Today, India, for the size that it is, has only four airlines that fly international: Full service carriers (FSCs) Air India and its subsidiaries, and Jet Airways, and Low cost carriers (LCCs) SpiceJet and IndiGo. This is in contrast to the 10 airlines that operate domestic scheduled services in India, today. While Indian carriers flew 81 million domestic passengers in calendar year 2015 (CY2015), Indian carriers flew only 18 million passengers in the same period.
Only two airlines/airline groups operate short, medium and long haul international services: Air India and Jet Airways. Both airlines have diverse fleets: from short haul domestic ATR 72 turboprops to long haul international Boeing 777s. The LCCs in contrast have narrowbody jets that can cater only to short haul international services.
Due to the limitations of fleet and perhaps the lack of commercially attractive international destinations, LCCs IndiGo and SpiceJet deployed only 4.8% and 9.5% of their total flights on international, in CY2015. In contrast, Jet Airways (Including operations from the Jetlite AOP) deployed 22.1%, while Air India (Including Air India Express and Air India Regional (Alliance)) deployed 32.7% of its total flights on international. Air India and Jet Airways together contribute to 84.5% of all international departures by Indian carriers, while IndiGo and SpiceJet contribute to just 8.8% and 6.8% respectively.
This statistic shows IndiGo and SpiceJet are very small players in the international front, serving destinations at neighbouring countries. IndiGo operates only to five international destinations: Kathmandu (Nepal), Muscat (Oman), Singapore (Singapore), Bangkok (Thailand), and Dubai (U.A.E.), while SpiceJet operates only to six international destinations: Bangkok (Thailand), Colombo (Sri Lanka), Dubai (U.A.E), Kabul (Afghanistan), Male (Maldives), and Muscat (Oman).
Air India and Jet Airways started operations before the 5/20 rule was instated in the year 2005. IndiGo and SpiceJet started operations after the 5/20 rule was introduced. The 5/20 rule requires airlines to operate domestic services for a minimum period of five years, after which it can fly international only if the airline has a fleet size of 20 or greater.
Air India Express was the only airline to start immediate international operations (although on an AOP different from Air India) after the 5/20 rule was introduced. The first flight of the airline was an international flight.
Neither IndiGo nor SpiceJet fought the 5/20 rule at that time as the focus of both airlines then, as it is today, is to tap the potential of the domestic market. SpiceJet started international operations in October 2010, while IndiGo commenced international operations in September 2011. Despite both LCCs having started international operations nearly five years ago, when the scale of domestic operations were smaller, both airlines chose not to focus on international operations. (See IndiGo’s fleet induction, here) Both airlines always had the option of inducting larger aircraft to serve destinations beyond the surrounding Asian and Middle East countries. But such is not their business model.
As a result, the only Indian carriers to majorly serve international are Air India and Jet Airways, both of which were not ‘victims’ of the 5/20 rule, whereas IndiGo and SpiceJet, which chose to focus on domestic even though they started international operations five years ago, are ‘victims’ of the 5/20 rule, strongly opposing the removal of the a rule that means nothing, and does not impact either airline..
Go Air started operations in the year 2005, but chose not to increase its fleet beyond 19 aircraft. It deferred its 20th aircraft, which was readied by Airbus. As a result, the airline does not fly international, and seems to have no issues remaining a domestic player. Yet, the airline opposes the removal of the 5/20 rule, though it chose not to operate international.
In the quarter ending 31st December 2015, a total of 12.6 million international passengers were carried by both Indian and international airlines. Of that number, Indian carriers flew just 4.5 million passengers, or just 36% of the total traffic.
India is underutilising its bilaterals, due to restrictions placed by rules such as the 5/20. For the purpose of this case, and for want of time, we consider only three international destinations: Singapore, Bangkok, and Kuala Lumpur.
