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June 16, 2000
The Rediff Business Special/Neena Haridas
Branson's Virgin Airways seeks to rule Indian skies
How about a nice neck and scalp massage, followed by a manicure and zone therapy massage? Then how about drifting into a peaceable siesta at the Snoozezone? Of course, this would be after you finish sipping your leisurely glass of champagne while watching your favourite movie. Once awake, how about alighting at the ClubHouse, sauntering into the salon, and getting beauty-treatment before you proceed in style for that oh-so-important business meeting in a stretch limo?
Sounds like a day in the life of a Hollywood star? Well, not quite. These are samples of what Richard Branson, the flamboyant Virgin Atlantic chairman, has in store for you en route the Delhi-London flight.
And it is giving Air-India the jitters. Ever since Air-India entered into the magnanimous code-sharing agreement with Virgin Atlantic in December last, the market has been strife with speculation that Branson will charm the Delhi-London passengers onto his flights in more ways than one.
Virgin will start operating its India flights from July 6.
However, the maiden flight might still be delayed as Air-India is yet to reach an agreement with Virgin on the issue of fares and flight timings.
A final round of negotiations between Virgin Airways and Air-India is tentatively set to be held in Bombay starting June 19 to conclude an accord.
"Air-India has not confirmed that we can fly yet," a Virgin spokesperson in London had earlier said.
An industry source said that the British long-haul carrier has begun entering its flight schedules into the computerised reservation systems last week. Virgin is expected to begin its operations with two flights a week and put in a third service from October this year. And this could rise to six flights a week from January, according Virgin sources.
At the time of the agreement last year, Virgin had decided to put in an Airbus 340 aircraft with 255 seats into the Indian market. But Air-India sources said the airline has now decided to bring in the 747-200 aircraft with 390 seats.
Air-India has been asking that the number of seats blocked for its passengers on the Virgin aircraft under the code-share agreement be raised from the original 8 in upper class and 54 in economy because of the increase in capacity.
Virgin's arrival would mean additional air seats in the Indian market that has been in the grip of seat-shortage, especially on the India-UK and India-US sectors.
Virgin is expected to fly three flights a week between Britain and India. Since Air-India does not fly daily to London, Virgin will be flying the unused routes. However, there is commotion in the aviation circles because Virgin is likely to give Air-India a run for its money. Literally!
On his virgin trip to New Delhi, Richard Branson had said, "Our prices will be extremely competitive. Besides, no other airline will be able to match our services." Now, competitive pricing would mean that Virgin tags its Delhi-London flight for less that Rs 25,000 which is approximately the Air-India fare.
Asked if Air-India plans to reduce its fare to London in anticipation, a spokesperson said the airline has not planned anything on these lines. "The agreement is meant to increase traffic. And the seat-sharing agreement will increase traffic on Air-India as well," she said.
However, aviation analysts feel that once the divestment is complete in Air-India, some major changes in terms of competitive pricing will have to be done in order meet global standards of services. Said a former director in Air-India, "Obviously, Air-India will have to improve its services. The airline has barely 20 per cent of market share in international flying and the figure is measly for an entirely international airline company. I think there will be some price adjustments."
Explained Paul Moore, head, corporate communication, Virgin Atlantic, UK, "We are known for our aggressive marketing and pricing strategy. However, I would not want to comment on the exact fare as a meeting has been scheduled in this regard. Now, even if we maintain the ongoing market price, we will be more competitive because there is no airline that can match our services. For instance, we have only two classes -- upper class and premium class. Which means the premium class (which is our economy class) would offer better services compared to the average economy class. Besides, we have special packages for children and even newly-married couples."
Which is why Air-India is fearing an exodus of its already waning passenger list. This, in turn, explains why the two airlines have not been able to reach an agreement on the contentious issues despite signing the agreement.
Another fear that bogs Air-India is the exodus of employees. Until now, several people have quit Indian Airlines, Jet Airways, and Air-India to get aboard Virgin Atlantic.
Virgin plans to have English and Indian crew and the Indian crew is ready for the maiden flight after undergoing training in the UK.
Another area where Virgin is likely to give Air-India tough competition is cargo. According to Virgin's cargo director John Lloyd ex-India air cargo demand is strong to Europe and the US. Although there is no formal cargo cooperation with Air-India, Virgin has expressed interest in buying some space on the flights. The airline has signed a deal with the Delhi-based STIC Travel to act as its cargo general sales agent, he added.
"There is plenty of demand for outbound cargo space from India: not just for clothing, but for a phenomenal range of goods." Lloyd said there is still a 10-day backlog at Delhi airport in clearing export shipments, a reflection of the strong outbound demand.
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