Regional Connectivity Scheme fineprint for airlines: 10 facts
Civil Aviation Minister Ashok Gajapathi Raju, on Friday, revealed the fine print of the regional connectivity scheme which is expected to bolster air connectivity by promoting affordable flying. In the new Civil Aviation Policy, the government has capped passenger fares for flight journeys from unserved and underserved airports at Rs 2,500 per hour of flying for approximately 500 kilometres under the regional connectivity scheme. Here are the 10 salient features of the regional connectivity scheme, which is aimed at making flying affordable for the masses: 1. The regional connectivity scheme will be applicable on route length between 200 to 800 km with no lower limit set for hilly, remote, island and security sensitive regions. 2. The Central government will provide concessions to the tune of 2 per cent excise on Value Added Tax (VAT) and service tax at 1/10th the rate and liberal code sharing for regional connectivity scheme airports. 3. State governments will become key partners and provide free security and fire service, utilities at concessional rates and reduce VAT on ATF to 1 per cent. 4. No landing charges, parking charges and Terminal Navigation Landing Charges will be imposed for regional connectivity scheme flights. 5. A Regional Connectivity Fund (RCF) will be created to fund the scheme via a levy on certain flights. States are expected to contribute 20 per cent to the fund. 6. For balanced regional growth, allocations will be spread equitably across 5 regions – North, West, South, East and North East with a cap of 25 percent. 7. A minimum of 3 and a maximum 7 regional connectivity scheme flights per week per route with minimum 9 and maximum 40 seats per flight 8. The regional connectivity scheme will be in operation for 10 years with individual route contracts to be for a 3-year span. Limited period exclusive route rights will be allotted to selected operators. 9. Interested operators can submit initial route proposals. The gap in costs and revenues, if any, will be compensated through Viability Gap Funding. (VGF) 10. Market-based reverse bidding mechanism to determine least VGF to select the airline operator with the right to match to the initial proposer. The government said VGF will be reduced if passenger load factor remains high and will be discontinued after 3 years when route becomes self sustainable. Will Compton Authentic Jersey
Government a step closer to making Rs 2,500 flight for aam aadmi a reality
The government wants at least three subsidised flights a week at underserved airports as part of its efforts to enable 350 million more Indians to fly every year. “The airline providing regional flights will have to connect underserved airports with minimum three flights a week and maximum seven flights a week. Anything beyond that will not fetch any subsidy,” said aviation secretary RN Choubey. Not all seats in the flight will be subsidised, though. “Smaller aircraft with 13 seats will have nine seats under subsidy and 80 seater aircraft will have 40 seats under subsidy,” said Choubey. The airline operating regional flights will be allowed to sell the rest of the seats at market price. “We will not regulate fares on the seats without subsidy,” said Choubey. The government plans to immediately connect about 30 airports in the country that have adequate infrastructure but no flights at present. Under the scheme, the government will provide fares at Rs 2,500 per 500 km and fund the rest through a subsidy. Viktor Arvidsson Jersey
‘Hybrid Till may increase User Development Fee, hurt flyers’
The Centre’s decision to bring all airports under Hybrid Till model, under the new civil aviation policy announced last week, could make air travel expensive with a likely rise in User Development Fee (UDF), which in turn could drive up air fares. Under Hybrid Till, total earnings by airport operators are computed by adding a part of non-aeronautical revenue from areas such as duty-free shops and hotels along with revenue from aeronautical services like aircraft landing, parking and ground handling charges. This means, for UDF computation, only a portion of non-aeronautical revenue will be taken into account for overall revenue, said sources. At present, the government-run airports are under Single Till model wherein both aeronautical and non-aeronautical charges are taken into account to fix landing and parking charges thus reducing UDF. In Delhi and Mumbai, which are privately run, only 30 per cent of non-aeronautical revenue is added in total revenue, sources said. D Sudhakara Reddy, Founder & National President, Air Passengers Association of India, said Hybrid Till is a ‘negative thing’ and will increase UDF, and in turn increase air fares. For instance, in Chennai, UDF is ?120, which will increase to ?150 in the new system. UDF is included as part of the airfare, he told BusinessLine. Aviation policy The Civil Aviation Policy is said to ensure uniformity and level playing field among various operators, including the Airports Authority of India, and future tariffs at all airports will be calculated on the Hybrid Till basis. B Govindarajan, Chief Operating Officer, Tirwin Management Services, an aviation consultancy firm, said considering the need for greater investments in airport ventures, Hybrid Till should be supported. The Airports Economic Regulatory Authority of India should consider increasing the percentage of non-aeronautical revenues. If the percentage is initially for 25 