Monthly Archives: March 2007

Ariana Afghan Airlines May Go Out of Business

Bad news for Afghanistan’s national airline:  Ariana Afghan Airlines, which carries about 50% of the air traffic to the embattled nation, is on the brink of collapse.  They are one of the few airlines who cannot blame Southwest, low fares, or high fuel costs for their problems.  They have a terrible lease structure and, more importantly, incredible corruption which has left the airline mostly bankrupt.

The most interesting (and disturbing) part of the story, is that apparently for a $500 bribe, the airline’s safety department will grant you a pilot’s license.  If you can’t scrape that together, you can become a "licensed" mechanic for merely $200.  What a steal.

Student Kicked Off Flight for Coughing

A 16 year old high school student who was on a class trip from Hawaii was kicked off a Continental Airlines flight from Newark to Hawaii because she was coughing.  I wish there was more to it than that, but it actually appears that the student has some sort of coughing spell, and the pilot had her removed from the plane.  I’m guessing that staff at Continental were a bit on edge after the weird virus scare a flight from Hong Kong earlier in the week.  The student, who was travelling with a group of 40 students, was left behind in New York with a teacher.  At least they didn’t leave the 16 year old alone.  Continental says they will handle the matter internally.

Gol to Buy Varig in Brazil

Whoever though it would come to this:  Brazil’s lowfare juggernaut Gol is going to purchase Varig (or Nova Varig, as it’s now called) for $275 million, including just $98 million in cash.  The once mighty(ish) flag carrier has been greatly reduced in size after its near collapse last year.  Gol will receive the right to fly to Europe and the US and, more importantly, slots at Sao Paulo’s airport for domestic flights.

The State of Online Travel in India

Forgive me for veering off from the airline world for a moment here, but for the 2nd time in as many years, I’m actually going to do a bit of original work, rather than just passing on stories I read somewhere else along with a too-cute-by-half comment at the end.

With that self-deprication out of the way, I’ve seen a few articles recently about how quickly the online travel agencies are growing in India, and I wanted to put these pieces in a little perspective. 

ContentSutra, a website that follows the e-commerce comings and goings in India, has done a nice job passing along statistics from the online travel agencies (OTAs) in India.  From the site, we’ve learned that, for example, Yatra.com (1 of the top online agencies) is saying that they’re averaging $5 million in gross sales per month, selling 2500 airline tickets and 150 rooms per day.  While this $60 million annualized gross sales seems impressive for a site that launched last year, remember that OTA revenues are really just the commissions they generate, not gross sales.  So, taking an educated guess (let’s assume $6 per airline ticket and $10 per hotel room), they’re looking at $6 million in revenue for the year. We can also estimate that since Expedia’s revenues are about 12-14% of their gross sales, we’re probably in the ballpark (Expedia generates more of its revenues from hotels than does Yatra or the other Indian agencies.)

Leading site MakeMyTrip.com does about $120 million a year, or, we can guess, about $12 million in revenue.  We’ll assume that Travelguru and Cleartrip are probably somewhere in the that ballpark (let’s say each does about $9 million a year).  Does that mean the entire online travel agency industry in India is less than $40 million? 

Journalists have gotten a bit taken in by the gross sales numbers (which are fine, don’t get me wrong), but it doesn’t tell any of the story of how these OTAs will survive in a market where they’re barely getting paid for the sales they make.  The OTAs are betting that they’ll be able to create loyal customers over time, but this has proven to be mind blowingly expensive in the US.  Add to this the growth of the low cost carriers (who typically pay less than $2 –if that much — for a sale, plus the lack of hotel rooms from which to generate the great margins you see here), and it starts to get ugly very quickly.

Already, tens of millions of VC dollars have been poured into the online travel industry in India, and it appears the results will never get near where they’ll need to be to justify the investment.  If I’m missing something in my estimate, I’d love to hear about it…

This concludes today’s Obscure Market Analysis ™ from the OTR.   Now back to reading about which celebrities are getting caught having sex on planes.

Google Flight Status

Cool little tool from Google:  You can get flight status updates by texting your airline and flight number to 466453 (GOOGLE).  Kinda neat. 

Canada’s Harmony Airways Shuts Down

Canada’s Harmony Airways has closed down, citing fuel, competition, etc (ie, no money) for its woes.  It hopes to re-emerge some day as a charter carrier.  If you live in Vancouver, you may remember that Harmony was originally HMY Airways and used Jackie Chan to promote the airline.

Passengers on Continental Airlines Flight Not as Ill As Reported

A Continental Airlines flight from Hong Kong to Newark was held at the gate for 2 hours after arriving because several passengers reportedly had "flu-like" symptoms.  Earlier reports suggested that the flight was like a scene out of Airplane with a huge number of ill passengers ("We had a choice of steak or fish.  Yes, I remember.  I had the lasagna.").  However, it turns out just 7 passengers felt ill and were "normal," according to the Centers for Disease Control.  The plane’s passengers have now been released.

The initial concerns arose after it was determined that the sick passengers were part of a group of 80 people flying on the plane who had been on a river cruise.  Nothing to see here, please disperse.

Photos from the A380

If you’re interested in the A380, I’ve uploaded a slideshow of photos of the interior of the aircraft here.  Great stuff from a United employee who was on the flight to Chicago.

United’s Dirty Plane

Several people have sent me this article from the Consumerist that has a bunch of photos from a United Airlines flight from Hawaii to Chicago.  The plane was never cleaned prior to the flight, and, as you can imagine, it’s a mess.  United has since sent them two $300 travel vouchers.  But it’s well worth checking out the mess.

No Cellphones on US Airplanes

Good news:  The FAA is not going to permit cellphone use on planes.  Whew.