As of late February 2016, there are three airlines from Singapore that operate to 13 destinations in India. Singapore Airlines, Tiger Airways and Silk Air together operate 134 flights per week to India, from Singapore, and an equal number of return flights. Together, the airlines deploy 30,517 seats per week between Singapore and India, in each direction, using a variety of aircraft: Airbus A319s, A320s, Boeing 737-800s, Airbus A330s, Boeing 777-200s, 777-300s, and Airbus A380.
In contrast, three Indian airlines (four if you count Air India Express separately) connect Singapore to only four destinations in India. Air India, Air India Express, Jet Airways and IndiGo together operate 63 flights per week between the two countries. Together, the airlines deploy just 13,244 seats per week between Singapore and India, in each direction, using Airbus A320s, Boeing 737-800s, Airbus A330-300s, and Boeing 787-8s.
Thai Airways, Thai AirAsia, and Bangkok Airways operate from Bangkok to eight destinations in India, flying 73 flights and deploying 19,497 seats per week, Using Airbus A320s, Boeing 747s, 777-200s, 777-300s, Airbus A330-300s, and Boeing 787-8s.
In contrast, SpiceJet, IndiGo, Jet Airways and Air India together operate 62 flights, deploying 12,474 seats per week, from four Indian destinations to Bangkok, using Airbus A320s, Boeing 737-800s, 737-900s, and Boeing 787-8s.
From Kuala Lumpur, AirAsia Berhad, AirAsia X, Malindo, and Malaysian Airlines operate 180 flights to 12 Indian destinations, deploying 32,903 seats per week between Malaysia and India, using Airbus A320s, Boeing 737-800s, 737-900s, and Airbus A330-300s.
In contrast, only Air India Express operates to Kuala Lumpur, connecting only Chennai to the Malaysian capital with 4 weekly flights and deploying 744 seats per week.
While not all destinations are commercially viable, there is a huge mismatch between the capacity deployed by foreign carriers, and the capacity deployed by Indian carriers, on the same set of routes. Infact, the superior connectivity offered by foreign carriers is not matched by Indian carriers, leaving a large scope for more Indian carriers to boost the Indian economy while also providing international passengers seamless domestic connectivity.
The 5/20 rule must go if India should see it’s own airlines connect India with the rest of the world.
What the FIA won’t tell you
The Federation of Indian Airlines (FIA), have something against the airlines of the Father of Indian Aviation (FIA), Late JRD Tata. The Tata’s have already done enough to promote connectivity within India: TATA airlines was renamed Air India.
The FIA (Federation) is shaken by the prospects of airlines such as Vistara and AirAsia India. The goal of the FIA is to restrict the operations of such airlines to within India, so that players like the market leader can use its low cost base to lower fares on every route such airlines fly, and bleed the airlines dry. Starting with the smallest and the least capitalised airlines, airlines will knock off the Indian scene, one by one, leaving only a few to operate in India, with the market player enjoying a huge monopoly in setting fares. At that point in time, India will suffer, with neither good international connectivity, nor with strong domestic competition nor worthy alternatives.
While the FIA blames consultancy firm KPMG of auditing Singapore Airlines and consulting for the government, it remains silent on consultancy firm CAPA.
CAPA India, in its Aviation Outlook 2016, stated, “Despite repeated statements by the Minister that there is no logic to the 5/20 rule and that it should be abolished, the discriminatory regulation still remains in place”.
Guess which consultancy firm’s services was sought for IndiGo’s Red Herring Prospectus? CAPA India.
The Airbus A320 is the first aircraft to be certified with the Pratt and Whitney (PW) Geared Turbofan (GTF) Engines. The GTF engines are revolutionary, moving somewhat closer to a turboprop with the presence of the reduction gear-drive. The A320neo (new engine option) variant with the PW 1127G-JM engines, the A320-271N, has run into a spot of bother, which has made Qatar and IndiGo refuse the aircraft with its present restrictions. Lufthansa is now the launch customer of the neo.
