AirAsia India changes schedules and pattern to tackle operational issues

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Pattern_AAI_Dec_pre-17thAirAsia India, which is believed to be facing a shortage of Senior Flight Attendants, has modified its schedule and pattern to address two problems: shortage of crew, and a poorly performing route.

The airline has cancelled its Bangalore – Chennai return early morning for a long time now. The airline previously had two distinct aircraft patterns – ten short sectors (Goa, Kochi, Chennai) on one, and two long and one short on the other (Goa, Chandigarh, Jaipur). The new, effective pattern does not fly the early morning Chennai and return, while advancing the 15:10 Goa flight to 13:15. The 18:35 BLR-MAA flight has been moved to 16:30, with a corresponding change to the return flight. The late night Bangalore-Kochi flight has been pushed to a departure 25 minutes later.

As a result of these changes, the airline presently operates just 14 daily flights as against its usual 16. Aircraft utilisation has gone up on the first pattern from 10:15hrs to 13:35 thanks to the Jaipur flight, while the second pattern’s utilisation has dropped to 7:35 in considering the early morning Chennai cancellation. The yellow highlighted cells belong to flights that were moved from one pattern to the other.

Most of the re-scheduling may have been done to better match the cabin crew’s flight duty time limitation (FDTL). As a result, the airline’s schedules had become fairly chaotic in November, with a significant number of cancellations and delays.

This month, two Airbus A320s are expected to join AirAsia India’s fleet from parent group AirAsia. The airline will fly to Pune from Bangalore and Jaipur from Pune effective 17th Decmeber, for which the aircraft are expected on Indian soil between the 10th and 15th of December. To cater to the new routes without disturbing the present schedule, just one additional aircraft is required in the airline’s fleet.

The airline was affected by the DGCA’s directive barring management pilots from assuming training positions. One of the airline’s captains, who reportedly has tendered his resignation but is serving his notice period, has been recognized by the DGCA as a Type rating Instructor (TRE). The airline also has a foreign captain from the AirAsia group serving as a training pilot.

Meanwhile, Subramanian Swamy had last evening tweeted about a Delhi High Court Hearing today, concerning both AirAsia India and what he may have meant as Vistara.

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Fly Easy – A possible regional startup

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Fly EasyFly Easy (India), the brand name of a Bangalore based regional airline proposed to be started by ABC Aviation and Training Services Private Limited, has called for applications for positions in ten departments in the company.

The startup-airline company had received its initial NOC (No Objection Certificate) from the aviation ministry on the 18th of January, 2012. This is five days earlier than Air Costa’s first NOC which was issued on the 23rd of January, 2012.

The initial NOC is valid for a period of 18 months, and must be renewed every six months thereafter to maintain its validity. The airline is presently in its third (3rd) renewal, and will have to apply for its fourth (4th) renewal on the 23rd of January 2015.

The airline may apply for its AOP during its 5th renewed NOC period, if all goes as per plan. However, it is uncertain if the airline has sufficient funds to start operations.

The airline reportedly has an authorised capital of INR 12 Crores. This would have been just sufficient (only to meet regulatory requirements, insufficient for operations though) to start an airline with aircraft such as the E170 and E175. However, for an airline that plans to fly the E190s (or heavier aircraft), the regulatory requirement is a minimum paid up capital (not authorized capital) of INR 30 Crores minimum. The airline’s reported authorized capital is not in agreement with the airline’s plans to fly E190 aircraft.

As of today, the airline aims for a regional scheduled operator’s permit for the Southern Region – the most lucrative region for regional operations in the country. Earlier news reports had indicated Guwahati, Amritsar and Surat as ‘priority’ destinations. The airline indicates its plans to have a fleet of Embraer E-190 aircraft. Such  aircraft will help any airline tap long, thin markets that are either underserved or virgin. Aircraft with the range and capacity of an Embraer E190 (a little more than 100 seats – 112 in the case of Air Costa) gain prominence in the light of the saturation and focus of/on mature markets – Tier I routes and certain Tier III routes.

The airline’s website is up, and the brand colours, design and theme are perhaps the best amongst startup regional airlines in the country.

The airline company has an office at Bangalore’s Kempegowda International Airport’s Alpha 3, though the company is  registered at Trivandrum, at an area just south-east of Trivandrum international airport.

The airline company has four directors – Rafi Sainulabdeen Mohammed, Rajesh Ebrahimkutty Majidha Beevi, Sanaulla Zulfiqar Ahmed Khan and a ‘Rajesh’.

As per the airline’s website, the CEO is Finn Thaulow. It is uncertain whether he is the CEO or still a CEO-designate. The approximately 60 year old Norwegian CEO was formerly with FlyMe Europe, and Syrian Pearl Airlines. During his tenure as CEO at FlyMe Sweden, the airline, which operated Boeing 737 Classics (-300 & -500), filed for bankruptcy in March 2007. The sudden closure affected numerous passengers who had purchased tickets from the airline.

In 2011, trial against FlyMe was initiated, in which the CEO, Finn Thaulow, along with three others were charged. Finn Thaulow was charged with ‘serious accounting fraud’, as reported by Gotheborg Daily- a Swedish Daily. Reportedly, the four accused ’emptied the company of 40 million kronor in the winter of 2006 through a fictitious transaction involving the purchase of shares in River Don Ltd’. At this moment, we have been unable to establish the result of the trial.

Syrian Pearl Airlines, which was founded in 2008, with Finn as the CEO, started operations in May 2009 with a BAe 146-300. The airline had entered into a ACMI (Aircraft, Crew, Maintenance, Insurance) agreement with Orion Air of Spain, concerning two BAe 146 aircraft, one of which it started operations with. According to the US Department of Commerce, the agreement was a breach of US export regulations. Finn had privately appealed against a temporary denial order (TDO), stating that it was Orion Air’s responsibility for ‘obtaining all necessary licenses and governmental approvals on Orion Air before sending the two BAE 146-300 aircraft to Syria’. The airline ceased operations three months after its commencement, when the lessor Orion Air pulled out due to the US sanctions imposed on it.

Finn Thaulow was on the shortlist for Tarom’s board of directors. Tarom is the flag carrier of Romania.