per cent, there should be a mechanism to gradually increase it to higher percentage slabs on year-to-year basis. In the long run, Hybrid Till will eventually become Single Till since investments would have given rightful return to investors, he said. There was a mixed reaction for shifting to Hybrid Till from Single Till with the International Air Transport Association (IATA), representing airlines globally, opposing it, while the Airports Council International (ACI), representing airports worldwide, welcoming it. IATA said moving to Hybrid Till will make air traffic expensive as it will impact the basis for tariff determination for private airports. Passenger charges in India will increase, making air travel more expensive. Welcoming the government move, the Airports Council International said in a statement that Hybrid Till will increase private investments in airports and enable the sector to play its role in facilitating growth in air travel. Of the 100 busiest airports in the world, half operate either under a Dual Till or Hybrid Till. A balanced hybrid approach creates incentives for airports to develop commercial activities independently of their aeronautical activities. Commercial activity is a vital resource to drive modernisation of airport infrastructure and improve the quality of passenger service, the ACI said. Growing passenger traffic In the last five years, passenger traffic in India has grown 8.6 per cent on an average, well above the global average of 5.2 per cent for the same period. Preliminary ACI forecasts suggest that the total passenger traffic in India will reach 320 million by 2020, up from 212 million last year, and double to over 600 million by 2030, placing India as one of the largest air transport markets in the world after China and the US, ACI said. Colton Sceviour Womens Jersey
NHAI gets green nod for Rs1,246-crore UP road upgradation project
National Highways Authority of India (NHAI) has received environment clearance for updgrading the 146-km long carriageway of Kanpur (Chakeri) to Allahabad section of NH-2 in Uttar Pradesh at a cost of Rs 1,246 crore. “Based on the recommendation of the Expert Appraisal Committee (EAC), the Environment Ministry yesterday gave environment clearance to the NHAI’s proposal ‘Rehabilitation and Upgradation of existing carriageway of Kanpur (Chakeri) to Allahabad section of NH-2,” a senior government official said. The approval has been given subject to the compliance of the specific and general conditions, the official said. The total cost of the project would be Rs 1,246 crore. The total length of the proposed road section is 145.31 km, which passes through three districts — Kanpur (23.7 km), Fatehpur (90.33 km) and Kaushambi (32.2 km) in UP. As per the proposal, the road will be widened to six lanes with 10.5-metre carriageway width on either side, 1.5-metre wide paved shoulder and 2-metre wide earthen shoulder. Service roads will also be widened in the build-up sections. The upgradation of this section would involve construction of three flyovers, two toll plazas, one major bridge, eight new and minor bridges and 176 culverts, among others. Among conditions specified, NHAI has been asked to construct suitable over-bridges in Sarsoul and other villages where road crossing is an issue. Since 12,305 trees are likely to be affected due to six laning, the company has been asked to take adequate measures to build green belt. Roquan Smith Authentic Jersey
Infrastructure output growth hits 5-month low in May
Infrastructure sectors grew at five-month low rate of 2.8 per cent in May, slipping from a four-year high of 8.5 per cent in previous month, as oil and natural gas output contracted. The eight infrastructure sectors — coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity — had expanded by 4.4 per cent in May 2015. The eight core sectors comprise nearly 38 per cent of total industrial production. In April, these sectors grew at an over four-year high rate of 8.5 per cent, helped by double-digit expansion in refinery products and electricity generation. The May growth numbers are the lowest since December last when the core sector had expanded by just 0.9 per cent. A decline in production of crude oil (-3.3 per cent) and natural gas (-6.9 per cent) dragged the growth rate to a five-month low. Also, growth in output of refinery products (1.2 per cent), cement (2.4 per cent) and electricity (4.6 per cent) also slowed down in May as compared to the same month last year. These segments had expanded by 7.8 per cent, 2.7 per cent and 6 per cent, respectively in May 2015. Coal output growth was also lower at 5.5 per cent in May this year compared to 7.6 per cent in year-ago period. Only fertiliser and steel output recorded healthy growth. It increased by 14.8 per cent and 3.2 per cent in the month under review. During April-May 2016-17, the growth of eight core infrastructure sectors increased by 5.5 per cent from 2.1 per cent in the same period last year. Brandon Allen Jersey
Flipkart says it’s not looking for fresh funds