According to Air Transport World (ATW), “…operational restrictions are still in place for the Pratt & Whitney PW1100G engine, pending some hardware and software changes”. This restriction requires the engines to idle for three minutes before the aircraft can commence taxi. Qatar will not accept a part-baked product, and IndiGo will not operate an airplane that will mess with its strict turn-around schedule.
The 5th production Airbus A320neo (-271), MSN 6801, is slated for Lufthansa, to be registered D-AINA. The 11th production A320-271N, MSN 6864, to be registered D-AINB, is the second A320neo slated for Lufthansa. The remaining A320neos upto the 11th are slated for Indigo (5), Qatar (2), and Spirit Airlines (1). Both are assembled at the line at Hamburg (Germany). The first A320neo is planned by Lufthansa to be introduced into commercial service in January first week, according to ATW.
With Lufthansa stepping up as the launch customer, Qatar will become the second operator to induct the A320neo, and IndiGo the third. Go air is slated to receive the 23rd production A320neo (-271N). IndiGo will then receive its neos only in early 2016, as had originally been widely speculated, based on other issues the engine had earlier faced.
The Pratt and Whitney GTF engine, by virtue of its new technology, will have its share of issues till the engine matures, as is the case with almost every new engine. While the GTF optimises propulsive efficiency through the use of a reduction gearbox to drive the three stages of the engine at optimal speeds, the alternate engine to power the A320neo, CFM’s LEAP-1A, optimises thermal efficiency by running the combustion chamber much hotter, relying heavily on material technology to withstand such temperatures. According to Aspire Aviation, the CFM engines have underperformed on fuel consumption, and is facing issues related to both component heating, and cooling mechanisms.
While IndiGo and Go Air will bear the brunt of the bound-to-happen hiccups as the engine matures, Vistara, which is yet to make a decision on its engines in the first half of 2016, will receive its leased neos only in the second half of 2017. The airline will have good time to keep a close watch on the PW1127G-JM engine performance and reliability to make a better informed decision. While the aircraft and engine certification programme put the aircraft through extreme tests, it is also a known fact that Indian operating conditions are harsh for engines. Prolonged operations in Indian conditions will truly test the A320-271N.
Air India has apparently not yet decided on leasing neos in the short-medium term.
Vistara, which is on track with its fleet expansion plans, received its 8th Airbus A320-232SL at Toulouse. The aircraft, registered VT-TTI and bearing manufacturer serial number (MSN) 6785, is flying from Toulouse to Delhi via Ras Al Khaimah International Airport (UAE), where it will stop for refuelling before continuing to Delhi.
This 8th aircraft, along with the recently accepted 7th aircraft (VT-TTH) will allow the airline to either expand or strengthen its network. The timing of the airplanes is good – allowing the airline to build capacity for the peak season – the months of October, November, December, and part of January.
The airline’s 9th aircraft is expected in the month of November. The airline will close calendar year 2015 with a fleet of 9 aircraft.
Vistara today flies to 11 destinations, with the 12th destination – Varanasi – being added on the 21st of October. All 8 airplanes will be flying 21st October onwards.
The airline, with the 8th aircraft, has the capacity to deploy an additional ~6 flights. Offering a morning BLR-DEL and an evening DEL-BLR is important to raise the appeal of the airline’s network. It will not be surprising if the airline adds a pattern that flies BOM-BLR-DEL-XXX(perhaps VNS?)-DEL-BLR-BOM, to offer its customers better connectivity to BOM and DEL from BLR.
The airline, which has flown nearly 6,50,000 passengers till end September 2015, is expected to cross the 1 million passenger mark by December 31st, 2015, considering the peak season and the addition of capacity with three new airplanes.
Vistara is the newest airline to have taken wings.It’s a little over two months since the airline started operations. In this period, the airline’s fleet has grown to five, and will soon grow to six for a large part of the Summer schedule. The cities it services have also grown to eight. The fleet size and the number of airplanes have made another pan-India airline that started operations earlier- Air Asia India – now the smallest airline in terms of fleet size and destinations.