Prior to FlyME, Finn was the Vice President of Alliances and Corporate partners at SAS Scandinavian Airlines – the flag carrier of Sweden, Norway and Denmark. He was also part of Spanair’s management team. Spanair, which ceased operation in 2012, was a Spanish airline, and a subsidiary of the SAS Group during Finn’s engagement.

Finn has over 25 years of aviation experience, and that may immensely benefit the airline, should it take-off.

DGCA responds to The Flying Engineer

On 14th November 2014, the Flying Engineer had pointed out discrepancies between airline’s reported data and DGCA published data. The Director of Statistics at the DGCA – R Savithri – responded with the following statement:

The issue of mismatch between the passenger numbers published under passengers carried as per the ICAO Form ‘A’ for the said months and the passenger numbers published on page 14 of Domestic Traffic Reports had already been noticed by DGCA. ln order to resolve this problem a meeting was held in the month July and it was found that the main reason of the mismatch lies in the fact that the airlines were not including the number of passengers carried on the domestic leg of the international routes while reporting data as per Form ‘A’ of ICAO. While passengers carried published on page 14 of Domestic Traffic Reports includes this number. There is still a small difference in the number of passengers carried shown under the two tabs from the month of August onwards. This difference still persists due to the fact that the passengers carried published on page14 of Domestic Traffic Reports also includes charter or non scheduled flights data which is not a requirement for ICAO Form ‘A’“.

The implications of this is that the market share of various airlines, as calculated and published by the DGCA, is not truly indicative of an airline’s market share. The variations are, admittedly, small.

The director also clearly stated that the hours under ‘Aircraft flown’ correspond to Block Hours. Some airlines, in an attempt to make their aircraft utilization numbers appear good, had stated that those were flight hours. The director clarified that ‘no airline is reporting flight hours instead of block hours’.

The Flying Engineer has also learnt that the statistics for AirAsia India and Air Costa will be available in the statistics publication January 2015 onwards. Air Costa’s data has been included in the Total Traffic Statistics of Scheduled lndian Carriers for the month of October, which was published a few days ago.

How SpiceJet rattled IndiGo’s performance

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LF VS MONTH ALL 8 YEARS INDIGO

In an interesting observation, IndiGo’s load factors for Q2 FY2014-15 were found to be consistently below the average domestic load factors for the first time in its entire operational history.

The chart above (click to expand) captures IndiGo’s domestic load factors as reported to the DGCA. Plotting this against the average domestic load factors reveals 13 months out of 98 when the load factors of IndiGo have dipped below the average. Most of these below-average loads were in the first seven months of operations at IndiGo. In the last six financial years – the same years when the airline has been reporting profits – this has occurred just thrice. However, in this financial year alone, it has occurred thrice – in Q2 FY’15.

It what appears a challenge of supremacy, SpiceJet’s market stimulation was able to distort usual market dynamics in the lean season. For instance, September, which is historically – from the last three years – the weakest month for domestic travel as indicated through the lowest load factors – has this year matched the load factors as seen in May 2014. While demand still remained low, the market stimulation drive  created demand, at the expense of yields but to the benefit of RASK – revenue per available seat kilometer.

While SpiceJet brainchilded and executed this, not every airline could follow its footsteps. IndiGo was unable to match SpiceJet’s market stimulation effects, which positively impacted SpiceJet in Q2, and positively impacted other airlines as well. IndiGo’s load factors also rose in sync with the average domestic load factors, but however, underperformed with below average loads.

Indigo, by following what SpiceJet did, salvaged its September. However, its loads in July and August this year were lower than its loads in the same months the previous year. This performance explains in part the Q2 loss of 100Cr incurred at IndiGo.

In short, market stimulation both surprised and helped the blue airline.

India didn’t seem ready for a taste of South East Asian proven low cost strategy. At the same time, IndiGo is ready to make a killing in the months of November and December, lapping up the excess demand due to SpiceJet’s cancellations and planned temporary capacity reduction.

SpiceJet stimulated the market with great effort, only to hand it on a platter to IndiGo in the peak season.

IndiGo posts a loss of INR 100Cr for Q2’15, expands fleet with Tigerair aircraft

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IndiGo acft

IndiGo, the airline known to consistently post annual profits, realised a net loss of INR 100Cr in Q2 FY2014-15, covering the months of July, August and September (see footnote). In this period, the airline added a capacity of 15%, compared to Q2’14, but flew 21% more passengers – a total of 5.7 Million.

The airline ended Q2’15 with 10 aircraft more than Q2’14, with the fleet strength standing at 82 as of September 30th 2015. This is an increase of 14% in fleet strength compared to Q2’14. The disproportionately higher increase in capacity compared to fleet increase is explained through a 3% increase in average aircraft utilisation, up to an average of around 11.5hrs in Q2’15.

The increase in passengers in Q2 is partly due to an increase in capacity, and partly due to market stimulation efforts that IndiGo adopted, to keep up with SpiceJet’s initiatives. On April 4th, IndiGo launched fares between INR 1,499 and 2,199 for travel between 1st July 2014 and 30th September 2014. The period of travel was exclusively in Q2’15. This was followed by few other promos, most of which were for travel in September 2015. This resulted in September recording the highest growth in passenger, Year-on-Year, as seen in the graph below.

Cost and Rev Indicators Trend

IndiGo’s capacity increased in the three months of Q2: July, August and September. However, compared to Q2’14, the number of passengers per ASK dropped in July, picked up in August, and shot up in September due to numerous sales that targeted September: historically the weakest month for domestic travel. The airline’s cargo performance recorded a growth in July and September. The increase is partly due to the fact that IndiGo has started carrying mail in addition to freight, since May 2014.

Average flight hours per departure have reduced, indicating on average shorter flights flown by the airline, due to increase in domestic flights. International flights, which comprised 6.6% of all flights in Q2’14, has halved to 3.4% in Q2’15, indicating a strengthening on the domestic front and a reduction on the international front (International flights dropped by almost 40%).

