Airlines Deals

Paramount Airways is out to disprove that low-cost airlines have to compromise luxury. It’s doing so by eliminating the divide between business and economy classes at a price that is less than the economy class fare. Paramount managing director M Thiagarajan speaks to T S Sreenivasa Raghavan:

What’s your business model?

It’s simple. We offer value for money. We’re the first to offer premium service at affordable price. It’s lower than economy class fare. Inside the aircraft, we’ve no middle seat.

Quality of food and beverages we offer is best in the industry. To ensure personalised service, we employ four cabin crew for every 75 passengers. We also offer excellent lounge facility.

Unlike low-cost carriers (LCC), where quality often takes a beating, we give best service at a lesser price. It’s precisely for this reason that we’re called High Value Carrier (HVC).

How do you plan to merge luxury travel and small city travel?

Our market research indicates a significant attitudinal change among people residing in smaller cities. Till recently, people who reside in metros were the only ones exhibiting the desire to splurge money on comforts.

It’s not the same anymore. People who live in Cochin, Coimbatore, Madurai and such other smaller cities are ready to spend. We want to encash this.

We’ve over 500 small cities which are connected by air. Real wealth is in smaller cities. Air traffic between them would see a quantum leap in days to come.

Who’re your potential customers?

We’re mainly looking at carpet customers. To be more direct, the ones who are already flying with other airlines but are not happy with their flying experience. We’re also targeting a few high-end leisure travellers. The ratio would be in the range of 85:15.

What factors according to you are hampering the growth of new airlines?

First, infrastructure. We need more parking slots and the sort. Privatisation is the only solution. Second, fuel costs in India are the highest in the world.

They vary from state to state. The villain is sales tax. We need a new tax structure to circumvent this problem.

What’re your future plans?

First, we want to consolidate our position in the south. By 2008, we want to emerge as a national player. In August, we’re adding two more aircraft to our existing fleet.

With that, we’ll increase our frequency. Tentatively, we’ll have four flights to Hyderabad, three each to Coimbatore and Madurai and five to Bangalore.

We’ll also operate on three new sectors: Chennai-Trivandrum, Coimbatore-Bangalore and Trivandrum-Bangalore.

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With the addition of one more Embraer aircraft, Paramount Airways will soon be adding an evening flight on the Chennai-Madurai sector, the Airways in a release today said.

With the advent of an additional aircraft, the Airways was also planning to increase the number of flights in other sectors.

Airways managing director Thiagarajan said ontime performance and dedicated services have made Paramount the first choice for travellers, especially from the non-metros like Madurai.

“The response has been encouraging and we are now introducing an evening flight connecting Chennai and Madurai. We will also soon be introducing first class in select sector,” he said.

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Paramount Airways, in an effort to increase its sales network and ink interline agreements with foreign carriers, will join the domestic Billing and Settlement Plan (BSP) and finally make its online debut with a GDS in July. The domestic BSP, which was formalised in December last year, is slated to include all IATA agents and non-IATA agents. Paramount Airways in order to increase its global penetration has inked an agreement with Amadeus and will be live from the first week of July. Speaking to ETW, Paramount Airways’ MD, M. Thiagarajan, said, “We will be available globally because of Amadeus and this will give us a wider international presence. Partnering with a GDS is also a stepping stone for the interline agreements we want to have with other airlines.”

Thiagarajan emphasised that this was not an exclusive agreement and it was an open contract, hinting that the airline was open to other GDS too. He added that since they already had their internal connectivity to distribute tickets in place, the agreement was not a conventional legacy system. Paramount Airways is holding talks with a few airlines, including Qantas Airways, for interline connectivity, but Thiagarjan preferred to be tight lipped about the details. But he did indicate that the key hubs the airline is looking at are the Middle East, Europe and Far East, while Paramount would provide connectivity to all the cities it is already servicing. With ambitions of becoming a national carrier, the airline aspires to have interline agreements to service the entire country.

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Believed to be the fourth largest metropolitan city in India , Chennai, located along the coast of the Bay of Bengal, carries a heavy tag of being considered as a gateway to South India. But like all battles, this one too is not without its struggles.

The city, to its credit, is trying hard to look towards the future and usher in development to prove itself worthy of the unsolicited label. From being called Chennapatnam to Madras and finally Chennai - instrumented purely by political whim - the city has woken up to the needs of the soon to be economic powerhouse that is India. Apart from being an industrial centre, it has over the last few years seen tremendous commercial developments whether it is its automobile, textile or software industries. A domino effect of this has been its recent real estate boom.

