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Why IndiGo flies high while rivals bleed in Indian skies – Book Review

The book presents the inside-out of various airline businesses that have been in India along with IndiGo like the state-run Air India, Jet Airways, Go Air, SpiceJet and the defunct Kingfisher Airlines, including their financial details and operational mechanisms.

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The IndiGo Story

On June 16, 2005, at the Paris Air Show, a little-known Indian budget airline, IndiGo, hogged the world’s attention by ordering 100 A-320 jets from global aerospace major Airbus at Toulouse in southern France.

“The deal was worth $6 billion at list price. The news made global headlines and the audacity of it all stunned everyone. Indeed, till then, no airline in India had ever thought of ordering so many planes at one go. The order was simply audacious,” recounts author Shelley Vishwajeet in this non-fiction book.

Delhi-based Vishwajeet, a business and political journalist, explores through this title the reasons for the success of low-cost carriers, particularly IndiGo, while offering rare insights into the Indian aviation industry.

With a no-frills narrative, the 51-year-old author relies on historical records, reports of the aviation regulatory body, the Directorate General of Civil Aviation (DGCA), since the 1970s, and innumerable annual reports of airline firms, including IndiGo’s, to provide an extensive history of Indian aviation.

“It took a year of going through thousands of documents to logically arrive at the reasons for the success of low-cost carriers in India and abroad, so as to provide the reader better understanding of the aviation sector,” Vishwajeet told IANS.

As stated in the Foreword by Mark D. Martin, Chief Executive of Dubai-based aviation advisory firm Martin Consulting, air travel in India till 2005 was designed to suit the “mature (and ridged) baby boomers” (born from the 1940s to the 1960s).

Co-founded by Rahul Bhatia and Rakesh Gangwal in 2005, IndiGo — India on the go — was, on the other hand, appealing to a newer generation of flyers, the millennials (born after the 1980s), for whom air travel was just another mode of transport, Martin adds.

The book presents the inside-out of various airline businesses that have been in India along with IndiGo like the state-run Air India, Jet Airways, Go Air, SpiceJet and the defunct Kingfisher Airlines, including their financial details and operational mechanisms.

While Kingfisher was facing a cash crunch, its owner, tycoon Vijay Mallya, was in a “tearing hurry” to fly on overseas routes after acquiring the country’s first low-cost airline, Deccan Charters, in 2007 and floating a low-cost arm, Kingfisher Red, which led to him bleeding losses, the author writes.

IndiGo, however, adhered to the principles of keeping operational costs low and on-time performance, Vishwajeet analyses. It is currently India’s largest airline, with a market share of 42.8 per cent (Jet Airways is a distant second at 14.9 per cent) and close to 200 aircraft.

“Kingfisher was trampled because of its mounting debt and rising finance cost while IndiGo ensured stringent operational and financial management and a disciplined execution of its low-cost model,” he recounts.

The choice of the Airbus A-320 was also a “well thought exercise to keep finance and operational costs down”.

The airline also opted for lighter seats as the lower weight of an aircraft translates into higher fuel efficiency, Vishwajeet assesses.

Due to its low-cost model, Gurugram-based IndiGo has managed to make a profit over the past 10 years, barring its first two years into operations. (For Q2 this year, however, IndiGo reported its first-ever quarterly loss since its listing — of Rs 652 crore.)

“Between 2008 and 2011, when every airline was bleeding due to rising jet fuel costs, IndiGo managed to squeeze profits.”

The author also takes the inquisitive reader through several lesser known red-letter events of Indian aviation — dating back to 1911 when the world’s first airmail service started in India, with a French pilot, Monseigneur Piguet, flying with 6,500 letters over the Yamuna river from Allahabad in what was then the United Provinces of Agra and Oudh (now Uttar Pradesh) to Naini, some 11 km away.

Availability of military aircraft post World War II was said to have spurred air services in India and the world over.

Though IndiGo remains a smart protagonist in the book, the author delves into the events that gave the company a bad name, such as clashes with passengers, including incidents of a flyer being man-handled by its ground staff in New Delhi last year and a Bengaluru doctor being offloaded over complaints of mosquitoes in the cabin, among other such instances.

According to aviation analyst Martin, who is interviewed by the author in the book, IndiGo, however, remains a “revenue machine that is on a turbo-charger and revved up to take on the best of the best”.

As the company has ambitious plans to fly to 24 new foreign destinations by 2020, it remains to be seen how IndiGo fares against its Indian and global low-cost rivals.

Raising several key questions on the survival of India’s airline industry, the book makes for an informative read for all, particularly aviation enthusiasts.