Flipkart chairman Sachin Bansal said the company is not looking at raising fresh funds. “We have enough funding to last us a long period of time,” he said on Wednesday. Some are likely to interpret the statement as an acknowledgement of the troubles the e-commerce major is having in raising funds at desired valuations. Rival Amazon recently announced a fresh $3 billion investment in its India operations; it had in 2014 announced a $2 billion investment. The collective sum far exceeds the $3.2 billion that Flipkart has to date raised. Its last round was $700 million in July 2015. Bansal also played down the markdowns of Flipkart’s share value by some mutual funds in recent months. “Along with us, many companies in the world went through markdowns. Uber too was marked down by mutual funds, but it raised money at a higher valuation than in previous rounds. I don’t think much about the markdowns. We should focus on execution, keep our heads down, focus on customers and things will happen,” he said. Bansal, who was speaking to the media after an interaction with Karnataka industries minister RV Deshpande, acknowledged that some of the internet companies are going through a down cycle, but he said the down cycles won’t last for long, just as the positive cycles “don’t last forever”. “E-commerce is 2% of shopping in India. So we have a long way to go,” he said. Jabrill Peppers Jersey
Malls are excited, markets not so much
When TOI visited various marketplaces and malls on Thursday to gauge the reaction of establishments to the newly approved Model Shops and Establishments Bill permitting business through the night, there was a distinct lack of enthusiasm among market associations in sharp contrast to the happiness of mall management. Atul Bhargava, president of the New Delhi Traders’ Association, said that restaurants and lounges could benefit because there were enough people who would dine late at night, but the same could not be assumed of high-street markets. “After midnight, Connaught Place is full of drug addicts, hawkers and beggars. Who is going to take responsibility of the security?” Bhargava asked. In a similar vein, Sanjeev Mehra, president, Khan Market Traders Association, added, “People would anyway prefer a mall after midnight to a stroll around the markets. So for us there is not much of a scope for additional business late at night.” Malls, however, have welcomed what they called the government’s “big step” towards development of retail and employment. Dinaz Madhukar, senior vice-president of DLF Promenade and DLF Emporio malls, said, “Delhi, being the capital, could see an increase in terms of mileage to retailers, employees and shoppers alike.” He expected vendors in malls with high entertainment quotients to be excited about the flexible work hours and increased footfall. As for safety concerns, especially of women, Madhukar explained that Mumbai had a reputation for being safer for women because it was a 24×7 city with people around at all times. In contrast, Delhi roads and markets became isolated after a certain time. “If malls and other establishments were to remain open 24×7, we would see more people out and about, making for a safer environment in Delhi as well,” he reasoned. An important fallout of longer business hours would be retailers levelling up with online shopping. “A factor for the popularity of online shopping is the convenience of shopping any time. With this bill, even brick & mortar can play the same game,” said Yog Raj Arora, director of Select Citywalk mall. “Retailers are paying rental for 24 hours, so it is in their interest to have longer hours of trading.” The mall, which currently pulls the shutters at 11 pm, could then extend the shopping hours to 12:30 am or even 2am in the first stage, Arora said. There are, of course, concerns even among youngsters about security. “In our country, it might be a bit difficult to implement such timings. Can the government ensure safety and security to everyone?” asked Aparajita Singh, a resident of Lajpat Nagar. Jatin, a Gurgaon entrepreneur, however, argued that it wasn’t compulsory for everyone to venture out at night for shopping or dining. “At least if we sometime decide to dine outside in the middle of the night, we will have options,” he said. His clinching argument: “It is also a way to ensure safety of people. If people are willing to hang out till late night, crime will gradually come down.” Marcedes Lewis Womens Jersey
Straitjacketing ecommerce in new GST Bill will kill innovation: IAMAI
The technology industry has taken a strong stand against the provisions in the new draft of the Goods and Services Tax Bill, which could have an impact on the growing startup and ecommerce industries, as well as hamper the IT services sector. According to the new draft, ecommerce sector will be troubled by the lack of clarity in the way “operators” and “aggregators” are defined, according to Internet and Mobile Association of India. While it welcomed the new draft clarifying that the first point of transaction will be the point of taxation for ecommerce companies, it added that the Bill defines “aggregators” and “electronic commerce operators” (or ‘operators’) as two separate categories. “Operators” are liable to pay tax according to the GST Bill, while aggregators are not. With the rapidly changing models of carrying out business online, grouping existing companies in straitjacketed definitions might be a difficult task. “The deeper challenge is the imprecise and overlying definitions failing to take into account the different business models that exist in this sector,” said IAMAI in a statement. An “aggregator” is defined in the Bill as someone “who owns and manages an electronic platform, and by means of the application and a communication device, enables a potential customer to connect with the persons providing service of a particular kind under the brand name or trade name of the said aggregator”. In the grey area are companies such as online