A paradoxical refuge

Chennai is an intriguing mix - a paradoxical refuge for the young and the old. Although it does not have much to offer a discerning tourist, it does serve as a transit point to many.

Being a metro, Chennai has great connectivity as far as railway and road routes are concerned. The Southern Railways has ensured that the city is well connected to all metros as well as smaller cities. Similarly, it is possible to drive down to Bangalore, Kancheepuram, Tirupati, Mahabalipuram, Pondicherry and even Kolkata from here, thanks to the excellent road network.

However, despite having the advantage of having domestic and the international airports clubbed together, its air connectivity leaves travellers much to ask for. While the low-cost airline boom has also touched Chennai skies, passengers travelling to certain destinations may not get a direct flight. For instance, while Go Air flies only to Delhi, Hyderabad and Pune, Kingfisher connects Chennai only to Delhi and Mumbai, apart from a few second-tier cities. SpiceJet flies out to only five cities and Paramount Airways connects Chennai only to the southern cities, leaving passengers with little choice despite the much touted aviation revolution in Indian skies.

With more than 15 international flights and six domestic airlines operating in the city, the Airports Authority of India has constructed a master plan to project Chennai as not just a gateway to South India but also as a hub to fly to Southeast Asia due to its proximity
But amends are being made. With more than 15 international flights and six domestic airlines operating in the city, the Airports Authority of India has constructed a master plan to project Chennai as not just a gateway to South India but also as a hub to fly to Southeast Asia due to its proximity. This will allow international tourists to directly fly into Chennai.

The city’s airport is also all set for a facelift except that the authorities are still debating whether the city needs a new one or merely expanding the old one would do.

Structure and form

The IT industry is a goldmine of sorts; it is bound to usher in development in any region it touches. And so it is with Chennai. Several companies like Wipro, Ascendas, TCS, Infosys and Polaris have mushroomed here along with automobile giants like BMW, telecom bigwigs like Motorola and Nokia. To provide further impetus the Centre and the state governments, are initiating projects like the four-lane Chennai bypass Phase II, a cloverleaf structure close to the airport that will directly connect the city to different National Highways and simultaneously ease traffic in the city. The Rs 200-crore project, that is expected to be completed by 2008, includes widening of roads near the multi-layered flyover.

However, the much hyped IT corridor on the old Mahabalipuram road, which was taken up for widening from the present two lane into a six-lane road, is way behind schedule.

Nevertheless, the chain of development has already been jumpstarted and with the emergence of business centres, business travellers can’t be too far behind. The city, in these few previous years, has witnessed a surge in corporate travel, with the result that a number of leisure and business hotels have come up in the city. International brands like the Courtyard Marriott, Radisson, the Hilton and Le Royal Meridien have a strong presence in the city and many more five-star hotels including the Leela group and JW Marriott are slated to enter the market in the next few years.

The city also has a 25-acre convention centre, Chennai Trade Centre, considering that MICE is fast emerging a huge market here. However, the city could do better with bigger convention centres, either as part of hotels or standalone with a hotel in its premises.

But despite all the talk of buoyancy in the hospitality industry, the hoteliers are sore about the curfew imposed on the bar timings (11 pm). Moreover, the Federation of Hotels and Restaurants Association of India (FHRAI) recently put forth its set of demands to the new government to charge the luxury tax on the actuals. It has also demanded the industry to be provided an infrastructure status.

On the other hand, the concept of mixed use development is a hit in this filter coffee drinking city with big real estate developers and hoteliers opting to have malls along with entertainment centres, multiplexes, food courts and hotels in the same complex.

Bewitching beauty

Chennai’s infrastructure has been attracting investments from various sectors, thereby increasing travel into the city. It set the ball rolling when it launched its catchy campaign ‘Enchanting India - Experience Yourself’ in 2003. In fact, the state bagged an award for ‘Best State Tourism in Marketing Efforts’ and an award from the Pacific Area Travel Writers’ Association for its promotion of Chettinad Heritage, among others.

The new DMK regime is also chalking out plans to use aggressive and innovative ideas to promote the state from different aspects, including medical tourism, considering that Chennai boasts of some of the best hospitals in the country. More than Rs 32 crore was allotted for various projects; promotional activities were accorded top priority with a budget of Rs 12 crore and tourism infrastructure development was given Rs 10 crore last year.

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Top brasses of domestic airlines are set to make a splash in the outskirts of London. They are off to the city for participating in the 45th Farnborough International Airshow, starting tomorrow.

Kingfisher Airlines Chairman and Managing Director Vijay Mallya and GoAir Managing Director Jeh Wadia are expected to announce major acquisition plans in the show. The orders are estimated to be over $2 billion.

