Air Sahara Limited Business Information, Profile, and History

Company Perspectives:

Sahara is an emotionally integrated family. We not only believe but practice No Discrimination, Justice and High Quality--which means enthusiastic, productive performance of duty, "KARTAVYA," towards the consumers' and workers' genuine satisfaction.

Our objective is to provide warm, safe, efficient, reliable and environment friendly air transport services.

We at Air Sahara consistently strive to review and improve our standards of quality and productivity, by way of adopting best practices, learning from others and constantly innovating to deliver "Customer Delight" making Air Sahara customers' preferred choice.

History of Air Sahara Limited

Air Sahara Limited is a leading private airline in India, owned by the diversified Sahara India Parivar group. It flies 115 flights on a network of 20 destinations, operating a dozen Boeing 737 airliners and seven regional jets. It also operates four helicopters on charter flights between Delhi and Mumbai (Bombay). The carrier was allowed to begin flying to neighboring countries in the spring of 2003.

Origins

The Indian government opened its domestic air market to private carriers in the early 1990s. One of the first to create a new airline was the diversified conglomerate Sahara India Pariwar. The Pariwar had been formed in northern India in 1978 as a small finance company with just INR 2000 in start-up capital. As noted by Air Transport World, the name "Sahara" means shelter or support in Hindi.

Air Sahara began operations as Sahara Airlines Limited on December 3, 1993. A single Boeing 737 airliner made up the fleet. This aircraft crashed on a training flight in February 1994.

Most of the new start-up airlines--East West, Damania, ModiLuft, and NEPC--folded within a few years. Sahara Airlines held on. It earned INR 23.37 crore ($1.2 million) on revenues of INR 424.36 crore ($78.7 million) in the 1997-98 fiscal year ("crore" is a traditional term meaning 10 million).

Sahara began a charter service with four new helicopters in 1999. The late 1990s were characterized by fare wars as Sahara struggled to lift its market share and build its fleet. In April 1999, the airline cut fares again by 10 to 20 percent.

Parvez Damania, who had founded Domania Airways and sold it to NEPC Group in 1995, became director of Sahara Airlines in February 1999. Chief Controller Uttam Kumar Bose, who had been with Sahara Airlines since it was founded, left the airline in August 2000 and joined start-up Crown Express. He was soon back with Sahara, however, in the position of chief executive officer.

Rebranded in 2000

On October 2, 2000, Sahara Airlines was rebranded as Air Sahara. A frequent flier program called "Sahara Club Crown" had been launched the previous month. At the time, the airline operated eight Boeing 737s. Earlier in the year, the company dropped a plan to introduce a feeder airline called "Sahara Connect" using a dozen turboprop aircraft. The airline had a rather large workforce for the size of its fleet, 1,600 employees. Calcutta became the airline's third hub in October 2000.

Air Sahara reported a turnover of INR 40 crore in the 2000-01 fiscal year, and was profitable. The airline faced competition from the larger Jet Airways, and more new carriers like Royal Air and Visa Air were being launched. An e-commerce unit was established in 2001 to develop links with travel sites, and in March Air Sahara began booking flights over the Internet. Travel packages, particularly to resort destinations, were becoming more important. Air Sahara sold an estimated 10,000 packages from Delhi and Mumbai (Bombay) to Goa. In the fall of 2002, Air Sahara bought the Centaur Hotel in Mumbai from Air-India.

Revamped in 2001

A major revamp of the airline was launched in July 2001, Bose told the Financial Express. To improve reliability, the Dutch global airline KLM was tapped for maintenance support. On-time performance was raised from 57 percent to 96 percent.

While other airlines were scaling back during the post-9/11 slowdown in international travel, Air Sahara CEO U.K. Bose told Business Line it was a perfect time to increase market share. The airline actually increased frequencies on certain routes. Air Sahara went into November 2001 operating 37 flights and ended the month operating 53, to 12 destinations. The company spent INR 5 crore on promotions during the month.

