Paran Balakrishnan: Flying high on a tight budget

MY WORD!

Does anyone remember Sir Freddie Laker, the maverick who almost shook up the global aviation industry? Sir Freddie, for those whose memories stretch back 27 years was the quixotic figure with a genius for publicity, who promised to fly backpack travellers across the Atlantic from London to the US for £118.

Laker's Skytrain flew till 1982 until it was brought down by gigantic debts and the rivalry of every other airline in the world.

Skytrain was an aberration that was long before its time. I vividly remember watching with awe the lengthy queues snaking through London's Victoria Station mostly made up of young people planning a cheap holiday in north America.

There were more would-be travellers queuing at the Skytrain window than there were for the next train to Croydon. Laker's motto was: "Fly Me I'm Freddie."

It's said that Sir Freddie who retired to the Bahamas wasn't very impressed by the no-frills airlines that were readying for take-off around the world. And perhaps he was right.

Sir Freddie, when last asked, reckoned that most countries still weren't ready to see their national carriers outdistanced by fledgling upstarts and going down in flames.

The aviation industry has always had an extraordinary appeal for businessmen who should know better. Its sexier to own aeroplanes, paint them in bright colours and hire pilots and airhostesses than it is to make ball bearings or mine for coal.

Richard Branson once remarked that it was easy to own an airline: "You start as a billionaire and you'll soon be a millionaire," said the publicity-loving tycoon.

Evidently, there are many would-be airline owners who haven't heard Branson's dictum. Otherwise what would explain the rash of no-frills that are springing up in Asian and European skies? In Europe there are reckoned to be about 20 low-cost carriers many of which made their maiden flights in the last 12 months.

Amazingly, a similar phenomenon is sweeping Asia with the speed of the Sars virus. Leading the way is the astonishingly successful Malaysian carrier Air Asia which has just launched a Macao-Bangkok flight for the princely fare of about $54 (compared to the existing $455 offered by Air Macao).

Inevitably, success breeds imitators even at 30,000 ft. Half-a-dozen others are about to launch rival services that will criss-cross Asia including subsidiaries of Singapore Airlines and Qantas.

Similarly Australia-based Virgin Blue is also looking for a route through the clouds to Asia. Singapore, after trying to keep low-cost challengers to Singapore Airlines at bay, is now opening a separate terminal for the plebeian new carriers.

Astonishingly, as we've witnessed in the last few months, even India hasn't been immune to the low-cost revolution sweeping the skies.

Led by Captain G R Gopinath of Air Deccan about seven or eight new airlines are taxiing onto the runway "" unless they are defeated by the proposed taxes on leasing in this week's Budget.

It isn't tough to predict that the new carriers could transform the aviation industry if they ever leave the runway. But taking-off could be tough unless the new would-be entrepreneurs have figured out their flight plan with extreme care.

The fact is that getting off the ground is a relatively simple affair. The lending agencies are relatively happy to lend to would-be aviators because they can always reclaim an expensive Boeing 737 or Airbus if the airline goes belly up. Keeping the aeroplane in the sky and at the same time keeping costs low is an altogether different business.

Nevertheless, for the winners there are, as always, rich pickings. Europe's two most successful no-frills airlines, EasyJet and RyanAir "" after a tough few months caused by competition from newcomers "" are reporting healthy profits once again mainly because the aviation industry seems to be picking up globally once again. And Air Asia is flying to ever greater heights. Even Australia's Virgin Blue has become a quick winner.

But staying in the skies is no easy proposition and many newcomers will soon vanish from the world's airports. Will the Wadias and the Mallyas manage to pull it off? Or, will they shoot each other out of the skies?