Domestic airlines – Jet Airways, Kingfisher Airlines and Paramount Airways – had grabbed the spotlight at the Paris Air Show, making commitments to buy aircraft worth more than $7 billion from Boeing, Airbus and the Brazilian aircraft maker Embraer.

“Kingfisher chief is likely to sign a major agreement with US-based aircraft engine manufacturer, Pratt & Whitney, for supplying engines for its five Airbus A-330s,” a highly placed source said.

Pratt & Whitney is set to make the announcement with much fanfare. Mallya is also likely to sign an agreement to acquire simulators from a UK-based company, the source added. However, the size of the deal is not known.

A senior Kingfisher executive declined to comment. Significantly, European aircraft manufacturer Airbus Industrie has selected Kingfisher’s A320 aircraft to display in its exhibition stall.

Meanwhile, GoAir, the Wadia group-promoted low-fare carrier, is expected to place an order for 20 Airbus aircraft. “This is part of its fleet expansion programme. GoAir had placed an order worth $1.2 billion with Airbus to acquire 20 Airbus A320 aircraft in last Asian Aero Space Conference held in Singapore in February,” industry sources said.

GoAir executives declined to comment, adding “we are exploring aircraft acquisition opportunities”.

“Apart from existing players, new entrants into the Indian aviation scene are also expected place orders for aircraft and other related infrastructure,” an industry source said.

For Jet Airways, Chairman Naresh Goyal would be visiting Farnborough International Airshow, while Air Sahara would be represented by President Alok Sharma in the show.

A special team from Air Deccan, Paramount Airways and SpiceJet has already left for the show. As Air Deccan has almost signed major agreements with suppliers, the airline may not place orders any further, a company executive said.

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Mandarin Airlines, a unit of Taiwan’s largest carrier, China Airlines, will lease eight planes made by Empresa Brasileira de Aeronautica SA to replace older aircraft and to add capacity.

The carrier will lease three Embraer 190 aircraft and five Embraer 195s from GE Commercial Aviation Services, General Electric Co.’s aircraft-leasing unit, Taipei-based Mandarin Airlines said in a statement today. The planes will replace 11 older Fokker aircraft, spokeswoman Nadia Huang said today.

Like other Asian carriers, Mandarin Airlines is adding capacity to meet rising travel demand. Asia’s airlines may post a 6.5 percent increase in traffic annually until 2009, the International Air Transport Association said in February.

“The new planes will increase our capacity because they’re bigger,'’ Huang said by telephone from Taipei. “We will phase out the Fokkers gradually.'’

Mandarin Airlines plans to use the planes, to be delivered between 2007 and 2009, on domestic routes and possibly on new international routes, Huang said, declining to give further details. The airline flies to eight cities on the island, as well as Hong Kong, Seoul and other Asian destinations, according to its Web site.

China Airlines shares rose 0.3 percent to NT$15.15 in Taipei. They are down 5 percent for the year, compared with a 1.4 percent gain in the benchmark Taiex Index.

Embraer Infrastructure

Embraer said that it would open an Asia-Pacific spare parts logistics center for operators of its EJets, including the 190, before the second half of 2007, as well as placing a full flight simulator in the region.

“We are in the final stages of selecting locations for this infrastructure,'’ Frederico Fleury Curado, executive vice president at Sao Jose dos Campos, Brazil-based Embraer, said in a statement.

Mandarin Airlines will be the first Asian carrier to operate the Embraer 190 and 195. Hong Kong Express Airways Ltd. and India’s Paramount Airways Pvt. already fly the smaller 170.

Mandarin Airlines was considering the Embraer 190, Boeing Co.’s 737-700 and Airbus SAS’s A319, Chairman Michael Lo said in March. The carrier’s fleet includes six Fokker 100s, five Fokker 50s and three Boeing 737-800s, Huang said today.

The Embraer 190, which can carry as many as 106 people, has a range of 2,300 nautical miles (4,260 kilometers). The 118-seat Embraer 195 can fly 2,100 nautical miles.

Mandarin Airlines’ Fokker 100s are fitted with 109 seats each, while its Fokker 50s have 56 seats each. Stork NV, based in Naarden, Netherlands, stopped making Fokker aircraft in 1996.

GE Commercial Aviation, the world’s largest aircraft lessor, placed a $650 million order in June 2005 for 20 Embraer 190s, with an option to convert them to 195s. It will supply Mandarin Airlines’ planes from its existing backlog, according to Embraer. The aircraft maker had a total of 269 orders for the 190 and 195 at the end of March.

