Oil strike begins to pinch new

The oil officers strike entered the third day today as talks between the
government and striking officers association failed to arrive at a settlement,
amidst visible signs of fuel shortages, the liklihood of officers from other
public sector units joining the oil officers strike and reports of the
government having ordered oil companies to sack the striking officers.



So far 64 officers, belonging to the Oil Sector Officers Association, which is
spearheading the strike, had been terminated yesterday even as the strike is
expected to escalate to other public sector units in the in power, steel and
engineering sectors. Reports also say senior oil company executives being
sympathetic to the striking officers.



With only Hindustan Petroleum Corporation supplying fuel, and exisitng stocks
being rapidly depleted, the situation has turned grim with prospects of
scarcities looming large. According to reports snaking queues are seen outside
HPCL petrol pumps.



A large number of petrol pumps and CNG outlets operated by Indian Oil and Bharat
Petroleum have run out of stock and consumers are beginning to feel the impact
of the strike as cabs and autos go off the roads as tanks run dry.
Domestic Airlines



Shortage of petrol, diesel and cooking gas has been reported from various parts
of the country as the indefinite strike of state-owned oil companies\' officers
enterd its third day. A number of pumps had reduced their stocks in anticipation
of a further cut in fuel prices.



After a marathon two-hour negotiation, petroleum minister Murli Deora and the
striking officers had failed to arive at a settlement as both refused to budge
from their demands.



The impact of the strike is expected to magnify as the government has so far
refused to relent to the striking officers demand for better pay packages, on
the grounds that the recently revised salaries are among best at a time when the
economic slowdown is leading to job losses.



Deora is likely to meet Prime Minister Dr Manmohan Singh later in the afternoon
on the strike after the union cabinet morning.



Flights have been delayed and cancelled at all major cities, with the worst
affected being Indian Airlines,
Jet Airways and
Jetlite as they source their
aviation turbine fuel from Indian Oil Corporation, whose officers have
alsojoined the strike. However,
Kingfisher had had a relatively smoother time as it tanks up from Hindustan
Petroluem, whose officershave not joined the strike.



The country\'s main gas trunk pipeline Hazira-Vijaypur-Jagdishpur (HVJ), run by
GAIL, continued to remain out of operations as ONGC has failed to supply natural
gas.



The impact is now also being felt on the power sector, with the gas-based power
units across the country facing shutdowns on Thursday. According to the
\'northern region load despatch centre\' data, around 1,500 MW of gas generation
was \'\'affected due to non-availability of fuel.\'\'



The shortages have affected power generation at power plants operating on
natural gas as feedstock, across states.



Over 9,000 officers of National Thermal power Corporation are expected to join
the approximately 40,000 oil sector officers, raising the spectre of power cuts.



The BHEL Executives\' Associations, which supports the OSOA\'s srike plans to join
the strike if the government does not implement the Justice M J Rao Committee\'s
recommendations for central public sector enterprises.



Oil officers being sacked

The government has asked PSU chiefs to sack the striking officers. It is
reported that upto 64 officers from ONGC may be sacked. ONGC\'s Association for
Scientific Technical Officers (ASTO) secretary Manoj Bhagawati said that
including him three other officers from Assam Assets were placed under
suspension for participating in the nationwide strike since Wednesday.



Another three suspended officers include A K Barua, Diyajuddin Ahmed and
Safaruddin Ahmed.



Impact of the common man



* Fuel scarcity for private car owners

* Taxis and autorickshaws have been going off the road as their tanks run dry

* Commodities will get dearer if they cannot reach market, particulalry
perishables like vegetables and fruits

* Cuts in power supply

* Flights affected

* LPG and pipeline gas supplies fall

Foreign carriers may soon buy stake in Indian airlines

New Delhi, Jan 7 (IANS) Foreign airlines may soon be allowed to buy equity
stake in domestic carriers, a senior government official said here Wednesday.�We
are in talks with the industry stakeholders. We have to first evaluate how much
additional investment we need in the form of FDI in the aviation sector,�
Aviation Secretary M. Madhavan Nambiar said at the Indo-US Chambers of Commerce
summit.

Though foreign investment is allowed up to 49 percent in Indian air
operators, foreign carriers are still barred from owning stake in domestic
carriers.

Many foreign carriers, however, have shown interest in owning stake in
Indian airlines.

Nambiar added that the government would sign a bilateral safety agreement
with the US next year, which would help the two countries share their
technologies.

The Bilateral Aviation Safety Agreement (BASA) is expected to help Indian
companies market their products more effectively in global level, an aviation
ministry official said.

DoNER ties up with Indian for dedicated air services in North East

After nearly two years of tender submissions and bidding, the Ministry for
Development of North Eastern Region (DoNER) has tied up with Indian erstwhile
Indian Airlines to have
dedicated air services across the region, a Central Minister said yesterday at
the 57th plenary meeting of the Northeast Council. �The Ministry has had talks
with Indian to have dedicated air services across the North East, which will
greatly boost accessibility in the region,� said DoNER Minister, Mani Shankar
Aiyar.