What is Vistara? How is it? Where is it going? What should it perhaps do? This and more in our fairly deep analysis, which you can read more about by clicking here.
There are few airlines in India which talk about their employees on social media. IndiGo has been featuring some of its staff and crew in its in-flight magazine, but these are more individual stories – either of struggle or achievement than a general feature. AirAsia India hasn’t officially talked of its staff – most photos of staff in a joyful mood are clicked and posted by its poster CEO Mittu. Air India only recently got active on social media. Go Air remains silent and Jet Airways uses certain employee photos to focus on matters other than the employees.
SpiceJet stands out. It became the only airline in India to sticker photos of its crew on the sides of its poster aircraft – VT-SZK. It did away with models, and featured employees for all promotional advertisements and banners. SpiceJet uses its employees as faces of the airline. Women’s day had to be special
Of all airlines in India, SpiceJet and Air Costa were the only ones to issue press releases with photos of their all women crew. While SpiceJet talked of 16 all women flights operated on Women’s day, Air Costa operated four flights with an all women crew. Air India operated four such flights, but spoke nothing of it on its social media sites. Air Costa issued a press release, but it was only the chief financial officer (CFO) Vivek who posted photos of the all women crew. The only airline that well coordinated the effort was SpiceJet.
Sanjiv Kapoor, the COO, was active on Twitter, and posted a photo of him posing with the all women crew who flew him from Goa to Delhi. The airline allowed all its fans and followers on Twitter to ask four of its women crew – a captain, a first officer, a cabin crew in charge, and a cabin crew, questions about pretty much anything. It also posted photos of the all women crew that operate the first Q400 and Boeing 737 flights today. SpiceJet pulled all plugs to engage with its audience, and the crew interaction was perhaps the most meaningful activity hitherto undertaken by any airline in India, on Women’s day. The message was clear – don’t just admire, ask and learn. SpiceJet may have been successful in not just inspiring, but guiding men and women seeking a career in the airline industry. Efforts of the management head and the airline social media team seem to have been energetic, and well co-ordinated. Sunday wasn’t an excuse.
While SpiceJet conducted a great, out-of-the-box and meaningful exercise on social media , one aspect where it perhaps fumbled was in blindly (though unofficially) promoting a poorly researched story about a SpiceJet woman pilot from a particular religious community that was carried in the mainstream media – Hindustan Times.
Social media take away – Do what SpiceJet did (not necessarily follow, but get inspired!). It was brilliant and out of the box. Also make social media mental checklists a habit, so that certain stories, when promoted, don’t damage the image of an individual or an airline.
Kudos to SpiceJet, for what it did. We’ll next have to convince them to form an ‘Aviation Day’ that we can observe and celebrate.
When the DGCA notified the public that TATA-SIA airlines, now operating under the brand name Vistara, had applied for an Air Operator Permit, the DGCA had made public the joint venture’s proposed route pattern, detailed below.
In the light of the temporary relaxation in meeting route dispersal guidelines handed to Vistara, The Flying Engineer analyses the proposed route pattern for year 1.
The proposed route pattern, as handed over to the DGCA during the application phase during April 2014, had listed Mumbai, Goa, Bangalore, Hyderabad, Ahmedabad, Srinagar, Jammu, Patna and Chandigarh as destinations – either non-stop or with one stop, from Delhi. Based on the weekly frequencies, we’ve computed the average daily frequency, and computed the capacity (in available seat kilometers – ASK) as per ICAO’s Air Transport Bureau (ATB) guidelines.
The proposed route pattern for one year generates enough capacity on CAT IIA, but generates a CAT II capacity that just meets or falls slightly short (0.18%) of meeting the capacity as stipulated by the existing (at the time of writing this piece) Route Dispersal Guidelines (RDG) as laid down by the Ministry of Civil Aviation (MoCA), India. However, the airline, in its original proposed route pattern, could notwhere have met the required capacity on CAT III routes, as shown in the table on top.
