Low-cost carriers drive Indian revival

Indian low-cost carrier IndiGo's order for 180 Airbus A320s in January has thrown the spotlight back on the country's airline industry, amid growing confidence that the sector could finally be putting behind its troubles of the last few years.

This time, however, it is the low-cost airlines that are leading the way. Privately held IndiGo's memorandum of understanding was for 150 of the new re-engined A320neo and 30 regular A320s, with the deal likely to be confirmed in the coming months. The aircraft, set for delivery between 2016 and 2025, and the move for the Neo, marked the first public commitment for the airframer's re-engined narrowbody.

Another of the country's low-cost carriers, SpiceJet, the airline taken over last year by Indian media tycoon Kalanithi Maran, firmed up an order for 30 Boeing 737-800s featuring blended winglets in late 2010. These aircraft will be delivered from 2012. The carrier, which already operates 24 737-800s and 737-900ERs, has also ordered up to 30 Bombardier Q400 turboprops that will be delivered from the second quarter of this year.

Both are expanding to take advantage of the growth in the price-sensitive domestic market, to increase their network within the country as the infrastructure catches up with demand, and to begin international operations. Under Indian government regulations, airlines must be in business for five years before starting international services. SpiceJet met that criteria last year, and IndiGo will do so later this year.

The three main full-service carriers - state-owned Air India and the publicly listed Jet Airways and Kingfisher Airlines - are in various stages of recovery. All of them made excessive orders for aircraft in 2005-07, and then dumped capacity in the following years in an attempt to capture market share. But with falling yields, all began to report losses that worsened during the downturn. The capital investments also drained their balance sheets, and all have tried to raise funds through different sources. All three also operate a hybrid business model, with a full service airline supported by a low-cost carrier that they incorporated later partly in response to the emergence of the budget airline market in the country. However, a failure to fully separate the two businesses has meant that the inherent inefficiencies and high costs from the full-service business have seeped into the subsidiaries. They have paid the price.

Air India has been making a loss for years. Beset by internal resistance to change and public objection to the state using tax dollars to bail it out, it is still trying to overcome its many problems. Jet and Kingfisher also reported losses, but appear to be faring better after cutting capacity and costs, and as the recovering economy boosted demand. All of them want to begin new services and say that they are ready to compete once again. But the low-cost carriers, despite their significantly smaller fleets, are holding their own. Indian airlines carried 4.88 million passengers in November, up 5.9% from October. While Jet Airways and its subsidiary JetLite were the domestic market leaders with a 26.2% share, followed by Kingfisher with 19.1%, IndiGo edged ahead of Air India with the third largest share at 17.3%. And IndiGo led the pack with a seat factor of 91%, ahead of SpiceJet with 87.5%, closely followed by Kingfisher.

While infrastructure remains a problem, the Airports Authority of India plans to build and upgrade airports in various secondary cities. It also has plans to build the infrastructure in smaller upcoming cities, citing a growing population and rising demand. That would mean greater demand for new aircraft as airlines renew and add to their fleets.

Boeing said in its 2010 market outlook that India would need 1,150 commercial jets over the next 20 years, while Airbus forecasts demand for 1,032 aircraft over the same time period. Boeing also believes that the airlines are finally getting a handle on the situation after the highs and lows of the recent years.

"Airlines have matched capacity more closely to demand, especially on newly launched international routes," says the airframer in its recent 20-year outlook for India. "Measures like [leasing out] have proved effective in mitigating the near-term effects of the [economic] downturn and will, in the longer term, facilitate the return of leased airplanes to Indian carrier fleets."

Airbus predicts in its latest global forecast that domestic Indian traffic volume is set to soar at 9.2% a year, the overall figure exceeding 250 trillion revenue passenger-kilometres by 2029. It also predicts traffic from India to China, South-East Asia and North America as being among the fastest-growing flows.

Low-cost carriers such as IndiGo and SpiceJet are likely to be the major beneficiaries of this growth, suggests the Centre for Asia Pacific Aviation.

"India will also undoubtedly offer an enormous international short-haul market in its own right. The Indian diaspora has traditionally been underserved and, as new regional centres open up, the opportunities for low priced non-stop travel are magnified," it adds.

