GMR, GVK and air travelers in India

It’s already over a week since I moved out of the Bengaluru International Airport and an “Airport Retail” perspective, but I am still somewhat connected to the Travel Retail business as Café Coffee Day operates across the key airports in India. Indian airports are joining the BIG league with Indian corporate houses actively engaging into airport development as private partners to the Indian Government’s initiative of privatizing the airports. Since the last nine years, five out of over 75 airports in India have been privatized – Cochin, Bangalore, Hyderabad, Delhi and Mumbai. These airports together handle over 70 million passengers (out of 100+ million air passengers) every year. The Indian aviation industry has been growing at a CAGR of over 15% over the past few years and this is expected to continue until 2020.

Out of the five airports, Delhi and Hyd. Airports are co-owned by the GMR Group and Mumbai and Bangalore are co-owned by the GVK Group. The GVK Group announced on 05 Nov. 2009 that it has picked up a 12% stake in BIAL, the company that operates the Bangalore Airport from one of its promoters, Unique Zurich Airport. Both the groups are large Industrial houses with varied interests across Infrastructure, Power, etc. Both the groups have their promoters and their families actively involved in the management of the in the business and the family name is projected as the face of these projects. Together, they are expected to invest over 40,000 Crores (USD 10 billion) over the next 15 years into Airport expansion and development.

The modernization (work-in-progress) at Delhi and Mumbai airports shows the efforts undertaken by both the groups amidst stiff resistance from various Unions of the Airports Authority of India (AAI), the erstwhile operator of these airports, public outcry for loss of land & livelihood and political & bureaucratic interference in decision making. However, the outcome is welcoming to see – new structures all around, reconstruction and new construction of airside facilities including the Runway and most importantly, the Terminal Building. From curbside parking management to commercial facilities inside the Terminal, from lounges to toilets, things seem to be very well progressed in all ways. The choice of commercial offering is quite interesting – an eclectic mix of Domestic, Indian and International Brands which seem to be well accepted by passengers.

The four airports would handle over 60% of the total air traffic in India and the two groups are the ones leading this initiative. While Hyderabad and Bangalore are Greenfield airports that commenced commercial operations in March and May 2008 respectively, Bangalore is expected to initiate an interim expansion in 2010 with the surge in air-traffic. While the single runway would remain, the terminal building is expected to be substantially increased to accommodate the growth for the next 3-4 years by when the new terminal and the second runway would be in place. Hyderabad, on the other hand will saturate its Terminal space in the next 5-7 years and thereon, will also have a second Terminal and Runway. Mumbai will have its new and swanky Terminal for Domestic operations by early 2010 while Delhi will have the much talked-about and hyped Terminal 3 by the middle of 2010, well in time for the upcoming Commonwealth Games.

So, what’s in store for air travelers? A lot! To begin with, Indianness. Indian consumers (even air passengers in a way) are quite different from their western counterparts and this is clearly visible in their consumption patterns. Where in the world would you find air passengers enjoying hot Idlis and Vadas, Rotis and Rice or shopping for Diamonds and Watches at 7am? Where would you find air passengers enjoying a chilled beer with dosas and paneer tikkas or shopping Denims and T-Shirts at 7pm? Point to note is that most of such food is cooked and served hot – this needs a larger kitchen area than in the west where the majority of the food that is served is cold and from the chillers! If this needs to be done at the terminal level, adequate care needs to be taken while designing and planning the same. This is just the tip of the ice-berg; there are many more – higher capacities of electric power (since most of Indian food is otherwise cooked with LPG), seating space with tables (since Indian food is usually served on plates and trays), etc. And most importantly, the local identity at the airports – something that is sometimes loud, but certainly present at various international airports such as Dubai and Singapore. And a lot more to look for!

An Indian powerhouse is formed, claimed The Moodie Report, the world’s most read travel retail website while announcing the news of GVK’s strategic alliance with Zurich Airport. The Indian and International media have been covering this extensively over the past 24 hours (I get atleast 2-3 alerts on Google every half an hour!). More than the coverage and the usual media-hype, it is the substance of the news that’s more important for passengers. Like any other fellow passenger and as a representative of the Concessionaire at all the leading airports, I am quite excited about the upcoming opportunities. And I stand as a proud Indian today, looking at where the Indian companies are taking Indian Aviation infrastructure to. Jai Ho!

Grab and Fly

Air Travel in India is picking up slowly, but steadily once again, and this is visible in the numbers reported by International and Indian-origin Airlines and Airports over the last two quarters. For a 12 month period ending Sep. 09, over 90 million people took to Indian skies - that's a mindboggling 250,000 people every day. This includes departing and arriving, domestic and international passengers (pax.). 75% of pax are domestic while the rest are international - and that's approx. 190,000 pax. In this, over 40% fly Low Cost Airlines; that's over 75,000 pax everyday.