Speaking on the issue of increasing interest in investment in the region, Aiyar
said that after Thailand they will now concentrate on Vietnam. �Last time we had
a summit in Thailand to showcase the potential of the North East and encourage
investment in it, which got a great response. This time we will hold a similar
summit in Vietnam,� he added.

Advance bookings surge 30% on air fare cuts

Major Indian carriers have seen advance bookings on travel portals surge by 30 per cent since the fare cut announcements last week.

While portals such as makemytrip, cleartrip and ezeego have seen a rise of 30 per cent in advance booking in the first week of January, others such as yatra and travelocity, with a 10-15 per cent surge, are also expecting more bookings in the coming weeks.

�Domestic and international bookings have surged since Kingfisher, Air India and Jet Airways cut fares, and the low-cost carriers announced Rs 99 and Re 1 tickets for advance travel,� said Himanshu Singh, managing director, Travelocity.

The cleverly-introduced advanced booking fares have induced passengers to book tickets until as late as November.

For instance, Delhi-based makemytrip sold around 51,000 domestic airline tickets from January 1 to 5. Of that, around 82 per cent were booked for January, while the rest came for the five months from February till June. The portal has seen around 10 JetLite tickets getting booked for as late as November. Last year, 95 per cent of the bookings came for January and only 5 per cent were for the rest of the months. Also, there was no booking beyond March 2008.

Similarly, Mumbai-based travel portal cleartrip, which sold 70,000 tickets between December 26 and January 5, saw 70 per cent of the tickets being booked for the current month, and around 3-10 per cent for the months till April. cleartrip booked 5 Jet Airways and Kingfisher tickets each for November.

�Given that this is only the first week of January, we expected most of the bookings to be for this month. But, we have never seen bookings this early before. We usually see advance bookings for only as late as 30 days from the announcement of the fares,� said Noel Swain, vice-president, marketing, cleartrip.

Portals now expect advance bookings to account for a larger chunk of their revenues.

��Prior to the announcements last week, only 10 per cent of our total bookings were advance. Now, this has shot up to 30 per cent,� says Keyur Joshi, COO and co-founder, makemytrip. Portals also said that unlike before, airlines are offering an increased chunk of their inventory on such fares.

As a result of the bookings, airlines have made around Rs 3-5 crore of upfront cash on each of these travel portals in the first week of the month itself.

While SpiceJet has already sold around 20,000 tickets on two portals together, giving it upfront cash of more than Rs 8 crore last week, IndiGo Airlines has sold more inventory but has earned revenues worth Rs 6 crore since their average prices offered are lower than SpiceJet.

Full service carrier Kingfisher, along with Kingfisher Red, has also sold tickets worth Rs 8-10 crore on just cleartrip and makemytrip. The actual revenues earned would be much more substantial since the portals account for a mere 3-5 per cent of a full service carrier�s total sales and 5-8 per cent of the sales of a low-cost carrier.

Travel agents also said their overall bookings have gone up by 20 per cent. �Earlier, given the competition and abundant capacity, airlines felt their pricing should be more dynamic, so spot fares emerged. But now that capacity has reduced considerably, and competition is not so tight, airlines are back to offering advance purchase fares,� says Anoop Kanuga, chairman-western region, Travel Agents Association of India.

Industry experts said there would be some shift in travel trends as the railways would lose some First AC passengers to the low cost carriers, which in turn would lose some of their customers to the full service carriers, as the gaps in fares among the three have narrowed.

According to a recent study done by Yatra, a Rajdhani Express first AC fare on Delhi-Mumbai would come to Rs 3,300. JetLite is giving away an all-inclusive fare of Rs 3,200. While IndiGo�s average fares across sectors in January comes to around Rs 3,815, a Kingfisher Airlines average ticket in the month of January costs Rs 4,008.

IndiGo offers Re 1 to Rs 99 base fare

MUMBAI: Budget air-carrier IndiGo will offer Re 1-Rs 99 base fare across most of its sectors from Friday, but it would still be not less than Rs

2,926 for a Delhi-Mumbai flight.

IndiGo would now be offering an all-inclusive fare of Rs 2,926 for sectors such Delhi-Mumbai, Delhi-Bangalore, Delhi-Chennai, Mumbai-Kolkata, a company release said today.

"We are happy to announce the introduction of Re 1-99 base fare on a majority of our flights," IndiGo Airline\'s president, Aditya Ghosh said in a release issued today.

The offer would, however, be valid only for tickets purchased 21-days in advance, it said.

The special fares are in line with the reduction in Air Turbine Fuel prices and aims at passing on the benefit to the passengers, the airline said.

"Lately, there has been a reduction in ATF prices and we want to pass the benefit to passengers immediately", he said.

Jet Airways to breakeven in FY10

Wolfgang Prock-Schauer, CEO, Jet Airways, expects load factor to be around 60-70% in domestic and mid-70% in international routes. "We are targeting mid-70% load factors in FY10."

Prock-Schauer said 2008 was a very bad year and that the company was recouping last year losses with the cooling off ATF prices.