IndiGo load factorsHowever, a lack of vigour and success in market stimulation may have been responsible for the domestic load factors (LF) of the airline to consistently trail the average domestic load factors (see graph above). It may be possible that since IndiGo responded to sales, especially those by stimulation leader SpiceJet, but didn’t initiate them, the efficacy of the sales drives may have been severely limited (a lot of planning and analysis goes into each sale. Responding to others may rob the respondent the time to perform sufficient due diligence). See the comparison between SpiceJet’s and IndiGo’s load factors, below – IndiGo can do a lot better. This could have had an adverse impact on the airline’s RASK (Revenue per available seat kilometre). We consider only the domestic LF, as International forms just 11% of the airline’s deployed capacity.

Interestingly, Rakesh Gangwal and Sanjiv Kapoor have both earned a Master of Business Administration degree from the Wharton School of Business of the University of Pennsylvania. However, a true low cost airline experience (and proven market stimulation strategy) is brought to the table by SpiceJet CCO Kaneswaran Avili. His experience at AirAsia and Tigerair have resulted in the graph below.

A comparison with SpiceJet

6E vs SG lfA comparison with SpiceJet becomes inevitable – the two largest low cost carriers with seemingly different strategies today.

Sources within IndiGo reveal that the airline’s CASK (cost per available seat kilometre) is at around INR 3.6. Compared to its next biggest LCC competitor – SpiceJet’s CASK of INR 4.07, this is INR 47 paise lower. IndiGo lost INR 175 for every passenger flown in Q2.

The CASK at IndiGo seems to be INR 3.6, and the RASK for Q2 may hover around INR 3.4-3.5. This may be higher than SpiceJet’s Q2 RASK of INR 3.26, which was impacted by cancellations and clubbing of flights.

Here are two interesting scenarios:

One – where IndiGo could have stimulated the market like SpiceJet. An aggressive market stimulation may have narrowed the loss for IndiGo, or it could have perhaps reported a profit. The airline could have flown fuller airplanes (in the light of its disappointing load factors) and brought in more revenue, resulting in a higher RASK. SpiceJet in 2014-15 is undoubtedly the Indian market leader in stimulation. IndiGo on the other hand didn’t respond too well to this. It will be interesting if this figures in their next year’s strategy.

Two: Where SpiceJet could have had the CASK that IndiGo enjoys. If SpiceJet’s CASK was INR 3.6 against its INR 4.07, its loss would have narrowed to around just INR 120Cr. Despite its high RASK, SpiceJet was able to salvage the situation to a level where the loss was arrested at INR 310Cr.

If IndiGo starts behaving like a true low cost carrier, perhaps emulating, and not merely responding to the kind of market stimulation that SpiceJet was able to execute, it may become an untouchable. The only way for other airlines to survive will be through differentiation: Vistara as full service, with favourable connections to the world through Singapore; Jet as a full service, with favourable connections to the world through the middle least; and SpiceJet through its well differentiated in flight services and Tier II/III connectivity. AirAsia and GoAir may face the highest heat as they yet do not have an offering that IndiGo doesn’t. While AirAsia may have the backing to grow to a scale to take on IndiGo with scale and lower costs, GoAir will be the loner.

Fleet and network expansion

A strategy that IndiGo seems to be applying is market dominance through excess capacity, frequency and network. The airline, however, is yet to make the most of its ‘overcapacity’.

IndiGo received its 100th aircraft on the 3rd of November, 2014, completing an order that was placed in 2005. With this 100th aircraft, the fleet size rose to 84 (16 A320s were sent off as per the old lease contract that lasted six years).

To fill the gap between November and last next year – when its NEOs from its second, 180 aircraft order placed in 2011, are expected to be delivered, IndiGo has ‘short term’ leased around 12 Airbus A320 aircraft used by Tigerair or its now defunct subsidiary at Indonesia – Tigerair Mandala. The first aircraft, a non-sharklet A320 that flew at Indonesia, joined IndiGo’s fleet on 21st November as VT-IDB.

IndiGo today (26th Nov 14) announced Kozikhode as its newest, 37th destination, which will be connected 2nd January onwards. With this, the airline’s daily flight count will rise to 554.

Footnote: Source of loss: Airline internal sources.

AirAsia India’s performance in Q2

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AirAsia_ATB

AirAsia India completed its first full quarter of operations. The airline, which took off on June 12th 2014, carried 128,089 passengers in 946 flights to 5 destinations, in the Q2 period. It posted a net loss of approximately INR 29 Crore.

The airline had had an interesting performance. To know more about how it performed, and get a glimpse on the outlook of the airline, click here: AirAsia India – Q2FY15 performance and outlook.

It’s Friday! And we call upon the CIA.

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Art00_sIt’s been a long, tiring week, both in the offices and on twitter. The best way to unwind is to look at certain things from a light – very light angle. Wait, we’re taking something totally irrelevant.

CIA – Comical Indian Aviation – brainchilded by The Flying Engineer and encouraged, fed, and moulded by Dr. DSL, is an attempt to elicit a laugh at the end of a stressful week. We can’t promise you a frequency of CIA strips. Nor can we say if we’re dedicated to the CIA strip. Enjoy it as it comes.

Don’t mistake us, we’re not taking sides. We’re not stating facts. We’re not breaking news. We don’t know whom we’re talking about, and we are certain that any and all interpretations that you may arrive at are purely the figments of your imagination based on the creativity of our comic ‘strip’.

By the way, we had thought of FIA – Funny Indian Aviation, but dropped it knowing how nasty the FIA can be to some.

So, enjoy ACT – 1! (Click to enlarge)

Art01_s

Q2 with Professor Sanjiv Kapoor

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Sanjiv_funny_faceSpiceJet’s COO Sanjiv Kapoor conducted a class on introductory airline economics. He also dived, to some depth, into the Q2 results, and shared views on the airline’s performance.

The Flying Engineer also did his homework, and analyses, together with what was said in the class, SpiceJet’s performance.

Also talked about is a bit beyond Q2: October. Load factors at the airline dipped. In November, the airline’s fleet size has shrunk. The why, and what next of these and more, here: Q2 results and Prof. Sanjiv Kapoor’s introductory class on Airline Economics.