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.

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.

Airlines see blue skies in FY11 on cost cuts, improved traffic

India’s airlines are expected to post aggregate losses of around $2 billion (Rs9,260 crore) in 2009-10, largely on account of excess capacity and high fuel prices, but most of them are looking forward to a better, even profitable, 2010-11 on the back of their own cost-cutting measures and an increase in passenger traffic. The growth has already started coming in. If the current situation prevails, the next financial year will be good for airlines. Most importantly, the gap between demand and supply will disappear in the year. Demand could outstrip supply by 2014. That marks a significant turnaround for a sector plagued by overcapacity in 2008-09 and part of 2009-10. The aggregate loss of India’s airlines rose 44% to Rs8,557.37 crore in 2008-09 and the airlines expect to post a loss of a similar magnitude this year. Meanwhile, passenger traffic in the country, the fourth highest in the world after that in the US, China, and Japan, fell in 2008-09 on the back of high tariffs; it also fell in the first part of 2009-10. (Negative outlook: The aggregate loss of India’s airlines rose 44% to Rs8,557.37 crore in 2008-09 and the airlines expect to post a loss of a similar magnitude this year.) However, most airlines have started posting better results in recent months. Jet Airways (India) Ltd, the country’s largest airline, showed a 33% increase in its domestic passenger traffic in November, compared with the same period last year. The airline’s international passenger traffic has also registered a growth of 19% in November. Even in what is typically the lean season for Indian airlines, Jet Airways managed to clock an operating profit of Rs44.24 crore for the quarter ended 30 September. However, its net loss in the quarter widened to Rs406.69 crore from Rs384.53 crore a year earlier, largely on account of a five-day pilots’ strike and lower airfares. The Indian aviation market is growing realistically at 4-5% currently, compared to the levels of 2007-08, which was the boom period. The issue of overcapacity has been addressed. That’s an opinion that is seconded by analysts. The airline sector is exhibiting strong recovery, with an increase in passenger traffic and bottoming of yields. This, along with stable oil prices, is expected to lead to (the) sector turning profitable by next year. “I have always been very optimistic about the Indian market. All signs are that traffic is improving but we also need to see an improvement in yields. The yield improvement will come as capacity is constrained and I am sure we will see another wave of orders (for planes) in 2011-12,” said Kiran Rao, executive vice-president, marketing and contracts, for aircraft manufacturer Airbus SAS. Not everyone agrees with that. Airline CEOs (chief executive officers) are always optimistic and they will expect profit every year. As long as the growth is artificial and fares do not cover the cost of operations, profitability will be a question. An industry analyst, who did not want to be identified, pointed out a potential problem arising from Indian carriers cancelling or deferring orders for aircraft. “Most of the carriers have deferred their aircraft acquisition plans. If the revival is true and if they fly back to black, they will miss the wave of next boom.” Over the past month, shares of Jet Airways have risen 19.68% and closed at Rs560.45 each on Wednesday on the Bombay Stock Exchange. Shares of Kingfisher Airlines Ltd rose 15.06% to close at Rs60.35 each, and those of SpiceJet Ltd zoomed 31.22% to close at Rs55.90 each in the same period. The exchange’s benchmark Sensex index has risen by 3.8% in the same period and ended Wednesday at 17125.22 points.

Firemen declare Delhi's new airport terminal 'unsafe'

The Delhi Fire Service has declared the brand new departure terminal 1 D at the capital's Indira Gandhi International Airport (IGI) unsafe.

Delhi Fire Service chief R.C. Sharma has refused to provide a no-objection certificate (NOC) for terminal 1 D, citing many shortcomings during the two inspections conducted by his team in the past few months.

In his last report on May 13, Sharma cited six shortcomings. He said the ventilation system in the VIP lounge, baggage area and the office area was yet to be completed. Further, he stated, the exit route in the retail area should have a separate staircase or passage.

"In some places sprinklers are hidden in the false ceiling, which should be brought down. Some of the restaurants are under construction and are using wooden material. The wood works need to be painted with fire retardant chemicals. Necessary fire alarms or sprinkler system should be extended to these areas," Sharma noted in his report.

