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Air-routewise, India underserved from the US

With more than three decades of experience in airline business, Bruce D. Parker, the Chief Information Officer of United Airlines and Senior Vice President of United's Information Services Division, is a man who has lived with planes for the best part of his life. Parker leads United’s information technology division with over 1,500 employees and nearly a half-billion dollar budget. During Parker’s administration, United has aggressively moved forward on a number of information technology fronts. UA has introduced an innovative concept through a unique partnership with ITN, (Internet Travel Network), and maintained an industry-leading website, ual.com. Parker has also launched SkyNet, the company’s first intranet that electronically links United's 95,000 employees. He leads the StarAlliance, a global team of airlines created to provide customers with the "virtual airline" experience.

Parker spoke in length exclusively to Bishaswar Malakar, of Business Economics during a recent short visit to the city to launch SkyTech Solutions. He remains a strong advocate of IT in airline business and wants to make UA a model for other airlines.

Q: How do you view the global airlines business today? What is the trend and how do you look at its future?

A: We would like to see nations going for open skies policies, and thus allow more competition which ultimately benefits the consumer.

Also, we support the trend toward forming alliances, which give global travellers seamless access they need to most destinations. Star Alliance— of which we are a founding member- gives United customers an unsurpassed globalnetwork that a single airline cannot provide.

Q: What is the share of UA’s business in the Asian market? What is the situation now and how do you view this market in the near future?

A: In 1998, 16 pc of United's revenue was generated in the Pacific. We are seeing signs that suggest that the economies in the region have bottomed out, and are expecting conditions to improve further in 1999.

United Airline views the Pacific as a collection of routes: some are performing well, such as the South Pacific and Hong Kong/US, and others are still challenging.

Q: In how many Asian countries do you have offices?

A: Our regional offices are in Hong Kong, but we maintain country offices in all locations that we serve in Asia Pacific. We are keeping our Indian staff on the payroll after we suspend Delhi-London/Delhi-HKG service, on the anticipation that we will soon be announcing the introduction of non-stop service from Delhi to the US.

Q: Some analysts feels that the second half of the year for the US economy will not be good enough. What do you feel on this issue and what will be the company’s strategy if the economy slows down?

A: We are fortunate that the US economy remains strong, and will continue to monitor it closely. We are following a slow restrained-growth strategy for 1999.

Q: What does Y2K mean to airlines? How many airlines do you think have complied globally? What about UA’s compliance to this problem?

A: Y2K presents us with a challenge, but we are confident we will be ready. We do not see this as a competitive issue, and are cooperating with other airlines, the Air Transport Association (ATA) and the International Air Transport Association (IATA) wherever we can.

At United, we've made great strides with our Y2K efforts. While many people think of Y2K in terms of December 31st 1999, for us, the cut-over to a Y2K operating environment has already successfully occurred 146 times.

For example, on February 4th, we began booking reservations and issuing tickets for travel in 2000. Applications and systems to make that move successfully to the Y2K environment began in the autumn of 1998.

As of today, nearly all applications have been remediated. Our focus is now turning to our comprehensive testing strategy, including tests with our business partners and others.

Q: Paperless ticketing solution and booking via the internet are the new concepts. Do these technologies reduce the need for ticketing agents following direct handling of clients by the airlines?

A: Not at all. Electronic ticketing has simply changed the currency of travel entitlement. E-ticketing service has been an integal part of our strategy to make travel simpler and hassle-free for our customers. Customers no longer have to worry about picking up, forgetting or losing tickets.

Our goal is to have as many of our customers as possible arrive at airports "travel ready." Both E-ticketing and United connection on the Web are helping us achieve that goal.

Q: UA has decided to suspend the Indian operation temporarily due to heavy losses. Could you indicate the extent of the loss? When will that service be relaunched? Are you confident that after the relaunch the company will make profits from its Indian operation?

A: United Airlines announced recently that it plan to launch a non-stop daily service between Chicago’s O’Hare International Airport and Delhiby the start of the winter season on October 31, 1999. This is the re-launch of the Indian operation which was discontinued in April.

The new route will be among the longest operated by United, or any other airlines.

"We’re excited about linking our hometown airport at Chicago with Delhi. India is a dynamic and fast-growing country which has been under-served from the US.

These new flights will provide tremendous opportunities for both local and connecting customers. In fact, the new service will be the fastest way to reach Delhi from many cities across North America, including the East Coast. For example, customers in the New York area will find connecting to our service at Chicago more convenient than travelling eastbound to Asia via Europe."

United is able to offer the long flights linking North America non-stop with Delhi by using Boeing 747-400 jets with enhanced Phase III Pratt & Whitney engines. Depending on the exact routing, United expects the new flights to take approximately 15 hours, covering more than 7,484 miles. The operation of the new flights would be subject to certain contractual approvals.

 


Taking the internet to everyone

This is interview of R Ramaraj, Managing Director, Satyam Infoway, India's first private sector internet service provider (ISP). He was interviewed during his visit to Calcutta for launching their service in Calcutta.

Q: Satyam has spent one and half months as a national private ISP. What is the market response and what is the trend?

