayingsignificantgrowthintermsofaircraftinoperation,numberofpassengerscarried,numberofavailableseatkilometersandrevenuepassengerkilometers.Suchgrowthisputtingastrainoninfrastructure,whichcanfurthercomplicateeffortstorecoverfromscheduledisruptions.

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For several decades, air travel in India was monopolized by the two traditional state-owned airlines — Air India (primarily inter-

national) and Indian Airlines (domestic). This supremacy began to erode in the early 1990s when the Indian government scrapped the

ban on privately owned airlines, and a host of smaller airlines eventually sprouted to

challenge India’s dominant flag carriers. Some folded, but others, such as Jet

Airways, thrived, and as a result, Jet Airways’ domestic market share

rose to more than 40 percent by early 2005.

Open Skies By Shail Maniar | Ascend Contributor

L i be r a l i z a t i on i n I nd ia,s a i r t r a nspo r ti ndus t r y has caused t hecoun t r y

,s two t r ad i t i o na l ca r r i e r s t o adap t t o a new env i r onmen t.

Air India Express photo by TomLo/PlanePictures.net; Air India photo by Attila Hollósi/PlanePictures.net; Indian Airlines photo by Andrew Hunt/Airliners.net; Jet Airways photo by M Radzi Desa/MyAviation.net; Air Sahara photo by Antony Best/Airliners.net; Paramount Airlines photo by Luis Rosa/MyAviation.net; British Airways photo by Wojtek Werpachowski/Airliners.net; SpiceJet photo by Joe Walker/MyAviation.net; Go Air photo by Olav Rhensius/Propfreak Collection; Lufthansa photo by Chai Tzong Ying/Airliners.net; Cathay Pacific photo by Ben Wang/Airlners.net; Kingfisher Airlines photo by Gerd Beilfuss/MyAviation.net; AirDeccan photo by Jan Kertzscher/PlanePictures.net

For much of the ’90s, Air India, Indian Airlines and Jet Airways each carved out a market segment of their own, and it seemed that equilibrium of sorts would be maintained for a very long time. Economists coined 2004 as “the year India learned to fly” and 2004 turned out to be a watershed in Indian civil aviation. Three key factors that supported this claim were: Liberalization of India’s civil aviation policies (result: launching of several new private air-lines),

A burgeoning Indian economy (result: very strong travel demand),

The quest for a “quality product” from the Indian consumer (result: new airlines focused on providing world-class service).

As 2006 progresses, both Air India and Indian Airlines will need an extreme makeover to survive and compete in the changed Indian aviation market.

CurrentStateofAffairsCompetition is leashing a three-pronged

attack on both Air India and Indian Airlines. Having established itself as a dominant player in the domestic air travel space, Jet Airways and Air Sahara — recently purchased by Jet

Airways — are taking on Air India on many of its once-prized international routes. Domestically, both Air Deccan and recent entrants Kingfisher Airlines and SpiceJet are eroding Indian Airlines’ market share each month on most domestic routes. By early 2006, the combined LCC market share in India was around 27 percent, and as a result, Jet Airways’ market share dropped to about 35 percent and Indian Airlines’ share dropped to 25 percent. On the positive side, Jet Airways and most other carri-ers increased capacity in the domestic market, indicating that the size of the Indian aviation market has increased year over year.

By Shail Maniar | Ascend Contributor

Opens Challenges

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Open-skies agreements with India have result-ed in Asian, European and Middle Eastern airlines ramping up flights to India; Air India has lost its dominance on various routes to British Airways (flights to London), Cathay Pacific Airways (service to Asia) and Lufthansa German Airlines (flights to Europe).

The current state at Air India and Indian Airlines can be summed up as:1. Desperately needing a long-awaited fleet

renewal. New aircraft have not been added in more than a decade.

2. One of the largest workforces among air-lines in the world today.

3. Government interference in the manage-ment decision-making process. Political lead-ers continue to control appointing managers, deploying aircraft and deciding routes.

Another not so obvious challenge facing both Air India and Indian Airlines is potential talent attrition. Both have an experienced work force with expertise in key airline functions, particularly in international operations. For a long time, an aviation career in India could only

be sought at these two airlines. New private airlines will need to get up and running quickly, and a natural place for them to hire trained cockpit crew and administrative staff would be from the two state-owned airlines. The recent takeover of Air Sahara by domestic leader Jet Airways enables it to further strengthen its position in the India marketplace and distance itself from the rest of the pack. The acquisition also enables Jet Airways to gain additional access to key operational assets (check-in counters, hangars, parking bays, etc.) as well as qualified and trained cockpit crew, cabin crew, and maintenance personnel.

The state of the aviation industry in gen-eral, however, is upbeat and vibrant. According to the International Air Transport Association’s forecast for India, international passenger traf-fic will grow 8.4 percent annually between now and 2009. When added to domestic traf-fic, the growth is close to 12 percent. With this magnitude of growth, it is natural to assume that both Air India and Indian Airlines could

position their products to gain a substantial slice of the Indian market.

TurningChallengesintoOpportunities

Though the Indian government has recently liberalized the aviation policy to sup-port new local private airlines, it needs to strike a balance between liberalization and support for Air India and Indian Airlines to create a more vibrant, competitive and liberalized aviation industry, which would be a draw for investors and travelers alike. The government is tackling the issues head on. Recently, the government finally approved a plan to buy up to 68 aircraft for Air India and 43 for Indian Airlines. There is a window of opportunity for Air India, and the government realizes this, too, since the biggest beneficiary of open-skies agreements such as that with the United States will be Air India in the short term. No other local airlines have aircraft capable of flying to long-haul des-tinations such as the United States.

The government’s other strategy is to

establish and solidify Air India’s presence on international routes that lack competition from the likes of the combined Jet Airways and Air Sahara. The government’s new policy of allowing Jet Airways and Air Sahara to fly to international destinations, such as Southeast Asia, Europe and the United States, excludes the high demand and profitable routes to the Middle East for now. As a result, Air India floated a low-cost subsidiary, Air India Express, to primarily operate from the southern state of Kerala to the Gulf and West Asian destinations with an 18-aircraft fleet. If this experiment is successful, it would make Air India Express the choice airline for the millions of Indian expatriate workers in that region.

Indian Airlines is undergoing a more dra-matic makeover to respond to the competition and is in the process of re-branding itself to Indian. Signifying continuity with change, the new look of the airline communicates a bold, striking, progressive and distinctive image. The big and bold font of the new logo connotes

the inherent strengths and the solid base of the airline — of its vast network, technology and infrastructure. Indian is hoping that newer aircraft and a fresh brand will enable the Indian traveler to view it as an entirely new carrier.

One school of thought says that Air Indian and Indian should merge, saving millions of dollars by creating operational synergies in marketing, ground handling and purchasing as well as reducing their workforce from 40,000 to 20,000. The government has considered this option, but political pressures and oppo-sition from trade unions have stalled these plans. The current strategy is to offer portions of the airlines’ equity to the public while retain-ing full management control.

Will these measures, when added up, revive both Air India and Indian and enable them to compete? Opponents say these mea-sures are half baked and won’t take them far. And unless they are given access to foreign capital and independent decision making, they will have little chance to survive.

WillTheySurvive?Given how the Indian aviation scenario

is playing out, Air India has better odds at turning around and surviving as compared to domestic-focused Indian Airlines. The barriers to entry are much higher for a new Indian car-rier in international operations verses operating domestically. Some signs indicate Air India may be considering starting a full-fledged domestic operation to feed its large international opera-tion, a move that would position the airline to compete with the combined Jet Airways and Air Sahara. Air India has a vast network of routes in its arsenal, though much of it is unused due to limited aircraft capacity and mission capability. Though the new aviation policies will allow the likes of Jet Airways and Air Sahara to initiate international flights, this is easier said than done. Long-haul flights require appropriate aircraft, crew and logistical support.

Undoubtedly, regardless of which airlines survive in this battle, the biggest beneficiary will be the Indian air traveler. India remains far behind China in numbers of domestic passen-gers and aircraft. But the global aviation indus-try sees India as the next China. The aviation scenarios in both China and India are playing out quite differently — new Indian entrants, such as Kingfisher Airlines, are leading the way in creating a totally new travel experience for Indians, and the state-owned flag carriers are playing catch up for survival. a

Shail Maniar is managing director for the Sabre Airline Solutions® business in

Bangalore, India. He can be contacted at [email protected].

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By early 2006, the combined LCC market share in India was around 27 percent, and as a result, Jet Airways’ market share dropped to about 35 percent and Indian Airlines’ share dropped to 25 percent.

HigHlight

GTSP60608.REL.indd 1 4/21/06 2:43:12 PM

An increase in online air travel bookings in India has created a need for robust Web-based capabilities.

By Craig MacFarlane | Ascend Contributor

Take it Online

t’s no mystery why more and more airlines are attracted to the India market. Despite a growing population of

1.1 billion, only 15 million people a year travel by air domestically. The country’s middle class, forecast to increase from the current 300 mil-lion to 400 million by 2010, represents a largely untapped segment that is increasing its spend-ing power as the nation’s economy expands. Given the potential for increased air travel, car-riers are taking steps to ensure they are primed to take advantage of the new opportunities.

One of the ways carriers will be able to reach the Indian market is through the Internet. The number of people with access to the Web continues to grow as Internet penetration increases throughout the country, boosting the ability of airlines to sell tickets electronically. The increasingly affluent middle class is rapidly adopting Internet usage, leading to a significant increase of online travel book-ings and direct-to-traveler interactions.

Studies indicate that Indians are more likely to purchase travel online. Recent sur-veys show that 36 percent of Indians making purchases online bought airline tickets, mak-ing it the most popular category of Internet sales. That compares to the global figure of 21 percent for the category. Beyond that, the Internet & Mobile Association of India reports that nearly 24 percent of the 11.8 billion rupees (US$263 million) Indians spend online each year goes to purchase travel by rail, still the most popular method of transportation in India. And 47 percent of all online rail ticket buyers are in the key demographic between the ages of 26 and 35. When rail purchases are added to airline tickets, overall travel represents almost 58 percent of total Indian online spending.

The amount of monthly online travel transactions continues to increase. According to estimates by the Internet & Mobile Association of India, the average number of transactions has increased from 207,000 a month in 2003 to 795,000 in 2005. Airline online bookings are expected to double in India during the next

two years to US$40 million. Web sites for low-cost carriers and specialized travels portals such as makemytrip.com and ghumo.com con-tinue to grow, drawing increasing numbers of online shoppers who purchase airline tickets. Makemytrip.com reports selling 800 tickets and hotel reservations a day.

The growth of the Indian middle class, combined with its willingness to shop for and purchase travel online, makes India an ideal market for airlines, particularly in terms of on-line travel bookings. Due to the surging middle class with its growing appetite for conducting business through the Internet, airlines are focusing heavily on their online presence in India, spurring them to develop methods and tools for efficient and effective online commerce.

SabreSonic™ Web, a powerful, flexible Internet booking tool, is a complete, fully hosted online booking system that enables airlines to display and sell their products most

efficiently and leverage choices of other part-ner airlines, car and hotel products directly to customers at anytime, from anywhere. The Web component has realized tremendous growth in passenger sales in India. In 2004, more than 33,000 reservations were booked online for more then 44,000 passengers via the Web component. The entrance into the Indian market produced associated sales revenues of US$7.1 million for the respective airlines for the year. The growth trend in 2005 showed a dramatic increase in reservations booked online — more than 375 percent. In 2005, airline sales for India through the Web com-ponent topped US$25.8 million. Projections for this year suggest continued growth, with online bookings forecasted to exceed more than 200,000 passengers.

The Web component is a flexible Internet booking engine that enables airlines to create a self-service environment for their customers

1. Where and when are you travelling?

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SabreSonic Webprovidesconfigurableshoppingchoicesbasedonairline-definedconfigura-tionswiththeabilitytobookone-way,round-tripandmultiple-destinationitineraries.

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while still maintaining control over how those customers interact with the airline. In addition to the customer-direct attributes of the compo-nent, it offers travel agency portal functionality as well as corporate portal functionality. These features help carriers in India and around the world work directly with travel agencies and corporations to streamline the booking process and ensure their ability to capture all forms of online bookings whether driven directly by the end traveler, a travel agent or a corporation.

The current trends and numbers for online travel bookings in India make it an extremely exciting market that is poised to

continue growing and providing increased value for airlines. The Web component will help airlines capture that value as consumers and agents rely more on the Internet to book airline travel. The component has a number of robust features that position it as the Internet booking tool of choice for the Indian market: It enables airlines to offer the choice of three distinct shopping paths to travelers based on their individual shopping needs. Travelers can shop by price, schedule or date, offering them the flexibility they demand.

It provides redemption capabilities for loyalty customers.

It offers a tool that enables airlines to quickly configure the look and feel of their booking

engine, allowing for optimal flexibility. It offers a highly flexible and powerful admin-istration tool, providing an effective solution for managing online content.

It enables airlines to react rapidly to market changes to ensure their online presence maximizes its revenue potential.

It reduces distribution costs. The tool can also be adapted to the

unique needs of the India marketplace. For example, the country’s airlines utilize courier services to deliver tickets to their customers, where the payment for that ticket is then received. The Web component will soon include a feature enabling customers to pay by invoice, which will accommodate payment through courier services.

The picture is clear. The online market-place in India is growing at a tremendous rate and is on the cusp of transforming the travel business. Airlines are excited by the opportu-nity, and the Web component can help airlines achieve success by expanding their online booking capabilities. It is a time of constant change and transition, but the opportunities that are beginning to present themselves are limitless. The population is growing. Internet adoption is growing. Online travel purchase is growing. The online travel business in India presents a new frontier full of challenge and tremendous reward for those carriers that best position themselves. a

Craig MacFarlane is marketing man-ager for Airline Passenger Solutions

for the Sabre Airline Solutions® business. He can be contacted at

[email protected].

My Reservations

Shop & Book

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TheSabreSonic Web component’spersonalizedwelcomepagepresentstravelerswithacon-solidatedviewoftheircurrentbookingsandtriphistory,anditisintegratedwiththeSabre® Traveler Loyalty System,whichprovidesreal-timefrequentflyeraccountinformationonthewelcomepage.

7 — Percentage of India’s economic

growth in 2003.

0 — Number of big shopping malls

in India five years ago. Today, there

are at least 100.

15.9 billion — Total revenue,

in U.S. dollars, for India’s software indus-

try during the 2003/2004 fiscal year.

800 — Estimated percentage

increase in Indian wages during

the next four decades.

75,000 — Average monthly

salary, in rupees, of a senior air

hostess in India.

45 million — Expected

increase in the number of passen-

gers in the Indian aviation market

during the next five years.

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An overall surge in air travel expected in India in the coming years will be fueled by more carriers entering the market,

pushing airfares down to make air travel more affordable; improved air transport infrastruc-ture, which will make the industry more effi-cient; and the continued growth of the Indian economy, providing citizens more disposable income.

The current volume of 15 million domes-tic air passengers a year pales in comparison with the rail passenger volume of more than 13 million — a day. However, air traffic is expected to grow to 50 million passengers a year in the next five years. Some industry analysts project that the number of com-mercial aircraft will grow from just under 200 today to more than 500 in the same five-year timeframe. As air traffic continues to grow in the coming years, airlines will need automated solutions to adequately process travelers.

With a middle class expected to grow to 400 million by 2010 and with new open-skies agreements and deregulation of India’s air transport industry, many airlines are excited about the prospects of the India travel market. But, is there a catch?

TheChallengeUnfortunately, there is a dark side to all of this optimism — at least in the near term. The Indian government offered open-skies oppor-tunities to the private sector in 1993, creating much-needed competition for the two state-owned airlines, Air India and Indian Airlines. The move resulted in the creation of new airlines, such as Jet Airways and Air Deccan, an overall decrease in the cost of air travel and an increase in consumer demand. But the cost of this liberalization in India has been severe congestion at many of India’s key airports, most of which were built in the 1950s. Two airports — New Delhi and Mumbai — account for approximately 50 percent of India’s air traffic.