Low Cost Airlines have been confused with Low/No frills airlines in India. Globally, No-Frill Airlines such as easyJet and Ryanair do not provide many services on ground and on air to pax. Their turnaround time (duration on ground at the airport between a landing and take-off) are minimal, between 40-50 minutes per location and the aircraft spends more time on air (hidden from the public eyes) rather than being seen on the tarmac, more as an advertising and brand-building activity, like the Legacy carriers. Legacy carriers or full service carriers operate on a hub-and-spoke model - they bring pax. from several cities and pass them on different flights to other cities; and are those which provide a host or services such as check-in & security check assistance by ground staff, lounges for pax. of various seating classes such as business, economy, etc. and F&B on ground (in case of flight delays) as well as on air.

Low cost carriers actually focus on "lower cost of operation" which means leaner staff on ground and on air. These airlines encourage pax. to check-in before they visit the Airport or to use the self service kiosks rather than the manned counters which are fewer in number and take more time. Ever since the launch of Air Deccan, the low-fare regime started in India. Although the airline followed most principles of a Low-Cost airline, it was also instrumental in bringing the "price-war" between the airlines. Suddenly, the big boys were offerring throw-away prices that the common man grabbed with ease and hapiness. One merger, one take-over followed and a few closures are in the offing. But even these airlines may pull off with the increasing domestic air traffic. So, Low-cost airlines and Low-fare airlines are not to be confused really.

Aircraft food is generally abhored by frequent travellers (by popular definition, these are pax. who undertake over 12 trips a year) and prefer to eat at the Airport Terminals or outside. These are also pax. who are considered to be well-traveled and a bit more evolved than their counterparts in understanding and appreciating the Airport F&B offerring such as variety and quality, not to mention the superior Customer Service (in comparison to what was available earlier). In many parts of the world, it's quite common to see Starbucks, McDonalds, Illy and many international brands at airports which provide the continued offerring to its patrons. However in India, this trend is quite new, probably a few years now. The first few organized F&B retailing outlets were commenced by India's largest chain, Cafe Coffee Day - with outlets across over 35 airports, this is the largest Travel Retailer in India at the moment. Mumbai CSIA, India's busiest airport where I was passing through today has over 11 touch points across various locations.  Organized retail footprint at Airports was pioneered by Bengaluru International Airport when it was under planning and construction stages between 2005-2008 where Cafe Coffee Day operates three outlets.

With over 75,000 pax. who fly Low cost airlines which do not provide (complimentary) F&B on board , that is already a huge market potential. Assume 30% of these pax. would consume at Airports and if each spends INR 100 per visit, the total turnover is approx. over INR 25 lakhs everyday! And among the rest, if 50% of them, ie., 25,000 pax  spend INR 40, that is over 10 lakhs. And such multiplication (which is not complex) is anyone's guess while using some common sense and a calculator. However, the BIG picture is the impending F&B opportunity at airports. Today, more and more passengers, irrespective of whether they fly Legacy carriers or Low-cost, are preferring to consume at the Airports. Bars and Restaurants are added attractions and it is quite common to see pax. arriving early to the Airport to have a quick bite of their favorite food or to have a drink - one for the runway! as I always say.

With more and more newer air passengers getting added everyday, this is one opportunity that cannot be missed. And Cafe Coffee Day would only continue to lead the way!

I leave, but my soul remains...

I have always compared the making of our “Bengaluru International Airport” to the epic Ramayana – of how thousands of hands contributed towards the construction of each and every square inch of this place. I was particularly among the few lucky ones in the country, to play a pivotal role in this mammoth infrastructure project; one that has faced innumerous criticism and obstacles over the years, but today, the Runway, the Terminal and the other buildings stand edifice to show what has gone into its making – satisfying passenger needs to its best and growing higher – in ranking among its peers as well as its revenues, a sign that clearly proves how much our passengers like our Airport. I still remember the sunny morning in March 2006 when I came to the erstwhile corporate office of BIAL at Hebbal to meet the then Chief Commercial Officer, Mr. Stephan Widrig. A visionary and a great leader, he was also among the few “perfect” gentlemen and kind-hearted human beings I have ever known. As always he had been, he let me speak for over 20 minutes – about myself, my past, my present and what I wanted to accomplish in future. He was a keen listener, not just the words the other person utters but those that one doesn’t too. After a 30 minute discussion, he seemed to have been convinced that I was the right one for the job. I had to wait for over an hour – reading the few aviation magazines on the reception area, while also thinking about the excitement that I would be having, should I actually get recruited. I always had a flair for aviation from my childhood – first it was about becoming a crew member, then a pilot and later on, as a passenger. But to become a catalyst or airport manager was something that I hadn’t thought in my wildest dreams! In the next three hours, everything was over – an offer letter was handed, medical check-up completed at a nearby hospital and I was ready to be welcomed into the Company! I joined on 3rd May 2006. And the rest, as they say is History.

