There is an interesting news in Deccan Chronicle about the BIAL mess. According to this report, the reluctance on part of the private partners to infuse additional Rs. 200 crores, led to the inadequate facilities at BIA.
Courtesy - Deccan Chronicle
http://www.deccan.com/Bengaluru/City/CityNews.asp?#Stakeholders%E2%80%99%20refusal%20led%20to%20mess
Interestingly, the public representative seems to have gave in to the whims of private partners. Their silence doesn't end there. They continued to be silent till date. Their silence is understandable due to our political high handedness. Example is recent 180 degree turn in BBMP's hoarding policies.
Is the cat out of the bag? May be not. Many more such revelations are needed to know the whole truth. It is still too early to comment on the ramifications on this revelation if it were to be true. But still it relevant to ask some pertinent questions:
- Why are these GOK/GOI officials are tight lipped?
- Is because, in our governing system, the ultimate authority lies in Corridors of Political bosses and their offices?
- How does we empower these helpless (if they indeed are) souls to stand for the public good?
- How does the public partners get emboldened to force the private partners do the right thing?
- How do we ensure that private partners in public infrastructure are held accountable for their follies?
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Can we trust BIAL ?
Two newspaper articles, published in Bangalore today, concerning BIAL, the company promoting Bengaluru International Airport, deeply saddened me, despite proving my claims right.
Readers will recall, for the past year, in public and on this blog, I have been claiming that the growth rate of aviation in Bangalore, was beyond the capacity of the new BIAL airport. My article "The case for keeping HAL airport open" highlights this.
The first article in The Times of India, quotes Mr. Albert Brunner, CEO of BIAL, “We started the process of planning for the Bangalore airport about two years before Hyderabad did. So we couldn’t anticipate the huge growth Bangalore was to see subsequently”
Thank you for making my point sir, after denying it for almost one year. But I would love to hear your corporation's response to the contents of the Deccan Chronicle article, also published today, which claims "According to a highly placed official, who was part of key board meetings of BIA during 2005 and 2007, none of the (private) partners were ready to fork out the Rs 200 crore that was needed to make the airport better, if not the best in the country."
The article clear contradicts BIAL's claim in the Times of India, about the high growth rate being unanticipated. The article quotes source who claim that ALL the partners in BIAL, governments included, were fully aware of the massive growth rate in Bangalore's aviation in mid 2006, while the terminal was still in blue-print stage, but the promoters refused to pump in a measly Rs. 200 Cr. additional, to ensure the required corrective action.
The article goes on to say “When the work on BIA had commenced, there was a report that called for immediate attention —colossal air traffic growth. The study was commissioned by BIAL. Lufthansa Consulting carried it out. The verdict was that between 2005 June and 2006 July, air traffic grew by 45 percent, the largest in the history of any city in the country. The revised traffic study showed Bengaluru's explosive air traffic growth and pegged it at 10.1 million passengers by 2010, which it has already crossed now,” sources said.
A special board meeting was called to discuss the report in mid 2006. “The stakeholders led by Mr Albert Brunner, were called to attend that meeting. During the meeting, all the four members of management belonging to Siemens, Unique (Flughafen Zürich AG) — Zurich Airport, Switzerland, Larsen & Toubro, and officials of the Airport Authority of India and KSIIDC were apprised of the situation. “The time was ripe to affect any changes in the structural and design plans as the blueprint was still on the drawing board and no work had taken place,” sources said adding that it was arrived at that an additional Rs 200 crore had to be invested to meet the growing demand.
Already drained in terms of the two years taken in signing the concession agreement, the private investors were in no mood to listen. “They outright rejected the proposal stating that a lot of time and money was already wasted and that they wouldn’t give in to the new demand, despite the state argued that it has provided land free of cost and centre stated that it was pumping in 13 percent of total cost.
But the private partners while refusing to pump in additional funds said that they could make good with a functional airport and at the same increase the airport’s capacity. So a compromise was made on the aesthetics and futuristic architecture to save money,” the official said. So what Bengaluru eventually ended up with is a 71,000 sqft unimpressive terminal with maximum holding capacity of 15 million passengers as claimed by BIA"
This disclosure and the apparent contradictions raise serious doubts about the commitment of the private partners, to the best interests of Bangalore, both short term and long term. The finger of suspicion, for refusing the additional investment, can be fairly pointed at Siemens, since it is the dominant private partner and has the most number of Directors on the board, at 5. As the CEO of the corporation, Mr. Brunner has to follow the instructions of the board.Out of a total project funding of Rs. 2,015.23 Cr., the private partners have brought in only Rs. 326.70 Cr. i.e. about 16%. Despite being the minority funders, the private partners have been given inordinately high control and 40% of the equity.