You may also want to later read our pre-Q2 results analysis, here: SpiceJet in Q(2) – Great Performance in Testing Times

DGCA: Disappoints even when reporting data

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DGCA Data Error

The DGCA’s capabilities (or the lack of it) have come under question both before and after the FAA downgrade. What is further disappointing is that the data published by the DGCA is not accurate enough to be used for serious academic or analytical purposes. When thumbing through the data for Jet Airways, it was brought to light that the data reported by the DGCA in its Traffic Reports and Traffic Data differ, and both differ from the data reported by the airline.

Interestingly, the errors reported in the ‘Traffic Data’ for Jet Airways as published on its site are at places huge. The ‘Traffic Reports’, released around the 15th of every month, are more accurate, but lack sufficient data for an analysis. Certain data with have an error less than 1% may be ignored on a case basis. But the question still lingers: how two publications from the DGCA can have largely differing data between them – an error that may not be attributed to rounding-off-error.

This discrepancy was brought to light only through Jet Airways’ published data. Since other airlines do not publish such data, the extent of errors and deviations are uncertain.

Further, in the month of November, two airlines, both flying with red colours, have had numerous cancellations and delays. Delays and cancellations are reported by airports. In the case of Bangalore’s Kempegowda International Airport, the airport has been using the term ‘rescheduled’ for one particular carrier (and interestingly not for any other carrier), which effectively masks both delays and cancellations. In such a case, a delayed flight, operating ‘on time’ in accordance with a ‘rescheduled’ departure timing will prevent true OTP data (though the DGCA does not yet list the OTP for the airline in question) and ‘Cancellation Rate’ from being published in Traffic Reports, making comparisons between airlines both difficult and unfair.

AirAsia India’s pattern (or a part of it) effective November 17th

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New Pattern WS DGCA

AirAsia India, in its winter schedule filed and approved with/by the DGCA, has listed a slew of new flights, most notably the doubling of its Jaipur (JAI) and Chandigarh (IXC) frequency, introducing a double Vishakhapatnam (VTZ) frequency, and adding another frequency to Cochin (COK). The new schedule will require four patterns (four aircraft), but the fourth pattern is evidently incomplete. AirAsia India is expected to announce further new routes soon – an announcement delayed by at least two weeks now.

In the new pattern, the airline seems to focus on a mix of business and casual travellers. Early morning / morning departures to & from Goa, Cochin, Jaipur and Vishakhapatnam, followed by evening/late evening returns from these destinations. The Bangalore-Chandigarh sector’s plan is baffling (though the route records very good loads), as it seems to deploy two flights within two and a half (2:30) hrs of each other. The airline does this with its late morning Cochin flight, as well. The airline still seems to have an unfavorable slot for Chennai.

The aircraft utilization in the third pattern will touch an all time high of 14 hours.

The airline, to fly the new pattern (if it still holds – most of the airline’s forward looking statements haven’t fructified) will need two additional aircraft by November 17th. This fleet of four aircraft will require between 16 – 20 sets of crew, which at the highest requirement is 20 Captains, 20 First Officers, 20 Senior Flight Attendants, and 60 Flight Attendants (which may also include trainee cabin crew). The airline will need to go on a hiring spree for experienced cabin crew. Since the start of operations, the airline has held 11 walk-in cabin crew recruitment drives (including one tomorrow and another on Thursday), targeted mostly at fresh (inexperienced) applicants.

The airline was supposed to have received A320 MSN 6262, registered as VT-ATD, from Toulouse, but the aircraft was re-registered to 9M-AJT and delivered to Malaysia AirAsia. It is very likely that the next two Airbus A320 aircraft will be used airplanes from the AirAsia group. The question is not which, but when.

Opinion: Incomplete updates to employees may do more harm

Airline_concealed

Recently, the pilots of an Indian airline received an email from one of their c-level officers, stating that the Boeing 737-900s in the fleet are on their way out. The email reportedly did not include details concerning the fleet size.

Considering that the airline in discussion has six Boeing 737-900s in the fleet, of which one has entered storage, but the remaining five are still flying for the airline, speculations were rife in the airline, among its Boeing flight crew, that the fleet will drop from the present strength of 33 to around 26. If the Boeing 737-900 that entered storage is to be discounted, the Boeing fleet strength drops to 28. Some flight crew believed the fleet size will drop to 26, considering six 737-900s and one Boeing 737-800 that, according to their observations, has been on ground for long.

No, there were no rival airlines that were spreading rumours. Rather, it was the lack of information in the email that had led to speculation. Very evidently, any flight crew who receives such information will do the fleet math to come to a conclusion – perhaps based on incomplete information but definitely not baseless- about further fleet downsizing. While the c-level officer may have sent out the email to keep his employees informed – a commendable practice – apparently one key aspect was missed out – to think of the consequences of such information – generation of rumours about the health of the airline, and a loss of confidence in the future of the airline, among the very people whose morale he intends to boost.

What he stated was fact. However, sources reveal that the airline may be leasing Boeing 737-800s from an overseas carrier. The 737-900s don’t fit in well in the airline, and replacing them with the lower capacity -800s is a wise thing to do, to standardise the fleet. This key piece of information, for employees to realise that the fleet size will remain unaffected, and that the airline was further optimising and streamlining, was missed out.

Did the chief officer err by not mentioning the induction of -800 aircraft? No. Was the email well intended? Yes- there is no reason to believe otherwise. There may be no need to share forward looking information, as failure to acquire the assets on time will again raise a question on the health of the airline. What he possibly could have done was to add a line stating that the airline will be taking measures to ensure the fleet size remains unchanged. The ambiguous line, surprisingly, will have just sufficient information to answer more questions than raise doubts.

IndiGo receives its 100th aircraft, fleet size touches 84

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A320_IFH_first_sharkPlease read the edit footnote.

IndiGo today received its 100th Airbus A320 from Hamburg, Germany – one of Airbus’s three presently operational assembly lines. The aircraft, bearing manufacturer serial number 6336, and registered as VT-IAY, was ‘delivered’ to IndiGo yesterday (3-Nov), at around 2300HRS IST (1730 UTC). IndiGo flew the aircraft from Hamburg (Germany) to Istanbul (Turkey), and after a brief tech stop (for refuelling), continued to Delhi. The aircraft landed at 0900 HRS IST (033UTC).

