Even as airbus industrie created aviation history last fortnight by successfully putting to air its biggest jumbo aircraft thus far, the A380-it can seat 555 passengers in a typical three-class configuration-its losing streak in the aviation market only seemed to get worse. Its most recent setback, of course, has been in India, where flagship carrier Air-India (a-i), picked American rival Boeing over Airbus for a $6.9-billion (Rs 30,360-crore) deal to purchase 50 new aircraft. Not surprisingly, Airbus is crying foul, saying that bid conditions were changed at the last minute to favour Boeing, and that its two latest planes-the A350 and the A380-were not even considered. The European aircraft maker has even demanded a vigilance enquiry into the decision.

But could it be that the Boeing 787 Dreamliner is actually a better option for carriers? Going purely by the Chicago-based manufacturer's recent wins, the answer seems to be yes. Air Canada recently placed a $15-billion (Rs 66,000-crore) order for 96 Boeing planes, including 14 787s. So have Japan Airlines (30 787s), Korean Air (14), and six different Chinese airlines (for 60 787s). Indeed, of the 50 planes (15 are optional) that A-I plans to buy, 27 are 787s (of the other 23, 15 are 777-300er long-range aircraft and eight 777-200lr ultra long-haul jetliners). The 787's USP? It is 20 per cent more fuel efficient compared to the current generation jetliners like the Airbus A330 and costs one-third less in maintenance, because of its lightweight composite building materials and improved engines (besides, it offers wireless on-board systems). But Nigel Harwood, Airbus' Vice President (Sales), Indian subcontinent and South Asia, says that the plane most suitable for India is the A380, "which is 31 per cent more economical than the 787 and will be available for delivery from 2006 onwards".

There's still a ray of hope for Airbus. The deal, while cleared by the A-I board, now needs the Government of India's approval. Let's see if it can come up with any last-minute surprise manoeuvres.

-Sahad P.V. and Kushan Mitra

LIFT
A-I's Belated Take Off

A-I CMD V. Thulasidas: Buckle up

The last time Air-India (A-I) expanded its fleet was about 15 years ago. The 38 aircraft in its fleet today have an average age of 13, with only 36 in active service. As a result, despite having 15,500 (fy2004) people on its payroll and rights to fly to over 100 countries around the world, A-I is a white elephant, with Rs 5,897 crore in revenues and Rs 900 crore in accumulated losses till last year (it did make Rs 92 crore in net profits, though, last year). In the recent years, it has lost market share on key sectors to foreign carriers such as Emirates and Singapore Airlines. The Boeing order for 50 aircraft, then, is like a lucky wind that could see the carrier gain market share on the lucrative India-us and India-Europe routes. The only catch: Deliveries don't start until 2006 (the 787s come much later in 2008), by when even local rivals like Jet Airways and Air Sahara, which have been allowed to fly international destinations, would have muscled their way onto A-I's turf.

-Kushan Mitra

Q&A
"It Takes Time To Become Global"

After 37 years with the HSBC group, David Eldon retires in May as the Chairman of the Hongkong and Shanghai Banking Corporation. An old Asia hand, Eldon spoke to BT's R. Sridharan on banking in India and Asia. Excerpts:

India would like Mumbai to be at least an Asian financial hub. How would you rate its chances?

It's a fairly complex answer. If you want to be a financial hub, you first have to decide who's your customer and who's your competition. The latter would be Hong Kong or Japan or Singapore. The financial hubs of the future would be Shanghai and Seoul. What do you need to be a financial hub? A legal structure that's quick and transparent, international expertise and a market-friendly regulatory structure, which allows banks to come in.

So how would you rate Mumbai on these parameters?

I would honestly have to put Mumbai closer to the bottom of the list of existing or upcoming financial hubs. But I am not saying it can't be done. Only that it needs a lot of work.

Do you see a global bank coming out of India in five or 10 years time?

It takes a long time to be a global force. In fact, there are hardly any global banks... we clearly are one. Even if you look at some major European banks, they are not global. They may have offices internationally, but I don't think they could say that they do business in all of them. If we use that as a clarification, there's no reason why some of the major Indian banks cannot become international, without necessarily being global banks.

Bt Cotton's Ally
Farmers in Andhra rally around the crop.

Advantage BT cotton: Higher yield, lower costs

Ever since BT cotton seeds were first introduced in India in 1996 and approved for commercial production in 2002, there have been restless debates over it. The debates have ranged from the safety of using biotechnology in agriculture to cotton productivity to MNC domination of seed supplies. But slowly, the popular opinion seems to be leaning towards Bt cotton. (It's called Bt because the seed uses an insect-resistant gene from the bacterium Bacillus thuringiensis.) The support is coming from a state that has witnessed a large number of farmer suicides-Andhra Pradesh. "Farmers who have used Bt cotton are now reporting better yields," says S. Jaipal Reddy, Chairman (Cotton Commodity), Confederation of Indian Farmers' Associations.

In Andhra, the total area under cotton crop, according to Reddy, is between 20 lakh acres and 25 lakh acres. Of this, 1.90 lakh acres was under Bt cotton in 2004. Compare this with 2002, when out of 18 to 20 lakh acres under cotton, only 6,800 acres was planted with Bt cotton. This year, Bt cotton may be grown in over 10 lakh acres, Reddy reckons. The Bt cotton advantages: higher yield and lower (pesticide) costs. At between eight quintals and 12 quintals per acre, Bt cotton, Reddy claims, yields 20 per cent more. Abuse of the crop could be disastrous for Indian farmers. Not interspersing Bt cotton crop with non-Bt cotton crop can lead to a new variety of pests that are resistant to all pesticides.

-E. Kumar Sharma

The BT 50 Index
Despite a jittery fortnight, there are signs of a consolidation.

With diverse corporate results-some good, others disappointing-pouring in, the market remained extremly volatile this fortnight as well. But with the overall results generally on expected lines, the BT 50 remained flat at 235.87 points. However, the credit policy (RBI increased the reverse repo rate by 25 basis points) impacted bank stocks, which fell by 2.78 per cent. Also with OPEC's support, global oil prices have gone below $50 (Rs 2,200) per barrel. With no spike expected in the short term, the stock market can breathe easy.

Our flagship free float methodology-based index-BT 50-has completed two years now. The free float methodology has several advantages: first, it considers only the value of stocks freely available in the market (after excluding the part held by promoters and other strategic investors) and the weightage assigned to individual shares is more representative than the market capitalisation-based methodology; second, it takes care of the perpetual selection dilemma regarding closely-held companies. For instance, the inclusion of these companies may distort the index based on total market capitalisation methodology, but dropping them altogether may reduce its representative character. The free float methodology facilitates inclusion of large closely-held companies but assigns them a lesser weightage. After the success of our broad market free float index (that the Sensex subsequently decided to adopt this is testimony to the efficacy of the free float method), we decided to launch sector indices using the same method. While the general index captures the overall movements (covering several sectors), sector indices capture the movements in individual sectors. All these indices have a common base period (January 1, 2002). The weightages are reassigned every quarter after companies declare their ownership details. The base value of all BT indices is 100.

-Narendra Nathan