classifieds naukri.com, online listing portals OLX.in and Quikr, online travel operators MakeMyTrip. com and Yatra.com, Ola and Uber. According to the GST Bill, these have characteristics of both and different business models have not been considered. “Straitjacketing ‘ecommerce’ into poorly defined categories will stifle innovation, which will not only affect the fortunes of ecommerce companies but will also prevent better services for customers in India,” IAMAI added. The Bill in its current form would also make life difficult for people in the IT services. “If the bill is passed in the same way it is currently envisaged… then people will be required to take as many as 100 different registrations and compliance and… a transaction which has been happening seamlessly across the country will have to then be somehow disaggregated and mapped on to states and how it is used so that it can be taxed accordingly,” R Chandrashekhar, National Association of Software and Services Companies told ETon Monday. Online sellers welcomed the move to make marketplaces accountable, but asked for greater clarity on the issue of GST registration. In its current form GST gives advantage of the tax charged by the marketplaces only to the sellers having GST registration in the same state as the marketplace. Jay Ajayi Womens Jersey
From proceed to checkout: What happens when you buy a product online
When you click the ‘Buy Now’ button on an online store, you launch a thousand processes for getting your product shipped to you. All these are done to precision in a few days, or in hours if you have paid for priority gratification. How does this happen? Do tens or hundreds of people have to be deployed to pack that palm-sized portable hard drive into a cardboard box with bubble wrap? How many levers have to be cranked? There’s lots of technology involved but also lots of humans, which slows things. Because buyers always need their products delivered faster, companies like Amazon and Flipkart are constantly in search of technology that can automate the order-to-delivery process to be quicker and error-free. Typically, once an order is placed with an online marketplace, its system checks the customer’s delivery pin code and the order is directed to a warehouse that has the product in stock and is closest to that location. The pick-to-dispatch cycle typically involves humans picking the correct product in order, packaging it and dispatching it to a delivery person. This can be largely optimised using technology to make the process faster, said Suresh Shenoy, vice president of engineering at Ekart, the logistics arm of Flipkart. Picking the right product involves the warehouse staff going around the facility with tote bags and a list of items on their handheld devices. These devices optimise the route within the warehouse for them, so they know where exactly a product is stored and in what order to fill their bags. A human ‘picker’ and there’s the ‘packer’ at the end of the processtypically spends half his or her time in a warehouse walking about to pick products, said Shenoy. Imagine a picker constantly walking to identify and pick products in a warehouse that’s 1.5 lakh sqft to 3 lakh sqft. It could take them forever even to pick up all the products purchased by a single buyer. “Our software ensures that the most frequently ordered items are placed in the warehouse in such a way that it is closest to where the pickers start their journey. The list of items given to pickers on a handheld device optimises the route they have to take to pick all the items,” Shenoy said. If you have paid extra for same-day or next-day delivery, your order is put on a priority list. “We recognize one-day and same-day delivery at the time the customer places the order and then process them in a prioritized manner throughout our network to enable ontime delivery,” says Akhil Saxena, vice president, India customer fulfilment, at Amazon India. Amazon was among the first to offer priority deliveries in India. It has gone on to add release-day delivery for exclusive product launches, midnight and Sunday delivery in 200 cities and morning delivery in Bengaluru, Delhi-National Capital Region, Mumbai and Hyderabad. That’s possible because of companies like Gurugram-based GreyOrange, a robotics startup that counts Flipkart, Jabong, Snapdeal, Delhivery and DTDC among clients. It helps online retailers and logistics firms automate their warehouses through its flagship robots, Butler and Sorter. Butler helps in intelligent storage of inventory, rearranges stored racks based on past and current orders and brings shelves to the ‘pick stations’ on receiving orders. Sorter, which is more popular in India, is an automated system for loading, scanning and bagging packets based on destination. It involves dimensioning and weighing the products and sorting them on a conveyor belt using a pneumatic arm to divert them according to pin codes, hub codes and destinations. “The orders are sorted at the end delivery hub by robotic arms. The barcode is read and the package is weighed to rule out theft of the product from the package,” said Samay Kohli, chief executive of GreyOrange. Before dispatching a product to the last-mile delivery provider, two more checks are required. A profiler matches the product with a picture from the customer’s order page to make sure the right colour, size and model is being shipped. The packages dimensions and weight also are measured to avoid any dispute with cargo companies. The order is then sent