Title: The IndiGo Story: Inside the Upstart That Redefined Indian Aviation; Author: Shelley Vishwajeet; Publisher: Rupa; Pages: 210; Price: Rs 500

(Bhavana Akella can be contacted at [email protected] )

Analysis

Dealings of European missile manufacture under scanner

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Rafale Fighter Jet

New Delhi, Feb 17 (IANS) A leading European arms manufacturer MBDA, which supplies missiles for the Rafale jets, has come under the scanner of probe agencies here for its suspected links with lobbyist Deepak Talwar, who was extradited from Dubai last month.

The country head of MBDA, Loic Piedevache, has been summoned by the Enforcement Directorate to appear before it on Monday in connection with the probe relating to the company’s links to Talwar, who is believed to have steered several deals with Airbus, which holds a stake in MBDA, during the UPA regime, according to sources.

Infrastructure major Larsen & Toubro had entered into a joint venture with MBDA to supply missiles and missile systems to the Indian armed forces.

L&T holds 51 per cent stake in the joint venture, L&T MBDA Missile Systems, and had identified defence as one of the key drivers for achieving growth in the sector.

The sources claimed that apart from questions on the company’s engagement with the Indian forces, Piedevache would also be questioned on the alleged payments to Talwar’s NGO. Advantage India, to the tune of Rs 88 crore between 2012 and 2015, from MBDA and Airbus.

Later, the entire money was said to have been withdrawn in cash by using “fake purchases”, the sources said.

Analysts said this was probably a rare occasion when the India head of a leading international firm was being summoned by a probe agency.

Piedevache has been heading the company’s operations in India for a decade. The Mirage upgrade programme and Rafale were signed during Piedevache’s tenure in India and he could be privy to information, the sources said.

“If required, the probe agency may also summon group export director Jean-Luc Lamothe. First of all, Piedevache would be asked to explain the company’s payments to Talwar’s NGO,” the sources said.

Piedevache could not be reached for his comments. An MBDA spokesperson said the company would support the authorities in their probe. It maintained that it had supported social development initiatives in India as part of corporate social responsibility, which included some payments to the NGO.

The company is involved in the Rs 30,000 crore offset programme associated with the 36 war planes.

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Analysis

Rupee weakened against $ in choppy weekly trade

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India Rupee

Mumbai, Feb 17 (IANS) In a choppy week’s trade, the Indian currency weakened against the US dollar to close above the 71 a dollar mark on Friday, owing to a sharp rise in crude oil prices, turmoil in the equity markets and uncertainty around the US-China trade relations.

In what could translate into further trouble for the domestic currency, analysts see an upward move of 6 to 7 per cent in the Brent crude prices in the coming week.

The rupee lost heavily towards the end of the week – over 70 paise in the last three trading session – as traders reacted to the sanction on Venezuela and production cut by OPEC and Saudi Arabia.

Sajal Gupta, Head Fx & Rates Edelweiss, said “technically … crude now looks set for another 6-7 per cent rise” which would mean that the rupee was likely to depreciate further in the coming sessions. “And if Rs 71.80 per dollar is broken, we can head towards Rs 72.50 mark.”

Among other factors impacting the currency, Gupta said, with crude and dollar index giving breakout, rupee would remain under pressure. Trade deficit data released on Friday post market was also not very encouraging with monthly deficit touching almost 15 billion dollars.

“Political tensions would also remain heightened with key leaders vowing strong retaliation in wake of the biggest terror attack in the Kashmir valley.”

Explaining the factors which has caused volatility, Anindya Banerjee of Kotak said the currency markets largely depend on the capital flows … and right now the fear of a possible retaliation by the government in response to the Pulwama attack is having an affect.

“The context of the whole event is also important because (Lok Sabha) elections are around the corner,” Banerjee said.

Also, the currency losing against the dollar and rising crude oil prices was a double whammy for the bond markets, he added.

On the global front, discussing the factors affecting the currency, Banerjee said, the Chinese economy was very fragile right now and moreover investors were looking for developments in the US-China trade talks.

However, Gurang Somaiya, currency analyst, Motilal Oswal, felt that the rupee was protected from any major weakness as “Foreign Institutional Investment (FII’s) came around good”, especially in February.

According to data from the bourses, FII has seen inflows worth Rs 1,096 crore in February.

India on Friday revoked the Most Favoured Nation Status (MNS) of Pakistan and has warned that more stern actions will follow the attack in Pulwama. Additionally, equity markets have declined for 6 straight sessions showing weak investor sentiments.

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Analysis

Fake Operations – Column: Spy’s Eye

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FBI

A national Intelligence organisation — like that of India — earns the respect of the countrymen because it helps the State in discharging its sovereign function of safeguarding national security, stays completely non-partisan and establishes a method of working that is secretive but never crooked. Since security, by definition, is protection against a scheming adversary resorting to a ‘covert’ attack, the counter-intelligence effort relies on tradecraft techniques perfected with professional training – like surveillance, infiltration into the enemy’s camp, communication monitoring, raising human sources and carrying out an interview under ‘cover’. The adversarial entity has to be identified and then targeted keeping in view the aim that security by definition is preventive – if there is therefore the danger of an enemy infiltrating its vanguard into the country clandestinely, these ideally have to be picked up right at the point of entry.

