SpiceJet aims international flights

Indian low-cost carrier SpiceJet has received in-principle approval from India's government to operate international flights, and plans to do so from June. It has applied to begin services to Colombo, Dhaka and Kathmandu. The applications are being processed, and it may start the new routes in our summer schedule. SpiceJet is likely to operate between Chennai and Colombo, Kolkata and Dhaka, and New Delhi and Kathmandu, says Sridharan, adding that Colombo will likely be the airline's first international destination. SpiceJet operates a fleet of 20 Boeing 737 aircraft, and expects to receive five more by next April. The carrier will focus on the three cities in its first year of international operations, and evaluate new destinations after that.

Air India may lose 'national carrier' tag

The Union Cabinet is set to meet soon to decide if beleaguered state-owned carrier Air India should retain its 'national' character at all. It will also debate if strategic disinvestment is the best way forward for the airline, which is estimated to have accumulated Rs 7,200 crore in losses in 2009-10. With most of Air India's woes emanating from its international operations - where it loses around Rs 3,000 crore a year on 30 routes - a group of ministers (GoM), chaired by finance minister Pranab Mukherjee, has recommended that the airline stop flying to these routes. "This will change the character of Air India," this would turn Air India into a regional airline. The civil aviation ministry is preparing a detailed note for the Cabinet on the carrier's financial health and turnaround measures recommended by the GoM. "Cutting down loss-making international routes will have serious implications. Basically, the government has to decide if Air India continues to fly abroad or within India alone". At the same time, the Cabinet may also debate the issue of strategic disinvestment as a long-term viable option for the carrier. "The government cannot pump money into the National Aviation Company of India Ltd (Nacil) forever". But, it is likely that the Cabinet refers back some of these issues to the GoM for its detailed and considered. A major blow to Nacil's finances comes from prestigious but loss-making daily non-stop flights to New York from Delhi and Mumbai on the latest long-range fleet of Boeing, accounting for losses to the tune of Rs 750 crore a year. The GoM, set up to monitor Air India's turnaround plan, was also to decide on the politically sensitive matter of wage cuts of Air India's 31,000 employees. But it has now left the decision for the Cabinet. To avail government bailout, the carrier was asked to undertake cost-cutting measures that would help it save around Rs 2,000 crore by March 2010. Air India was able to cut costs to the tune of Rs 700-800 crore till December last year. As part of its turnaround strategy, the carrier has shortlisted five candidates for the post of chief commercial.

The carrier recently received a shot in the arm with the government releasing Rs 400 crore as a first tranche towards equity infusion. Air India had asked for Rs 5,000 crore as equity infusion and a letter of comfort from the government to convert its high-cost debt into low-cost ones.

Indian Aviation 2010 Snapshot

The Indian aviation industry is one of the fastest growing aviation industries in the world (& incurring maximum losses) with private airlines accounting for more than 75 per cent of the sector. With a CAGR at 18 per cent and 454 airports and airstrips in place in India, of which 16 are designated as international airports, Union Civil Aviation Minister Praful Patel has stated that aviation sector will witness revival by 2011. With an increase in traffic movement during December 2009 and increase in revenues by almost US$ 21.4 million, the Airports Authority of India seems set to accrue better margins this fiscal, as per the latest estimates released by the Ministry of Civil Aviation. This is being primarily attributed to increase in the share of revenue from Delhi International Airport Limited (DIAL) and Mumbai International Airport Limited (MIAL) along with increase in airport charges. The Hyderabad International Airport has been ranked amongst the world's top five in the annual Airport Service Quality (ASQ) passenger survey along with airports at Seoul, Singapore, Hong Kong and Beijing. The Hyderabad International Airport is managed by a public-private joint venture consisting of the GMR Group, Malaysia Airports Holdings Berhad and both the State Government of Andhra Pradesh and Airports Authority of India (AAI). Airports Authority of India (AAI) is also spending US$ 427.5 million on developing the airports in Kolkata and another US$ 384.7 million on Chennai airport. The AAI is also looking at upgrading and modernising 35 non-metro airports. Both Chennai and Calcutta airports will be completed by next year. In addition to actual airport infrastructure, the government is also looking at building infrastructure in the air in terms of air traffic control (ATC) and CNS systems. Safety and surveillance is another huge area being worked upon. The civil aviation ministry has prepared a blueprint to convert Delhi airport into an international hub for passenger airlines with effect from August 2010 to help the airport, which is being expanded by a GMR-led consortium, utilise large amounts of additional capacity that will be ready by July 2010. Under the plan, NACIL will set up its hub in Delhi (Delhi currently serves as the hub for domestic operations and Mumbai for international operations).The government is also planning to make Delhi a regional hub to connect south-east Asia to Europe by capitalising on the capital’s strategic mid-point location, according to ministry sources. State governments too are taking interest in setting up special economic zones (SEZs) for the aerospace industry.