This aircraft marks the completion of the first order of airplanes IndiGo had placed with Airbus, on 16th June 2005, during the Paris Airshow. Back then, IndiGo was just a name.

However, even as far back as in 2005, IndiGo had done its homework well. Not many times does Airbus praise a yet-to start airline with words such as, “IndiGo is the result of extensive analysis and planning by very experienced airline executives and we are convinced it will be a successful new player in a market that is both large and fast growing”. These words were spoken by the then Airbus President and CEO, Noël Forgeard.

IndiGo today has survived as the only airline in India to consistently report profits over the last six years, and stands to witness the completion of a massive order of aircraft. The airline firmed up an order for 180 Airbus A320s on 22nd June 2011, for 150 A320NEO and 30 A320CEO (current engine option) aircraft, making it one of the NEO’s launch customers. On 15th October 2014, IndiGo signed an MoU for 250 A320NEO aircraft. As covered first by The Flying Engineer, IndiGo will short term lease A320 aircraft from ailing Tiger Airways.

IndiGo’s fleet

Almost one year after placing an order for 100 aircraft – in June 2005 – IndiGo received its first A320 on 28th July 2006. The airline commenced operations on 04th August 2006 – 11 days before the completion of India’s 59th year of Independence, and just 6 days after receiving its first aircraft.

All the aircraft since day one have been directly delivered to the airline from Airbus. Till date, the airline has not flown an aircraft that was previously used by another operator. The airline has engaged in sale-leaseback deals for each of its aircraft. The early lease agreements were for about six years (see adjacent graph) – a period just long enough to make the most of a brand new, efficient Airbus A320, while escaping the costly ‘D’ check. Lease agreements have been revised this year to extend the lease to 10 years, in view of IndiGo’s plans to aggressively add capacity to take on the Indian market.

IndiGo Returned Aircraft AgeAnomalies have existed in the airline’s aircraft lease. Of the 16 aircraft that have been returned, five flew for the airline for a period ranging from as low as three months to 1 year 5 months (see adjacent graph). Three of these aircraft are today being flown by Etihad, the same airline IndiGo is losing a large number of pilots to.

IndiGo Present Aircraft Age

Of the 84 aircraft in operation, almost quarter the fleet size is between two to three years old, and another quarter between two to one year old (see graph). This shows that nearly half the fleet size was inducted in the last two years. Interestingly, it is two years since Kingfisher airlines stopped all operations, and nearly 60% of the fleet – almost 50 aircraft- was inducted since then. IndiGo expanded fast enough to grab the void in the market that Kingfisher left behind, to today command the largest domestic market share, which is upwards of 30%.

Distribution FrequencyOn average, every 35th Airbus A320 produced since 2006 has been delivered to IndiGo. On average, the airline has received one Airbus A320 every month.

Yearly DistributionInterestingly, though, the airline, for 120 days – between 1st April 2014 and 30th July 2014 – did not receive any aircraft (see graph above – red arrow). It is the longest gap between aircraft deliveries in the history of the airline. The yearly frequency of aircraft joining the airline has not been consistent. (See adjacent graph).

The graphs also show that the 6 year lease, which was in effect earlier, has been extended since early this year.

Registration Series

Registrations

IndiGo had to adopt five different registration series to cater to its 100 aircraft. Of these five series, only three – the IN, IE, and IF series have had all the English alphabets as the third letter.

All 16 aircraft that have left IndiGo’s fleet were from the IN series. Sharklet equipped A320 aircraft at IndiGo started in the IF series, with VT-IFH. VT-IFH was the first shraklet equipped A320 in India.

With Airbus’s continuous improvement to the A320, every series has something unique, with some changes that may not be noticeable from the outside. For example, VT-IAP onwards, all A320s have a smooth nose, with the lightning strips now embedded in the nose cone (see image comparison below). This helps reduce aerodynamic drag.

IndiGo_nose_differences

With 30 Airbus A320CEOs still in the order book, IndiGo may sustain the induction of 1 A320 a month for the next 2.5 years atleast. Tigerair’s 12 A320s may be used to boost capacity till such time IndiGo’s target fleet size with its own aircraft is reached. With Airbus’s initial A320NEO production rate set to be slow, deliveries of a mixture of A320CEOs and A320NEOs may start late next year, with mixed deliveries running perhaps into 1.5 years, as Airbus gradually boosts production rate (with its new FAL at Mobile, Alabama) and transitions to an A320NEO line from the A320NEO and CEO mix line. However, conversion of some of IndiGo’s A320CEO to NEOs is expected.

Thanks to Oscar Victor for certain info.

Edit, thanks to Cyril Roy: As per Flightglobal, the 30 A320CEOs have been converted to A320NEOs. No CEOs exist on Airbus’s order book for IndiGo. In the light of this, it may seem that Tigerair’s 12 A320 will fill the gap for exactly a year before NEO deliveries begin

Edit, thanks to Shakti Lumba: Airline’s first aircraft delivery changed to July from June, 2006. Start of operations corrected to 4th August, 2006 from 15th August.

 

SpiceJet – Impressive Performance amidst Serious Challenges

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Spice737_DELSpiceJet is a unique airline. The airline had a massive management reshuffle, and the new management is actually working hard – very hard towards turning around the airline. In a record period – of around nine months, the airline has actually effected so many changes that it is an all new SpiceJet – in terms of appeal, service, and performance indicators. Symbolically, its the phoenix of the Indian airline industry.

Load factors, one of the strongest indicators of revenue, have been consistently up in the airline from the last few months. In Q2 FY2014-15 – comprising the months July, August and September, the airline recorded the airline industry’s highest ever domestic load factor in recent history, of 85.9%. What makes this achievement more remarkable is the fact that it was achieved in a lean season. The average Q2 domestic load factor stands at 82.5% – the best performance in the last 15 quarters of SpiceJet, and the highest among all Q2s in the entire history of SpiceJet.

Yet, the Q2 results will report a loss, and profitability in Q3 is somewhat threatened.