Unless Indian carriers take the neces-sary steps, increased traffic at India’s airports will lead to longer lines at check-in, which could adversely impact customer satisfaction.

TheSolutionBy automating some of the check-in functions, airlines have the ability to provide an enhanced level of service while still controlling costs. Automating check-in functions offers custom-ers self-service capabilities, freeing agents to handle special needs.

A tool such as SabreSonic™ Check-in, which provides components such as self-ser-vice kiosks and Web check-in can help carriers in India effectively manage traffic flow. The Check-in component’s unsurpassed departure control capabilities simplify traveler processing, both on and off airport grounds, as well as pro-vide the most definitive airport automation solu-tions available in today’s transportation industry.

After implementing the Check-in com-ponent, airlines have realized resource cost savings of up to 20 percent, primarily through

Congestion in India’s airports as a result of the substantial rise in air traffic can be streamlined through effective self-serve check-in technology.

By Mark Canton | Ascend Contributor

Just Checkin’ In

AsnewcomersentertheIndianmarketandairfaresbecomemoreandmoreaffordable,manyofthecountry’sresidentsarefillingupIndia’sairports,whicharerapidlybecomingover-crowded.

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Sabre Airline Solutions archives

staff re-allocation or cost avoidance achieved by eliminating the need for additional staff to handle operational increases. Airlines utilizing the Check-in component realize considerable benefits, including: Increased revenue opportunities — Faster check-in and shorter lines increase traveler satisfaction, resulting in repeat business.

Reduced operational costs — Self-service options reduce the need for additional airport staff and enable growth at a lower cost.

Optimized staff utilization — Enhanced traveler-processing options enable staff to improve service to customers outside of the traditional ticketing and check-in counters.

Streamlined deployment — Airport traveler- processing solutions simplify application deployment and maintenance through an application service provider approach, ensuring uniformity across an airline’s operational network.

For airports in India, the transition to self-service check-in alone, Internet and CUSS kiosks, could alleviate many of the symptoms of developing infrastructure. Processing pas-sengers away from small, congested ticketing and check-in areas will streamline this airport-centric activity, helping key airports in India cope with the increase in passenger volumes

until longer-term infrastructure projects are completed.

Last year, the Sabre Airline Solutions®

business worked with Jet Airways to deliver Web check-in capabilities for domestic trav-elers. And, early this year, kiosk check-in will debut at Mumbai’s Santa Cruz Domestic Airport with a few check-in kiosks. Jet Airways will implement several dozen kiosks during the next few years to help improve the airport experience for its passengers and further dif-ferentiate the airline from an ever-increasing number of competitors.

Once perceived as added benefits, ser-vices such as electronic ticketing and self-ser-

vice check-in are now seen as standard offer-ings by seasoned business travelers across the globe. As India seeks to increase air travel to and from the country, these services must be considered and incorporated into the design of upgraded and new airport infrastructure. Fortunately, the groundwork has been laid and the Indian government and Indian airlines alike are working toward an improved airport envi-ronment to support a very bright future.

Mark Canton is director of airport products for Airline Passenger Solutions marketing

at Sabre Airline Solutions. He can be contacted at [email protected].

With a middle class expected to grow to 400 million by 2010 and with new open-skies agree-ments and deregulation of India’s air transport industry, many airlines are excited about the prospects of the India travel market.

HigHlight

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Sabre Airline Solutions

ndia, one of the fastest-growing econo-mies in the world, is the third-most pre-ferred destination for foreign investment

after China and the United States. Nearly 30 percent of India’s international trade moves by air. The growth in trade between India and a number of countries, such as China, Germany and the United States, coupled with market liberalization is resulting in significant increase in freight shipments from India.

In addition to the expanding exports, domestic express cargo products have realized a significant increase caused by the develop-ment of assembly plants and parts manufactur-ers and the need for on-time and fast delivery of critical supplies and documents. During the last decade, India’s air cargo market has grown beyond 10 percent a year and is expected to achieve close to 20 percent growth during the next couple of years.

CargoCarriersinIndiaThe Indian government liberalized bilateral air transport deals with a number of countries, granted permission for private domestic air-lines to fly internationally and plans to spend 177 billion rupees (US$4 billion) to modernize and expand airport facilities to support the growth. Several international carriers, both passenger airlines and integrators, such as FedEx, have expanded their presence in India, and some of the country’s major carriers, such as Air India and Indian Airlines, are seeking to begin freighter operations. Indian carriers estimate that their growth in air cargo traffic will outpace that of passenger boarding during the next 20 years.

Demand for air cargo is growing in India as exports will reach 4.4 trillion rupees (US$100 billion) this year. FedEx expects India’s 20- billion rupee (US$450 million) air express mar-ket to grow by 15 percent annually. DHL intends to grow its fare share in this market by taking control of Blue Dart, a leading cargo express carrier in India. British Airways World Cargo expects to double capacity and revenue

from India, making Mumbai and Delhi mini-hubs. Emirates’ SkyCargo, the leading Middle Eastern carrier, and some of the world’s top five cargo-carrying passenger airlines, such as Singapore Airlines Cargo and Korean Air Cargo, continue to expand their Indian pres-ence through direct services and alliances.

ChallengesintheIndianCargoMarketplaceFor most carriers flying to and from India, cargo is increasingly becoming an important source of revenue. On average, revenue from cargo represents 15 percent of the total air traffic revenue, up to 40 percent for some air-lines. Inadequate airport infrastructures, secu-rity systems and outdated technology pose significant challenges, stifling the growth in air cargo traffic. Approximately 50 percent of international traffic rights remain unused under the bilateral system due to airport capacity constraints. Many of India’s airports are under-

utilized while airports in large metro cities are struggling to meet the capacity demand. This poses challenges in terms of information and cargo flow through terminals and ware-houses. The majority of India’s cargo business is handled through agents and forwarders. Technology and systems used by the country’s forwarders are not compliant with international standards, and they are challenged with the inability to interface with a carrier’s operating system and exchange information across dif-ferent carriers. There are also limitations in terms of automated customs interfaces to and from India. Carriers playing in the Indian mar-ketplace have to ensure that taxes/accounting and interfaces to cargo agents’ invoicing sys-tems cater to the Indian cargo marketplace. The eFreight initiative by the International Air Transport Association cargo division could be a significant challenge in India from a cul-tural standpoint. Because India lacks the legal framework, it cannot support advance sale of space or a neutral air waybill, which are critical for any air cargo carrier. These operational chal-lenges could hamper efficient and transparent cargo movement across the carrier network.

Other challenges could also deprive carriers from maximizing revenue across its Indian operations. As carriers expand their presence in India, it is important to capture as much market share as possible and carry the right type of cargo within the constraints of the network to increase revenue and maximize profitability. These challenges are related to planning the cargo logistics chain as well as managing customers in terms of contracts and pricing. One of the key challenges is building the support network to feed cargo in and out of major airports. This includes aspects such as a trucking network and partnerships, satellite warehouses, and cargo receipt facilities at city locations. Enforcing tendering of cargo within the appropriate time window coupled with traffic congestion adds another dimension. The maturity of forwarders and agents in the Indian cargo market also adds further complexity.

As cargo operators in and out of India experience a growth spurt, advanced technology will play a key role in ensuring continued success.

By Raja Kasilingam | Ascend Contributor

Car“go” to India

TheBoeing787Dreamlinerwillenterser-vicein2008,offeringmorerevenue-gener-atingcargospacethananyotherairplaneinitsclass.

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This challenge manifests in terms of not having good information on characteristics (weight, volume or rate) and cargo not showing up at all or in time for building a flight, as well as not having cargo prepared in a form ready to fly.

TheAnswerEffective use of advanced technology, such as the Sabre® CargoMax™ Revenue and Pricing Suite, is the answer for India’s freight opera-tors expecting to increase their market pen-etration in India. The CargoMax suite, coupled with business knowledge and experience from the Sabre Airline Solutions® business, enables carriers to overcome the many cargo-related challenges they face. Sabre Airline Solutions has a vast amount of knowledge and expertise in revenue management, revenue account-ing, reservations and operations. Its strong consulting organization specializes in strategic network planning, pricing and product devel-opment for cargo operations aligning people, process, tools and communications.

The CargoMax suite offers decision-support and operational systems designed to address some of the key cargo business and operational requirements of an airline such as space control, revenue management, manage-ment reporting, performance measurement, rating, revenue accounting, invoicing, claims management, inventory control and operations planning.

TheRightToolsThe CargoMax suite includes four compo-nents that interface with industry-standard systems such as CASS, IDEC, cargo portals and reservations systems. The suites compo-nents include: Sabre® CargoMax™ Revenue Manager, which provides decision-support capabilities in cus-tomer behavior management, contract nego-tiations with freight forwarders, space plan-ning, pricing support, revenue performance and critical flights management,

Sabre® CargoMax™ Accounting Manager, which offers rating, pro-ration, revenue accounting, invoicing and billing capabilities for various airlines, agents and forwarders,

Sabre® CargoMax™ Reservations Manager, which provides the capability to manage schedules as well as the flow of materials and information from booking through final delivery to cargo customers. The system also manages flights from booking through shipment prioritization and final manifest-ing and interface to load planning, customs interfaces, and tracking of shipments and containers,

Sabre® CargoMax™ Claims Manager, which facilitates claims filing, processing, tracking and settlement.

The full suite drives significant value for carriers in terms of revenue enhancement, pro-ductivity improvement, service improvement,

customer response time, accurate and fast bill-ing, air waybill management, and transparency of shipments and containers.

TechnologyandOperationsSupportReservations Manager and Accounting Manager offer technology support necessary to run and expand operations and offer a vast range of capabilities, including: Interfacing support with local customs for pre-clearing cargo, booking (for cargo agents), and billing and tracking,

Compliance support to eFreight, Interline communications and online cargo portals such as GF-X, CPS and Ezycargo to support additional booking channels,

Technology protocols such as Cargo IMP and XML messages and connectivity through the Internet without the expenses of a commu-nications network,

Real-time and open-communications func-tionality.

NetworkandLogisticFrameworkPlanningTo effectively grow, India’s cargo carriers should have the necessary logistical support to receive, store and feed cargo to major airports. The consulting team at Sabre Airline Solutions can assist in planning the infrastructure con-sisting of warehouses, feeder network and alli-ances. Revenue Manager can help maximize the freighter network by optimizing supply and demand, including planning freighter routes, aircraft type and frequency. The net effect is seamless integration with a carrier’s network into major hubs in terms of cargo movement.

ManagingCustomersandRevenueManaging cargo customers and revenue in a growing market requires segmenting custom-ers based on key characteristics such as rev-enue, customer behavior (usage) and type of cargo (density). It also requires managing cargo capacity in terms of allocations to various prod-ucts, customers and feeder stations. The key is to collect quality data and deploy models and algorithms that will work with limited data and learn as more information becomes available. Revenue Manager enables carriers to allocate space and set pricing guidelines to various customer, station and product segments. It assists carriers in contract negotiations with forwarders and customers to determine price and space allocation, and it manages customer “no-show” behavior in terms of not using the space allocated as agreed upon. The net impact of utilizing the Revenue Manager is increased revenue and reduced customer-ser-vice failures in terms of offloads.

All research points to the fact there will be more and more carriers operating in the Indian cargo marketplace. This clearly means two things: those that have the right tools to support planning and operations will have the capability to sustain growth, and those that manage their products, capacity and pricing effectively will financially succeed.

Raja Kasilingam is vice president

of cargo products for Sabre Airline Solutions. He can be contacted at

[email protected].

AircargoinIndiaisaflourishingbusiness,withmarketgrowthbeyond10percentayear,whichisexpectedtoclimbnearlyanother10percentinthenextcoupleofyears.

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The odds are that it could happen to any number of airline passengers. Statistics show that one out of every 20 flights last

December, specifically during peak seasons, was likely to be canceled either by weather, mechanical failure or some other unforeseen event. With almost 233,000 flights scheduled worldwide from Dec. 22 through Jan. 1, that amounts to more than 1,000 flights that would have been cancelled or diverted every day during one of the busiest times of the year.

For most passengers, a cancelled flight means much more than just a delay getting to their destination. It typically means standing in long lines at the airline ticket counter or being put on hold trying to find and book the next available flight. And some are also faced with finding new connecting flights to their final destination. For some, it might mean spending that important family holiday in the airport wait-ing for flight accommodations while folks gath-er anxiously for the arrival of their loved one.

Today, technology can minimize the impact of disruptions. For a passenger travel-ing from Houston, Texas, to St. Petersburg, Russia, via Chicago, Illinois, a flight delay could create havoc with an itinerary. If the original itinerary called for a connection in Chicago to London followed by a flight to Moscow’s Sheremetyevo International Airport and then on to another flight to St. Petersburg, a two-hour delay in Houston due to a mechanical issue could cause the passenger to miss a connecting flight, leaving the passenger anxious and need-ing to know how to get to the next destination.

In situations like this, Sabre® Reaccommo-dation Manager, a new, advanced automatic passenger reaccommodation tool, can come to the rescue of airport staff, airline person-nel, and, most importantly, airline passengers. Reaccommodation Manager was designed to deliver optimized and smart reaccommoda-tion solutions when schedule changes occur, whether it is day-of-operations or long-term rev-enue management changes. The system has

been developed by the Sabre Airline Solutions® business to revolutionize how airlines re-route passengers affected by disruptions and long-term schedule changes.

SystemCapabilitiesandBenefitsReaccommodation Manager can help airlines recover from a number of unexpected events through a range of capabilities and benefits: Through automation, standard procedures and optimization, the system helps airlines quickly reaccommodate customers during flight disruptions.

The Web-based tool enables airlines to review and manage flight disruptions and impact on passengers in real time.

The system generates multiple solutions by prioritizing passengers and optimizing net-work availability.

The tool works directly with reservations and departure control systems to obtain passen-ger name records and availability data.

The solution helps airlines manage day-of-departure and revenue management flight

schedule changes. The system integrates with Sabre® Movement Manager to acquire the latest flight schedule changes.

The tool offers quick, optimal solutions that are readily deployable, including optimization with “what-if” scenarios and the ability to define business rules for reaccommodation.

One of the key benefits of Reaccommo-dation Manager is the rapid rebooking process that is based on specific parameters, such as customer value, class of service, frequent flyer status and special passenger requests. The system provides passenger coordinators with a simple three-step process to understand, manage and rebook entire itineraries during disruptions. Reaccommodation Manager was designed to handle multiple disruptions at a time, rebook the vast majority of airlines’ cus-tomers and eliminate the need for sequential rebooking. During times of disruption, frontline staff and customers will be informed promptly of new flight details, and customers will be able to receive their rebooked flight details

By Apurva Mathur | Ascend Contributor

Rapid Reaccommodation: Attaining Higher Levels of Customer Service

ThickfogoftencontributestoflightdelaysandcancellationsattheIGIAirportinNewDelhi,India.Advancedtechnologycanquicklyhelpreaccommodatepassengerswhenflightdisruptionsoccur.

Photo by Kamal N

arang/The Hindu

Advanced technology, such as Sabre Reaccommodation Manager, helps airlines quickly respond to flight cancellations and delays by efficiently rebooking customers on alternate flights.

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via short message service, e-mail and other electronic means.