One has to pause and think, whether it is this inordinate ceding of our rights to a private monopoly by government, that has resulted in Mr. Brunner's statement, in the Times, on "UDF being absolutely essential", “Only that will convince our shareholders to bring in more money for the second phase of development”. I am distressed by the implications of the message and angered by the dictation of terms.
In my recent article in praise of the operations at Bengaluru International Airport, I made the statement Trust will take time, and engagement is the method. Trust is a two way street. In an era of Corporate Governance, it is incumbent on any corporation, and its leadership to engage its stakeholders, including customers, with the highest levels of transparency and integrity, which breeds the required trust.
My good friend Syed, raises some very pertinent questions of government as well. Apart from being on the board of BIAL, they are responsible and duty-bound to uphold our rights.
- Why are the GOK/GOI officials tight lipped?
- Is it because, in our governing system, the ultimate authority lies in corridors of political bosses and their offices?
- How do we empower these helpless (if they indeed are) souls to stand up for the public good?
- How do we force the public partners to get emboldened and force the private partners to do the right thing?
- How do we ensure that private partners in public infrastructure are actually held accountable for their follies?
All these years of dealing with politicians seems to have taught BIAL a thing or two. If BIAL does not want us Bangaloreans taking all their statements, as we do of our politicians, with a huge pinch of salt, it's time for BIAL, which includes government, to come out and tell us the whole truth, and nothing but the truth.-----------------------
Regards
Devesh R. Agarwal
Visit my aviation blog at http://aviation.deveshagarwal.com
Regards
Devesh
Bangalore Aviation
Enjoy life, destroy FUD
Jab apna hi sikka khota hai !
BIAL includes GoI and GoK
Syed, I have taken the liberty of including your questions in my article. As far as I am concerned, GoI and GoK are equally responsible and equally answerable.
I refer to BIAL and to me BIAL = Siemens + Unique + L&T + KSIIDC (GoK) + AAI (GoI).
-----------------------
Regards
Devesh R. Agarwal
Visit my aviation blog at http://aviation.deveshagarwal.com
Regards
Devesh
Bangalore Aviation
Enjoy life, destroy FUD
Ghost at BIAL :)
Syed, whoever it is, it has
Syed, whoever it is, it has to be senior since they have quoted from the board of directors meetings.
The issue here is not of the actions of BIAL, but rather the lack of pro-activism on their part, albietly on the behest of their promoters.
For the last year, I have been hearing from a variety of people from all aspects connected to BIAL, about various shortcomings that had to be forced down BIAL's throat. Something as simple as the canopies in the front and on the walk ways, canteens and restrooms for the non BIAL airport employees. Even today, airlines do not have their own office building. They are still using temporary facilities in what was to be BIAL's office.
I was told that BIAL wanted to start the airport without the ATC certified i.e. HAL ATC controlling the airspace.
This does not bode well for the long term. We should not have to waste our time and efforts monitoring BIAL and constantly pushing.
If we wanted an indifferent organisation that would react rather than pro-act, we could have taken any government organisation, like AAI. We do not need a BIAL for that.
I don't like to be critical of BIAL. I want to sit with them and work on making Bangalore airport much better, especially from a cargo standpoint. We deserve better and we should not be having to keep pushing for it.
-----------------------
Regards
Devesh R. Agarwal
Visit my aviation blog at http://aviation.deveshagarwal.com
Regards
Devesh
Bangalore Aviation
Enjoy life, destroy FUD
Keeping Political Bosses Happy !
Interesting story in Deccan Chronicle about how AAI bureaucrats manages the whims and fancies of political bosses. That seems to work wonders and the real job seems to be secondary. No wonder people were relieved with just a mention of airport managed by private companies.
http://www.deccan.com/Bengaluru/home/homedetails.asp#BIA%20needs%20a%20Mr%20Fix%20It
No wonder our bureaucrats are so popular among the business, industry and political circles. We do read all this on daily basis in news media about praises of this eite class.
How do we change this working and pleasing boss culture? If the bureaucrats can do it for political bosses, why not for general public also?
This working culture from our Babus's is taking toll on all the infrastructure projects, BIA being the showcase. BIA is fit case for a research and management thesis to demonstrate, how to be not functioning while claiming to be functionally incharge.
It is time the silent majority take note of this and act to stall further deterioration of government responsibility and actions. Otherwise, many more BIA's are in store for them.