The market stimulation, and ancillary revenues have brought SpiceJet impressive revenues, but unfortunately these revenues are overshadowed by high costs in the airline. The high cost structure at SpiceJet – higher than the other two prominent LCCs – IndiGo and Go Air, is due to funding issues. The airline, which is now finding it difficult to sustain purely on cash flows from advance sales, badly needs a fund infusion. Without a cash problem, SpiceJet can make more money, and lower costs. How? Find out about this, and more, in further detail through our analysis, by clicking here.

DGCA issues a notice on the use of Unmanned Aerial Vehicle & Unmanned Aircraft Systems

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UAS_Begumpet_IndiaAviation_2014The DGCA has issued a public notice on the use of Unmanned Aerial Vehicles (UAV) & Unmanned Aircraft Systems (UAS) for civil applications. The public notice, which must be complied with, bans the launch of any UAS or UAV in the Indian Civil Airspace.

Such a directive has been issued in the light of potential safety issues associated with high performance UAVs interfering with flight safety. Recent sightings of ‘UFO’s by commercial airline pilots have only helped speed up such a notification.

The notice, issued on 7th October 2014, will remain in effect till the DGCA formulates regulations associated with the certification & operation of UAS in the Indian Civil Airspace, in line with what the ICAO standardizes.

Impact on Hobby Flyers

170cc_prophang_airshowSince the DGCA’s regulations concerning UAS/UAV will be in line with those of the ICAO, ICAO definitions and policies may be adopted, in large or in entirety.

ICAO Circular 328-AN/190 concerning both UAVs and UAS, states, “In the broadest sense, the introduction of UAS does not change any existing distinctions between model aircraft and aircraft. Model aircraft, generally recognized as in tended for recreational purposes only, fall outside the provisions of the Chicago Convention, being exclusively the subject of relevant national regulations, if any”.

The DGCA circular may be accessed by clicking here.

Air Pegasus receives its first aircraft

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Air_PegasusBangalore based Air Pegasus today received its first aircraft – an ATR 72-500, MSN 699 – from its lessor, after successfully completing its acceptance flight. Minor glitches in the aircraft’s auto flight system had delayed the ferry.

The aircraft, sporting an all white body (much like Vistara’s first Airbus A320), was ferried from its storage at Kuala Lumpur, and flown to Bangalore via Dhaka, where it had a tech stop. The aircraft departed Kuala Lumpur at around 0340Z/0910IST, and landed at Dhaka at 1020Z/1550IST, after flying for almost 6hrs40min. The aircraft departed almost an hour later at 1120Z/1650IST, and landed at Kempegowda International Airport (Bangalore) at 1530Z/2100IST, after 4hrs10minutes.

The first leg – Kuala Lumpur (WMKK), Malaysia to Dhaka (VGHS) was 1,550NM long, and the second leg- Dhaka(VGHA) to Bangalore (VOBL), India was 1,047NM long. Cruise was at flight level (FL) 240. Below is the routing.

Air_Pegasus_Ferry

The aircraft was piloted by two captains- Sipsas and Brilakis – the only two expats on contract with Air Pegasus, as of today. The aircraft ferried flew in with a registration M-ABFC, and was formerly operating for Kingfisher Airlines with the registration VT-KAA. The aircraft went into storage in the April of 2012, and has not operated since.

Air Pegasus becomes ATR’s newest operator in the country.

Air Pegaus has been on a hiring spree, and may receive its AOP by end October, and start operations by early November. For more about the airline, you may read the interview of Shyson Thomas – MD & CEO, here.

Vistara: From Singapore Airlines, Of Singapore Airlines, For Singapore Airlines

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VistaraEverything – absolutely everything in the airline has a Singapore Airlines ‘stamp’.

On 25th September, TATA-Singapore Airlines, which will operate under the brand name Vistara, publicly announced the receipt of their first aircraft, an Airbus A320-232SL that arrived from Toulouse with a tech-stop (to refuel) in the middle east. The aircraft flew in all white – without the livery of the airline. The aircraft will eventually be either stickered or painted, and the aircraft’s delay in arrival will only push the start of operations to either end October or early November, after the airline can fly the aircraft on intended routes for a series of ‘proving’ flights to satisfy the DGCA’s Civil Aviation Policy CAP3100.

From Singapore Airlines

Vistara’s first aircraft – like the other 19 aircraft that are to be received over time, are leased from BOC Aviation. BOC Aviation is 100% owned by Bank of China, one of the largest banks in the world.

BOC aviation, headquartered in Singapore, was formerly SALE – Singapore Aircraft Leasing Enterprise, when it started operations in November 1993. When formed, SALE was a 50:50 ownership between Singapore Airlines and Boullioun Aviation Services. In the December of 2006, SALE was acquired 100% by the Bank of China (BOC) for US$965 million. In the July of 2007, it was renamed to BOC aviation, to reflect the change in ownership. With the support of BOC, BOC aviation was able to expedite its growth, from 100 planes in 2009 – over the first 16 years – to 246 owned and managed aircraft operated by 56 airlines worldwide in 2014- just five years later. BOC Aviation has another 196 aircraft on firm order, as of date.

BOC Aviation is headquartered in Singapore, and has leased airplanes to SpiceJet, and Jet Airways. Interestingly, the first ever lease to a Singapore Airline subsidiary or affiliate, although the lessor had its roots in Singapore Airlines. The 20 aircraft lease to Vistara is reportedly the largest leasing agreement in BOC Aviation’s history.

Of Singapore Airlines

TATA-SIA Airlines is a 51:49 joint venture between TATA Sons and Singapore International Airlines (SIA). SIA has invested US$ 49 Million. The TATAs, although a majority stakeholder, have no recent experience in the airline business, and the airline is expected to be pretty much run and managed by Singapore Airlines, although substantial ownership and effective control will be vested in Indian nationals. Singapore Airlines is expected to dictate how the airline will be run (executed). Vistara, a full service carrier, is expected to reflect a strong Singapore Airlines influence – at all levels of operations and perhaps even decisions.

The airline’s first aircraft was ferried from Toulouse by pilots Gopal Subramaniam and Mandhesh Singh. Gopal is Chief Pilot Line Operations, Technical & Quality at Vistara, and has joined from Singapore Airlines, where he still considers to be employed. Mandesh was flying the Airbus A330s for Singapore Airlines, and previously the A320s for SilkAir, and was part of the crew that inaugurated the direct Singapore-Coimbatore flight in 2007.