A: We have today about 10,000 customers for our Satyam Online ready-to-use Internet connection, across the 12 locations where we have launched in the last one month. Most of them are students and the home segment. A small percentage of users comprises small & medium businesses also.

We will reach 40 locations all over the country to provide internet service and will invest Rs 40 crore towards this target in this current fiscal.

Q: As a private ISP, do you feel the need for any further support from the government?

A: To achieve the government objective of taking the Internet to everyone, a lot of initiative for improvement has to be taken up. This will include upgradation of the existing telecom infrastructure, strong legal frameworks (cyber laws), implementation of the recommendations of the Telecom Regulatory Authourity of India (TRAI) and a stable political environment which will foster the growth of the internet in India.

Q: How many private ISPs can really stay in the market? Is the easy entry policy desirable and healthy? Will VSNL remain the main competitor even in future? What will be the strategy of Satyam to overcome such competition?

A: Like what we have seen in the west, we can expect a consolidation in the marketplace within a few months. We can expect a few 100 ISPs, both national and local, to be there initially. But a year hence, there could be less than 100 players offering ISP services in India.

VSNL’s role as a service provider and also as an infrastructure provider is something that is not easily digested by private ISPs. There is no level playing field in such a situation. We will have to wait and watch future developments.

As far as Satyam is concerned, our main focus will be on the quality of service offered by us. We will maintain a high level of service and offer maximum value additions to our users, enabling them to use the internet and derive maximum benefit from the Net.

Q: The government has allowed foreign investment in ISPs. What is the trend of foreign interest in this sector and why? What is the expected FDI in this sector?

A: FDI to the tune of 49 pc is allowed as per the policy announcement of Feb’98. But still other govoverment bodies who are involved are not clear on the scope of this proposal and they are awaiting proper clarifications on the same. We at Satyam have got FIPB’s nod for investment upto Rs 21 crore and Rs 9.8 crore for Himalayan Bell Ltd.

There is a lot of scope for FDI in this sector. But the point of projections is difficult to determine. The trend is fairly good and will continue.

Q: Who are your are collaborators for your services rendered by you? Does Satyam Infoway have any plans for financial collaborations with any foreign partner?

A: We have entered into exclusive strategic tie-ups with the "Best of Breed" players in the internet business. Our Internet Commerce expertise comes from Open Market Inc., USA, the world leader in Internet Commerce services. Our Network Management and administrative expertise come from our partnership with CompuServe Inc., the world’s largest public data network services company.

We have recently entered into a tie-up with GRIC Communications Inc., to provide international roaming facility to both our Satyam Online customers and to GRIC’s international travellers coming to India.

Q: What about financing by FIs & banks and employment generation in this service?

A: ISPs are no different from other companies. The Banks and FIs can enter into financial options with ISPs as per the rules specified by RBI. No extra benefit or sop is received for financing this service. Internet services will generate employment opportunities in all staff functions for basic marketing & sales professionals, networking professionals, administrative professionals and service oriented professionals who will look into the customer support function.

Q: Satyam is more focused on e-commerce. What are the major plans to promote this and what will be the new surprises to the users from Satyam?

A: Our primary business objective as we define it is "Enabling Business Over a Wire". Today, we offer E-Commerce solutions to more than 200 corporate blue chips in the country. These services include basic messaging services, intranet solutions, extranets, Notes administrative services, EDI, Internet commerce solutions. In fact, we cover the entire spectrum of E Commerce services including payment processing.

We are closely working with closed user groups for specific business solutions. Some of these projects include representations from banks, government bodies and service companies.

Q: What is the total turnover expected during the current financial year and for the next year? What will be the share of business revenue from e-commerce out of Satyam Infoway’s total turnover?

A: We expect to close the year with a turnover of about Rs 14 crore. A major portion of it will come from our E Commerce services.

Q: What steps have you planned in overcoming some of the shortcomings compared to Pentafour software?

A: As far as ISP services are concerned, we were quick to get off the block due to our experience in the EC business for the past one and half years. Therefore our learning curve is much shorter and this definitely will give us the required momentum.

Q: As president of the Internet Service Providers Association what are the major priorities before you? What is the status of the plan for a separate gateway?

A: To bring the internet to everyone. This is what we will strive to achieve as an association. As an association, we are also looking to make a foray into the internet. Though the government had allowed a separate gateway, investment for the independent gateway is very high runing into crores. So unless a sizeable internet penetration and a joint ISP initiative are not there, a separate gateway is unlikely. Talks are on and we should be able to give you some concrete picture on the situation soon.


Vast opportunities for Indian investment in SA

Under the supervision of Jerry M Matsila, South African High Commissioner to India, business between India and South Africa has expanded considerably. Some associations have come up recently to promote business and trade cooperation between India and South Africa. These are South Africa Foundation, Indian Ocean Rim Association, etc. Matsila played a major role in their formation. He was also a key figure in the signing of the historic Red Fort Declaration of 1997.

Talking to Bishaswar Malakar of Business Economics, he surveyed the growing commercial ties between his country and India.

He thinks the present Government of India is very co-operative in promoting business exchanges with South Africa. According to him, the BJP-led Indian government should make every effort to facilitate easy and quick export and import credit.