He further said systems at the new departure terminal could not be checked due to passenger movement and asked for arrangements to test the systems whenever possible.

But so far the Delhi International Airport Ltd (DIAL), a joint venture between the state-run Airports Authority of India and a consortium led by infrastructure major GMR, has not made any arrangements for the inspection of the systems.

In his report Sharma concluded that "terminal 1 D cannot be considered safe from the safety point of view till safety arrangements are fully completed."

Terminal 1 D, which is spread over 33,000 sq m, has replaced 1 B, the old terminal. It was opened for operations April 19. Kingfisher, Kingfisher Red and IndiGo, Jet Airways, JetLite and Spice Jet are operating from the new terminal, while GoAir, Air India and others are operating from terminal 1 A.

According to the airport officials, around 200 flights operate daily from the new departure terminal, which has been built at a cost of Rs.500 crore ($100 million). The terminal is able to handle 10 million passengers annually and is equipped with 72 check-in counters. It was inaugurated by Civil Aviation Minister Praful Patel.

The airport authorities had first invited the Delhi Fire Service officials April 8. At that time, the fire service wrote in its report that fire pumps and the fire control room were yet to be fully operational and that the sprinkler line was not charged with water at many places.

DIAL sent a report to the fire department May 4 stating that measures suggested had been complied with. The fire department again conducted an inspection and highlighted fresh shortcomings.

When asked why necessary clearance was not sought before the new terminal came into operation, DIAL spokesman Arun Arora said the terminal was absolutely safe for operations and for passengers.

"DIAL is very much alive to the required fire safety norms. We have been following all fire safety norms (domestic as well as international) for all equipment and procedures".

"All necessary documents have been submitted to the fire department and inspections have been carried out by the Delhi Fire Service officers. All observations and suggestions made by them were carried out by DIAL. The suggestions made by them during their subsequent visit to terminal 1 D are also being carried out," he added.

Arora said to ensure fail-proof fire safety DIAL has taken many initiatives.

"We have deputed 18 well trained firemen who keep patrolling all areas of the terminals - like the check-in area, airline ticketing areas and security holds. More than 50 fire hydrant outlets have been deployed inside and outside the terminal for greater safety," Arora said.

Though DIAL has been running the new terminal without fire safety clearances, the Delhi Fire Service was silent on why no action was being taken against the airport authorities. As per the powers conferred upon the fire department, it can cut electricity and water supplies to a building or even shut it down if the fire safety norms are not met.

History of low-cost airlines in India...

Knowing about my passion for Airlines one of dear friend send me a link. It had all the latest information about the low cost airlines in India. The ailines covered in that article are as follows -

• Air Deccan
• JetLite
• GoAir
• SpiceJet
• Indigo
• Air India Express
• Jagson Airlines
• MDLR Airlines
• Paramount Airways

I have not even changed the title of the article. Plz click on the title to read brief history of the above said airlines with present situations. Its a beautiful article on rediff.com

The Spicejet Way...

The most quite n non-controversial airline "Spicejet" has made a deal with Air India. Air India will take 02 of its boeing 737-800 aircrafts on wet lease. the aircrafts will be used for Haj Pilgrimage only, the flight number will be of Air India but the logo will be of Spicejet...its a great achievement for Spicejet as it is only in its 3rd yr of operation. A setback for all those airlines who are making a lot of hoopla to fly abraod, as they dont meet the criteria required of 05 yrs experience domestic flying. It will be connecting Varanasi, Jaipur & Lucknow with Jeddah for 75 days starting this november.

Seed Newsvine Dig the Web!

No Small aircraft @ Delhi...