Phee Teik Yeoh, CEO of Vistara, has been with Singapore Airlines for nearly 23 years, and started his career with the airline as a Network Planning Analyst. Considering the CEO being a Singapore Airlines’ guy, and that he has held a wide spectrum of portfolios at SIA, prepping him for the role as a CEO, all management decisions and recommendations will pretty much be the way Singapore Airlines wants it.

At AirAsia India, none of the technical or managerial positions are held by any former AirAsia employees.

For Singapore Airlines

Historically, airlines which Singapore Airlines either has a stake in, or is a parent company of, have filled gaps in services of SIA. For example, routes dropped by Singapore Airlines, and later SilkAir, have been taken up by Tiger Airways. Together with its subsidiaries and affiliates, Singapore Airlines has managed an extensive network, catering to both business travellers and budget travellers. An Indian network was missing, and with Vistara, Singapore Airlines can offer its customers a near seamless experience and service – connecting them from various parts of India to its hubs at Singapore or stations in India, from where passengers can be connected to the rest of the world. With Singapore gradually losing out as a preferred global hub to the strategically located and aggressive Middle-East Asian hubs, through which a significant number of Indian passengers transit, capturing the Indian market, both directly and indirectly, is key. The Vistara strategy gains prominence in the light of the Jet – Etihad deal, which is aiding in diverting international traffic from India to the West.

Singapore’s deep involvement in the airline will bode well for Vistara – in terms of network, service, safety, and operational service metrics of on-time performance, in-flight service, and in-flight experience. Together with brand new aircraft, Vistara as a full service carrier driven by Singapore Airlines is poised to conquer the full service market over Indian skies.

‘TATA’, on the other hand, is just a name.

A quick take on Tony’s talk

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TonyOne interview – just one – of Tony (Economic Times, ‘So IndiGo, FIA want to fight? We fight!: Tony Fernandes, AirAsia chief’- Anirban Chowdhury) set Twitter on fire, with Sanjiv Kapoor (COO, SpiceJet) reacting, and Vijay Gopalan (CFO, AirAsia India) counter-reacting.

This is not about the gossip, but to make sense of the nonsense.

Tony Speaks

First, for Tony to say that he doesn’t understand ‘SpiceJet’s logic or strategy’, and that ‘the fares are unsustainable’ is a surprise. The man behind these low fares is Kaneswaran Avili, who was with AirAsia since its inception, and has also been involved with the group’s Tune Hotels and Tune Money. Kanesh drove the discounts and promo ‘sales’ at SpiceJet, and his logic is no different from AirAsia’s, but perhaps, tailored to suit to the needs of the Indian environment – and particularly SpiceJet.

Despite repeated attempts by SpiceJet to make the industry understand the too-easy-to-not-understand logic of their low fare strategy, people seem to not comprehend it. Even more surprising is the fact that AirAsia India, which claimed to sustain with the all inclusive INR 990 fares (AirAsia India CEO Mittu told TFE on June 12th: ” 990 fare for us is something that we think is sustainable”), finds SpiceJet’s ‘sale’ airfares, which are priced on average around INR 2,000, ridiculous. Or that’s what Tony thinks. Below is a snapshot of AirAsia’s low fares – far lower than SpiceJet’s. SpiceJet’s fares are almost always higher than AirAsia’s, for the same sector.

AA_faresThe Spicy logic

SpiceJet’s strategy is simple : determine those seats that will fly empty, and sell those seats at fares that more than cover the costs associated with transporting that discounted passenger. The result? The average yields for SpiceJet may have diluted, but the airline now records a higher – much high revenue per available seat kilometer (RASK). Which only means that on average, the airline realizes a larger revenue per flight, than it used to without these promotions and sales. Had these promos not been in place, SpiceJet would have bled further – in the face of increasing symptoms of overcapacity, with no guarantee of sold inventory or high yields.

What Tony must remember is that SpiceJet did not have the luxury of being run entirely by industry professionals throughout its existence. AirAsia has had that, and has carried no dirty laundry. SpiceJet’s performance today is awesome-for those who really know the figures-but appear terrible only because of the losses, penalties, interests, and other unwanted baggage from the past.

All that Kaneswaran has done is to implement an AirAsia strategy in SpiceJet, tweaked to ensure its optimisation for SpiceJet specifically. This has resulted in industry-wide highest loads for the year, high RASK, and working capital even in the face of a cash crunch and a meager investment of INR 300 Cr by Maran. Team SpiceJet is keeping the ship afloat.

The last word

It was perhaps poor research, poor understanding of SpiceJet’s strategy, or just a joke badly presented that drove Tony to be taken so seriously. Tony’s loose tongue lands everyone – including his airline – in trouble. For Tony to not understand SpiceJet is to not understand his own – Fares Kilpady (Vice President, Revenue Management at SpiceJet, and formerly at AirAsia X) and Kaneswaran, which is unfortunate.

What Tony doesn’t realize is that every time he or his team make a statement that counters a previous statement by Mittu, it only puts the young CEO in bad light.

Sanjiv came back with knee jerk reactions – unfortunately, even if his arguments were valid – which shows him being sucked into an unwanted word game he’s not cut out for. It’s proof that Sanjiv – a non resident Indian, with his family at London- is getting topicalised. The ‘foreigner’ jabs were uncalled for – Sanjiv is as much a foreigner in India, atleast as far as his career history shows. Mittu and Tony are a different breed, with a different mindset; but Sanjiv’s appeal as a classy COO may be waning.

Unlike Tony and Mittu who seem to have sufficient non-airline related time, Sanjiv has a big set of tasks: to walk the talk, turnaround an airline, and secure an investor (perhaps a ‘foreign(er)’?)

Meanwhile, the media & India will soon get used to Tony, and possibly not bother or read too much into each and every comment that he makes – which puts Mittu in bad light and leaves a bad after taste with the competition.

IndiGo: Thins seats, widens savings.