For passengers, the benefits of an airline using Reaccommodation Manager become immediately apparent. With the system, the traveler would walk up to a self-serve kiosk to get her tickets and find her revised itinerary displayed. Reaccommodation Manager would look at her itinerary end to end and run through all the possible flights departing Houston and heading toward Europe, possibly via connec-tions within the United States, and on to her final destination of St. Petersburg. The system has the ability to solve the problem in several ways, including: Booking a passenger on a Lufthansa flight from Houston to Frankfurt connecting in Frankfurt to St. Petersburg,

Booking a passenger on a flight to New York from Houston and connecting on a flight to London Heathrow and then to St. Petersburg.

The system would look at the itinerary of every passenger on the British Airways flight to London Heathrow and review each passenger’s customer value, frequent flyer status, fare paid, etc. It would then build revised itineraries based on each passenger’s origin-and-destination information using airline-defined parameters. In a matter of minutes, Reaccommodation Manager enables airlines to sort through all possible flight options to determine the best alternative for cancelled or delayed flights. The system automatically books the substitute flight, issues a boarding pass via an airport kiosk or at home via the online check-in tool (or even in flight if the airplane is equipped with an on-board printer) to inform travelers about cancelled connect-ing flights — and all this can be achieved without customers ever having to talk to a gate agent.

Reaccommodation Manager also pro-vides airlines the ability to determine the impact of changes to a long-term schedule for booked passengers. For those booked on flights that are impacted by future schedule changes, airline coordinators can use Reaccommodation Manager to quickly find the best replacement flights to get passengers to their final destina-tions. The tool can also be used to evaluate the cost of rebooking passengers prior to making the schedule change.

WhoWillBenefit?Several areas within an airline as well as customers will benefit from the rapid response of Reaccommodation Manager, including: Revenue management — Enables airlines to rebook passengers for seasonal schedule changes in addition to day of departure,

Passenger coordinators — Enables them to participate in the decision-making process of flight cancellations and delays,

Airports — Provides information in a timely manner about passenger rebookings,

Operations control — Evaluates passenger impact of a cancellation or delay in what-if mode,

Customers booked on a combination of inter-national and domestic flights — Provides true origin-and-destination rebooking, not just for the affected flight segment,

Customers whose itinerary includes host airlines as well as other airlines during day of operations — Rebooks passengers on other airlines even though the impacted flight is on the host airline,

Highly valued customers (platinum, gold, frequent flyer) — Provides consistent, high levels of customer service.

Air New Zealand became the first air-line in the world to select Reaccommodation Manager to ease the plight of passengers whose traveling plans are disrupted by flight delays or cancellations.

“We strive to offer world-class cust-omer service and are constantly looking at ways to ensure our passengers receive the

very best experience every time they book and fly with us,” said Rod Butchers, manager of operations delivery for Air New Zealand. “By adding Reaccommodation Manager to our existing portfolio of Sabre Airline Solutions technologies, we aim to deliver a superior level of service by reducing the problems associated with flight disruptions. For example, passenger rebooking can be taken into consideration when we decide if a flight needs to be can-celled, delayed or diverted to alternate destinations. And when we do have disrup-tions, it is stressful for all our passengers and staff. In the time it takes to rebook passen-gers, long lines at the airport form and customers become frustrated and demand to know what is happening. We are trying to take that stress away.”

Apurva Mathur is director of flight operations products for Sabre Airline

Solutions. He can be contacted at [email protected].

Reaccommodation Managercanquicklyidentifypassengerswhohavebeenimpactedbyascheduledisruptionandrunaseriesofscenariostodeterminethebestreaccommodationoptions.

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One of India’s most prominent software companies, Ramco Systems Corp., is taking the lead in providing maintenance, repair and overhaul solutions to carriers in India and around the world.

By Allan Bachan | Ascend Contributor

The Right Fix

As one of the most populous nations on the planet, and with an economic annual growth of 7 percent, India’s aviation

market has considerable annual revenue potential. Last year, Indian carriers placed more than 500 billion rupees (US$12 billion) in new aircraft orders, increasing the need for airlines to place a strong emphasis on the cost of maintaining their planes as well as automat-ing their processes to effectively operate in a heavily regulated business.

Carriers such as Indian Airlines and newly launched SpiceJet rely on the exper-tise, knowledge and automation of India’s top technology provider, Ramco Systems, which has helped set their businesses in motion by creating software that fits their specific needs as well as those of a rapidly evolving industry. With a keen understanding of the aviation industry and expertise dating to 1938 when its parent company, the Ramco Group, was estab-lished, Ramco Systems, which has teamed with the Sabre Airline Solutions® business to offer its systems to airlines around the world, is at the forefront of India’s expanding avia-tion and MRO market and continues helping emerging airlines worldwide by creating appli-cations that help achieve their business objec-tives as well as address regulatory needs.

Ramco Systems, one of the leading software providers for maintenance, repair and overhaul operations, has helped MRO service providers world wide address airlines’ issues. Ramco Systems has been doing the same for various carriers for more than a decade, using ground-breaking technology and innovative ways of creating applications that tackle the changing needs of the industry. Ramco’s avia-tion solution addresses all aspects of aviation management, including: Technical records; Quality; Engineering; Technical operations; Production planning and control;

Line, heavy and shop maintenance; Materials management and logistics; Financials; Human resources; Sales; Decision support — performance dashboards. The tool also uses strong built-in configu-

rable workflows to create and maintain new business processes that help airlines run an effective and efficient enterprise. In addition, the solution incorporates processes tailored to carriers’ specific unique needs, enabling them to easily refine processes as their envi-ronment changes.

ImplementingtheRamcoMROSystembeginswithbusinessprocessmodelingandismanagedstrategicallytoensureeveryaspectoftheprocess—fromdefiningtherightsolutionandbuildingtimelinestosystemsintegration,customerserviceandtraining—issuccessful.

MoreThanJustSoftware

Customer support

Business process modeling

Systems definition

Project planning and administration

Legacy integration

Custom components

Robustsolutions

Training

Delivering value

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Ramco’s aviation solutions meet the business requirements of passenger and cargo carriers as well as MRO providers regardless of size, complexity and geographic location. It encompasses a diverse range of airline and MRO services, including: Aircraft maintenance planning and execution;

Components such as task/job card management with features including electronic sign off and paperless records;

Engineering and technical records management;

Aircraft operation management including functionality such as electronic flight bag and aircraft routing;

Logistics management including warehouse management;

Procurement of aircraft and non-aircraft parts;

Outsourcing of repair activities, warranty, part loans and rentals with features such as bar coding and RFID;

Human resources management; Sales management; Financial management; Aviation analytics.

SolutionHighlightsThe Ramco System offers a number of features and benefits: Pure browser-based Web-centric solution, host-in or host-out options;

Pre-built software solutions available in multiple technologies;

Proven integration into third-party human resources, payroll, finance solutions and legacy applications;

Extensive vendor management capabilities and material management capabilities;

Electronic signatures and extensive workflow automation and alerting;

Add-on capabilities: Digital dashboard — aviation analytics,

Class II electronic flight bag.To address the market requirements of

faster turn-around time, better productivity, cost-effective operations and customer satis-faction, airlines and MRO service providers need to be equipped with solutions that are comprehensive yet cost effective. With chang-ing times, these solutions need to be scalable yet robust, and Ramco Systems has developed solutions that exceed airlines’ MRO expecta-tions and requirements.

Allan Bachan is maintenance, repair and overhaul product manager for Sabre Airline Solutions. He can be


Photo courtesy of Airbus

Ramco Systems, which has teamed with the Sabre Airline Solutions business …, is at the forefront of India’s expanding aviation and MRO market …

HigHlight

In2005,newaircraftordersinIndiaexceeded530billionrupees,whichwilleventuallydrivetheneedformoremaintenance,repairandoverhaultechnologyandservices.

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By seeing the potential of the India

market, Perot Systems helped launch

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the country’s airlines.

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Last December, Perot Systems Corp. announced the launch of information technology infrastructure operations from

its Noida and Bangalore, India, facilities. The Plano, Texas-based company also dedicated a new office tower at its Noida campus, continu-ing the steady expansion of its India footprint and employee base.

As one of the first large international companies to see the business potential in India, Perot Systems helped pave the way for other multinationals to expand their presence in the country. Now, the growth of these coun-tries in India is helping fuel an expanding econ-omy, which, in turn, is contributing to a growth in air transportation. The presence of these companies also increases travel demand, as executives fly from corporate headquarters around the world to visit facilities and opera-tions within India.

Perot Systems is a global provider of technol-ogy-based business solu-tions in targeted industries including healthcare, gov-ernment and commercial

markets. The company’s India-based team — which also includes business process oper-ations in Chennai — is expected to grow to around 6,000 associates by the end of the year. That would make the Perot Systems staff in India total one-third of the company’s staff worldwide.

“This is a significant accomplishment for Perot Systems because we now are ‘three deep’ in both India and the United States — with applications, infrastructure and BPO capa-bilities in two world staging locations,” said Padma Ravichander, managing director of the company’s global applications solutions divi-sion and senior executive for Perot Systems in India and Asia/Pacific, during a press confer-ence for the Noida office tower dedication.

When Perot Systems began a joint ven-ture with India firm HCL Technologies in 1996, few technology services firms had tapped into the area. Morton Meyerson, the company’s chief executive officer at the time, foresaw the advantages of India’s growing number of engineering graduates.

“He saw that information technology was globalizing quickly, and we needed to find

the best talent in the world,” said the current chief executive officer, Ross Perot Jr., in an interview with The Dallas Morning News.

The move into India was once seen as a pioneering and risky move. But by the time Perot Systems announced that it would buy HCL’s interest in the company for US$105 million in 2003, the move made sense. In the seven years leading up to the purchase, customers were pressuring computer services firms such as IBM, which once enjoyed huge profit margins to handle technology operations for corporate clients, to do more work for less. They demanded the firms outsource work to India or other low-wage countries such as the Philippines and Russia. That kind of demand forced computer services firms to start opera-tions in India and other low-wage countries just to stay competitive.

In March 2005, Perot Systems further underscored the importance of India and the Asia/Pacific region to its long-term growth strategy at a meeting of its board of directors in Bangalore. The meeting was historic, as it was the first board meeting of a major U.S. multinational IT corporation in India. In bring-ing the board to India to review its corporate strategy, Perot Systems signaled its commit-ment to seizing the global opportunities in the technology services industry.

During the March meeting, Perot Jr. commented on the company’s emergent busi-ness opportunities for India, “The board of directors of Perot Systems is here as a result of the hard work that has gone into build-ing a strong global business. The company has achieved a lot in a relatively short time frame, but in many ways we are only just beginning to reach our potential, given the opportunities before us and the strength of our capabilities — especially in India.”

Perot systems President and CEO Peter Altabef said, “Perot Systems’ India operations are a cornerstone of our emerging global deliv-ery model of integrated IT, BPO and consulting solutions. It is important for the board to meet here as we work to provide more solutions for our customers, opportunity for our employees and value for our shareowners.”


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HighlydecoratedexecutivesfromPerotSystemsCorp.heldapressconferenceinChennai,India,inMarch—fromleft:AnuroopSingh,director;PeterAltabef,presidentandchiefexecutiveofficer;PadmaRavichander,managingdirectoroftechnologyservices;RossPerot,Jr.,chairman;andAnuragJain,vicepresidentofbusinessprocesssolutions.

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Addis Ababa-based Ethiopian Airlines, which has continued to build its network, expand its fleet and explore additional methods of earning revenue, is at the top of its game in Africa’s air travel market. By Christian Gossel | Ascend Contributor

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land StrategyA Game-Winning

Since its first flight to Cairo, Egypt, in April 1946, Ethiopian Airlines has steadily expanded its network. The carrier began

operations with five Douglas-McDonald DC-3s serving four routes in Egypt, Djibouti, Yemen and Ethiopia. Today, it serves 44 international destinations in Africa, Europe, the Middle East, Asia and the United States with a fleet of 23 aircraft. And, with 26 destinations in Africa, its African network is unrivaled.

“For the past 60 years, we have been connecting the world to more of Africa than any other airline,” said Ethiopian Airlines Chief Executive Officer Girma Wake. “At the same time, we are opening up our continent to busi-ness and tourism with our worldwide network. We are proud to fly the flag as Africa’s ‘World Class Airline.’”

To support its expansion, Ethiopian Airlines acquired six Boeing 767-300ER and five Boeing 737-700s, which were delivered last July. The second phase of the fleet mod-ernization program began with the order of 10 Boeing 787 Dreamliner aircraft, with delivery of the first one slated for 2008, boosting its fleet to 33.

“We continue to expand to meet the demands of a burgeoning African economy with an aggressive fleet acquisition program of 21 new aircraft: six Boeing 767-300ERs, five Boeing 737-700s and 10 Boeing 787 state-of-the-art future craft,” Wake said.

Recently, the airline took yet another sig-nificant step forward by modernizing its visual image with a new logo and aircraft livery.

“The fresh, new look keeps faith with the past while, at the same time, announces the dawn of the era,” Wake said.

A key feature of the fleet expansion and enhancement of Ethiopian Airlines is its emphasis on the skill and expertise of its nearly 4,600 employees. The massive invest-ment in training (two-thirds of its employees undergo some form of training every year) and technology (a state-of-the-art flight simula-tor and an acclaimed, internationally certified maintenance and engineering center) ensures the airline’s fundamental philosophy.

Ethiopian Airlines has established one of the finest pilot and aviation maintenance training centers in Africa. While it provides an unsurpassed facility for its own pilots and tech-nicians, it also offers training to airline person-nel from other companies in Africa, the Middle East and Europe, creating ancillary revenue.

Not relying only on revenue from car-rying passengers, Ethiopian Airlines is a sig-nificant player in providing maintenance and training services to other airlines in the region, such as Chanchangi Airlines, Air Burundi, ADC Airlines and Congo Presidential Aviation. The airline’s maintenance center is also employed by Middle East carriers Phoenix Aviation and Dolphin Air; Russia’s Transaero and Boeing from the United States. Ethiopian

Airlines’ M&E division, a U.S. Federal Aviation Administration-approved facility, has contrib-uted significantly to the airline’s bottom line, and to support its continued growth, the carrier will build a 7,200-square-meter state-of-the-art maintenance hangar that will accommodate two Boeing 767 aircraft concurrently.

Cargo presents another important source of revenue for the carrier. Almost 12 percent of its revenue comes from freight services, and its cargo business continues to expand. To meet the growing demand for

the export of flowers, fruits and vegetables, Ethiopian Airlines will need to increase its freight operations frequency, which will, in turn, boost inbound cargo capacity. Ethiopian Airlines, in conjunction with its European cargo general sales agents, is aggressively marketing the added capacity. And the airline continues exploring ways to convert older passenger aircraft into freight planes to accommodate the rise in cargo traffic.

“If passengers are the lifeblood of our airline, cargo is the muscle,” said Ayenew Alemneh, director of cargo marketing for Ethiopian Airlines. “Our dedicated cargo fleet works tirelessly to supply world markets with the products of Ethiopia and our African neighbors.”

To facilitate the increase in freight traffic, construction of a new, modern cargo terminal was completed last November. The new facili-

ty will hold 104,000 tons per annum and will be equipped with a modern 1,500-square-meter cold room designed to support a turnover of 130 tons of palletized cargo per day.

A combination of its continually expand-ing network, increasing passenger traffic, secondary revenue streams, forward-looking technology (such as Sabre® PC AirFlite™ flight scheduling system and Sabre® FliteTrac® sys-tem) and exceptional staff, Ethiopian Airlines has the right formula to maintain its status as Africa’s World Class Airline.

“What does it take to become Africa’s ‘World Class Airline’?” Wake asked. “It takes people dedicated to safety and service — safety and reliability are traits every airline should share. It takes modern technology investment and planning with vision; it takes outstanding corporate citizenship that enables us to play a vital role in the socio- economic development of this great conve-nience of ours, which we affectionately refer to as our ‘first world.’”

Christian Gossel is a Europe, the Middle East and Africa-based account

director for the Sabre Airline Solutions® business. He can be contacted at

[email protected].