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Amadeus has strengthened its presence in India with a new content agreement with Paramount Airways.

Under the agreement, Paramount’s complete inventory will now be bookable to all Amadeus travel agency subscribers, allowing the airline to benefit from increased geographic reach, and at the same time, strengthen its brand recognition beyond its domestic market. This global agreement will also enable the airline to compete more effectively by offering additional sales services while expanding into new distribution channels.

“With the growth of the Indian aviation sector, it is clear that effective distribution is a key tool in transforming the way Paramount does business. We are delighted to have reached this agreement with Amadeus. By selecting Amadeus, we intend to support our business expansion by tapping into their extended network; implementing new initiatives and reaching out to customers not previously available to us,” said Mr. Thiagarajan, Managing Director , Paramount Airways.

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Amadeus is strengthening its presence in India with a new content agreement with Paramount Airways.

The airline is the first in India to offer full business class services at prices equivalent to the economy class fares of other carriers.
Under the agreement, Paramount’s complete inventory will now be bookable to all Amadeus travel agency subscribers, allowing the airline to benefit from increased geographic reach, and at the same time, strengthen its brand recognition beyond its domestic market. This global agreement will also enable the airline to compete more effectively by offering additional sales services while expanding into new distribution channels.

India’s gross domestic product has grown by an average of 8.1% a year for the past three years, with Indian companies now accounting for two-thirds of the global market in offshore IT services [1]. The addition of all-business Paramount Airways allows Amadeus travel agents to support their business customers’ increasing interest in this 21st century land of opportunity.

“With the growth of the Indian aviation sector, it is clear that effective distribution is a key tool in transforming the way Paramount does business. We are delighted to have reached this agreement with Amadeus. By selecting Amadeus, we intend to support our business expansion by tapping into their extended network; implementing new initiatives and reaching out to customers not previously available to us,” said Mr. Thiagarajan, Managing Director, Paramount Airways.

“Amadeus is committed to providing travel agencies with the most relevant travel content through our advanced distribution business. Given the incredible potential and dynamic growth of India’s travel industry, the implementation of our distribution technology within Paramount is a key step towards supporting their growth and expansion in this vibrant and dynamic market,” said Damian Hickey, Vice President, Airlines Business Group, Amadeus Asia Pacific.

“At Amadeus, our focus is on empowering our travel agency partners with the best of breed and most current technology solutions that enable them to maximise their business efficiency. Our global partnership with Paramount will now ensure that travel agents in the Indian subcontinent can book Paramount tickets on the Amadeus system at the click of a button,” said Ankur Bhatia, Managing Director, Amadeus India Pvt. Ltd.

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Amadeus, a provider of technology and distribution solutions to the travel and tourism industry, is strengthening its presence in India with a new content agreement with Paramount Airways.

The airline is the first in India to offer full business class services at prices equivalent to the economy class fares of other carriers.

Under the agreement, Paramount’s complete inventory will now be bookable to all Amadeus travel agency subscribers, allowing the airline to benefit from increased geographic reach, and at the same time, strengthen its brand recognition beyond its domestic market.

This global agreement will also enable the airline to compete more effectively by offering additional sales services while expanding into new distribution channels.

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The Chennai-based private carrier, Paramount Airways, will increase its daily flight operations out of Chennai Kamaraj Domestic Terminal to 25 from the present 14.

Giving details of the increased frequency of services out of Chennai with effect from June 29 (Thursday), the Managing Director of Paramount Airways, M. Thiagarajan, told The Hindu that the airline would fly thrice daily services to Bangalore and Hyderabad from June 29.

“The new services to Hyderabad and Bangalore would be a boon to link conveniently all the three major Information Technology hubs in South India”, Mr. Thiagarajan said.

Embraer jets

Speaking on the expansion of the airline, which currently operates with two 72-seater Embraer jets, Mr. Thiagarajan noted that with the arrival of the third Embraer jet from Brazil on July 7 to Chennai, the airline will introduce flights to Thiruvananthapuram and Mangalore.

The increase in fleet would also facilitate the airline to re-introduce flights to Delhi, increase frequencies to Kochi, besides introduce services to Mumbai from Chennai.

Presently, the airline flies to Coimbatore, Madurai, Bangalore, Hyderabad and Kochi.

Mr. Thiagarajan said recently the airline had signed an agreement with the Amadeus Reservation System, providing hassle free bookings to be made by over 1,600 travel agencies across the country.

Dual seating

The Managing Director said with the arrival of the third Embraer jet from Brazil, the airline which was currently an all “Business class airline” would provide dual seating configuration with 11 First Class seats being introduced.

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