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Private airline for North-east soon

August 27, 2007 14:55 IST

The North-East is finally set to have its own exclusive private airline with daily flights to Guwahati, Agartala, Lilabari, Dibrugarh, Dimapur, Aizawl and Silchar among others.

Guwahati-based Surya Airlines, promoted by Universal Empire Group, which has been waiting in the wings for long after getting licence for scheduled operations, are going to start operations in October this year.

"We are planning to service the NE region exclusively and will have one daily flight to all these destinations," said promoter K Balachandran Nair.

"We had got the licence for scheduled operations in October last year. But certain procedures took time which is why there was a one year delay," added airline vice president Arun Pillai.

The carrier plans to operate with 19 seater Beechcraft aircraft on these routes. They will be deploying three aircraft in the beginning, adding another two in the next six months. "We will add another two depending on the traffic demands.

The airline sees a huge traffic potential in spite of the infrastructural difficulties in the region.

"There is very less service in the region. And there is huge air traffic potential because the other forms of transport like roadways and railways are minimal. We are exploring routes like Dimapur-Imphal, Agartala-Silchar and Imphal-Aizawl which have very few flights and scope for many more," said a company official.

Agrees Amrit Pandurangi of PricewaterhouseCoopers. "If you look at the road service from Agartala, it id in such a dismal condition that there is huge scope for air travel," said Pandurangi.

"Since the production cost of the bike will be the same as our 100cc bike Platina, we hope to attain far better margins, as the price of Exceed will be Rs 6,000-7,000 more than Platina, thereby allowing us a profit margin of around Rs 4,000 on every bike sold," Rajiv Bajaj said.

The 125 cc bike aims to attract customers from the economy bike (100 cc) segment with an upgraded product at a marginally higher price.

"We have found that people would not mind paying that extra Rs 7,000 for a bigger capacity bike, which would deliver a mileage of a 100 cc," said S Sridhar, Bajaj Auto CEO  (two-wheelers). At about Rs 40,000 to Rs 42,000 it will be about Rs 4,000 to Rs 5,000 cheaper than the 125 cc Discover model.

Bajaj will also lower its focus in the low margin 100 cc segment.

"We are now focusing on the middle (125 cc) and upper (+125 cc) one third of the pyramid as we are making very little or no money in the huge segment of 100 cc which has also witnessed a fall in sales year-on-year," said Rajiv Bajaj.

"Real margins are actually coming from the Pulsar segment. We have just 24 per cent market share in the 100 cc segment," he added.

Hero Honda, however, will not walk out of the 100 cc segment which constitutes the bulk of its sales. The company says an aggressive plan is underway to push the product in rural India and woo the bicycle owner to go in for an economy bike.

While officials refuse to divulge details about new bike launches, market sources suggest that the company is upgrading its new models (and charge only about Rs 1,000 to Rs 1,500 more) and will get aggressive in the +150 cc bike segment while also launching an economy bike (perhaps a 100 cc).

The company maintains that it has done better in maintaining its inventory and production.

A key decision was to delay the launch of its new plant in Haridwar. The plant was supposed to go on stream producing over 1.5 million bikes, but now the launch has been postponed by a year. That means it will not be forced to dump products in the market.

Like Bajaj Auto, it is also hoping that the festive season will give it a reason to smile and it is also working out special finance packages to woo buyers.

"Our recent launches, including Splendour NXG, refreshed Pleasure, Passion Plus and Super Splendour have been received well in the markets," said Anil Dua, vice president (marketing and sales), Hero Honda Motors.

"Our approach is to strengthen our brands, to bring in new products, support them with extensive communication and leverage the Hero Honda brand."

Down south in Chennai, TVS Motors aims to create new excitement with nine new launches in various segments by March 2008, through which it hopes to regain volumes.

The company is also planning to foray the three-wheeler market to reduce its dependence on two-wheelers.

New models include a high volume entry-level motorcycle (100 cc) along with an executive segment bike (+125 cc category), a scooterette, an electric scooter, besides two- and four-stroke three wheelers.

The company hopes to generate about Rs 70 crore from projected sales of 10,000 units in the first year of the three-wheeler operation.

To ensure that it can make big bikes above 150 cc, TVS has also set up a 140-strong research and development team, which is working on high-end bikes.

This high-margins segment has been growing faster than the total market. It is also pushing exports to tide over the decline in domestic sales.

Anirban Chowdhury in New Delhi
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