According to him, Jet Airways will breakeven in the next financial year. "If ATF prices remain at current levels; Jet could post small profits in FY10. However, the FY10 profitability would largely depend on load factors and pick up in travel."

Business class travel is falling significantly around the world but Prock-Schauer sees a recovery in the aviation sector due to the lower ATF prices.

Here is a verbatim transcript of Wolfgang Prock-Schauer�s comments on CNBC-TV18. Also watch the accompanying video.

Q: Given the way ATF (Aviaiton Turbine Fuel) prices have come down and any uptick in load factors that you have seen. By which quarter do you think you will turn profitable and which financial year do you expect to post a full net profit?

A: As you mentioned, 2008 was a year where all negative factors come together. We had a big overcapacity situation in the industry and a record high of fuel prices, beginning of the recession, the financial meltdown and on top of that terror attacks in Mumbai. So, 2008 was a bad year for aviation. But now, the lowered ATF prices are reducing the losses.

To give you a precise projection by when we will be profitable, is premature. We are approaching a breakeven situation quite rapidly and now in the current scenario and I would think that by next financial year we should be in the breakeven region and then from there onwards be profitable again so that�s the way how I see it going.

The recession is here in most of the markets so the economy has also slowed down in India. But nevertheless fuel prices will go down and our capacity reduction has been implemented. We can achieve breakeven situation in the next financial year.

Q: If ATF prices hover somewhere close to the current levels, is there a reasonable chance of Jet posting a profit in FY10 or do you think you can�t say that with certainty yet?

A: Given situation there can be a small profit but I don�t want to promise too much in the current scenario because it will be difficult to assess how the global recession will affect aviation. Business class travel is dropping significantly all over the world. So, it will be very difficult to assess the situation. I would say that I am more optimistic today than I was 8-9 months ago, when crude prices were at USD 150 per barrel. The trend is going in the right direction. But there are a lot of unpredictable factors and for this reason I would like to speak to this given scenario.

Q: For the rest of the calendar year that is year 2009, what kind of fare cut do you expect to see over the next few months and what kind of average load factor do you think you would have?

A: We have implemented a reduction in the fuel surcharge already and we recently introduced a series of new fare initiatives, specifically apex fares where you can get very competitive fares. This could be in the magnitude of 5-10% drop in yield.

But on the other hand we have seen very positive direction towards this new fare category and in the recent Christmas break there was not too much traffic volume, but now we will see traffic picking up. So, we could operate between 60-70% in the domestic arena and internationally we have been already operating in the last couple of weeks or months in 70% or mid 70%, so it is doing reasonably well.

Q: There have been some concerns about how you are funding or meeting your working capital requirements. Can you confirm whether indeed a loan of Rs 1,000 crore has been taken by Jet and whether that�s involved any pledging of shares?

A: I cannot go into detail but what I can say is that we have sufficient funding for operation and we have secured sufficient working capital facilities to come over this difficult phase. It is quite obvious that banks have faith in our strategy and our positioning and our liquidity is secured and we have enough working capital facilities.

Q: Is it your expectation that throughout 2009 you will be more or less be able to hold on to more than 60% load factors and if you can do that will it more than offset the pressure on yields because of a reduction in rates?

A: Load factors in 2009 could improve further because of what we have done on the domestic side� we have taken out about 16% of our capacity in this year and we want to keep this capacity stable. Despite the fact the domestic market has declined in the recent month by about 15-20%, in the coming year we could see stabilisation and small growth. So if we keep our capacity stable and the market continues to grow at a modest rate at about 5% or maybe even 10%, we will see higher load factors. We should have a 70% load factors on the domestic front. That�s our goal.

Internationally, we have completely stopped our international expansion programme. With the stable capacity and continuous growth in the international traffic which we think will stay in the Indian aviation. We will be able to achieve load factors in mid-70\'s; at least I would say and that�s our goal and this is also an international benchmark figure. You have to operate at about 75% load factor minimum to be profitable in an international operation.

So overall, a combination of stabilisation of capacity and modest growth should enable us to achieve improvement in load factors.

Jet reduces fares for purchases up to 7 days in advance

NEW DELHI: The country\'s largest private airline Jet Airways on Monday introduced three-, five- and seven-day advance purchase fares for Business
Class customers on certain domestic sectors with immediate effect.

While the 3-day advance fares range from Rs 7,200 to Rs 8,100, tickets purchased atleast five day prior to the date of travel will cost between Rs 6,500 and Rs 11,500. The 7-Day advance fares would range from Rs 4,500 to Rs 17,500, the airline said in a statement.

The offer is valid for purchases made till January 31. A Mumbai-Vadodara ticket would be available for Rs 7,200 three days in advance, while tickets on Bhopal-Delhi flights would cost Rs 6,500 five days in advance.

A Guwahati-Kolkata tickets would be available for Rs 4,500 seven days in advance. The prices do not include taxes and surcharges, it said.

With the jet fuel price coming down continuously since September last year, carriers have been under government pressure to reduce air fares. Jet had recently announced Rs 250 basic fare for domestic flights for purchases made 21 days in advance