Photo courtesy of Ethiopian Airlines

Aspartofitscontinuedgrowthandsuccess,lastyear,EthiopianAirlinestookownershipofsixBoeing767-300ERandfiveBoeing737-700s.

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talking to the travel tradereach the online travel trade

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Four Canada-based airlines provide service to some of the country’s most remote towns, filling a need for travelers who would otherwise have little or no travel options.

By Rick Dietert, Holly Burkholder and Michelle Priller | Ascend Contributors

Remote Access

Canada, because of its expansiveness and the remoteness of some of its towns and cities, has a rich airline history. And while

most people around the world will recognize the Air Canada brand and most likely the up-and-coming low-cost carrier WestJet, there are several smaller niche carriers that serve a vital transportation need for many Canadian citizens.

Some of these regional carriers, such as Canadian North, Central Mountain Air, Bearskin Airlines and First Air, while small compared to traditional airlines, strive to provide the same or even better service than their larger inter-national counterparts. In doing so, they are investing in state-of-the-art technology to help enhance customer service and continue to

provide vital air links to remote areas within Canada that would otherwise be lacking.

CanadianNorthYellowknife, Canada-based Canadian North serves the Northwest Territories, which is 1,346,106 square kilometers (538,442 square miles) with a population of about 42,000, and the Nunavut Territory, which is 2,093,190 square kilometers (837,276 square miles) with 29,300 citizens. The region is primarily inhab-ited by native residents including Inuvialuit and Inuit.

Originally created by Canadian Airlines in 1990, Canadian North was purchased in 1998 by the Air Nortera Group, a holding com-pany that is 100 percent owned by more than

30,000 Inuvialuit and Inuit shareholders. In fact, the carrier’s motto is “Your North, Your Airline,” and its tail motif is a polar bear in front of the midnight sun.

Canadian North operates five 737-200 combis, a 737-200 and a Fokker 28 and serves remote cities, including Yellowknife, Ranklin Inlet, Hay River, Norman Wells, Cambridge Bay, Inuvik and Iqaluit. The airline also serves Calgary, Ottawa and Edmonton.

SeveralCanada-basedregionalairlines,suchasCanadianNorth,servesomeofthecountry’smostremotecitiesandtowns,suchasYellowknife(right).

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The carrier has partnerships with other regional airlines such as Kenn Borek Air Ltd., Aklak Air, Calm Air, Air Tindi and North-Wright Airways, and it accepts connections from Air Canada and has supported EDIFACT through check-in capabilities with the airline for a num-ber of years. As the International Air Transport Association’s mandate for 100 percent elec-tronic ticketing approaches, Canadian North is also preparing to set up an interline electron-ic ticketing agreement with Air Canada via the Interline Electronic Ticketing Hub, a module of SabreSonic™ Ticket.

While Canadian North has always done everything possible to provide excel-lent in-flight service, which includes hot meals with exotic dishes such as bison pot pie and an excellent choice of wines on most flights, it is expanding its customer-service offerings to include improved online flight booking features and Web-based check-in pro-cesses. Canadian North has offered Web booking options for several years and will soon utilize SabreSonic™ Web, an advanced booking engine, so

it can offer a range of other customer ser-vices such as fare-led itinerary searches. The airline will also implement several other solu-tions, including: Sabre® Virtually There® Web site, which enables customers to automatically receive reservations confirmation via e-mail as well as obtain information about their destination such as local weather and flight status,

Customer Insight, a module of SabreSonic™ Res that provides an integrated customer relationship management tool that enables consistent customer service regardless of the method customers use to book their flights,

Web Check-in, a module of SabreSonic™ Check-in that enables customers to check in from remote locations via the Internet.

While Canadian North has carved out a niche market in a remote area of Canada, its desire to provide an exceptional level of ser-vice, in part, through its recent technological advancements, will help strengthen its brand and encourage repeat business.

CentralMountainAirCentral Mountain Air was established in 1987 as a charter airline flying DC-3s and float planes to northern British Columbia to min-ing and guide outfitting areas. It is a privately owned airline that serves more than 17 com-munities in British Columbia and Alberta. The carrier employs more than 300 people and is headquartered in Smithers, British Columbia, with sales and marketing offices in Calgary.

Central Mountain Air operates 14 18-seat Beech 1900Ds and a Dornier 328. Some of the cities served by Central Mountain Air in British Columbia include Campbell River, Comox, Fort Nelson, Fort St. John, Kamloops, Kelowna, Prince George, Quesnel, Smithers, Terrace, Williams Lake and Vancouver. Kamloops and Kelowna are especially popular destinations with rapidly expanding tourism and skiing operations. Other communities served in Alberta include High Level, Lloydminster, Rainbow Lake, Calgary and Edmonton. Several scheduled flights are operated under Air Canada flight numbers as part of a

codeshare agreement.Central Mountain Air

has recently selected the Res component and utilizes the Web component for its online booking engine. In addition, Central Mountain Air is also setting up interline electron-ic ticketing with Air Canada via the Interline Electronic Ticketing Hub.

BearskinAirlinesFounded in 1963 by John Hegland, Bearskin Airlines — nicknamed the “Bear” — was named after Bearskin Lake located in north-ern Ontario and is another Canadian regional airline that primarily serves the needs

BearskinAirlines,or“TheBear,”operatesmorethan200dailydepartures,servicingremotetownsandcitiesthroughoutnorthernOntarioandManitobawithitsfleetofmorethan30aircraft.

Photo courtesy of Central Mountain Air


Photo courtesy of Bearskin Airlines

ManyofCanada’ssmall,remotenortherntownsrelyonairservicefromairlinessuchasCentralMountainAirtoconnectthemtootherpartsofthecountry.

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of the First Nation population of northern Canada. Bearskin Airlines has more than 375 employees and its main offices are in Sioux Lookout and Thunder Bay, Ontario. Today, Bearskin Airlines operates more than 200 daily departures that serve northern Ontario and Manitoba communities including Dryden, Fort Frances, Flin Flon, Kapuskasing, Kenora, North Bay, Lynn Lake, Red Lake, Sioux Lookout, Sault St. Marie, Sudbury, The Pas, Timmins, Thunderbay, Ottawa and Winnipeg.

Bearskin operates a diverse fleet of more than 30 aircraft that includes seven Fairchild Metroliners, six Beech 99s, four Beech King Air 100s, four Pilatus PC-12s, and a number of Piper Aztecs and Cessna 337s.

Bearskin Airlines strives to offer excel-lent customer service to its passengers, and it produces its own in-flight magazine, Bear Country, which promotes tourism to northern Ontario and Manitoba and highlights the unique culture of the First Nation tribes. Bearskin Airlines also has a commercial agreement with Air Canada and participates in the Aeroplan frequent flyer program.

The carrier has turned to the Sabre Airline Solutions® business to provide addi-tional passenger service features that include reservations, departure control and Web com-ponents within the SabreSonic™ Passenger Solutions. Bearskin is also the launch customer for the new Sabre Airline Solutions travel bank feature that enables airlines to refund tickets

into a personal travel bank that can be used for future online bookings. In addition, Bearskin Airlines is improving its service by setting up interline electronic ticketing with Air Canada.

As the employees of Bearskin Airlines like to say, “When flying in Bear Country, let the ‘Bear’ take you there.”

FirstAirFirst Air, another northern Canada operator, serves the remote cities of the Northwest Territories and proudly displays a tall Inukshuk, which is a traditional Inuit marker, on the tails of its Boeing 737 aircraft. First Air evolved

from Bradley Air Services, founded by Russ Bradley almost 60 years ago, and later expanded through acquisition of other air-lines including Ptarmigan Airways and NWT Air. Today, the company is owned by the Makivik Corp., an Inuit corporation, and oper-ates under the motto, “First Air, the Airline of the North.”

First Air combines a mix of sched-uled service, freighter operations and char-ter service that is supported by more than 19 aircraft, including Boeing 737-100s/200s combis, Boeing 727-200 combis and freight-ers, ATR-42s, HS-748s, and a Lockheed 382 Hercules. Its charter service mainly supports the Canadian government and mining opera-tions in the northern Arctic. The scheduled service and cargo operations serve more than 225,000 passengers and 22 million kilograms (24,200 tons) of freight in a year. Service is pro-vided to connect more than 24 northern cities including the major cities of Ottawa, Montreal, Winnipeg and Edmonton.

First Air also partners with Air Canada and participates in its Aeroplan frequent flyer program. A long-time user of the Res compo-nent, First Air has also been taking advantage of some of the new tools that Sabre Airline Solutions has rolled out including its new Web component booking engine and is also setting up functionality to allow interline elec-tronic ticketing with Air Canada via the Interline Electronic Ticketing Hub.

As these carriers’ capitalize on advanced technology, they’ll continue to provide links between remote communities as well as the business centers of the country.

Rick Dietert, Holly Burkholder and Michelle Priller are North American-based account

directors for Sabre Airline Solutions. They can be contacted at [email protected],

[email protected] and [email protected].


Inuvik,Canada,servedbyCanadianNorth,islocatedontheMackenzieDelta,Canada’slargestfresh-waterdelta,closetotheArcticOcean.AremotedestinationwithaviewoftheRichardsonMountains,InuvikisthegatewaytoothernortherncommunitiesinCanada.

FirstAir,whichprovidesscheduledservices,freighteroperationsandcharterservicetotheremotecitiesoftheNorthwestTerritories,operatesBoeing737aircraft,whichdisplayatallInukshukoneverytail.

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Photo by Michael Durning/Airliners.net

Market. Sell. Serve. Operate. To the general population, they are four simple words, but to airlines around the world, they are the backbone of a successful business. Optimum manage-ment in these four areas is essential to running a long-term, healthy airline. And excelling in these areas, from planning through execution, dis- tinguishes the successful airlines from their competitors.

Technology plays a vital role in an air-line’s ability to effectively and efficiently mar-ket its schedules to customers, sell more tickets through preferred distribution channels, serve its customers and manage daily opera-tions. A premium airline software provider needs to be aligned with an airline’s needs in these main areas.

In recent years, many airlines have taken drastic steps to simplify their operations and remove as much complexity as possible. And with a strategic software provider, a more diverse and comprehensive portfolio can help airlines streamline operations through integrat-ed systems, bringing more value to airlines. However, if not well organized and managed, a broad portfolio can become unclear and confusing.

Sabre Airline Solutions offers leading airlines a product portfolio that has unmatched breadth and depth compared to any other provider in the world. And to ensure airlines can quickly identify which of its more than 100 systems best meets their needs, the portfolio has been strategically divided into the key areas of “market, sell, serve and oper-ate.” The scope of its 15 product areas and 10 product suites might ordinarily seem com-

plex, but when an airline needs to make improvements in one or more of the four critical areas of its business, it’s clear which products within the Sabre Airline Solutions portfolio is best suited.

From planning through execution, the Sabre Airline Solutions product portfolio is structured to help airlines — any size, any-where in the world using any business model — better market, sell, serve and operate.

MarketSabre Airline Solutions offers airlines an elite group of products to market their inventory. The Market product group helps airlines deter-mine how best to offer their schedules to customers and how to make the most revenue from the schedule using superior products to manage fares and cargo as well as leveraging passenger revenue accounting applications. Other Market applications give airlines valuable insight with data collection and global distribu-tion system evaluation. An airline’s loyalty pro-gram establishes long-term customer relation-ships with the most highly valued customers. Products supporting an airline’s market needs include: Quasar™ passenger revenue accounting sys-tem,

Sabre® AirFlite™ Planning and Scheduling Suite,

Sabre® AirMax ® Revenue Management Suite, Sabre® AirPrice™ fares management system, Sabre® CargoMax™ Revenue and Pricing Suite,

Sabre® GDS Analysis, Sabre® Loyalty Suite,

Sabre® SmartFlow ™ tool kit, SabreSonic™ Inventory.

SellThe Sell product group enhances an airline’s ability to reach customers through its preferred distribution channels by providing booking engines, channel distribution, customer relationship management, sales data analysis, reservations, shopping options and ticketing solutions. Sabre Airline Solutions helps airlines sell intuitively, using advanced tools to plan and analyze data, including: Customer Data Delivery, Customer Insight, Sabre® Qik ® Business Processing Solutions, Sabre® WiseVision™ Data Analysis Suite, SabreSonic™ Res, SabreSonic™ Shop, SabreSonic™ Ticket, SabreSonic™ Web.

From PlanningThrough Execution

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By Stephani Hawkins | Ascend Editor-in-Chief

Successful airlines are able to market their service, sell tickets, serve

customers and operate efficiently. The Sabre Airline Solutions® business

has tools designed to help airlines achieve each of these strategic goals.

ServeThe Serve group offers applications to accom-modate passengers requiring special services and to manage airport staff while handling passenger check in from home, curbside and gate. Delivering an easier experience for customers throughout the travel process improves customer satisfaction by providing aids for trip organization. Advanced solutions are available to help airlines excel in these areas, including: Sabre® InformSM mobile services, The Qik solutions for customer processing, Sabre® Virtually There® Web site, SabreSonic™ Check-in.

OperateThe Operate group delivers integrated solu-tions for a system’s operations control center, including flight planning; opera-tions and disruption control; maintenance, repair and overhaul; staff and gate manage-

ment; crew management; flight scheduling; and dining and cabin services. The vital Operate products oversee an airline’s daily operations — ensuring that flights leave and arrive on time, or, the in case of an unexpected disruption, can be quickly and efficiently handled. Solutions designed to help airlines operate with maximum efficiency include: Maintenix® MRO System, Ramco MRO System, Sabre® AirCrews® Crew Management Suite, The AirFlite suite, Sabre® AirOps™ Flight Operations Suite, Sabre® AirServ ® In-flight Solutions, Sabre® Flight Control Suite, Sabre® GS Fusion™ Ground Support Suite, Sabre® Rocade® Airline Operations Suite, Sabre® Streamline™ Resource Management Suite.

In addition to helping airlines better market, sell, serve and operate from planning through

execution, many Sabre Airline Solutions sys-tems, such as the AirMax suite and the AirPrice system, are integrated, helping further optimize the effectiveness of critical business areas.

Providing end-to-end solutions is only half of the equation for a well-rounded, solid, reliable software provider. Understanding how each product can best be utilized by airlines and determining which functional areas they support is just as critical. The simplified arrangement of the Sabre Airline Solutions portfolio is indicative of its thorough understanding and knowledge of the airline industry and what drives a thriving business. That, combined with its range of state-of-the-art solutions for any type of airline in any nation is what differenti- ates Sabre Airline Solutions from any other technology provider in the world … and that combination will help many airlines soar above the rest.

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During the past few years, revenue man-agement technology has been advanc-ing at a rapid pace, and most of these

advancements involve how to best respond to competitive changes in the marketplace. Effective pricing and revenue management technology involve getting the right price for maximum revenue. Unfortunately, an airline’s “right price” in a market can’t be determined without considering competitors’ fare levels, restrictions and schedules.

Keeping track of an airline’s current competitive situation can be a daunting task. The sales and marketing teams must keep track of the current competitive state across a very large number of market, fare, departure date and return date combinations: Markets — Non-stop flights plus connecting markets often number in the tens of thou-sands for a large carrier.

Competing airlines — There are typically several per market.

Fares — Millions of active fares are stored in the Sabre® global distribution system.

Availability — This includes each competi-tive itinerary and future departure date up to a year in advance.

Despite the complexities involved, an airline’s sales performance is directly related to its marketplace competitiveness.

Today, revenue management demand forecasts are based on historical average com-petitive schedules and fares. Previously, this approach didn’t pose a major problem, but with the emergence of restriction-free pricing during the past few years, the airline business has changed considerably. Assumptions of stable, unchanging competitive availability are unrealistic in the current environment and can significantly reduce the value of revenue man-agement. However, new revenue manage-ment technology, known as choice modeling, is emerging, rendering these historical average

assumptions obsolete. New data sources, such as low-fare shopping results, are used to capture available fares by carrier for origin-and-destination markets and dates, thus allowing rapid identification of situations in which car-riers are under or over priced relative to their marketplace competition.