Air passengers to pay yet another fee
Air passengers to pay yet another fee
The air transport cartel is at it, again. In all too familiar theme, we passengers must get ready to pay one more "fee".
-----------------------
Regards
Devesh R. Agarwal
Visit my aviation blog at http://aviation.deveshagarwal.com
Regards
Devesh
Bangalore Aviation
Enjoy life, destroy FUD
Ridiculous
And they also charge a congestion charge for Bombay (maybe other cities also). As if passengers generally like to circle the airport.
I thought one of the objectives of any business is to minimize transaction costs. Either the agent adds value or he does not. If he does, then he deserves a fee. If he does not he should not be paid. Web bookings being charged?
Why are they shooting themselves in the foot?
Srivathsa
Drive safe. It is not just the car maker which can recall its product.
Proving the MBA's wrong
BIAL is not alone !
Is it time for a "no-fly day"
I think the entire air travel industry is taking us for granted.
Is it time send all of them a signal ?
-----------------------
Regards
Devesh R. Agarwal
Visit my aviation blog at http://aviation.deveshagarwal.com
Regards
Devesh
Bangalore Aviation
Enjoy life, destroy FUD
Devesh, I second your proposal !
Get ready to be charged even more travel agent Transaction Fee
Read the bold portion in the last paragraph. This is positively scary. Talk about outright fleecing.
Airlines concede to Transaction Fee in India, mark it as part of OC column
TAAI agrees, TAFI awaits feedback from members
As per industry sources, TAAI has in-principle agreed to the decision of charging Transaction Fee and also informed its members about the same. However, TAFI is awaiting feedback from members on the decision. Only after receiving agreement from both the associations the airlines will implement the same.
As per the decision, travel agents will now charge a Transaction Fee of Rs 350 per ticket on domestic Economy Class, Rs 500 per ticket on domestic Business Class, Rs 2,500 per Economy Class booklet and Rs 3,500 per Business Class booklet. Interestingly, tickets purchased for SAARC, which include Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka will be included under domestic travel. On international tickets, Economy Class that falls under TC1, which includes North and South America, Australia and New Zealand and TC2, which includes Europe, Taiwan, Japan, Korea and Africa and South West Pacific will be charged Rs 2,500 and TC3, which includes Middle East, South East Asia and China will be charged Rs 1,200. On international Business tickets for TC1 and TC2, the charge will be Rs. 5,000 while for TC3 will be Rs 2,000. International First Class tickets will be charged a fee of Rs 10,000 on TC1 and TC2 (Including South West Pacific) and Rs 5,000 on TC3 category.
It has also been decided that the Transaction Fee will not be refundable and will be retained by travel agents, even when a ticket is processed for refund. The agents can charge a fee over and above the cancellation charges for any modification or cancellation. The airlines will also charge the same Transaction Fee at the City Traffic Office, Airport Traffic Office and the website.
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Regards
Devesh R. Agarwal
Visit my aviation blog at http://aviation.deveshagarwal.com
Regards
Devesh
Bangalore Aviation
Enjoy life, destroy FUD
BIA Mess; Visit of our Legislators to foreign airports
Re: BIA Mess; Visit of our Legislators to foreign airports
Indian domestic air passenger traffic goes from bad to worse
Cross posted from my blog
Indian domestic air passenger traffic goes from bad to worse
Recently released figures show an alarming drop to only 8.6 million domestic passengers for the third quarter of (July-September) 2008, with a miserable 2.68 million passengers for September 2008. This represents a 17% reduction over the same period last year, a 19% reduction from the previous month, and whopping 25% drop from the preceding quarter. Compare this with 33% annual growth in the previous three years.
Most industry experts attribute this drop due to the 25-30% reduction in capacity by airlines, and the 10-15% increase in fares.
Jet group (Jet Airways and JetLite) are still the dominant force in the industry, and with their new found ally the Kingfisher group (Kingfisher and Deccan) control almost 60% of the market.
Despite the deep cuts, flight load factors continue to drop. Experts feel there is an excess capacity of 20% or about 300 flights, which need to be cut, before the demand-supply balance is reached. This is evidenced by the sharp capacity rationalisation undertaken by Kingfisher Red (formerly Simplifly Deccan), which helped the airline raise its load factors from a miserable 39% in August to a more respectable 51.7% in September.
While all airlines have been witnessing a drop in traffic from the beginning of this year, the Kingfisher group shows a sharp decline of over 30% from the first quarter (Jan-Mar) of 2008 to the third quarter (Jul-Sep) of 2008.