On the eve of Independence day the Business-Standard published a news on front page regarding not allowing small aircrafts @ Delhi Airport... the excerpts from the news-->

• Delhi Airport will not allow additional smaller planes from winter of 2007-08, these aircraft include ATR's, Bombardiers, Embraers & Sukhoi Superjet 100.
• DIAL's decision maight be followed by GVK grp-controlled Mumbai Airport (MIAL).
• Small aircraft movements (landings & take-offs) account for 10% of the 650 aircraft movements a day. the industry estimates that with thee regional airlines policy, at least 150 movements of small aircrafts will b added in the nxt 12 months.
• The Govt.'s policy to encourage connectivity, most of these aircraft (below, 40,000 kg) do not pay landing charges to the airports. this move is expected to act as a dampener for the Govt. recently announced policy to encourage regional ailrines.
• DIAL is also considering a move to impose landign charges on smaller planes currently landing in Delhi, though nothing has been finalised.
• Its said that the higher runway occupancy time of Bombardiers & ATR's reduce the movement of heavy aircraft, which provide the main chunk of airport revenues.
• Small aircraft lacked the category III equipment landing in a fog, which would result in delays & inconvenience to passengers.
• DIAL may consider permitting smaller aircraft once new runway is commissioned in 2008. The ban of smaller aircraft will impact the growth of regional airlines, which will primarily b using ATR's & Bombardiers. (for complete story plz...click on the title of the news)

I personally feel that this is a ploy against the development of regional airlines. may be any of the big or established airline is ploying hard to hinder the progress of regionnal airlines.

A few of the points that clicked me are-

1. how come this move is taken only after the announcement for new policy for regional airlines.
2. why this move is to be implemented in the winter season of 2007-08 at not right from now.
3. how come a small aircraft like ATR or Bombardier takes much longer time on the runway, whereas, they need shorter runway to takeoff.
4. also, the new aircrafts always have new avionics(all equipments used by pilots while flyin an aircraft...) installed in them, so how come they dont have the so called "cat-III" equipment, where as all the delays in fog are caused by bigger aircrafts which are older & the cost of implementing these equipments is much higher.
5. when, the Govt, has announced that it will gv concessions in landing charges, how come DIAL announcing that it may charge the landing charges.
6. to b on safer side DIAL says that it may allow smaller aircraft, when the new runway is ready, which I feel that is not likely to be completed on time.

these are a few questions which put creates a lot of confusion...some of the Delhi & NCR based airlines are-

• Spicejet
• Indigo Airlines
• Indian (now, Air India)
• Jagson Airlines
• MDLR Airlines...

Seed Newsvine Dig the Web!

The Par-amount (Air)ways...

the only Business Airline in India...providing business class servies @economy fares...it flies only in South -India, where its a mkt. leader with a mkt. share of nearly 26% bt, if v see it on a national perspective its a mere 2%...it connects all the major n small cities in south- India... Paramount is eyeing a controlling stake of 51% in both Spicejet & GoAir... Spicejet is targeted 4 nearly $10 million where as, GoAir is targeted 4 anywhere between $ 25-35 million...if both the deals goes thru... Paramount will become third largest Airline in Indian Aviation industry...Paramount has a fleet 5 Embraer 170/190 series aircrafts the only airline in India using these jets... MD Mr. Thiagarajan was the youngest CEO of any Airline in the world when it took off (then, 27)...the business model adopted by Paramount is now being followed by many interntional airlines... atleast as of now, 4 me its really a Par-amount (Air)ways... Seed Newsvine Dig the Web!

Who's who...???

after so many mergers n acquisitns in Indian Avaiation...i checked out the latest i can get on the directors or CEO's list of all the famous (i tried my best to include all) & listed airlines...bt, yes the list doesnt stop here, its jus a snapshot...--> Air Deccan- Capt. G.R. Gopinath (Executive chairman) & CEO is Mr. Ramki Sundaram...; Spicejet- Mr. Ajay Singh (Director)...; GoAir- Mr. Jeh Wadia...; Indigo- Mr. Bruce Ashby (president & CEO)...; Paramount- Mr. Thiagarajan...; Kingfisher- Mr. Vijay Mallaya...; Jet Airways- Mr. Naresh Goyal...; TAAL (non-scheduled)- Mr. Salil Taneja...; Global Vectra Helicorp.- Mr. Sarabjot Singh Naunihal...; Jagson Airlines- Mr. J.P. Gupta (Chairman)... National Aviation Company of India Limited (NACIL)Air India+ Indian- Mr. V. Thulasidas...!!! if the kitty of ny of the above airlines got other 1 then, this particular list is surely goin to b irrelevant... Seed Newsvine Dig the Web!