ChangesintheBusinessEnvironmentRecent years have seen significant changes in the underlying airline fare products. New fares with fewer rules and restrictions have resulted in greater revenue dilution and yield declines in many markets. New Internet-based e-com-merce channels have emerged; Web fares have proliferated, and deregulation of global distribution systems in the U.S. marketplace has led to broader adoption of “most-favored-nation” agreements giving access to low-fare content and availability.

The surfacing of powerful new low-fare search engines on major Internet travel agencies, such as Travelocity ® and Expedia, has led to greater transparency of airfares for customers and suppliers. In effect, it is easier for all parties to get accurate information on competing airfare products. In addition, the recent deregulation of U.S. global distribution systems has created a business climate that will permit improved historical data collection as well as new capabilities such as real-time pricing and availability.

ChangesinRevenueManagementTechnologyOne important enabler for competitive rev-enue management is improved data collec-tion. During the past 18 months, the Sabre Holdings™ business has put significant effort into retaining results from low-fare search requests and storing this history to a data warehouse. These low-fare search requests for a particular O&D market, departure date and return date provide insight into the relative competitiveness of various airline itineraries serving specific markets at specific times. Although not yet available as a product, historical shopping results are available for research and analysis purposes. Prototypes of new applications that issue competitive alerts to our airline partners are currently being tested, and these alerts notify revenue management analysts of specific problematic markets and departure dates in which they are either under priced or over priced, relative to competitors. Early results show that these alerts are proving useful in identifying previously unknown market com-petitive issues.

Also, due to the efforts of airline, ven-dor and academic research teams, significant improvements are being made in the areas of customer demand forecasting and revenue management optimization. One primary area of research is in the application of new sta-tistical tools for airline demand forecasting

TalkingTechnologyWith…RICHARD RATLIFF, SENIOR RESEARCH SCIENTIST, SABRE HOLDINGS

Competitive Revenue Management: The Next LevelThrough the use of choice modeling, the latest in

revenue management technology, historical average

demand assumptions are becoming a thing of the past.

New choice-based demand forecasts will enable airlines

to quickly identify when they are under or over priced

in comparison to their competition.

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known as customer-choice models. In addition to historical booking activity, these new cus-tomer-choice models consider demand shifts caused by changes to competitor prices and/or schedules. Early results show that these fac-tors have a significant impact on demand, so this new technology is being built into the Sabre® AirMax® Revenue Management Suite to help provide more accurate demand forecasts. These customer-choice models are also being used in revenue management optimization; factors such as “upsell” (the likelihood that customers will pay a higher fare if their first choice is unavailable) and “recapture” (the likelihood that customers will book an alternate flight on the same carrier if their first choice is closed for sale) can be considered.

Revenue management inventory con-trols are also growing more sophisticated. Point-of-sale and journey controls are becoming widespread, and increased business flexibility from open-systems computing plat-forms (such as SabreSonic™ Inventory) are being adopted. In a recent article in the Journal of Revenue and Pricing Management, Ben Vinod, chief innovator for the Sabre Airline Solutions® business, and I discussed how “smart” controls for real-time availability and pricing will become one of the most important revenue-enhancing technologies for airlines within the next decade. We are con-ducting studies with travel agencies on the use of new capabilities, such as dynamic availability and dynamic pricing. These various real-time inventory and pricing capabilities are compo-nents of a complete operations engine that comprises the core of the new competitive revenue management process.

RevenueOperationsEnginesIf an airline has up-to-date competitive infor-mation regarding available flights and fares,

it can perform a real-time reevaluation of the inventory controls that were generated dur-ing the most recent revenue management planning system optimization. The purpose of the reevaluation is simple: to check that the predicted marketplace conditions match the current ones. If competitive conditions have changed significantly (either better or worse), then the resulting inventory control decisions should be revised.

For example, when overnight revenue management planning optimization process-ing was performed for “Husky Airlines” flight 89, it was assumed that Husky’s prevailing 30 percent historical market share would con-tinue, resulting in a K-class demand forecast of 35 passengers remaining between now and the time of departure. However, upon checking actual low-fare search results involving a specific future departure date, our customer-choice models show that Husky’s primary competitor, “Snowflake Air,” is projected to win 90 percent market share on that date (leaving only 10 percent share for Husky and all other carriers in that market). A quick check reveals that the schedule hasn’t changed, but Snowflake has reopened its previously closed deep discount fares on two flights. Given the new market conditions, the previous demand forecast of 35 is unlikely to be realized. Husky’s demand forecasts should be decreased, the revenue management optimization model should be run again, and the resultant availability of Husky’s deep discounts would likely make it more market competitive. This simple example shows how up-to-date market competitive information can be used to improve an airline’s revenue management availability.

In our distribution channels, it will soon be possible to use information from low-fare search results to optimize prices and

availability in real time, considering current competitive conditions. These patent-pending dynamic availability and re-pricing capabilities are known collectively as active inventory, and they represent a major step forward in revenue management technology. Instead of relying exclusively on planning forecasts to predict selling conditions, active inventory uses actual current market conditions to reduce the impact of planning forecast errors. Also, by pushing more automation and intelligence into the real-time decision, it helps simplify management of markets and dates by revenue management analysts. Historically, major revenue manage-ment advancements in the industry have been inventory related (virtual and continuous-nest-ing O&D inventory controls). These new active inventory capabilities will be integrated into the Inventory component during the next few years.

RevenuePlanningEnginesTraditional revenue management forecasting and optimization models are also undergo-ing major improvements. Customer choice models form the basis for future choice-based O&D demand and cancellation forecasting, which will forecast demand at the market level and allocate it to scheduled itineraries across all carriers. This technology has been used for years in the Sabre® AirFlite™ Planning and Scheduling Suite, but no data sources were available to calibrate demand at the O&D service/departure-date level. Shopping data has helped fill that gap, and use of a common forecasting methodology will lead to greater consistency between the AirFlite and AirMax suites’ demand estimates. In addition to forecasting, choice models will make improvements in revenue management optimization through improved estimation of up-sell, recapture and the effects of price elasticity.

“... ‘smart’ controls for real-time availability and pricing

will become one of the most important revenue-enhancing

technologies for airlines within the next decade.”

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UserBusinessProcessesIn the future, revenue management analysts will mainly focus on tracking market-level activity and competitive situation awareness. Customer-choice models and shopping alerts will highlight unusual market events for analyst review. Analysts will be able to more precisely control fare and inventory decisions through active inventory rules. This is an important step forward because restriction-free pricing has changed revenue management analysts’ focus and business processes. Instead of the previous “myopic” forecasting that considers only a carrier’s own historical data, competitive positioning is now the key consideration.

A typical workflow for future revenue management analysts will consist of three major steps:1. Reviewing alerts (from operations pro-

cesses),2. Performing root-cause analysis (by revenue

management analyst),3. Taking corrective action (manually or auto-

mated).Analysts will be equipped to perform

root-cause analysis using shopping data results, and this capability will include “what-if” scenario analysis (via simulation). These simulations will include a tactical capability to replay yesterday’s shopping and booking transactions under different competitive sce-narios (availability and fares) and estimate the likely revenue outcome using customer-choice models.

Given the importance of these opera-tions functions, the primary focus of pricing and revenue management in the future will be to establish good decision rules and use model-based systems to automatically adapt to specific competitive situations. Analysts will review recent performances and update the model-rules logic on an ongoing basis. Since choice-model-estimated market share auto-matically accounts for both pricing and sched-uling quality of service differences, analysts should find it easier to use than today’s price dollar differences in spotting broad patterns of competitiveness across markets and dates.

RevenueManagementWithRestriction-FreePricingThe catalyst for these recent technological advances has been the expanding use of “restriction-free pricing” by carriers worldwide. Most traditional carriers dislike the notion of restriction-free airfares because restrictions enable better segmentation of various cus-tomer types (early-booking leisure travelers versus late-booking business travelers), but they are often forced to match low-fare airlines in the affected markets to remain competi-tive. Fare restrictions help limit “buy down” of higher-fare passenger types into lower-fare categories — also known as dilution. Revenue performance of incumbent carriers could drop

by 5 percent to 11 percent in markets where new airlines introduce restriction-free airfares.

If competitive pressures dictate the launch of restriction-free airfares, how can airlines offset these huge yield declines? Simulation studies by the Massachusetts Institute of Technology International Center for Air Transportation showed that the nega-tive yield impacts from dilution can be less-ened by the use of more sophisticated O&D revenue management controls. Their primary finding was that, in low-fare air environments, network revenue management is even more critical to effective control of seat inventory between low-fare airlines’ local markets and connecting network traffic.

Why is revenue management even more important in restriction-free pricing than in traditional fare structures? In traditional fare structures, two mechanisms exist that inhibit late-booking business travelers from purchas-ing deeply discounted airfares: Fare restrictions (advance purchase

requirements), Fare availability (revenue management

controls).In the absence of fare restrictions, the

full burden of preventing dilution falls to the revenue management availability controls.

Revenue management in restriction-free pricing is much more complex than in tradition-al, segmented fare environments. Competitors being open or closed for sale in a given class

have a powerful effect on demand. As such, carriers must pay close attention to their competitors’ availability status. An article in the April 2004 Journal of Revenue and Pricing Management provided an excellent discussion of the business importance and practical usage of competitive availability information in reve-nue management with restriction-free pricing.

Low-FareSearchShoppingDataUnlike published fares, which can be obtained from sources such as ATPCO or SITA, there are no standardized industry sources of com-petitive availability information by O&D market and departure date. Furthermore, advances in low-fare search engines and emergence of restriction-free pricing are making ongoing competitive awareness for each future date even more difficult. The absence of restric-tions means availability is the primary means of fare product segmentation. In addition, new powerful low-fare search engines such as those employed on Travelocity ®, Expedia and Orbitz can now find “sum-of-locals pricing,” where two local fares are used instead of higher-priced through fares. Detecting these non-obvious fare combinations can result in sudden, unintuitive shifts in the effective mar-ketplace price. As such, identifying competitive imbalances and correcting them (preferably in real time) is becoming more important.

In an ideal world, pricing and revenue management decision-support systems would

Optimized faresand availability

Historically,majorrevenuemanagementadvancementsintheindustryhavebeeninventoryrelated(virtualandcontinuous-nestingorigin-and-destinationinventorycontrols).NewactiveinventorycapabilitieswillbeintegratedintotheInventorycomponentduringthenextfewyears.

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ActiveInventoryProcessing

consider competitors’ pricing and availability. In the past, this wasn’t possible. However, we have put considerable effort into stor-ing the results of historical low-fare search transactions for large portions of the airline marketplace. Because these historical data show which carrier performed best on low-fare search results, they provide better insight into the underlying reasons for sudden demand shifts between different carriers in an O&D market. Such information is critical in demand forecasting using customer choice models. Shopping data capture and use of customer-choice models are providing important new emerging capabilities for future revenue man-agement systems.

Choice-BasedDemandForecastingWe use statistical choice models to estimate the probability of selecting specific itinerary and fare alternatives returned from the fare search results. Given that something is booked, these models estimate the probability of selecting a particular option displayed in the low-fare search results. The relative attractiveness of the various itineraries displayed is calculated considering schedule attributes (elapsed flight time, departure time and carrier share in the originating airport) and the available price. This probability of selection among competing itin-eraries is equivalent to estimating the market share of each option.

By considering both the probability of selection and current available fares among competing alternatives, the expected revenue of a sale for each itinerary can be computed as:

This itinerary-level expected revenue equation is very useful because it enables an airline to determine the revenue impact of changes in one carrier’s price considering the current available price and quality of ser-vice of competing carrier itineraries. With this capability, a simple optimization model can be used to search for the “optimal” price amount (the point at which expected revenue is maxi-mized). Intuitively, this makes sense because a carrier’s maximum revenue performance under competition must consider competitors’ current prices.

Expected revenue improvements are very common. Although the additional reve-nue associated with one transaction isn’t dramatic, the cumulative impact of many small, tactical improvements to displays is expected to be significant. For bookings that involve a low-fare search (especially those made via Web channels), recent shopping simulations by the research group for the Sabre Holdings™ business show that more than 10 percent expected revenue improve-

ments are typical for re-priced itineraries. Such incremental gains are very large, and it is anticipated that further improvements can be gained when used in conjunction with modern origin-and-destination revenue management planning systems.

CompetitiveRevenueManagementNew tools and methods that incorporate com-petitive positioning in the marketplace will greatly extend the impact of revenue man-agement for airlines. New practices will help pricing and revenue management analysts better address important business require-ments such as: Helping them better understand customer preferences using shopping data,

Helping forecast demand and cancellations better via improved demand forecasting using

new customer-choice model technology, Providing better visibility into the sales pro-cess by using competitive alerts products designed to help identify problem markets and dates,

Helping improve market-competitive posi-tion and revenue using improved real-time response systems such as dynamic avail-ability and pricing.

It’s an exciting time in the industry, and I hope you agree that these new tools will help take your marketing performance to the next level.

Richard Ratliff is a senior research scientist for the research group at Sabre

Holdings. He can be contacted at [email protected].

“Delta’s SimpliFares: Not simple, but better” by J. Brancatelli, The Brancatelli File, http://joe.biztravelife.com/05/010605.htm, 2005.

“Price Optimization and Inventory Control: The New Generation in Revenue Management and Reservations” by B. Vinod (the Sabre Holdings™ business), Aviation Industry Group, Competitive Airline Business Strategies: Asia & the Middle East, 2004.

“Airline Pricing and Revenue Management: A Future Outlook” by R. Ratliff and B. Vinod (Sabre Holdings), Journal of Pricing and Revenue Management, Vol. 4, No. 3, 2005.

“Availability Based Value Creation Method and System” by R. Ratliff, A. Walker, B. Smith and A. Brice (Sabre Holdings), United States Patent Office, http://www.uspto.gov/, Patent Application Number 20030191725, 2003.

“Future of Revenue Management: A View from the Inside” by D. Cary, Journal of Pricing and Revenue Management, Vol. 3, No. 2, 2004.

“Revenue Management Performance in a Low-fare Airline Environment” by P. Belobaba and T. Gorin (MIT International Center for Air Transportation), AGIFORS R&YM Study Group Meeting, 2004.

“Revenue Management Performance under Simplified Fare Structures” by P. Belobaba and M. Dar (MIT International Center for Air Transportation), AGIFORS R&YM Study Group Meeting, 2005.

“Revenue Management with Restriction-free Pricing” by S. Mishra and V. Viswanathan (the Sabre Airline Solutions® business), AGIFORS R&YM Study Group Meeting, 2003.

“bmi’s Response to the Changing European Airline Marketplace” by S. Donnelly, A. James and C. Binnion, Journal of Pricing and Revenue Management, Vol. 3, No. 2, 2004.

“Revenue Management Under a General Discrete Choice Model of Consumer Behavior” by K. Talluri and G. van Ryzin, Management Science, Vol. 50, No. 1, pages 15-33, 2004.

InterestedinLearningMore?

Additional information about competitive revenue management can be found in several references, including:

Expectedrevenue =

Current available fare of an itinerary

Estimated share of an itinerary

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Think globally, act locally. The phrase first coined in 1979 referred to the argument that global environmental problems can

turn into action only by considering ecological, economic and cultural differences of local sur-roundings.

Today, the phrase describes a strategic business priority reflective of the new eco-nomic realities of a 24-hour-a-day, seven-day-a-week “follow-the-sun” marketplace where successful multinational companies must live in the markets they serve.

