Spotlight

Flying high

Kale Consultants is a leading player in the revenue accounting and management space for the airline industry. Renuka Vembu finds out more about the company, which deals with 12 of the top 20 airlines internationally

From its inception, Kale Consultants has had its footprints across industry verticals like airlines, banking, healthcare, hospitality and travel. It embarked with Air India as its first customer in the airlines industry, and is now associated with over 60 airlines worldwide. It is recognized as a leader in the revenue accounting and management space for the airline industry, and as a pioneering solutions provider in the air cargo, logistics and travel space.

Over the course of the past five years, a strategic re-engineering exercise has seen Kale completely focusing on the booming airlines, logistics and travel industry and the company has hived off its other businesses as a result of this change in strategic direction. A direct impact of this can be seen in the revenues of this business which have grown from $2 million in FY01 and are expected to touch about $30 million by the end of FY08.

Over the last few years, Kale has significantly increased its capacity and reach. The company now employ over 1,500 techno-functional professionals spread across three software development centers, four managed process outsourcing centers in India and global offices in USA, UK, New Zealand and Argentina.

Winning combination

As the world is shrinking, the airline industry is growing, as people travel extensively. Likewise, the air cargo and logistics industry is growing rapidly due to the globalization of world trade and supply chain integration becoming a reality. However, these are coupled with concerns like high fuel costs, increased traffic, price competitiveness and constantly evolving business models.

The company’s vision is to offer solutions that incorporate domain knowledge with industry best practices. This is further augmented by in-depth partnerships with industry bodies like IATA. It therefore takes a customized approach and works collaboratively to architect solutions that optimize value to the customer. These also include flexibility in choosing delivery models and pricing structures.

The key factors behind Kale’s achievements can be summed up as follows:

• Sharp focus and competitive positioning in areas of operation
• Best-of-breed product suites
• Combined product and Managed Process Services (MPS) offering
• Strong industry relationships and a marquee client base.

Major developments

Two of the major developments at Kale have been:

• Kale and ATPCO cooperate to jointly offer one best-practice proration solution to the airline industry: In 2003, Kale and ATPCO (Airline Tariff Publishing Company) were selected as the only two neutral solution providers for the First and Final billing service, a simplified way for interline settlements. In 2007, they entered into a strategic alliance to offer a unified NFP solution, which will be powered by Kale’s APEX.
• Acquisition of Zero Octa: The strategic acquisition of UK headquartered Zero Octa, the leading provider of revenue recovery and audit services, has made Kale the largest provider of Revenue Accounting and Management services to airlines globally.

Strategy adopted

Vipul Jain, CEO, Kale Consultants, asserted, “Our aim is to become one of the top three omnibus solution providers of choice in the airline, logistics and travel domain. Being a pioneer in the IPR led business model with exclusive focus on these sectors gives us in-depth understanding of their emerging needs and challenges.”

Kale has integrated vertically into platform based outsourcing and offers the entire value stack from software to BPO. They have formulated their pricing models to increase annuity revenues and to enable customers to pay for use. Whilst concentrating on organic plans in niche markets, the company would also be looking at inorganic and alliance opportunities.

Recent trends

Jain expects the airlines, logistics and travel markets to grow positively from here on. His view is that the industry is looking at initiatives to simplify business, from existing complex procedures, and the industry players are increasingly looking at standardization and adaptive systems to accommodate business growth and interoperability.

Geographically, Kale’s growth in the European and American markets will be driven by the need to simplify operations, and place a greater thrust on outsourcing. Further, there is an increasing trend of replacing legacy solutions and implementing Web-based applications. The booming Asia Pacific and Middle East regions will look towards harnessing the right technology to manage the needs of rapid expansion, Jain felt.

Kale’s revenues have been growing at a steady rate and this year it expects the total consolidated revenues to be around $30 million. In the next three years, it aims to become a $100 million company.

Core focus

Jain stated some statistics, “As per a recent World Economic Forum report, the travel and tourism industry accounted for 10.3% of world’s GDP and 8.2% of total employment worldwide. Another figure according to a recent study is that outsourcing opportunities in the travel industry are in excess of $12 billion and is growing at a rate of 45% CAGR. A recent NASSCOM-McKinsey study indicated that the market share for India to reach $1.2 billion by 2010.”

This substantiates Kale’s core focus in the airline, logistics and travel industry, where its domain skills, experience and solutions gives it a lead over the competition. Its strengths and expertise in this industry built over the years, and forged industry partnerships help it and its clients to be at the cutting edge of industry trends and developments.

The clientèle

Apart from offering continued services for established players like Air India, Kale also has worked with start-up cargo airlines like QuikJet, travel companies like Mercury Travels and logistics players including airports, freight forwarders like direct logistics and container management companies like Apollo Logisolutions.

Internationally, it works with 12 of the top 20 airlines. Their customer base includes two of the world’s largest airline alliances, SkyTeam and Star Alliance, and other international clients encompassing Qatar Airways, bmi, Continental Airlines, American Airlines, Zuji, and lastminute.com, amongst others.

Jain summarized that the company will continue to capitalize on their strongholds in ALT. Having achieved leadership and industry prominence for the Airline Revenue Accounting and Management space, it is looking forward to replicate the success in the logistics and travel domains. It plans to strengthen its presence in the American market, and would soon be launching industry benchmark software products for the logistics and travel industries.

nivedan.prakash@expressindia.com