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Q: What is the present status of bilateral trade pacts between South Africa and India? What is your expectation about their future?

A: Ever since India and South Africa started diplomatic relations in 1993, bilateral trade between South Africa and India has witnessed excellent growth. Both the countries have been cooperating with each other to evolve joint strategies on many concurrent global issues.

The joint initiatives have resulted in a growth in the volume of bilateral trade. It has risen from $1.70 million in 1992-93 to 634.76 million in 1996-97. This volume is likely to cross $1 billion by 1997-98 and 2 billion by the end of this century. India is working with a target to achieve a trade of 5 pc of the total foreign trade of South Africa.

Q: What are the objectives and achievements of the India-South Africa Commercial Alliance (ISACA)?

A: ISACA was formed in October 1997 in view of the close relationship between the two countries- India and South Africa. The core objectives are: a) to promote trade, investment and commercial relations; b) to enhance the bilateral relationship through mutual understanding and experience sharing; c) to encourage and assist business cooperation.

 After more than six months of its inception, ISACA is emphasising the structure of the body like controlling board, types of sub-committees, areas of common interest, etc. In the next two months at the India-South Africa commission meeting these issues will be discussed and finalised. We want that representatives from the business community to join the board.

At the same meeting, a mining working group will be formed to promote bilateral opportunities in the mining sector.

Q: What steps are the South African government taking to make the country investment friendly for the global investors?

A: The South African government has been continuously emphasising foreign investment and technology transfer as the topmost priority areas on its economic agenda. The government has been instrumental so far in attracting foreign investment to the county. The revitalised efforts of the government have already started bearing fruit. About 500 foreign companies which left the country in the 80s are coming back. Among them more than 100 are from the USA and the UK respectively. This is due to the integration of the economy with the global market. There are a host of incentives which are attracting a lot of investment in the country.

 The South African government has identified certain key sectors for economic development. These areas include employment generation segments like small scale and cottage industries based on utilisation of local raw materials, infrastructure development including construction and housing, general health, hotel and tourism, mining, textiles, drugs & pharmaceuticals and engineering goods.

Q: How will the Indian investors be benefited by investing directly in South Africa?

A: The Indian business community derives a lot of benefits from direct investments in South Africa. It will provide them with a market having a population of 130 million. It will enable easy access to Latin America and other African countries.

 Indian exporters will make a major breakthrough in the international market which is the prime target of a developing country. This will be possible if Indian products get a competitive edge on price and quality. South Africa will be a boon to the companies for availing to the extent of ready cost advantage of about 40 per cent. The companies will get a hefty benefit of reduction in their freight bill of 40 pc if the goods are exported from South Africa instead of India and the shipping time reduced to 50 pc as per the latest Indian Institute of Foreign Trade (IIFT) study.

 India's relations with South Africa are age-old and about one million people of Indian origin are based there.

 According to the economic agenda initiated by the South African government, vast opportunities are awaiting India to tie-up industrial ventures and transfer its technical know-how to the South Africa. The thrust areas: small and medium units in agro-processing, textiles, leather, processing of timber, industrials training

 institutes to train manpower, pharmaceuticals, chemicals, banking, insurance, tourism and information technology.

 Q: What are your views about the tariff rate structure of goods in India and to what extent do you favour it in the context of World Trade Organisation?

 A: India is moving steadily towards the globalisation process with the opening up of the economy. The progress in this regard is not very unsatisfactory, though there are some drawbacks. India should adhere to the World Trade Organisation commitments for phased removal of restrictions.

 Q: The present government in India is in favour of economic and trade reforms with a 'swadeshi' blend. Do you foresee increased trade relations between India and South Africa in this context?

 A: We are observing a positive outlook about growing relations with India. We are hoping a lot more from this government.

 But It is very difficult to comment on the final stage of cooperation with the Indian government. We are basically taking a 'wait and watch' strategy. In August the Indian prime minister will visit South Africa for the Non-Aligned Movement Summit and I hope the outcome of the meetings on economic discussions will be very positive. Some policy decisions are expected for fuelling investments in prospective areas of both the countries.

 Q: What are the main objectives of the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC)? How will it help in developing the investment environment between the two countries?

 A: The main purpose of the Indian Ocean community is to promote business activity between the countries around the Indian ocean, keeping in line with what the trading community of the European Union has already done. The Indian Ocean is the third largest ocean and serves as an important waterway which carries a third of the world's bulk cargo and two-thirds of its oil. The South African Institute of International Affairs has observed that the countries of the Indian Ocean Rim have a population of about two billion, or one third of the global population, producing goods and services worth some $1 trillion. In the period 1994 to 1998, the trade volume doubled each year and the region's share went up to 11 pc from 9.6 pc.

 Q: What do you suggest the Indian government should do to boost trade relations between the two countries? What are your priority jobs?

 A: The Indian government should seek to facilitate easy and quick export and import credit. Efforts should be made towards developing infrastructure. India should continue to comply with WTO norms.

 The priority jobs, in my opinion are promoting the trade relations to step up investment, technology transfers, etc.