The airline’s present pattern, which includes DEL-BOM vv, and DEL-AMD-BOM vv, does not conform with the original proposed pattern. The frequency on DEL-BOM nonstop is already 21 a week, each way. The DEL-AMD-BOM pattern, which was to have kicked in during the second year of operations, started on the second day of the airline’s operations.
A very smart move that Vistara may have made is to push its requirement to meet the RDG three months later, which is April 2015 onwards. This benefits Vistara in two ways:
It allows the airline to make money in a lean season by flying on business routes which are not much affected by seasonal variations, while ramping up fleet and mainline network strength.
It will allow the airline to deploy disproportionally high capacity on CAT II/IIA and CAT III routes (to compensate for the first three months of operation, starting January 9th 2015) during the summer (Q1 FY15-16 / Q2 CY15), when demand for travel is high, due to a holiday season.
With this strategy, the airline may be able to minimise its losses in Q4 FY’15 and perhaps maximise its revenues in Q1 FY’16.
Statistically, Bangalore ranks the third among all cities in India as far as domestic passenger movements are concerned. In FY13-14, Bangalore witnessed 10.2 million passenger movements, which is after Delhi (24.2 million) and Mumbai (21.9 million). Besides Tier I cities, Ahmedabad had the highest traffic, of 3.6 million passenger movements. Going by Vistara’s priority in tapping lucrative, proven markets, Bangalore may be either the next Tier I destination or simply the next destination after Delhi, Mumbai and Ahmedabad. Goa witnesses the third highest passenger movements among non-Tier I cities, and may also become the airline’s next Tier II destination (CAT III route). It will not be surprising to see Vistara choose Pune as another Tier II destination, soon. Pune had the second highest non- Tier I traffic after Ahmedabad, at 3.5 million movements.
The original pattern would have required an average of 51:40hrs of block time to be clocked, per day (which will vary on a daily basis based on non-daily flights). The actual daily block time would have been between 50:30hrs to 53:20hrs. Assuming a conservative 10hr aircraft utilisation – per day per aircraft, the airline will require 6 aircraft to fly the original proposed pattern. The airline already has two aircraft flying, and a third in Delhi. Two others are ready at Toulouse and will be delivered by March end (2015), taking the total to five. With one aircraft per 1.5 months expected post March 2015, Vistara may be able to fly its original planned network in May 2015, should it still hold. But considering that the airline may end 2016 with 13 Airbus A320-232SL aircraft, it is likely that Vistara will far outgrow its original proposed network, even with the backlog of RDG – mandated capacity that will have to be flown.
With this in mind, it may not be surprising to see Vistara expand its network to Guwahati, Kolkata, along with few other stations. The projected growth seems both achievable yet aggressive.
Network service and on time performance are important yet just two of many factors that influence people to choose an airline. Vistara is just one of three full service carriers in India, bringing with it a strong brand formed by established and well known players – Singapore Airlines and Tata Sons. This will attract the discerning traveller. Full service carriers play the yield game, generated largely by the first class in their aircraft – the business class. The airline has 16 business class seats on each of its aircraft.
However, the only product differences between a low cost carrier and the premium economy (36 seats) and economy sections (96 seats) of Vistara are the food, the renowned oriental style emphasis on service and higher pitch comfortable seats, as the airline offers no in flight entertainment options or support. How these two cabin sections of Vistara will compete with other airlines is to be seen. For example, for travel on February 15th between Mumbai and Delhi (based on a search at the time of writing this piece), airlines including Jet Airways charge as little as INR 3,000 one way, while Vistara holds its ground at 6,520 one way. Whether brand name will prevail in a generally cost sensitive market is to be seen. However, there is also an emerging trend amongst people with disposable income who look forward to enjoying their money.