Late last year, Sabre Holdings demon-strated just how well it understood the prin- ciple by opening an operations base in Bangalore the “Silicon Valley” of India. Sabre Holdings has three businesses — Sabre Airline Solutions®, Sabre Travel Network™ and Travelocity® — that use the center for software development, on-time customer service delivery and operational support in Asia/Pacific.

“The new Bangalore office has been successful since opening last September, from the perspective of Sabre Holdings and our cus-tomers,” said Shail Maniar, managing director of Sabre India. “The move is reflective of our

strategy to grow globally and, at the same time, stay close to our customers.”

Sabre India started with only two work-ers in March 2005 and began the New Year with more than 50. Maniar expects to add at least another 70 employees by the end of the year, primarily in areas of product development, professional services support, quality assurance, data analysis and operations research.

“We are on target to build a world-class team at our Bangalore facility,” Maniar said. “Bangalore has a huge pool of talent consisting of both recent graduates and expe-rienced employees. Sabre India has quickly established itself as an ‘employer of choice.’”

Recruiting from top-tier Indian universi-ties, such as the Indian Institute of Technologies and the Indian Institute of Management, is a key strategy in developing the right mix of talent at Sabre India.

New staff is needed as solutions from Sabre Holdings are further established in India and the surrounding regions. Customers have embraced Sabre Holdings and welcome its presence in Bangalore, and being close to them is paying off. For example, Jet Airways’

Web check-in solution was customized and delivered by Sabre Airline Solutions employ-ees based in Bangalore. Additional capacity at the Bangalore facility will accommodate 162 employees and includes a world-class training facility to support customers in the region.

Having the Bangalore development office as a base of operations has permitted the Sabre Holdings business to grow their presence in the surrounding regions as well.

“Our professional services teams based here have traveled to customer locations in the region, such as Singapore Airlines, China Airlines and Air New Zealand, to manage our product testing and acceptance,” said Maniar. “This support has also been extended to our customers in Europe, the Middle East and Africa, such as Lufthansa German Airlines.”

BeyondBangaloreSabre Travel Network was the first Sabre Holdings company to set up offshore opera-tions in India.

It opened a Mumbai office in 1994. Today, three employees market airline distribu-tion products to airlines throughout South Asia, including India, Sri Lanka, Nepal and Bangladesh.


Following the SunThe Sabre Holdings™ business offices in India enable its

three businesses to connect with local customers.

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“Our airline customers have immedi-ate access to Sabre Travel Network products and service delivery processes because of our India office,” said Emmanuel Phillips, managing director for Sabre Travel Network in India. “Our local support helps these airlines increase revenues and efficiencies.”

In 2004, Travelocity moved a portion of its contact center operations and back-office fulfillment to India when it signed a multi-year master services agreement with WNS North America, Inc.

“Travelocity needed to differentiate itself from its online competitors, and our move to India allowed us to offer a customer-service guarantee,” said Lesley Harris, Travelocity vice president of sales and customer care. “Customers can now contact us 24/7. We’re able to staff more efficiently and offer more proactive services. For example, if one of our customers has a negative experience, we can follow up much faster, simply because we have a 24-hour time frame in which to work.”

OffshoreIssuesYes, trade is global, but landscape is local — that’s the challenge, according to Maimie

Jones, senior vice president of strategic sourc-ing for Travelocity. And more often than not, the challenges are basic.

For example, India and the United States, both former British colonies, celebrate Independence Day. The national holiday in the United States is July 4. In India, it’s Aug. 15. For planning purposes, managers with teams in India need to put both dates on the calendar.

“We have our holidays and they have theirs,” said Jones. “The point is that you need to be really familiar with the culture in which you are operating. Communication is very, very key.”

Jones said having a diverse, multinational team benefits all Sabre Holdings business units. “I think having offshore operations like the ones we have in India are tremendously important from our standpoint as a company that connects people with the world’s great-est travel opportunities. As we interact with different cultures, we get an appreciation for and information from potential customers. We get to see what they want from their travel experiences, which helps us develop more customer-specific products.”


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Photos courtesy of Sabre India

Sabre HoldingsofficesinBangaloreandMumbai,India,enableitsthreebusinesses—Sabre Airline Solutions,Sabre Travel NetworkandTravelocity—toprovidelocal24-hour-a-day,seven-day-a-weekservicetoitsAsia/Pacificcustomers.

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n a low-cost, low-price market, low-fare carriers have adopted unique tactics to attract consumers, promote their brand,

merchandise their product and earn ancillary revenue. In doing so, these carriers have shown a remarkable ability to adapt their busi-ness model to local conditions.

DistributionWhile Internet penetration is low and personal computers are still considered a luxury only the rich can afford, the high use of cellu-lar telephones coupled with the convenience and low cost of SMS text messages pre-sented a unique opportunity. India-based Air Deccan and Kingfisher Airlines seized upon this opportunity, enabling customers to pur-chase tickets with their cell phones through the use of SMS text messaging to transfer credit card details, passenger name records and ticket numbers.

Another innovative strategy LCCs are taking advantage of entails partnering with Internet cafes and travel agencies to sell tickets. Air Deccan, for instance, has entered a relationship with Reliance Web World, India’s largest chain of Internet cafes, which now sells 8 percent of Air Deccan’s total ticket volume.

“These outlets not only provide easy access to consumers for Air Deccan, they also help in brand promotion as they prominently display the Air Deccan banner,” said Gaurav Agarwal, marketing manager for Air Deccan.

Similarly, SpiceJet has formed success-ful partnerships with key travel agencies and branded them SpiceJet Shops.

“While these shops charge a small service fee from customers, they gain from SpiceJet’s aggressive promotions and strong brand,” said Sanjay Kumar, general manager of marketing and sales for SpiceJet.

RetailingWhile retailing food and beverage forms the main source of ancillary revenue for airlines around the world, it is still in a nascent stage in India. However, LCCs in India realize its potential and are rushing to capitalize on it. Air Deccan recently signed

a partnership with Café Coffee Day, a chain operated by India’s leading coffee con-glomerate, Amalgamated Bean Coffee Trading Company Ltd., to be the single ven-dor for all food and drinks. Air Deccan’s passengers can use their boarding passes as discount coupons at Café Coffee Day retail outlets, a win-win situation for both companies.

Air Deccan is also expanding its in-flight sales to include a variety of shopping options. Recently, it signed a deal with AVA Merchandising for India’s first in-flight shop-ping scheme termed “Brand for Less,” where customers can order brand-name products from a catalog at low prices.

FromDistributiontoMerchandisingWith…STEVE DUMAINE, SENIOR PRINCIPAL IN AIRLINE STRATEGY AND PLANNING FOR SABRE HOLDINGS

Innovative Marketing and Merchandising

Many innovative carriers in the India marketplace

are looking beyond traditional ticket sales to

generate additional revenue.

AirDeccanhastappedintoseveraltechnologicaladvancements,givingitscustomersdiversityinticketpurchasesusingseveralelectronicmethodsaswellaspartneringwithvariousvendorstoboostin-flightserviceandofferin-flightshopping.

Photo by Bhargav Prasanna/MyAviation.net

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“As the aviation market matures in India and

competition among LCCs intensifies, unique customer

touch points will become a major competitive advantage.”

“AVA [Merchandising] is a strategic tie-up to leverage the large number of passen-gers Air Deccan carries daily on its 146 daily flights,” said Capt. G R Gopinath, the airline’s chief executive officer and founding managing director.

Air Deccan provides incentives to its crew by paying its flight attendants a 10 per-cent commission on all sales. In-flight retailing currently accounts for 3 percent to 4 percent of Air Deccan’s revenues, which the airline hopes to raise to 10 percent within a few years.

AdvertisingLCCs in India hope to utilize their assets, including the body of aircraft, to profit from advertising. Kingfisher Airlines announced plans for selling ad space on the TV screen

inside its aircraft while Air Deccan sells adver-tising space on aircraft interiors and exteriors to brands such as Idea Cellular and Sun Microsystems.

As the aviation market matures in India and competition among LCCs intensifies, unique customer touch points will become a major competitive advantage. These carriers are likely to increase their dependence on alternate sources of revenue to keep their fares low as they fend off competition from the new entrants. Next on the horizon, look for LCCs to start offering discounted hotel and package deals to their customers.

Steve Dumaine can be contacted

at [email protected].

InIndia,Internetaccessislowandcomputersarestillperceivedasaluxury,whichhasseveralofthecountry’scarriersfocusingonalternativemethodstheircustomerscanusetopurchasetickets,suchasSMStextmessagingandInternetcafes.

Photos by Dinodia Photo Library

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Asia/PacificDragonair has increased customer sat-isfaction levels during check-in through the implementation of the Sabre® Qik® Developer Tool at the Pudong Airport in Shanghai, China.

The Hong Kong-based carrier, which serves 31 passenger destinations across Asia with one of the youngest and most advanced aircraft fleets in the region, selected the Developer Tool as a ready-made airport application that supports multiple languages to greatly enhance customer experiences at check-in by increasing staff productivity and performance.

“The check-in application from the Sabre Airline Solutions® business has enabled us to rapidly improve staff productivity by eliminat-ing the need for check-in agents to enter cum-bersome and repetitious commands,” said Ronnie Choi, director of customer services for Dragonair. “The check-in interface provides us with easy access to all necessary information so we are able to deliver more accurate and faster responses to customer requests. The implementation at Pudong Airport has successfully improved our check-in processing, hence we plan to roll this tech-nology out to Hong Kong and other cities in Asia/Pacific.”

Jet Airways, India’s leading airline, will be the first domestic airline in India to offer a distinctive online Web check-in facil-ity to its customers. Developed by Sabre Airline Solutions, the specialized Web tools enable passengers holding a confirmed and valid electronic ticket to check in for any of the airline’s 29 destinations throughout India anytime from 48 hours up to 60 minutes prior to departure. E-tickets can be issued through travel agents, Jet Airways’ portal, and Jet Airways airport and city offices. Through the new technology, Jet Airways has introduced yet another pioneering initiative that enables customers to not only select their preferred seat but also print their boarding passes for their same-day return flight on the carrier’s Web site.

“Jet Airways further strengthens its com-mitment for the growth of the Indian aviation industry through a new emerging technology,” said Peter Luethi, chief operating officer for Jet Airways. “This newly launched Web check-in facility provides yet another step toward a

seamless and hassle-free air travel experience.” After successfully launching online

bookings in which passengers can book, pay and print their e-tickets on the Web, Jet Airways, with the help of this new technology from Sabre Airline Solutions goes a step fur-ther to provide maximum convenience and comfort to its customers.

Travelocity™ has chosen India for ex-pansion of its operations in the Asia/Pacific region. The company feels the global trend to book travel online has begun to “find its feet” in India.

The business’ Asia/Pacific company, Zuji, will establish a specialist online travel team in India, targeting a “Travelocity India” site later this year. The new site will be built on the existing technology foundations of cur-rent Zuji online travel sites operating across the Asia/Pacific region, including Zuji sites in Singapore, Australia and Hong Kong.

“The future of travel bookings in India is online,” said Singapore-based Zuji Chief Executive Officer Scott Blume. “Just as we have seen the trend towards online travel bookings grow rapidly in the United States and now in parts of Asia, we absolutely believe that the global trend to book travel online has begun to ‘find its feet’ in India.

“We believe our decision to create a substantial, international online business in India will be a catalyst for change to the online travel business scene here. It’s a deci-sion we’ve made after much research, but ultimately because of our confidence in the Indian economy and the foundation of a robust domestic travel market, the rapid growth of the outbound and inbound sectors, the grow-ing trend towards e-purchasing in general, and the pool of talented people here. Travelocity India’s launch later this year will literally con-nect Indian travelers to the world and a world of travelers to India.”

Europe/Middle East/Africa

Air One, Italy’s leading privately owned airline, has slashed its data communications costs by 40 percent following its successful conversion to a number of operational and decision-support products from Sabre Airline Solutions. The carrier converted simultane-

ously to Sabre Airline Solutions products in seven different areas: passenger manage-ment, revenue management, fares manage-ment, planning and scheduling, movement control, dispatch management, and market data and analysis. The data communication savings stem from reduced transactions as a result of greater systems integration. The use of intuitive graphical user interfaces eliminates error messages, but most savings come from seamless integration of the reservations and departure control systems, eliminating the need to exchange data.

Air One is using SabreSonic™ Passenger Solutions for its reservations, ticketing, depar-ture control and booking Web site. Its suc-cessful migration involved three call centers, systems in 23 airports and cities, and the con-version of 153,000 passenger name records. The process was accomplished in just 18 minutes.

“Our growth goals are aggressive, and we now have a suitably aggressive technology partner,” said Lino Bergonzi, general manager of Air One. “We are one of the few European carriers now operating on a real, new-gen-eration open-systems platform, and we can immediately start taking advantage of cus-tomer-focused technology while at the same time lowering our operating costs.

“One of the reasons we chose Sabre [Airline Solutions] is because it provides one-stop shopping for airlines,” he continued. “Its consulting services, combined with technology that spans our operations, is important to help-ing us achieve our current and future objectives.”

Ethiopian Airlines signed a con-tract worth more than US$10.5 million (£5.8 million) with Sabre Airline Solutions for several products in its portfolio. Under the agreement, Ethiopian Airlines will migrate from a SITA sys-tem to the SabreSonic™ Passenger Solutions by the end of the year.

The airline will utilize several compo-nents within the SabreSonic solutions that pro-vide reservations, online booking, e-ticketing, codesharing and departure control. It will also use the Sabre® Traveler Loyalty System to help maximize its frequent flyer program and the Sabre® AirPrice™ fares management system.

“The key phrase behind our new rela-tionship with Sabre Airline Solutions is ‘sys-tems integration,’” said Girma Wake, Ethiopian Airlines’ chief executive officer. “Sabre Airline

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Solutions has a large portfolio of proven software and decision-support tools that will help us master the current and future growth of our airline. As the information technology needs of Ethiopian grow and evolve, we believe Sabre Airline Solutions will be able to accommodate us, both with its products and through its renowned consulting business. We see this new cooperation as a partnership that will allow both our companies to expand their presence in Africa and beyond.”

Gulf Air and TAP Portugal, to achieve savings in their on-board service costs, have selected the Sabre® AirServ ® In-flight Solutions, enabling them to integrate their entire range of catering and cabin ser-vices and drive savings of up to 15 percent from their total catering budgets.

The solutions enable electronic-busi-ness collaboration between the airlines’ caterers, suppliers and warehouse operations across the globe. They streamline the entire range of in-flight operations across each carrier’s network of business partners, trans-ferring real-time information to caterers and vendors.

“The AirServ solutions give us the ability to automate all our catering and cabin services from menu planning and scheduling, beverage services and duty free to entertain-ment, reading materials and cleaning ser-vices,” said Tariq Sultan, vice president for Gulf Air. “The software will deliver an imme-diate increase in operational efficiency and a significant return on investment.”

Users of the AirServ solutions have real-ized particularly significant savings through automation of invoice auditing, resulting in reduced missed payments. Inventory costs are cut through better order visibility, fore-casting and control, while meal spoilage is reduced through accurate, automated passen-ger forecasting. The solutions also help the carriers reduce distribution costs, decrease catering spend, and increase multiple provi-sioned or back-catered flights.

Air Management Group con-tracted with Sabre Airline Solutions to help operate its new Moscow, Russia-based air taxi services under the Dexter brand, which operates light aircraft configured with four or six seats specially designed for frequent busi-ness travelers.

“The idea is to offer business travelers an uninterrupted, efficient, safe and quick point-to-point transport service between cit-ies where direct air connection is congested, irregular or simply does not exist at all,” said Evgeny Andrachnikov, chairman of the board of AMG. “We are also selling on the concept of flexibility, so our operational and decision-support technology needed to be able to help us with this.”