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IndiGo Seat Change

Indigo – the Indian airline known to religiously adopt best low cost carrier practices, thanks to its founders who brought with them unequalled relevant airline experience, has taken yet another step to lower costs, and in part increase passenger comfort.

IndiGo flies one aircraft type- The A320-232, with some of the newer ones featuring fuel saving wingtip modifications known as ‘Sharklets’. As of date, the A320 can seat a maximum of 180 passengers in an all-economy cabin layout. With such a configuration, all seats, with the exception of those at row 1, 12 and 13-the later two being emergency exit row seats- feature a 29 inch seat pitch.

Of the 29 inches in seat pitch, around 4 inches may be subtracted due to the thickness of the seat, leaving an effective room of about 25 inches, or 2′ 1″. For an average Indian with a height of around 171cm and a Body Mass Index (BMI) of 24, this leaves between two to three inches between the knee and the seat pocket in front. Magazine thickness in the seat pocket affects how much ‘knee’ room is finally available.

With SpiceJet talking about its latest cabin product SpiceMAX, where the first five rows of most of its Boeing 737-800 & -900 aircraft feature a generous 35 inches of seat-pitch, or about 31 inches from the backrest to the seat pocket in front – or half a foot more than IndiGo’s offering, IndiGo may have felt threatened by its inability to match such a product for its passengers. The Flying Engineer learns that the airline has recently changed its passenger seats to the Dragonfly from SICMA Aero, which manufactures and sells aircraft seats under ZODIAC Aerospace group. The airline previously flew the model ‘5600’ seats from Weber seats – the company which in 2012 became Zodiac Seats U.S. LLC, which is now a subsidiary of Zodiac Aerospace of France, and is one of the largest manufacturers of airline seats in the world.

The new ‘Dragonfly’ seats offer a double advantage and a disadvantage.

The new seats are thinner, and lighter. Thinner seats free up more legroom. The seats offer between and inch and two of extra legroom. The lighter seats shave off 700kgs from the airline’s aircraft’s operating empty weight. 700kgs on a Bangalore-Delhi sector of 1000NM translates to a saving of about 50kgs of fuel per such flight. The savings are as low as 0.6% for a short (200NM), full flight, and 0.8% for a long (1000NM), full flight, and can touch 1% when load factors are lower. With savings between 10kg and 50kg of fuel, dependant on the flight, an assumed 20kg of saving per flight, on average, translates to a saving of 3.65 million kg of fuel per year, assuming 500 daily flights. This translates to INR 34 Crore per year, with an average fuel price of INR 74.69 per litre.

The disadvantage, as reported by a recent flyer on board IndiGo, is the discomfort associated with such seats. The manufacturer describes, “With its ergonomic stamped backrest, the Dragonfly offers tremendous operational savings, fewer parts and increased cabin density – all the while adapting to finicky passengers’ growing desire for improved living space”. However, comfort isn’t stressed upon as much as the 5600’s, and the thinner cushioning has been reported as relatively uncomfortable.

Further, unlike the model 5600, the Dragonfly seats may not be IFE capable.

The seats on board IndiGo’s A320s are 18 inches wide, inner armrest to inner armrest. Airbus offers customers an option of 17 inches seat width with a 25 inch wide aisle – a configuration designed for quick turnaround times, or 18 inches seat width and a 20 inch wide aisle – a configuration designed for enhanced passenger comfort.

To be fair, the seats on SpiceJet’s 737s – as are all 737s, world over- are only 17 inches wide. Barring the first five rows of ‘SpiceMAX’ seats, and seats on the emergency exit rows, most other seats on SpiceJet’s 737s feature a 29 inches seat pitch, which offer a passenger 25 inches from the backrest to the seat pocket, and 17 inches in seat width. IndiGo’s seats, however, offer one to two inch more legroom, and one inch more seat width, catering to the ever increasing population of those with above-normal BMIs. The new seats allow the airline to offer more space uniformly across the cabin, while saving money, too.

An eye on costs is what the airline is known for: the airline has a very strict fuel policy, wherein the airline, and not the captain, decides on how much extra fuel must be uplifted. This has been possible due to a strong analysis of historical fuel data. The airline also incurs a cost of between INR 4 and 5 for every kg of potable water that is uplifted. The capacity of the potable water tank is 200 litres, but the airline monitored water consumption for every sector, and now only fills between 40 litres and 120 litres, depending on the sector. As a result, the airline saves between INR 320 and INR 640 per sector. Assuming a very conservative saving of INR 300 per sector – the airline saves, over 500 flights a day and over a year, almost INR 5.5 Cr.

Savings – possible through constant innovation, quick adoption of fuel saving technologies, constant analysis, great strategies, and strict implementation.

Thanks to Oscar Victor for certain data.

AirAsia India’s Second Aircraft

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AAI A320AAI_9M-AJFAirAsia India received its second aircraft, which landed at Hyderabad at around 13:30 IST (UTC + 5:30) on the 26th of August, 2014. The aircraft flew in from Kuala Lumpur.

The second aircraft is an A320-216SL, but not brand new like the previous aircraft. This A320, MSN 6034, was delivered on 24th March 2014 to AirAsia Malaysia, and registered 9M-AJF. The aircraft has been with AirAsia Malaysia for almost five months.

The aircraft sports the same livery as AirAsia India’s first aircraft, registered VT-ATF. The only changes to the exterior will be the replacement of the Malaysian flag with the Indian flag, and a change of registration from 9M- to VT-. The registration is expected to be VT-ATB.

TweetThe Flying Engineer had, on 19th August, guessed 9M-AJF as one of two aircraft to likely join the AirAsia India fleet.

The second aircraft is almost as new as the first aircraft. With AirAsia Malaysia contracting its operations, many of its aircraft are underutilized, enabling the parent airline to offload one aircraft to its Indian associate.

With the second aircraft joining the fleet, AirAsia India will fly an additional pattern September 5th onwards. The pattern will include flights to Goa, Chandigarh, and Jaipur from Bangalore.

AirAsia India was to have launched the virgin Bangalore-Chandigarh route. IndiGo, however, stole that opportunity from AirAsia India, by introducing a Bangalore-Chandigarh service September 1st onwards.