I am glad I took this decision to join BIAL – something that many around me were sceptical about. Some even said that this would be the biggest disaster of my life. Today, they and the whole world know what it has been. Indeed, this has been a highlight in my career and one of the best times that I have had (and I hope there is much more to come in the years ahead). The portfolio that I have managed is among the most coveted in the world – no exaggeration. To be a part of creating and managing the first of its kind Travel Retail footprint across any Indian airport, that too a Greenfield, can only be a wish – one that I have accomplished and walking out today with pride.

Among the first things I did after I joined was to commission a Consumer Research – to understand what passengers wanted at our Airport. So, Synovate was asked to study over 600 respondents at the former HAL Airport – an effort that took more time to commence than to conclude. Once the report was in place, we started to work on the demands. We also started discussions with Retail & F&B Operators in India and their first question always was – “Who would Shop at the Airport?!?” for which we didn’t have ready answers. Although the Travel Retail Industry was already a USD 30 Billion business globally, India’s share was (as is still) less than 1%. So, we started to dig deeper and had a counter question as answer – “Who would not shop at Airports & why?” and interestingly, the answer was quite simple: Passengers wouldn’t shop

• If they believed that the products sold were of inferior quality

• If the pricing adopted was crazy, ridiculous and unreasonable

• If the overall ambience wasn’t conducive for consumption

And it was important to make the offering as competitive and compulsive as possible. It was around the same time that International Travel Retail Operators were looking at India on a more serious note – a market that was dominated by ITDC, the Govt. of India undertaking, for the past three decades and smaller private players since the late 90’s. Through a competitive bidding process, the Joint-venture of The Nuance Group – Shoppers Stop was selected as the main Retail Partner and HMSHost and Cafe Coffee Day as the main F&B Partners. Note the word Partner – it was not just on paper but in spirit. Since the business potential was both large and risky, we had decided to follow the Revenue share model – one that is used at the best airports across the world. And no one complains – if there is an upside in the business, then both the entities share the profits and vice-versa.

Construction, which was in brisk pace already had started to gather steam by Feb. 2007. On my very first visit to the site, on 8th May 2006, I was shown a concrete upcoming structure – where a basement that’s six meters below ground was being laid and I was introduced to what would later be known as the “Terminal Building”. Even today, I watch in awe the gigantic super structure – enormous day-light coming inside thereby giving a sense of place unlike many airports where so much of electricity is consumed as well as being felt cluttered. The ATC Tower, 64 meters in height was growing everyday and it was so exciting to measure the height with fingers from far, like how young adults measure in front of the mirror. And the runway spread over 24,000 square meters (60 meters wide and 4,000 meters long) was a delight to see being laid - we have done innumerable trips on this runway, by foot as well as burning rubber...

And then, the other partners were chosen. Each choice has a great history behind it. And there are too many that this column cannot take. By the end of the year 2007, all partners were in full swing with a Jan. 2008 timeline to finish the concrete/external construction and to begin store fit-outs. Every day was so different – new challenges, huddle meetings and new solutions. In the same month, a new logo was unveiled, one that displays the spirit of the city. Each team had grown in size and every member was getting prepared for the D-Day ahead – the Public Trials on 11th March 2008. The Airport had to prove that it was ready for operations and at 11.05 hrs, the first boarding call was announced by the former CEO, Mr. Albert Brunner. The Swiss Boss who spent over seven years in Bangalore by then knew the country and the countrymen better than most Indians. A workaholic by nature, his day would start at 08.00 hrs with his favourite coffee from Barista and would end by 20.00 hrs. And amidst his professional, bureaucratic and political meetings, he had the time and energy to socialise. He knew many things about the city that many of us didn’t know – from culture to cars, from fashion to food and wine.