Dexter uses the Sabre® Rocade® Airline Operations Suite to manage its growing fleet of 250 aircraft that make more than 1,500 departures a day in and around Russia. The Rocade suite provides a complete solution for efficient and flexible fleet and crew planning as well as operations control. The solutions are scalable and can be used by small start-up airlines as well as medium-size businesses with up to 150 aircraft.

“As airports become increasingly congested and scheduled business routes grow more crowded, there’s a definite niche opening up,” Andrachnikov said. “Sabre [Airline Solutions] is perfectly placed to help. The scale and breadth of our opera-tional and decision-support products mean I can be talking to British Airways in the morning and AMG in the afternoon.”

AirTran Airways signed a new five-year agreement with the Sabre Travel Network™ business to make all its fares and inventory available through the Sabre® global distribution system and Travelocity.

In addition, Travelocity Partner Network, the private-label booking business for Travelocity, will become the sole sup-plier of hotel, cruise and AirTran Vacations packaging content for the carrier’s Web site.

“This new long-term agreement is sig-nificant to AirTran Airways in the sense that, as our airline evolves, the channels of distri-bution must also evolve,” said Kevin Healy, vice president of planning for AirTran Airways. “Distributing through multiple Sabre Travel Network channels lets us conveniently serve our customers, both business and leisure flyers, and maintain our low-cost structure. AirTran Airways and Sabre Travel Network are commit-ted to creating distribution efficiencies through both current and emerging technologies.”

Oman Air became the first Sabre Airline Solutions customer to implement electronic

ticketing in the Middle East. The airline has introduced e-ticketing capabilities success-fully in its reservations offices in Muscat and Salalah, Oman; Dubai, United Arab Emirates; Cairo, Egypt; Mumbai and Chennai, India; and Kuwait. It uses SabreSonic™ Passenger Solutions for its reservations and check-in operations at these airports, so acceptance of e-ticketing was possible without additional third-party ground handling functionality.

Oman Air will extend e-ticketing capability to its offices in Beirut, Lebanon, and Delhi, India, before the end of the year. The carrier will then expand its e-ticketing capability to airports that require third-party ground handling functionality, such as Bahrain.

“The consultative element to Sabre Airline Solutions business is a real differentia- tor from other suppliers, adding value and eas-ing the implementation process,” said Edward Grauvogl, Oman Air’s planning divisional man-ager and acting commercial divisional man-ager. “We were surprised by how easily e-tick-eting was accepted by the local market, given our initial wariness about the introduction of this technology in a paper-driven society.”

Aeroflot Russian Airlines launched a pilot version of its new online book-ing service, reported its plans to introduce electronic paperless ticketing, confirmed it is on schedule with the technical requirements needed for its planned entry into the SkyTeam alliance and reported the success of the travel agency technology switch in Russia. The airline also revealed plans for the launch of self-ser-vice airport express check-in kiosks as well as touch-screen self-booking units travelers can use to plan flights and make their own bookings.

The technology upgrade involved the successful switch from outdated technology systems to cutting-edge reservations, opera-tional and decision-support products provided by Sabre Airline Solutions. The information technology overhaul, combined with the air-line’s recent product upgrade and re-branding exercise, enables it to compete successfully on international routes and paves the way for it to enter the SkyTeam alliance. Sergey Kiryushin, Aeroflot’s chief information officer, said the scale of the project was vast and one of the biggest travel IT projects attempted in Russia.

“To change our entire technology plat-form while running a growing and successful business has been a major challenge,” he said.

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“The fact that we have gone as far as we have, while simultaneously servicing growing cus-tomer inquiries and maintaining service levels, has been an outstanding achievement by the Aeroflot and Sabre Airline Solutions teams.”

Evgueni Bachurin, Aeroflot’s commercial director, said, “Everything we are announcing today is about customer convenience, staffing and cost efficiencies, bringing the airline up to date with best practices in the competitive world of the international aviation industry. We’re rapidly turning Aeroflot into an airline that embraces the best available technology and efficiencies, resulting in better service for customers and a more streamlined, cost-effective airline for the country. It’s one of the advantages of having chosen to go with Sabre Airline Solutions in the first place … it offers better technology and better support for these innovations than the previous incumbent or any of its competitors.”

Turkish Airlines signed a multi-year contract worth more than US$1 million with Sabre Airline Solutions for decision-support technology from the Sabre® AirMax® Revenue Management Suite and expects to boost total revenues by five percent as a result.

The newest version of Sabre® AirMax® Revenue Manager will reduce Turkish Airline’s exposure to no-shows and duplicate bookings. The system will help the carrier make the most of high-value demand close to departure, while simultaneously limiting the number of empty seats on departing aircraft. Revenue Manager will also give the airline a range of decision-sup-port tools including data collection, forecasting and performance measurement, enabling it to improve the way it manages seat availability.

“We expect big improvements in demand forecasts,” said Sami Alan, Turkish Airline’s senior vice president of revenue man-agement. “Revenue Manager, coupled with the Sabre® AirMax® Group Manager, will provide substantial marginal revenue contribution over our existing revenue management software.

“The Sabre Airline Solutions team was able to demonstrate the flexibility of the sys-tem to match our processes and needs, which was a refreshing change from the approach of other suppliers out there,” he said.

Gulf Air selected Sabre® CargoMax Revenue Manager to help take much of the guesswork out of managing complex cargo

operations so it can accurately plan loads for maximum revenue.

“Cargo is an increasingly important ele-ment of Gulf Air’s business, and Revenue Manager will further enable us to maximize this important revenue flow,” said Ali Murtada, vice president of business units for Gulf Air. “Revenue Manager fits perfectly with the rest of our Sabre Airline Solutions portfolio. We continue to look to our technology partner to provide technologies and tools that deliver results, from increased revenues to improved efficiency and productivity in our operations.”

Revenue Manager can also manage booked cargo that does not arrive at its planned destination as well as control and track bookings from a revenue perspective. The system enables product offerings and pricing decisions to be made with the most accurate information and data, adding to the ability to maximize revenue. In addition, Revenue Manager helps find the proper bal-ance between long- and short-haul traffic.

The AmericasUS Airways, the nation’s largest full-service, low-cost airline, has signed a new five-year, full content agreement with Sabre Travel Network. Through the agreement, all US Airways published fares and inventory — including Web fares — whether flown under the America West or US Airways brand are guaranteed to be available for all users of the Sabre® global distribution system, including online and offline travel agencies. This includes published fares that the airline sells through any third-party Web site and through its own Web site and reservations offices.

“Signing this agreement with Sabre [Travel Network] not only provides attrac-tive economics to US Airways, but it also ensures our most loyal customers will have easy access to our low fares through the distribution channel most convenient for them,” said Scott Kirby, US Airways execu-tive vice president of sales and marketing. “Many of our top business customers regard Sabre [Travel Network] as the most convenient and comprehensive way to book their travel. We’re extremely pleased with the agreement as it allows these customers to continue booking on US Airways through its existing systems.”

Eos Airlines’ flight schedules and fares are now available for access and sale to more than 50,000 subscribers who use the Sabre® global distribution sys-tem. Eos Airlines offers a single premium-class service on its daily flights between New York’s John F. Kennedy International Airport and London’s Stansted Airport.

“The fact that Sabre [Travel Network] can provide us with outstanding access to the high-yield corporate traveler was of great interest to Eos,” said Christopher Frawley, vice president of distribution at Eos. “This is a ter-rific match for our corporate-focused product.”

Northwest Airlines signed a five-year, full content agreement with Sabre Travel Network, enabling all Northwest published fares and inventory, includ-ing Web fares, to be available through the Sabre® global distribution system.

“We are pleased to enter into an agreement with Sabre [Travel Network] that achieves Northwest’s electronic distribution objectives,” said Al Lenza, vice president of distribution and e-commerce at Northwest.

Sabre Airline Solutions has successfully implemented technology from Microsoft to accelerate development and deployment for the next generation of the Sabre® Streamline™ Resource Management Suite. Through in-depth architect design review sessions at the Microsoft Technology Center in Austin, Texas, Sabre Airline Solutions and Microsoft were able to prototype a new smart-client application. The prototype com-bines the best of Microsoft’s newest technol-ogy and design approaches using Visual Studio 2005 and the 2.0 .Net Framework with the Streamline suite’s industry-leading resource management solution, which is utilized by more than 40 airlines, ground handling agents, airports and government agencies worldwide.

“By working together, Sabre Airline Solutions and Microsoft have enabled imme-diate results, and we look forward to a con-tinued relationship in executing the long-term vision of the Streamline suite,” said Pradeep Rathinam, Microsoft’s general manager of independent software vendors in the United States. “Sabre Airline Solutions has capitalized on the opportunity to gain early insight into the development and delivery of solutions utilizing Visual Studio 2005 and the .Net Framework.

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We are very excited about the Sabre Airline Solutions newly announced commitment as its work is representative of the tremen-dous momentum in the ISV community with the release of these new technologies.”

Sabre Airline Solutions, the industry leader in innovative technology that helps airlines better market and sell prod-ucts, serve customers and operate efficiently, reported sales through SabreSonic™ Web last year, totaling more than US$4.1 billion. This represents a 27 percent year-over-year increase in sales of the powerful airline Internet booking engine, an indication of the flight industry’s growing demand for passen-ger self-service capabilities.

The Web component also delivered a dramatic increase in the number of carriers adopting the solution in 2005 as well as the number of passenger bookings. Eleven new customers selected the component during the past year, bringing to 38 the total num-ber of carriers utilizing the solution in North America, Asia/Pacific, Europe and the Middle East. These carriers booked approximately 1 million passengers a month through the Web component — a yearly total of 13.4 million passengers, which represents an increase in passenger bookings of 33 percent over 2004.

Total activity through the component last year averaged more than US$330 million per month, and more than 11 million tickets were booked through the Web component during the same period, representing a 24 percent year-over-year increase.

“The Web component’s booking num-bers and revenues increased significantly in 2005, indicating the growing demand for pas-senger self-service capabilities and the growth of the online space,” said Gianni Marostica, president of Airline Passenger Solutions for Sabre Airline Solutions. “Since its launch in January 2004, the customer-centric shopping and booking method has proved its value to carriers and their customers alike by offering the best options for booking, check-in and exchanges for today’s travelers.”

Sabre Airline Solutions reached significant milestones last year on the second anniversary of the launch of its next-generation SabreSonic™ Passenger Solutions. Its hosted carriers employed the SabreSonic solutions to handle more than

350 million passenger boardings, successfully serving more than 40,000 passengers per hour. SabreSonic™ Inventory enabled carriers to manage more than 100 million inventory availability requests and book US$4 billion in tickets last year. In addition, hosted airlines used the system to complete more than 275 million check-ins, increasing passengers-boarded counts by more than 100 percent year over year.

During 2005, Sabre Airline Solutions completed 353 customer activations of SabreSonic solutions. The number of airlines benefiting from the unmatched flexibility, speed, performance and cost savings deliv-ered by the solutions exceeds 100 carriers worldwide.

“The breadth of the offering from Sabre Airline Solutions provides an integrated solution across all of our operations,” said Sergey Kiryushin, chief information officer for Aeroflot Russian Airlines. “In fact, we believe the technology solution it has packaged for Aeroflot offers benefits that are unmatched in the industry. This smart technology means improvements to our operations and that means better results to our bottom line and improved service to our customers.”

Lina Bergonzi, chief executive officer for Italy-based Air One, said, “Our growth goals are aggressive, and we need an aggressive technology partner. Our business strategy is based on offering convenient and efficient service, and the agreement with Sabre Airline Solutions is a key element of our strategy. SabreSonic solutions have the technology we need now and provide the flexibility we need to quickly adapt to growth and new business models in the future. This technology inte-grates with [the Sabre Airline Solutions] deci-sion-support software to keep a keen focus on operational excellence while driving out costs and improving our revenues, all in a rapid growth environment. During the course of our evaluation, there was no other company that could provide the power of this combination.”

Around the WorldAlaska Airlines and Korean Air successfully implemented interline electronic ticketing, provided by the Sabre Airline Solutions Interline Electronic Ticketing Hub, a feature of SabreSonic™ Ticket. The state-of-the-art e-ticketing component eliminates

the need for carriers to build costly systems for electronic ticket distribution and database maintenance. The e-ticketing hub significantly simplifies the process for enabling interline electronic ticketing between two carriers. This capability comes at a time when there is a growing interest in e-ticketing, especially for itineraries that include travel on different carriers.

“It is important for us to maintain the level of service our customers expect while keeping costs low,” said Karen Broghammer, manager CRC and technology development for Alaska Airlines. “The Sabre Airline Solutions new-generation technology and ease of implemen-tation enables us to do just that with electronic ticketing and positions us for future growth.”

In addition to the rapid delivery and reduced costs for interline electronic connections, Sabre Airline Solutions provides unique processing tools. The diagnostic tools, including e-mail alert functionality and access to individual ticketing messages, provides airline employees with the resources to quickly diag- nose and solve message errors. Availa- bility of such enhancements comes as a benefit of the product’s development in an open-system environment.

Sabre Airline Solutions, the industry leader in airline operations tech-nology, achieved preferred partner status in the International Air Transport Association’s Simplifying the Business initiative. Sabre Airline Solutions has supported this initiative since its announcement in 2004, introduc-ing industry-first new-generation solutions that include both standalone and integrated options for electronic ticketing and other key elements of the IATA program.

“As an industry, we have challenged ourselves to find cost-reduction possibilities in our complex processes,” said Bryan Wilson, project director electronic ticketing for IATA. “To make the most effective use of technology and simplify the business of travel, IATA is working with top-level technology providers like Sabre [Airline Solutions] to move the industry forward. Sabre [Airline Solutions] has demonstrated great initiative in making this change happen with innovative solutions like its e-ticketing hub. We consider it an important partner in accomplish- ing the goals set forth in our Simplifying the Business initiative.”

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Photo by Ben Goode/ShutterstockPhoto by Ben Goode/Shutterstock

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Product

Sabre AirMax Group Manager

Description

Sabre® AirMax® Group Manager is a Web-enabled solution that helps revenue man-agement and reservations agents maximize revenue and profitability through proactive management of group requests. The system evaluates group traffic based on historical and current traffic data, forecasts booking activity, and tracks the performance of individual group requests. Group Manager can help airlines increase revenues up to 2 percent, with some carriers receiving 100 percent return on invest-ment within three months.

Benefits

Group Manager employs sophisticated modeling techniques to effectively manage and control the risks associated with accepting group traffic. Designed for flexibility and modularity, the system offers numerous benefits:

Increased revenue and market share — The system manages risks by accepting group bookings and/or redirecting groups to low-demand flights, thereby increas-ing revenue and market share across the network.

Eliminaterevenuedilution— By carefully protecting availability for later booking of higher-value passengers, the system eliminates revenue dilution caused by group traffic.

Optimalblockallocation— Ensures that only the best commercial arrangements are accepted by means of critical evaluation of group requests by travel agents and tour operators during a season.

Higher loyalty — Groups are strategically managed to ensure that group turndowns are minimized by directing group traffic to low-demand flights and off-peak periods,

improving loyalty of various group types and sustained market share.

Productivity enhancements — Auto- mated request processing interfaces results in better resource utilization and reduced turnaround time of group request processing.

Features

Group Manager has several modules with an array of features and functionality, including:

Ad Hoc Group Request — Enables rev-enue management and/or reservations staff to evaluate ad hoc group requests in terms of revenue contribution and possible revenue displacement. The itinerary evaluator provides a recommendation to accept or reject the request based on forecasted demand as well as current bookings. Capabilities of the Ad Hoc Group Request module include:

Determining break-even fare or displace-ment costs, and expected profit for each itinerary,

Processes one-way, round-trip and multi-destination itineraries,

Offers negotiation capabilities for recap-ture of demand,

Splits itineraries if required. The auto-split feature determines the optimal split of the group request that results in maxi-mum revenue.