To attract passengers, Air Sahara offered to accept frequent flier miles earned on other airlines in its own rewards program. Users had to earn an equal number of miles on Air Sahara, however, before they could be exchanged for free travel or consumer goods. According to the company, 1,000 people signed up for the program in the first two weeks.

Air Sahara brought a live acoustic band on board certain long-haul flights during February 2002. In another marketing scheme, the company teamed with Standard Chartered Bank to offer fliers the "Instabuy" program providing interest-free credit for air travel.

Air Sahara aggressively marketed itself toward corporations. It had package deals with 500 companies. The airline was earmarking one of its newly ordered Regional Jets for corporate charters, with a special 18-passenger VIP seating configuration--a "sky limousine." In September 2002, Bose told Financial Express that 40 percent of the company's passengers were business travelers.

Boosting the Fleet in 2002

Air Sahara began 2002 with just five aircraft; the fleet doubled in size within a few months, and doubled again by the beginning of 2004. A new, smaller aircraft type, the 50-seat Bombardier Canadair Regional Jet, bolstered the airline's regional connections beginning in January 2003. Sahara was the first privately owned airline in India to operate regional jets.

The added capacity allowed the airline to increase flight frequency, Bose told Business Line. This helped appeal to the business travelers who made up 80 percent of the company's market. The company also established business lounges in major cities across India.

Sahara aggressively marketed the new flights with its "Cosmos" frequent flyer programs, "Steal-a-Seat" auctions, and discounted advance tickets, allowing the airline to compete with trains in price and to grow the domestic air market as Southwest Airlines had in certain U.S. markets. For a 20 percent premium, U.K. Bose told Business Line, rail users could shorten a 36-hour trip to 2.5 hours. Sahara was supporting its expansion in capacity with an upgraded web site.

New Horizons in 2003 and 2004

In the spring of 2003, Air Sahara connected 13 destinations with 63 flights per day. It operated hubs at Mumbai (Bombay), Delhi, Kolkata, and the recently added Chennai.

In 2003, only Jet Airways was larger among private airlines in India. Both it and state-owned Indian Airlines had a domestic market share of about 45 percent, while Air Sahara was claiming 12 percent of the market. There was plenty of room to grow the market; according to CEO U.K. Bose, only 0.75 percent of the population flew.

Air Sahara launched an unprecedented 24 new flights on a single day, September 7, 2003. This expanded the route network to 20 destinations. Most of the new flights originated in Chennai.

The Indian government, pursuing an open skies policy, then began allowing the country's private airlines to operate limited international flights to six neighboring countries forming the South Asian Association of Regional Co-operation (SAARC): Nepal, Bangladesh, Bhutan, Maldives, Pakistan, and Sri Lanka. These routes traditionally had been reserved for the state-owned carriers Air-India and Indian Airlines.

Air Sahara was the first of the private airlines to launch such long awaited service with a flight from Chennai (Madras) to the Sri Lankan capital of Colombo on March 22, 2004. Business Line reported that CEO U.K. Bose told the first passengers, "This is a flight which will be cherished and remembered by all." Rival Jet Airways was inaugurating its own Chennai-Colombo service.

Air Sahara added flights to Nepal, Bangladesh, and the Maldives in April 2004. The airline soon teamed with Cathay Pacific to offer service through Colombo to Hong Kong and Singapore. Air Sahara added two widebody jets to accommodate traffic to Colombo.

According to the Economic Times, Air Sahara CEO U.K. Bose expected flights to neighboring countries to account for up to 12 percent of revenues. There were plans to open up the broader ASEAN region to services from India's private carriers within a few years, increasing the possibilities for Air Sahara even more.

Principal Subsidiaries: Centaur Hotel.

Principal Operating Units: Aviation Academy; Cargo.

Principal Competitors: Air Deccan; Air-India Limited; Indian Airlines Ltd.; Jet Airways (India) Private Limited.

Chronology

• Key Dates:
• 1993: Sahara Airlines begins operations with two Boeing 737s.
• 1999: Helicopter charters are launched.
• 2001: The company name is changed to Air Sahara.
• 2003: Regional Jets are added to the fleet.
• 2004: The first international service is inaugurated.