• Investment Policy With the draft FDI compendium being finalised in end of March 2010, changes are expected in the aviation policy too. Currently, Foreign equity participation in airport infrastructure is permitted upto 74 per cent with automatic approvals and upto 100 per cent in special permission. FDI upto 40 per cent is permitted in domestic air-transport services. Foreign investors are allowed to have representation (upto 33 per cent in domestic airline companies).
• The Road Ahead Investment opportunities of US$ 110 billion are being envisaged up to 2020 with US$ 80 billion in new aircraft and US$ 30 billion in development of airport infrastructure, according to the Investment Commission of India.
• Indian aerospace companies are growing too. Hindustan Aeronautics Limited (HAL) was ranked 40th in Flight International's list of the top 100 aerospace companies last year.
• Aircraft manufacturing major, Boeing is in the process of setting up the US$ 100 million proposed Maintenance Repair Overhaul (MRO) facilities in Delhi. Air India is also in the process of launching Cargo Hub in Nagpur while Deccan Aviation has already started one from the city.
• North India's first private sector greenfield international airport, Aerotropolis, will soon come up near the industrial hub of Ludhiana in Punjab. Aerotropolis will be built with an allocation of almost US$ 3.77 billion covering an area of 3000 acres by Messrs Bengal Aerotropolis which has partnered Changi International Airport of Singapore.
• Punjab will also become the first state in the country to set up a Maintenance, Repair and Overhaul (MRO) hub at Ropar, 45 km from Chandigarh, for the civil aviation sector at a cost of US$ 6.4 million
• The country's first SEZ dedicated to the Aerospace Hattaragi, 37 km from Belgaum, in Karnataka was also inaugurated. The SEZ is spread over 300 acres of land and will come up with an investment of US$ 32.06 million.
• An Aerospace and Precision Engineering Special Economic Zone with a proposed investment of US$ 641.2 million has also come up at Adibatla, Ranga Reddy district, Andhra Pradesh.

Aged jets to be trashed

Domestic carriers operating jets that are more than 15 years old will have to look for replacement soon, as the civil aviation ministry has decided to gradually phase out older aircraft to check noise level around airports. The development follows complaints from people living around the country’s busiest Delhi airport about the rising noise levels. The new rules are likely to affect foreign airlines more as they would be also be barred from flying aged jets. Most of India’s domestic carriers have relatively new fleet, including air India. “We would have almost a brand new fleet by March this year as we would have either phased out or sold our old aircraft by then,” an Air India official said adding once all the new aircraft is inducted the average fleet age would be 2-2.5 years. The government has in the past received complaints from the passengers who have alleged that some foreign carriers deploy older aircraft on India-bound flights. “Some airlines especially from Asian countries operate with older aircraft. While it is advised that air-carriers to not operate with aged jets, we are examining the legal aspect of barring such airlines from flying such aircraft to India,” a senior civil aviation ministry official. The ministry would also ask the Central Pollution Control Board (CPCB) to specify the permissible noise level separately in the vicinity of airports in line with international norms. As per the globally accepted norms, the permissible noise is higher level in the vicinity of airports than other locations. India, however, does not differentiate between the noise level around the airport and other areas. In the last few years aircraft movement in the country has multiplied with more and more people flying on the back of growing economy and increasing incomes. The Capital’s Indira Gandhi International airport (IGI) now handles as many as 650 aircraft a day. The GMR-led consortium that is handling the Delhi airport has already introduced 24-hour aircraft noise and track monitoring system (ANTMS) to penalise erring aircraft on exceeding noise threshold values. The country’s largest airport operator Airports Authority of India (AAI) has also implemented mix mode operation to spread out the aircraft movement resulting into reduction in noise level.