On 30th March 2008, the Airport Team had a massive gathering along with its partners – to celebrate the completion of the project – one of its kinds in India where such a project was actually completed on time! A day I was waiting for close to two years to fulfil a promise that I had made to my former boss – that I would stand next to him and take a photo on Airport Opening Date. However, the Airport commenced commercial operations on the midnight of 24th May 2008 - behind schedule by six weeks due to various reasons that were beyond our control. However, I was among the equals – over 500 of us – some who cheered the first flight that landed and later took off on the tarmac and many others, welcoming and guiding passengers within the Terminal. I would still never forget that night, the first night – situations and emotions, good bad and ugly that flew through the air. The next morning was somewhat different – the Sun rose earlier than usual and so did passengers who took their morning flights out of Bangalore. Many had arrived over two hours in advance even for Domestic flights due to panic – that was hyped in the media about the distance of the Airport – a mere 35km from city centre. Volvo Buses that are operated till date by BMTC are among the most used, efficient, proactive, disciplined and courteous public transport systems in the country. Today, we find it challenging to have domestic passengers atleast 30 minutes before their departure – after all, their “Dwell time” at the airport is crucial to increase revenues.

Life has been very different before and after the Airport commenced operations. The short days that were long because there wasn’t much to do became longer days with little time to attend to many things – including lunch and dinner sometimes. About our Retail business, I have always boasted that Bangalore has been blessed with the best consumers and this has showed very well in our Operations. Every retail concept out-performed its expectations and even today, we see so many surprises - one that sets us thinking and keeps us on our feet.

After much deliberation and preparation, the Airport celebrated the first ever Shopping Festival along with its First anniversary. It was a big surprise to us, on 24th May 2009 that one full long year that was dotted with tragic terrorist incidents, global recession, India’s largest corporate fraud et al. And to rub salt on the wound, passenger traffic was dripping and so was consumer sentiment. Many who were braving the risk chose to sit on the fence and those who were already there were down-trading – both that wasn’t good for the Retail Industry in general and to the Travel Retail Industry in specific. But as always, the good and the bad stay for not too long and the past two quarters, especially the last one has been satisfying. Dassera and Diwali posted some encouraging figures and Christmas season already looks cheerful. Let’s hope.

Along these years, I have had the opportunity to meet so many great personalities in our Industry and I have also travelled quite extensively – ten countries to be precise. My first one was an official training trip to Zurich Airport which is also among the shareholders of BIAL. My week-long trip was mixed with enthusiasm, excitement and eagerness. I would sleep for not more than 6 hours a day and the rest of the time was spent learning and exploring. ZRH Airport is among the best in the world as rated by Airports Council International, an independent nodal agency that monitors passenger satisfaction across Airports worldwide. This tour was followed by a brief one at Frankfurt, the second busiest airport in Europe after London Heathrow. And my tour ended with Dubai – the world’s best airport as far as Commercial offering is concerned - they clock a turnover of over USD One Billion pa. In 2007, I visited Singapore and Kuala Lumpur. I consider Singapore Changi as my University – have made several trips now and every time I go, I stand and observe every square meter of the Commercial Areas – not just for ideas but for inspiration and clarity. Among my very few lifetime wishes is to work for this Airport, so I can learn firsthand. And in 2008, I visited Shanghai, Hong Kong, Bangkok in March, Singapore in Sep. and Hong Kong and Singapore once again in Dec. Hong Kong Airport is like a library – one can draw reference for any Travel Retail issue and they would have an answer to it. In June 2008, I visited Germany for a month as a Rotary Ambassador representing India to spread peace and friendship between the two countries. And during this trip, managed to visit London Heathrow (LHR) and Stuttgart Airport. LHR is among the most complex airport operation in the world, with a flight landing or taking off every 5 seconds between its two runways. With over 50% of its passengers transiting between the East and the West, the complexities involved in managing the commercial offering to cater to people from various nationalities, preferences, cultures and backgrounds is tremendous and World Duty Free that runs the Retail Business does a commendable job at it. I also had the privilege of talking about Indian Travel Retail at several Travel Retail Conclaves – at TFWA Singapore in May 2007, India Retail Forum in Sep. 2007 and IQPC at Singapore in 2008 and IQPC at Kuala Lumpur in 2009.

With such rich knowledge and understanding of the business, I stand proud with my head held high, of what I have been blessed and accomplished over the past years. But remembering my favourite Ramayana once again, my contribution to this Airport is as big, or rather as small as what a little squirrel did – to build the mythological bridge between India and Lanka. Like the squirrel, I would also be forgotten one day; although for me what I have done and achieved looks so big, it is indeed such a small contribution to this Airport. This is not something that I write for the sake of this column but something that I always believed in and have felt that way which many around me would know. This Airport and this company have given me so much, but I have returned very little. However, as I leave office for good today, I am sure, it’s only me which leaves but my soul remains here, always. Thank you, BIAL and its employees and associates – but for your support and encouragement, my new journey wouldn’t have been possible. I don’t consider this the end, but a beginning. After all, the woods are lovely, dark and deep, I have wishes to accomplish, promises to keep, but I have miles to go before I sleep.
And I have Miles to Go, before I sleep.
Jai Hind!