Industry Heavyweights Readying Outbound Charter Plans

The aviation ministry has virtually cleared the way for outbound charters. With the ball in the Directorate General of Civil Aviation (DGCA's) court for the formality of clarification, Bhisham Mansukhani finds that industry heavyweights are loosing no time in charting out plans to tap an overdue aviation segment that is perhaps bound to change the economic paradigms of international vacationing in the Indian context

The aviation ministry has been a busy one these last few months for the best of reasons - incessant reform. Apart from the historical buffet of progressions made towards providing additional capacity by allowing domestic airlines to utilise bilaterals in South Asia, the ministry also revisited its charter policy that was irrationally conservative regarding its stance on outbound charter. Not anymore.

"Airline business in India is a loss making venture. Much of it is owing to old regulations, which have to be amended in view of international competition. The primary objective of this new policy will be on making air travel more accessible to the common man and not an activity of the elite. We will begin to focus on branding Indian aviation to the world market," Rajiv Pratap Rudy, union minister of civil aviation had said of the aims of the new aviation policy. True to his word and emphatic to the industry's woes, this new age minister has done it again.

Early February witnessed an umpteenth dollop from the government towards aviation reforms with a new charter policy opening up and making viable, the venture of outbound charters and packing in further fillip for the thriving inbound charter segment. The industry was then taut in anticipation and is as of now, busy making plans towards taking Indian outbound to the grossly delayed next level.

On The Brighter Side

Ashwini Kakkar, CEO and MD, Thomas Cook has been a long lasting champion of the cause for outbound charters and as chairman of the tourism committee of the Bombay Chamber of Commerce and Industry (BCCI) placed accent on outbound charters as one that, "Could plug demand-supply gap as also the inbound-outbound imbalance. Kakkar is understandably joyous. "There are many good things for the industry within this charter policy. It would have been a lot better if the two to one rider hadn't been put forth as a condition but I guess the government sees this as a way to further spur inbound tourism. But it's a good start. Apart from taking the aspiration of international travel closer to the man on the street, it will reduce the pressure on scheduled airlines that chiefly service the business traveller. Take for instance, a BA fare to London is Rs 50,000. A charter flight seat will cost half that much although there is also a tour package component of minimum seven days that is to be added."

Kakkar said he awaits an affirmative from the DGCA, which is presently reviewing the policy and expects to start charters by December 2004. "The process may take another eight or nine months to get off the ground. The aircraft have to be registered and slots have to be negotiated at both ends. We are considering among other aircraft, the Boeing 767 (approximately 250 seater). In Western countries, charters account for 20 per cent of travellers especially holidaymakers. In India the possibility of at least one million people travelling is how we assess the potential." Other travel agents are equally upbeat about the policy.

Ranjit Malkani, chairman and CEO, Kuoni Indian subcontinent and Middle East, has also welcomed the government's decision to make, "outbound charter operations a truly viable proposition, by removing restrictions relating to frequency and size of aircraft. The liberalisation of charter norms is indeed a landmark that will lead to better growth of the Indian tourism industry." Malkani also sees the revisions on the inbound charters front as a "major fillip to inbound tourism by allowing inbound charters to land at all airports in the country."

Inflating Markets

An airline ticket has been an object' d 'desire long before the cell phone became one. The latter is now too commonplace to wow but the former is still contained within a clique. The industry is near sure that outbound charters will expand this select group. "The operation of outbound charters from India will significantly boost tourism by bringing about a reduction in the overall tour cost, thereby attracting a new target audience, which is price sensitive. Thus we see a new class of Indians who earlier could not afford going abroad, now getting into the ambit. Also, now, with no restrictions on either frequency or size of aircraft (previously only six outbound charters were allowed in 90 days), we expect outbound charters to considerably ease the airline seat crunch faced by travellers during the peak travelling season (April - June). Overall, the outbound market will achieve faster growth rates than at present," Malkani avers.

TCI is also one of the three immediate, perceived beneficiaries of the new policy. TCI’s manager, corporate communications, Meher Bhandara says, "The first kind of charter tourist is an aspirational tourist. He has not been able to afford a holiday overseas till now, but has always dreamed of it. The second kind of charter tourist could be those who travel overseas on holiday, but now have an opportunity to use this option and spend on longer vacations, travel more often. It will give more people an opportunity to travel. It will create a new market. All this, provided the economics work out."

Ally Against Empire

According to the government policy only those outfits that bring charters into India can operate charters out of India. There are only three companies operating charters into India - TCI, Thomas Cook and Kuoni. Besides, only those people who operate package tours can operate charters out of India. Bhandara chooses circumspection without total denial, "Charters will not be easy to operate and we are still awaiting many clarifications. Rules and regulations to operate charters out of India should be as simple as possible."

In fact, 95 per cent of all tour operators do not have an inbound and outbound business save the three behemoths. There are some who lament this analogy. There are other already arriving at the logical solution. Alliances of mutual convenience. "Outbound operators will have to solicit their opposite numbers to beat their way around the ratio rider. I think, they will first wait and watch the big three take the lead and one the trend is an irreversible one," says one former senior aviation practioner who chooses anonymity.

Sky & Dry

As everything new, the avenue of outbound charts has met excitement and caution. Buoyancy and a palpable numbers game is the sunny end of things while tricky workarounds like the peak season mismatch for inbound and outbound -- Indian travellers vacation between April to July while incomings are chiefly October through to January. Location is another issue as outbound charters take off presumably must take off from one of the metros. Inbound charters are mostly popular for circuits such as Kochi and Goa.

Inbound tourism stands to benefit as its augmentation has now been inextricably interlaced with India’s gathering success story of outbound tourism. Add to that, internationally, charters have proved to be very effective growth drivers and in India too, a liberal air charter policy will yield better results than the limited open skies policy.

Probed and done, outbound charter reform stands as yet another vista that a barracking aviation ministry has paved out for its shining private sector. The ring fence of absurd restrictions are history. The prerogative of making some now lies with industry giants and dwarfs alike.