to a central hub, called the mother hub, attached to the warehouse, where it is sorted into bags depending on the pin code, Shenoy of eKart said. Logistics firms that work with ecommerce marketplaces also use technology hacks to minimize the time and cost involved in delivering a product. For the first leg of a consignment that involves getting an order from a marketplace’s warehouse or merchant to a logistics firm’s sorting centre, efficiency is built using automated routing and cost-planning based on algorithms, said Santanu Bhattacharya, senior vice president, technology and products, at Delhivery. “For example, I will send a mini-truck to pick a shipment of expensive phones and devices and ship them through the air or road at the earliest, as opposed to, say, a mobile accessory,” he said. Once a product is ready to be shipped, it is dispatched by road or air cargo to the destination city or town, and to smaller delivery hubs from where delivery boys can pick it up. Real-time tracking of the delivery fleet, mapping technology and optimization of routes are few hacks that help in the last leg of shipments. delivery also uses a proprietary artificial intelligence software called AddFix that can recognize postal addresses and convert them into coordinates-based addresses. Buyers often get the pin codes incorrect or give addresses based on landmarks that online maps might not recognize, said Bhattacharya. “When we run an address listed on an order on Google, it gives us an efficiency of 30%, whereas running it on AddFix first and then on Google gives us an accuracy of 90%,” Bhattacharya said. Terence Newman Authentic Jersey
Flipkart’s new centralised procurement process aims to cut costs
Flipkart is said to be looking to cut costs by as much as 30% by merging departments, keeping hiring to a minimum and centralising purchases to steer the company toward profitability after years of burning cash as it won customers and became one of India’s biggest ecommerce marketplaces. The engineering departments of logistics arm Ekart and the advertising and ecommerce units will be unified into one as part of the exercise, said people with knowledge of the matter. Independent categories such as large appliances, small appliances, furniture, home decor, kitchen and furnishing will be clubbed into one home. The sales and marketing for all of them will be run by a single team after the merger. “This will also free up many people,”‘ said one of the persons, reducing the need for fresh recruitments, which are already sharply down from before. Flipkart is hiring only after careful evaluation of each new position, the person said. The company recently courted controversy when it deferred the joining date of fresh recruits from Indian Institute of Management, Ahmedabad. The ecommerce marketplace said it would hire the talent it needs to meet business goals. “At Flipkart, it has always been our endeavour to improve organisational efficiencies to achieve our goal of making quality products affordable and accessible to all Indians,” a company spokesperson said. The person didn’t respond to specific questions on cutting costs and manpower. “We continue to invest in automation and in driving efficiencies in our operations structure to improve our performance and productivity,” Flipkart said. “Our hiring plans are in line with the business goals and we are continuing to hire rich talent in our areas of focus. Over the past years we have built a team of outstanding global professionals. This year we are also emphasizing on internal development of our existing talent.” The company is also merging procurement for all functions such as media buying, promotions, IT, supplies and warehousing based on the assumption that the centralised unit will be in a better position to negotiate deals with vendors rather than multiple teams doing so individually. Ecommerce firms are yet to show signs of profitability, having focused on gaining market share and winning customers. But they are coming under pressure from investors that have poured billions of dollars into them, banking on the potential of Indian market, which is pegged at $40-50 billion by 2020 from $8-12 billion now, according to a report by Boston Consulting Group and Retailers Association of India. Ecommerce firms are also being prodded to optimise operations, curb discounts and focus on improving margins to maximise returns. Discounts have declined after the government barred online marketplaces with overseas investment from engaging in price cuts themselves. These have to come from participating vendors instead. This was part of rules issued in March by the government to put online and offline retail on a level playing field. As part of the cost-cutting plan, Flipkart recently tightened its returns policy, narrowing the window during which a customer can send back a product bought on its website to 10 days from 30 for most top-selling items. It also told sellers on the platform that they will have to pay higher commissions to Flipkart starting June 20. The firm is also looking at investment in automation at its warehouses and the last mile to reduce costs and the need for human intervention. The ecommerce firm is also trying out alternative delivery models. As part of this, Ekart has set up experience centres and pickup zones at tech parks, where office employees can collect orders from a single outlet. It has also partnered with 280 outlets of Apollo Pharmacy, where customers can pick up shipments. Baltimore Ravens Womens Jersey