Series Group Request — Enables pro-cessing of seasonal group requests from tour operators or consolidators for a specific departure date range. The series eval-uator helps prioritize and allocate seats to the competing requests based on their overall revenue contribution and minimum acceptable fare. This module can also help analyze corporate contracts for discount allocation.

Photo by Ben Goode/Shutterstock

Group Tracking — Tracks the group request performance from its creation through departure. Reporting on historical group performance provides an airline’s sales division an additional tool to gauge the effectiveness of particular groups. This information can be used for future negotiations with the group organizers or in the planning of special group promotions. The Group Tracking module can also be used to manage group bookings on future departures. It enables airlines to specify criteria by which particular groups can be flagged as requiring special attention before there is a significant revenue impact. Benefits of the Group Tracking module include:

Automated alerts for deposit, names and ticketing time limits,

Group utilization profiles based on request attributes, such as market origin and des-tination, agency, group type, point-of-sale, and season,

Generation of ad hoc performance mea-surement reports at various levels of detail for analysis.

Queue Processing — Enables real-time review and confirmation of group requests by providing an automated interface to a carrier’s reservations system. Revenue management and/or reservations staff can retrieve requests directly from the queues, evaluate, confirm and re-queue the PNR in the carrier’s reservations system. Without manual intervention, the auto-pilot feature can confirm or waitlist the group request based on a hierarchical set of user-defined rules, improving productivity.

Allotment Planning — Accurately esti-mates block space allocations including inventory and price for basic and peak sea-sons well in advance of the selling season. With this data, carriers can maximize expect-ed revenues for the planning period by using the system recommendation as leverage during negotiations.

Product

Sabre Corporate Loyalty System

Description

The Corporate Loyalty system helps airlines develop their corporate and travel agency loyalty customer base. The system enables companies to begin receiving rewards as soon as they enroll. With this program, airlines reward companies with credits, offered as points or currency, and the company redeems them for flights, special promotional discounts, free upgrades or whatever the airline makes available.

The company can use the rewards as employee incentives or even to reduce its corporate travel costs. These benefits make it easy for corporations to encourage their employees to fly a specific airline. The corporate solution offers multiple ways to manage corporate rela-tionships in addition to the market-specific loy-alty incentives. These options include prepaid travel, rebates, and trade and barter. With the travel agency option, airlines can offer incen-tives to travel agencies to encourage book-ings on their airline. Similar to the individual traveler program offered by the Sabre Airline Solutions® business, the Corporate Loyalty system provides extensive marketing and program management capabilities, including e-mail campaigns to develop corporate and travel agency relationships and segment-tar-get marketing programs, contract manage-ment tools, a multi-language corporate and travel agency Web site that enables company enrollment and activity viewing, administrative reporting, and account management.

Benefits

The Corporate Loyalty system offers signifi-cant benefits to airlines, including:

Delivering an effective, Web-enabled, multi-language corporate loyalty management solution,

Photo by Robert Kohlhuber/Shutterstock

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New and Improved Products and Services from Sabre Airline Solutions

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Providing one-to-one marketing opportunities so airlines can target individual corpora-tions,

Helping airlines generate high-yield business travel revenue by rewarding corporations with redeemable credits based on employee travel,

Boosting revenue by increasing corporate traffic.

Features

The Corporate Loyalty system includes several features, such as:

A user-friendly interface for easy, quick navigation;

Secure account access;

Strategic marketing message capability via e-mail or Web site;

Ability to target specific corporations;

Promotions based on class, cabin, city pairs or dates;

Multiple awards options for greater flexibility and customer satisfaction;

Several redemption paths (call center, e-mail, booking engine);

Survey functionality and results for promotional and marketing needs;

Account and market statistics;

Remote access based on a structured monthly fee, minimizing initial investment, providing access functionality quicker, reduc-ing information technology and database resources, and lowering maintenance and support costs.

Product

SabreSonic Shop

Description

SabreSonic™ Shop, a component of the SabreSonic™ Passenger Solutions, enables airlines to present fares that best match their customers’ diverse needs for low- fare options. By introducing advanced shopping features such as alternate date searching, alternate city shopping, flex-ible date searching and merchandising, the Shop component further helps airlines present the perfect fare to their customers, using fewer transactions, enhancing customer satisfaction and driving channel shift.

Benefits

The Shop component enables airlines to pres-ent itinerary options that balance their custom-ers’ needs for low-fare options, resulting in several key benefits:

Strengthened customer confidence — Shoppers can create itineraries that exactly match their needs based on a variety of parameters.

Increasedcontrol— Airlines have greater control over fare search space and can define merchandising rules to return only the flight options they want their customers to purchase.

Reducedcosts— The component returns a wide breadth of options for a single request,

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helping reduce the number of shopping trans-actions needed to find the right fare. The response can then be filtered to ensure the desired option is presented to the customer.

Maximized profitability — Airlines can preference the shopping display to show options that support their profitability objectives.

FeaturesThe Shop component offers flexible configura-tion through key modules to meet an airline’s specific needs:

Low-fare searching — The Low-Fare Searching module delivers a variety of available and applicable low-fare options for customers who already know when and where they want to travel. Using this module, an airline can expand the depth and breadth of low-fare options presented on its Web site, increasing customer confidence and driving gains in online traffic. By limiting the response to only those fares that meet specified travel criteria, the module also enables an airline to present options that its customers are more likely to purchase, increasing its Web site’s “look-to-book” ratio.

Merchandising — The Merchandising module helps an airline control the shopping experience of its Web-based sales channels through a user-friendly graphical user inter-face. By customizing the shopping output, an airline can create rules that optimize the shopping display, promoting flights that sup-port its profitability objectives. Additionally, an airline can create rules that override customer input on such items as passenger types, preferred departure time, alternate cities and the number of options returned to provide higher-quality responses. The mod-ule also provides increased pricing flexibility by enabling airlines to create and apply rules based on variables such as departure city, arrival city and travel dates.

Flexibleshopping— The component pro-vides several tools that enable customers who may not know when or where they want to travel to quickly find attractive fares on an airline’s Web site.

Product

Version 2006 Sabre WiseVision Sales Analyzer

Description

Version 2006 of Sabre® WiseVision™ Sales Analyzer helps airlines’ sales and marketing departments drive market share and revenue growth by providing visibility and analytical capability into the booking activity of agency channels. The analyzer provides comprehen-sive reporting, graphing and analysis capabil-ity to enable headquarters and regional sales directors to set targets and monitor booking activity by agency, conglomerate or geograph-ical point of sale.

Sales Analyzer helps decrease the time needed to analyze and interpret large quanti-ties of market data. Analysts and sales repre-

sentatives can easily and confidently identify potential areas of increased revenue as well as track the effects of sales or promotions on a specific segment of the market. Using the analyzer, sales representatives can effi-ciently schedule and manage their time by focusing on target markets and accounts for the best sales results. This Web-enabled solution provides timely, global access to market information data tapes information for sales representatives and headquarters-based analysts. The data becomes available to all users at the same time with a single data load.

Benefits

Sales Analyzer benefits airlines by focusing on sales force productivity that:

Identifies an airline’s market position, its market share on specific routes and its market compliance with passenger travel behavior, including the ability to focus by sales area or region,


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Provides data mining for interactive and focused drill-down analysis,

Assists management with structuring marketing incentives to capture targeted market share,

Facilitates communication between sales personnel and agencies,

Enables trend analysis based on historic information,

Provides the ability to analyze and evalu-ate advance bookings and proactively shift market share,

Unifies marketing and sales efforts by identifying airline markets with expansion and codesharing possibilities.

Features

Version 2006 of Sales Analyzer offers a variety of new features, including:

Expanded group management capabilities such as the ability to create e-mail, city, airport, city market and airport market groups,

Enhanced report and template capabilities, such as:

Ability to automatically execute pre-for-matted reports in the form of templates after each monthly data load and e-mail the reports,

Ability to execute trend and time-series reports,

Enhanced user management capabilities,

Ability to incorporate additional data sources such as host bookings data and host revenue data,

Ability to e-mail and share reports directly from the application,

Expansion of quality of service index data into all reports.

Product

Sabre GS Fusion Ground Support Suite

Description

The Sabre Airline Solutions® business and GSE Technical Services, Inc. jointly present the Sabre® GS Fusion™ Ground Support Suite — a suite of GSE fleet planning, maintenance scheduling and real-time tracking applications that can make a difference in the financial success of transportation businesses such as airlines, airports, ground handlers and equip-ment leasing companies. Designed by indus-try specialists and developed by technical experts, the GS Fusion suite’s planning tool and equipment management and tracking sys-tems effectively address the full spectrum any company’s ground support equipment needs.

This solution provides a comprehensive planning of GSE, equipment utilization, real-time track-ing and maintenance scheduling. By access-ing real-time data, planners need not guess if enough equipment is available for any job, on any day. The suite provides seamless commu-nication and collaboration between operational demands and maintenance needs, enabling a more accurate and smoother day of operations.

Benefits

Businesses utilizing the GS Fusion suite have realized substantial benefits, including:

A wide range of what-if scenario planning, including alternate flight schedules and changes in equipment,

Optimized equipment utilization, decreasing costs and improving productivity up to 25 percent,

Operational cost savings between 30 percent and 40 percent,

Increased manpower and equipment efficiencies of 10 percent to 15 percent,

Reduced maintenance costs of 15 percent to 25 percent,

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Reduced ramp and apron damages and insurance deductibles by 30 percent,

Increased equipment availability by 25 percent.

Features

Systems within the GS Fusion suite offer a range of features, including:

GeneratingGSErequirements— Planning analysts can automatically generate GSE requirements for different combinations of ground and passenger handling services.

Schedulemanagementandcomparison— Flight schedules, which can be entered for an entire season, are stored in a master database. Analysts can enter an effective date range for each flight, extract weekly schedules for any seven-day period and set GSE assignments for the weekly schedules.

Optimized GSE assignments — Analysts can choose the aircraft, GSE, day and order to optimize assignments. The optimizer can also globally assign all GSE for seven days, simultaneously.

What-ifanalysiscapabilities— By redefin-ing process parameters, the suite provides valuable what-if capabilities. After generat-ing requirements, analysts can view results and analyze effects on GSE resources and service-level agreements that can evolve from a change in the flight schedule, aircraft types, equipment usage rules or perfor-mance standards. These multiple scenarios

give credibility to an evaluation leading to new ground equipment purchases when necessary.

Maintenance planning — Providing an easy-to-use graphical user interface, the suite’s planning feature gives maintenance personnel full control to plan inventory in advance. Equipment data, maintenance profiles, warranties, scheduled inspections, specific maintenance requirements, spare parts inventory, job orders and maintenance intervals by time period or engine hours can be entered in advance.

Scheduleandvolumedataview— With the help of a schedule and volume chart utility, planners can view data in tabular format and adjust all details regarding the seasonal flight schedule, as well as planned passenger, baggage and cargo load information.

Flight schedulebuilder— The suite sup-ports multiple formats including the SSIM format for importing flight schedule informa-tion. A flight schedule can be quickly created or changed by using the spreadsheet-style functionality and the rapid-entry template to react to the dynamic environment at the airport location.

Configurable user interface — The sys-tems deliver a powerful, full-color, graphical, user-configurable interface that is easy to comprehend. It incorporates the use of pull-down menus and split-screen capabilities to quickly display information needed to make decisions. Quick key strokes, tool

bars and mouse-driven commands facilitate actions.

Inventory analysis — The suite can use data from a variety of sources to compare current GSE inventory for an airport against projected requirements. This feature is more accurately enabled due to the real-time GPS tracking data feed of equipment inventory.

Operationalreports— The solution offers printed charts showing equipment require-ments, equipment inventory, summary information and details for a selected flight schedule. It also lets analysts print equip-ment parameters that were used to gener-ate actual requirements.

Accesscontrolandauthorizations— The suite helps improve health and safety stan-dards and provide visibility of equipment usage while preventing unauthorized use.

Equipment utilization and optimization— Can be analyzed using real-time data to measure actual usage against plan for more efficient operational streamlining.

Operational costs — Can be reduced by increased awareness of fleet operations in the field because of online monitoring of damages, operator behavior, equipment idling and ETAs for assignments.

Fleet management reports — The suite produces utilization statistics, damage occur-rences, driver habits, position on demand requests, geo fence alerts, access control statistics equipment usage and location.

Photo by Jeffrey Skopin/Dreamstim

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Photo by Jason Kench/Dreamstim

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Photo by Dragan Trifunovic/Dreamstim

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Photo by Kheng Guan Toh/Dreamstim

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smartsolutions.

What makes a solution “smart”? Patented algorithms? Intuitive interfaces?

Open-systems architecture? Absolutely. But what’s really smart are solutions

that help you overcome your challenges and deliver results.

By working closely with carriers worldwide, we’ve developed a portfolio of

flexible, integrated solutions that can optimize operations for all airlines —

any size, any business model, anywhere in the world.

Learn how we can work together to create smart solutions for your airline.

Call us at 682 601 1000. Or visit www.sabreairlinesolutions.com.

2006 Issue No. 1

Editors in ChiefStephani Hawkins B. Scott Hunt 3150 Sabre Drive Southlake, Texas 76092 www.sabreairlinesolutions.com

Art Direction/DesignShari Manning

Contributing DesignersYvette Hunt, Michelle Kennedy, Danielle McLelland, Tim St. Clair

Contributors Shaquiq Ahmed, Kathy Benson, Jack Burkholder, Vinay Dube, Glen Harvell, Roland Hollis, Carla Jensen, Tracey Lewry, Craig Lindsey, Marcela Lizárraga, George Lynch, Deborah Magee, Sandra Meekins, Gary Millward, Mona Naguib, Soona Oh, Nancy Ornelas, Wally Phillips, Jody Pickering, Jenny Rizzolo, Santosh Sah, Melvin Tan.

PublisherGeorge Lynch

Awards 2006 International Association of Business

Communicators Gold Quill.

2005 International Association of Business Communicators Bronze Quill, Silver Quill and Gold Quill.

2004 International Association of Business Communicators Bronze Quill and Silver Quill.

2004 and 2005 Awards for Publication Excellence.

Reader InquiriesIf you have questions about this publication or suggested topics for future articles, please send an e-mail to [email protected].

Address CorrectionsPlease send address corrections via e-mail to [email protected].

Sabre Airline Solutions, the Sabre Airline Solutions logo and products noted in italics in this publication are trademarks and/or service marks of an affiliate of Sabre Holdings Corp. All other trademarks, service marks and trade names are the property of their respective owners. ©2006 Sabre Inc. All rights reserved. Printed in the USA.

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makingcontactTo suggest a topic for a possible future article, change your address or add someone to the mailing list, please send an e-mail message to the Ascend staff at [email protected].

For more information about products and services featured in this issue of Ascend, please visit our Web site at www.sabreairlinesolutions.com or contact one of the following Sabre Airline Solutions regional representatives:

Asia/Pacific Andrew Powell Vice President Level No. 05-05 Technopark Block 750E Chai Chee Road Singapore 469005 Phone: +65 9127 6927 E-mail: [email protected]

Europe, Middle East and Africa Murray Smyth Vice President Somerville House 50A Bath Road Hounslow, Middlesex TW3 3EE, United Kingdom Phone: +44 208 814 4540 E-mail: [email protected]

Latin America Marcela Lizárraga Vice President 3150 Sabre Drive Southlake, Texas 76092 United States Phone: +1 682 605 5333 E-mail: [email protected]

North America Kristen Fritschel Vice President 3150 Sabre Drive Southlake, Texas 76092 Phone: +1 682 605 5335 E-mail: [email protected]

sabre airline solutions and the sabre airline solutions ... · communicators bronze quill, silver...

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