Airlines fly to smaller cities for growth in passenger traffic

India’s airlines are charting new routes to connect neglected, smaller cities that have some tourist or business potential, as the economy brightens and passenger numbers rise. Airlines saw a spurt in passenger traffic, growing by 5.45% to 39.96 million between January and November, according to the regulator Directorate General of Civil Aviation (DGCA). The figure for December is not yet available. The number had contracted as much as 4.84% to 42.85 million in 2008. Kingfisher Airlines Ltd and regional airline Jagson Airlines Ltd are among those planning to harness the potential of smaller airports. “The bigger airlines have a focus on category I (metro) routes by default, but category II routes like smaller capital cities make a lot of sense,” said Jagson CEO Koustav M. Dhar. Jagson plans to take to the skies from February with a 88-seater aircraft and subsequently increase its fleet to four by the end of the year. It will connect Srinagar to Leh with a daily flight starting April. So far, only Air India has a weekly flight between the two cities. “Those (connecting state capitals and smaller cities) are the sectors to be in and they are consistent all year around at Rs4,000-4,500 (average fare),” said Dhar, comparing the average fare on the Delhi-Mumbai route, which can drop below Rs3,000 due to competition. “(However), if you put 180 seats on category II, they are not viable.” Jagson will also connect New Delhi to Shimla and Dharamshala, and operate flights to Ranchi and Patna in summer on alternate days. Kingfisher Airlines, India’s second largest carrier by market share, has started flights between Chennai and the industrial town of Salem in Tamil Nadu, and Jharkhand’s capital Ranchi and Chhattisgarh’s capital Raipur recently. It has also received permission to start services to Uttarakhand’s Pantnagar from New Delhi. Also on the cards are flights to the hosiery and garments hub of Ludhiana in Punjab from New Delhi. A Kingfisher official said the airline is waiting for regulatory clearances before it can take off to Pantnagar and Ludhiana. “Since these are new airfields, DGCA is still to clear them,” he said.National carrier Air India already flies between several small towns in the country.

SpiceJet signs on i-Vista to build its brand digitally

SpiceJet, India’s most preferred low fare airline appoints i-Vista Digital Solutions to handle its online marketing initiatives. i-Vista Digital Solutions is a leading enterprise digital marketing company that has been entrusted with this national mandate. i-Vista Digital Solutions will provide the following solutions for SpiceJet: § Conceptualize, design and develop online collaterals. § Perform off-page and on- page optimization leading to enhanced visibility for the SpiceJet website. § Identify and effectively utilize social media platforms for increased customer- connect to build brand ambassadors. § Online reputation management and tracking of consumer sentiments. § Comprehensive search engine marketing programme to enhance visibility of SpiceJet text ads. According to Anish Srikrishna, Sr. VP and Head of Marketing, SpiceJet Limited, “We at SpiceJet believe that online engagement with our customers is key to our success. Our website continues to be a key channel of distribution and information for our customers. We wish to enhance our online presence to build our brand, understand our customers and drive more traffic to our site. i-Vista Digital Solutions has the relevant expertise in digital brand building and marketing and can offer creative and technology solutions for our current needs. We are happy to have them as our partners.” “We won the SpiceJet business because of our ability to deliver advanced solutions in the internet space. We help our customers leverage the power of the internet and leave an indelible impression through our unique and well-rounded approach to the business. Our solutions for SpiceJet range from a variety of brand building activities, social media strategy and comprehensive analytics to help the airline achieve their mission,” said Narayan Rajan, CEO, i-Vista Digital Solutions.“If you also take into account that 1 out of 3 TV watchers will also be accessing the internet at the same time, you begin to see how effectively combining your offline and online campaigns can ensure your message reaches your customer. i-Vista has been in the digital business for the last 13 years and has built an enviable track record.

Wings on fire

Paramount Airways is all set to enter the big aviation league. An airline that has been operating what it calls an all-executive-class fleet, is now in final stages of talks with Bombardier and ATR. In not more than two months, by February 2010, Bombardier's Q400s or ATR's turbo props - 10 aircraft in all - will adorn the fleet of the south-Indian carrier. The target for paramount is simple. All ground work is through to operate the turbo props predominantly in Tier II and Tier III cities. Some of the cities that have been shortlisted are Pondicherry, Mysore, Salem, Bellary, Rajamundry etc., all in south India to start with. The number of destinations the airline covers will then increase from the current 17 to 40 by 2011.With a bare minimum fleet of 5 aircraft (all Embraer) the company has maintained the best passenger load factor among all airlines in the country. Paramount is also the only Airline in India that have seen Rs 79 cr profits as of March 2009. Come October 2010, when the airline completes 5 years of its operations, it will spread its wings overseas. Negotiations are already complete with Airbus to buy 10 of their 321 aircraft. The planes are to be acquired at a list price of USD 90 million. The deal is to be funded by the European Central Bank through a 12 year loan.The Airbus 321s will all be used for the company's international flights. Initially, Paramount will fly to South-East Asian destinations like Singapore, Kuala Lumpur, Bangkok, Penang and Middle East designations like Dubai and Abu Dhabi.