The "perfect storm" of collapsing demand, increasing costs, and a global financial meltdown, has truly let loose its fury on the Indian domestic civil aviation industry. The FUD factor (Fear, Uncertainty, Doubt) is further curtailing traffic as India Inc., rushes to save costs. There is no doubt on the severity of the impact. The blame lies squarely with the airlines who followed a herd mentality and blindly rushed in to buying capacity, while growth was at 33% a year.
The airlines may not have had a plan to deal with 33% declines, but without a doubt, they need immediate rationalisation of the insane Aviation Turbine Fuel (ATF) taxation structure, that is killing the Indian civil aviation industry. It is time Mr. Murli Deora and Mr. P. Chidambaram start listening to the pleas of their cabinet colleague Mr. Praful Patel.
ATF price rationalisation may not solve all the problems, but at least, it is a start.
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Added at Praja
Given this scenario, the financial viability of both HAL and BIAL operating together needs to be examined. Both airports will experience insufficient traffic and will be hurt financially.
I am still convinced on the location of HAL airport, and the positive role its location, will play in regional traffic.
I cannot comment about Hyderabad, but I think, BIAL should immediately undertake a detailed study, including airlines, at the Airavat counters, and at the 2T AC coaches at Railways, and understand the reasons for the flight of the short haul traffic from the air. I am sure it is a combination of fare increases, slowing demand, and BIAL location.
If the study finds the location factor to be significant (need not be large), BIAL and AAI should form a JV to open and operate HAL airport, with the primary focus of re-capturing short haul traffic. It will also benefit BIAL financially, as pressure for additional investment at BIA will be delayed, while BIAL gets access to a ready made facility at HAL. It will also permit BIAL greater flexibility on the quantum of UDF, as UDF will have a negative impact no matter its amount. It also affords BIAL some excellent PR with government, and will blunt the unjustified criticism being levelled at the passenger terminal building (PTB) by the netas while giving BIAL time to fix the PTB and make the cosmetic corrections needed.
Airlines do not want to invest in two terminal staff, but are willing to sub-contract the terminal operations. Today ground handlers like Globe Ground or AI-SATS operate till the airside edge of the terminal at BIAL. At HAL the edge will be extended to the landside. This opens up business opportunities for them as well.
I will not say with whom in BIAL, I discussed this idea with, but the reaction was positive, in sense I was told, "this is interesting and worth exploring".
-----------------------
Regards
Devesh R. Agarwal
Visit my aviation blog at http://aviation.deveshagarwal.com
Regards
Devesh
Bangalore Aviation
Enjoy life, destroy FUD
Bidar Vs Hosur
User Interaction Designer
Bangalore
Hosur is within 150 km
Thanks Jammy!...
User Interaction Designer
Bangalore
Commuter Rail Line for South-East
Narayan,
There is just one set of track/s on the south-east on which trains are running to Salem. The track starts at Byappanahalli & passes through /has following stations - Bellandur Rd, Karmelaram, Heelalige, Anekal Rd, Hosur, & onwards to Salem.
Commuter rail service has been recommended on this track upto Hosur in the CTTP. The route cuts Hosur road at Chandapura, & unfortunately does not go past Electronic City, nor does the route cover City, Cantt or Whitefield.
Hosur is very much within the 150 km radius
Interestingly, i would like to find out if Hosur lies in the 150 km radius from BIAL? Absolutely.-----------------------
Regards
Devesh R. Agarwal
Visit my aviation blog at http://aviation.deveshagarwal.com
Regards
Devesh
Bangalore Aviation
Enjoy life, destroy FUD
Airport in Hosur
Dr. Ravindra and Dr. Ashwin Mahesh had written a white paper on this issue. http://bangalorebuzz.blog.... BIAL can cite all it wants. We are seeing the DMK flex its muscles repeatedly. Sethusamudram, Sri Lanka, etc. This would make an interesting poll. If TN says they want an airport in Hosur and become adamant, do you think UPA will risk the government over BIAL ?-----------------------
Regards
Devesh R. Agarwal
Visit my aviation blog at http://aviation.deveshagarwal.com
Regards
Devesh
Bangalore Aviation
Enjoy life, destroy FUD
Airport and Votes
User Interaction Designer
Bangalore
Parliamentary committee recommends UDF withdrawl, re-open HAL
Sorry, but I am unable to post the story in plain text mode, and I cannot shift in to RTF mode. http://aviation.deveshaga... -----------------------Regards
Devesh R. Agarwal
Visit my aviation blog at http://aviation.deveshagarwal.com
Regards
Devesh
Bangalore Aviation
Enjoy life, destroy FUD
Parliamentary committee recommends UDF witdrawal, reopen HAL