Three days after securing its Air Operator Permit (AOP), Vistara opened for bookings, for flights 9th January 2015 onward. This marks the start of commercial operations in Q4 FY2014-15, a period which is traditionally the second weakest season for Indian domestic travel.
The airline places itself as a full service carrier (FSC), with a three class cabin.
Rows 1 – 4 feature a four abreast Business Class Cabin with 16 seats. The seats sport a 42-inch seat pitch, with a 7-inch recline. Business class passengers will be pampered with a meal service with fine linens and bone china tableware. Meal options – for all classes – are shown on the left. Business class passengers will have a separate check-in counter at airports. Passengers are entitled to 30kgs check in and 7kgs carry-on baggage. Fares are in two categories – Business Flexi and Business Saver, with the expensive former waiving off a change fee while allowing the ticket to be valid for 12 months.
Rows 5 – 10 feature a six abreast Premium EconomyClass Cabin with 36 seats. The seats sport a 33-inch seat pitch, with a 4.5-inch recline. This cabin section includes two emergency exits at rows 9 and 10. These rows offer a 36 inch legroom, but the recline is unavailable on row 9 and perhaps restricted on row 10 due to the cabin partition wall right behind. Passengers are entitled to food and beverage. Premier Economy class passengers will have a separate check-in counter at airports. Passengers are entitled to 20kgs check in and 7kgs carry-on baggage Fares are in two categories – Premium Flexi and Premium Saver, with the expensive former waiving off a change fee while allowing the ticket to be valid for 12 months.
Rows 11 – 27 feature a six abreast Economy Class Cabin with 96 seats. There are only 16 rows in this section, but the row numbering skips the number ’13’, misleading one to believe there are 17 rows. The seats sport a 30-inch seat pitch, with a 3.5-inch recline. The seat thickness will determine the actual legroom available. For example. IndiGo’s 29-inch seat pitch with its ultra slim dragonfly seats are thin enough to offer the equivalent of a 31-inch seat pitch legroom with standard seats. Passengers are entitled to food and beverage. Economy class passengers will have a separate check-in counter at airports. Passengers are entitled to 15kgs check in and 7kgs carry-on baggage Fares are in two categories – Economy Flexi, Economy Saver, and Economy Super Saver, with the expensive first option waiving off a change fee while allowing the ticket to be valid for 12 months.
In addition, passengers who have web-checked in will have a separate counter to drop off check-in baggage. The airline also offers an auto check in service, in which if the passenger has not self checked-in at 4 hours prior to scheduled departure time, the airline will auto check the passenger on the flight and send the boarding pass via SMS or email.
In total, every aircraft is configured with 148 seats.
The lower number of passengers and dedicated counters may check in a smooth experience. Being a FSC, load factors may hover around the 75% range, leading to just 111 passengers per flight, on average – possibly a smooth boarding experience.
Vistara’s IATA code is ‘UK’. On the first day of Operations – Friday, the 9th, January 2015, the airline will operate only on the Mumbai-Delhi and return sectors. Vistara’s regular flight numbers are expected to start with ‘9’. However, on January 9th, the airline will operate two flights to Mumbai from Delhi and one flight to Delhi from Mumbai, all with special flight numbers – 895, 890, and 228. Flights to and from Ahmadabad will commence the next day, on the 10th of January. With this, one aircraft will be stationed at Mumbai.
The first commercial flight will be operated as UK890, which Departs Delhi at 12:30IST and arrives at Mumbai at 14:45 IST.
The airline will commence operations with two aircraft, both Airbus A320-232SL, registered VT-TTB and VT-TTC. The airline will operate the following patterns from 10th January, with the first pattern for an aircraft out of Mumbai and the second for an aircraft out of Delhi. The pattern holds good for most days, with certain changes on Sunday. Reportedly, the pattern will run till 15th February 2015.
The airline will operate from Terminal 2 of Mumbai’s Chhatrapati Shivaji International Airport, and Terminal 3 of Delhi’s Indira Gandhi International Airport.