For this a lot of effort is made round the clock by operational teams to garner intelligence about the identity and location of ‘enemy’ agents. Intelligence operators could try to ‘turn in’ a member of the adversary’s set up or ‘plant’ a person of their own trust there. The results are never easy to get but the intelligence agency is prepared to ceaselessly slog for getting access to the plans and activities of a ‘real’ enemy. A professional and upright intelligence organisation goes for the hard targets and does not fall for the temptation of somehow creating an illusion of success for credit in the eyes of the political masters — by manufacturing a narrative of threat without establishing the presence of an ‘enemy’.

If this is done by fabricating a ‘trap’ by way of creating a fake university for getting unsuspecting individuals — who could not, by any stretch of imagination, be described as ‘enemy agents’ — to land in the country for joining that educational institution and then hauling them up as unlawful people precisely on the ground of being in a fake institution, this is a rogue operation and not an intelligence effort. The criminality here would be on the shoulders of the phoney entity and its creators alone and not on the victims of the ‘fraud’ committed by the former.

Imagine the shock that the people across the democratic world would feel over the recent media reports to the effect that the Homeland Security agents in the US apparently in collaboration with the Federal Bureau of Investigation (FBI) — both are a part of the US Task Force against Terrorism — have rounded up hundreds of Indian students precisely in this way and tried to claim it as a great operation designed to detect infiltration into US. India has sent a demarche to the US Embassy in Delhi questioning this action and the Indian Embassy in Washington has intervened to help the imperilled students but this raises serious questions about the spurious operations and unethical ways of some lead agencies engaged in counter-intelligence work.

The Trump regime had no doubt taken a serious view of illegal migrations and fraudulent entry of outsiders into the US from countries which traditionally posed a threat to the American security. But are the American intelligence agencies totally oblivious of the complete convergence that India and US had achieved on security matters or are they so desperate about creating an impression of being pro-active after their Chiefs had run into problems with President Trump that they wanted to secure ‘results’ through such dubious means?

The ‘University of Farmington’ based in Michigan was reportedly created two years ago by undercover agents of Homeland Security and its head — one Ali Milani — wrote letters to the prospective students imploring them to come to his university, getting in this questionable manner more than a hundred Indian students on its rolls during this period with the help of a gang of recruiters. The Immigration & Customs Enforcement agency (ICE) is now treating these students as a prize catch to prove its great work against ‘illegal’ immigration. It should have targeted the fraudulent intermediaries, something it did not do precisely because it had connived with them for ‘operational’ reasons.

The blind pursuit of Indian students is incongruous with the facts of the case. First, does the Homeland Security consider India as an adversary that would pump in its ‘agents’ into the US to indulge in unlawful missions there like some hostile neighbours and countries breeding Islamic radicals would possibly do? Secondly, considering the known keenness among Indian students to study in American universities with the legitimate objective of receiving higher education and jobs, the entrants would have responded to the ‘invite’ from this fake university with enthusiasm and come in only on legal travel documents.

In case a fake university was created by a fraudulent group outside of the government, it would have been the responsibility of the FBI to unearth that activity before any entrants were trapped but in this case a US government agency itself was the creator of an illegal entity, spending a whole lot of time, energy and funds to set it up just to be able to show that they had caught some Indian students on the wrong foot. Even if some students might have suspected the credentials of the university they would rightly expect the US government to deal with any irregularities about the institution they had joined in. But in this case, US undercover agents themselves were behind a university that fronted a trap operation. This is neither a good intelligence effort nor a worthwhile national security mission.

In any case, India should strongly object to this offending move of US agencies and treat it as an affront to its national standing. Is it possible that this is a deliberate act of Ali Milani to put India at par with those nations that had received adverse attention of President Trump and thus spoil Indo-US relations? The US policy makers should be interested in closely auditing the output of the country’s agencies entrusted with counter-intelligence work. The FBI should be concentrating on spurious institutions run by unlawful elements on its soil. Becoming a party to an operation meant to entice students to a fake university established by agents of the government themselves does not add up to a legitimate intelligence work in this case.

The FBI and other intelligence agencies, it is presumed, would be focusing on detection of sleeper cells of terrorists in the US that were posing a greater threat than before because of the unsuccessful ‘war on terror’. The danger had further increased with the known use of social media by the adversary for spreading radicalisation. The Commission on 9/11 had brought out many failings of US intelligence particularly, the inadequacy of follow up on signals that had indicated presence of radical aliens on American soil. American agencies can hardly afford not to devote all their time and resources to the serious threats to the security of US from terrorists and clandestine infiltrators. Violations of immigration laws and procedures can be detected — without resort to devious trap operations — through a professionally competent intelligence-based endeavour.

(The writer is a former Director Intelligence Bureau)

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